Finance Department denies understating cost of new Canberra office block

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The Finance Department has denied understating the cost of its new $376 million office block to the Parliament.

Instead the Department has defended its approach to the Parliamentary Committee process, saying it followed "long-standing practice" to supply a figure of $195 million to the cross-party Committee who examined key aspects of the decision to lease the state-of-the-art 1 Canberra Avenue.

Government contracting website AusTender shows Finance will pay developer Willemsen​ $376 million for a 20-year lease on the building and two members of the Public Works Committee who examined the deal in 2015 have told Fairfax the higher figure was news to them.

Finance had to work hard in 2015 to convince skeptical committee members that the move to Canberra Avenue from the department's present base at John Gorton House in nearby Parkes offered the best value for money for taxpayers.

But two Labor senators on the committee say they were never told that the ultimate price to the taxpayer of the Canberra Avenue option would be in excess of $376 million. 


"The contracted figure that was reported on AusTender is entirely consistent with what was provided to the Public Works Committee," a departmental spokeswoman said.

"Moving to 1 Canberra Avenue saves the Commonwealth, and the taxpayer, significant money over the lease period.

"Consistent with long-standing practice, the Public Works Committee figures were expressed in Net Present Value terms."

The spokeswoman claimed Finance had been correct to use the "net present value" figure instead of the "nominal" cost but did not explain why the $376 million sum had not been presented to the committee. 

"Net Present Value (NPV) is used to express a value (or cost) in today's dollars as opposed to the nominal cost," she said.

"NPV is a standard financial assessment tool for comparing the value of investments. Advice to the Public Works Committee uses NPV as a standard to enable comparisons.

"It is inaccurate and misleading to represent the figure of $376m as being a 'new' figure.

"The figure of $195m which was provided to the Public Works Committee is the total cost of outgoings to Finance expressed in NPV terms. The Public Works Committee was also provided with all figures in nominal terms, i.e. the full cost of outgoings over 20 years, which included the full lease costs as reported in AusTender."