An incoming Coalition government might sack staff from the doomed Climate Change Department if they refuse to take redundancies.
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The subsequent surplus office space in the Nishi building could be sub-let, or the Coalition might cancel the department's 15-year $158 million lease.
Opposition climate action spokesman Greg Hunt detailed plans for abolishing the department amid reports the government might get in first to make savings in the budget.
Abolishing the Climate Change Department would reduce overlap with other areas, Mr Hunt said.
"From a managerial perspective, I think it makes a lot more sense. It's a significant and genuine efficiency and improvement,'' he said on Sunday. "It's more logical and more efficient to have a single department of climate and the environment.''
Mr Hunt said the merger would result in job reductions.
"The merged department will be significantly smaller,'' he said.
"Our preference is to have voluntary redundancies - we've never hidden that it would be a significantly smaller department.''
Mr Hunt described the Climate Change Department's lease as one of the worst property deals for the Commonwealth in the past 20 years.
"They've managed to lock us in for an extraordinary amount of time with a building that is arguably surplus to needs,'' he said.
"We'll review the contract and review the options for sub-leasing to the private sector. I don't want to pre-empt the outcome of what would be a genuine review process.
"I am extremely confident from discussions I have had that we can save the Commonwealth very, very significant amounts of money.
"We will make significant savings in terms of staffing and associated administrative and building costs.''
A Coalition government would also abolish the Energy Security Council, the Climate Change Authority and the Climate Change Commission, as well as the $10 billion Clean Energy Fund.
Speculation on the Climate Change Department was sparked after Prime Minister Julia Gillard said last month its secretary, Blair Comley, would leave.
Nishi developers Molonglo Group said on Wednesday the apartments were nearly finished but was unable to give a firm idea of when the project would be completed. Most work at the Acton site has been shut down since last Monday, when Ply, the main contractor, allegedly owing millions to local subcontractors, called in the administrators.
Correction: This story was originally headlined "We'll sack climate staff and sub-let offices, warns Hunt". This incorrectly paraphrased the Opposition climate action spokesman.
