Senate Foreign Affairs, Defence and Trade Legislation Committee, , 6:53:45 to 6:59:23
Officials explain the cost-benefit analysis process for divesting defense assets, including the sale of Victoria Barracks in Sydney and the financial implications of moving to leased office space in Defense Plaza Sydney.
Topics: Infrastructure, Government spending, Integrity
Speakers: Celia Perkins, Speaker 28, Unknown Speaker
Thank you. give her a chance to so I just wanted to confirm um the um divevestature of defense assets that's currently occurring um that's happened as a a grouping so there doesn't seem to be any individual cost um benefit analysis of selling individual sites is that correct
>> uh Sly Perkins deputy >> secretary security and estate thank you for the question No. Uh in both the work that the original independent uh audit of the defense estate undertook and then the work that defense did to analyze and uh make recommendations to government on implementation. We undertook detailed costbenefit analysis work. that work um uh looked at uh uh market valuations for the potential sales site that could be achieved for the sites recommended. Uh I would note that they were undertaken with a view to uh understanding the heritage and contamination overlays likely. Uh in addition to that uh we worked through with government a couple of other really important elements uh uh of the costs to operate those sites. Uh that included uh an overall sense of the cost to sustain sites of that shape and size, the planned future maintenance that we understood and the planned investments that we understood would be necessary for those sites. So when we went back to um cabinet consideration um we had uh a a good sense of the potential uh uh realization of value that we would be able to achieve uh the costs that it would take not just um uh the cost that it would take to to make those changes. So we know that there is a cost to move people. We know that there will be some capability replication. We know that there will be um decontamination work uh history and heritage work. Um and the other headline uh point for us Senator was that um uh we modeled uh the planned savings to the sustainment budget uh uh for the estate into the future. So uh in the headline figures that the deputy prime minister announced in February uh uh they are the benefits that we see and and that is our desire to invest in you know the future estate for uh the current and the future operating force
>> but it wasn't necessarily done so so if we take um Victoria barracks in Sydney moving that into defense plaza Sydney and I think we heard last week it was $231 or so million dollars over 10 years. Is it fair to say that there has been no cost benefit analysis sight by sight? So, so it's difficult, I guess, for the taxpayer to figure out whether moving from a wholly um taxpayer owned um or governmentowned um facility to then having to pay, you >> $23 million a year to lease >> five stories.
Senator um yes we have done that analysis site by side including Yes. >> And really important point on defense plaza Sydney we we that is a lease in place um uh we have that uh lease in place uh you know for the long term we are already paying that cost but one of the things we knew and the independent defense of state audit identified is um we'd entered into that lease uh and started that process um precoid we know now that office occupancy is much lower than we'd planned for. So there's a significant capacity in that site which is part of the reason that we want to optimize where we already have an investment uh and an ability to operate in a you know more secure and more modern way. So that that cost we understood that cost won't really change um but we absolutely modeled uh across broad sustainment plan future investment and the cost to move to receiving sites.
Can I can I ask you to table that individual because we were told told in the inquiry last week that that it wasn't done individual side by side. That would be very
>> I've read Thank you. I have read um the hands or I haven't seen the hands yet. I I read a transcript from last week. I think um Mr. West's evidence last week is that we don't break down individual sustainment products sight by sight. >> Yeah. >> But we modeled um uh uh the the broader sense. Now what we have shared um uh previously and certainly in our responses to questions on noticed uh is that that that that work uh form part of um a cabinet consideration uh and that um the the the government's position has been that making public the specific financial information for the individual sites uh will diminish u our commercial advantage in negotiating uh for full market value as we proceed with the sales.
perhaps if you can table what you can um that allows sort of accountability and and I think it's it's in the public interest um for the taxpayers to know what's happening with with defense assets with their assets.
>> We'll take that on notice.