Senate Rural and Regional Affairs and Transport Legislation Committee, , 0:01 to 34:22
The committee examines the department's efficiency dividend, staffing reductions managed through natural attrition, and the impact of inflation on infrastructure spending.
Topics: Efficiency dividend, Public service staffing, Government spending
Speakers: Matthew Canavan, Jim Betts, Cha Jordanoski, Susan Charles, Hon Matthew Canavan, Hon Anthony Chisholm, Maree Bridger, Senator Matthew Canavan, Sonia Bradley
All right, hands are broadcasting. Good morning. Um, I declare open this hearing of the rural and regional affairs and transport legislation committee into the 202526 additional estimates. I begin by acknowledging the traditional custodians of the land on which we meet today and I pay my respects to their elders past, present and emerging. I extend that to respect to Aberiginal toouristra islander peoples here today. The committee is due to report to the senate on the Tuesday. the 31st of March 2026 and it is fixed Friday the 10th of April of 2026 as the date for the return of answers to questions taken on notice. The committee's proceedings today will begin with corporate matters of the Department of Infrastructure, Transport, Regional Development, Communications, Sports, and the Arts. Understanding order 26 of the committee, I'm sorry, under standing order 26, the committee must take all evidence in public session. This includes answers to questions on notice. I remind all witnesses that in giving evidence to the committee, they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence. The Senate has endorsed the following test of relevance of questions at estimates hearings. Any questions going to the operations or financial positions of the departments and agencies which are seeking funds in estimates are relevant questions for the purpose of estimates hearings. I remind officers that the Senate has resolved that there are no areas in connection with the expenditure of public funds where any person has a discretion to withhold details or explanations from the Parliament or its committees unless the Parliament has expressly provided otherwise. The Senate has resolved also that an officer of a department of the Commonwealth shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. Witnesses are reminded of the Senate order specifying the process by which a claim of public interest immunity should be raised. I incorporate the public immunity statement into the Hansard. I remind senators of their obligations under the behavior code for Australian parliamentarians to treat witnesses with dignity, courtesy, fairness, and respect. An officer called to answer a question on the first time should state their full name and the capacity in which they appear. I now welcome Senator the Honorable Anthony Chisum, Assistant Minister for Regional Development, representing the Minister for Infrastructure, Transport, Regional Development, and Local Government. Minister, do you wish to make any opening statement?
>> Uh, thanks chair. Good to be with you this morning. And no opening statement.
>> Thank you, Minister. I uh welcome Mr. Jim Betts, Secretary of the Department of Infrastructure, Transport, Regional Development, Communications, Sports, and the Arts. Mr. Betts, do you wish to make an opening statement?
>> Uh, a very short one, if I may, Chair. Uh, Senator Canavan wrote to me on the 28th of January, 2026, requesting detailed information in relation to a number of funding programs administered by the department. Uh, consistent with past practice, I'm pleased to table an extensive package of information in response to the senator's request. Uh Senator OS Sullivan uh wrote to me on the 5th of February requesting information about four projects and programs. Uh the information sought by Senator O. Sullivan is included in the documentation provided in response to Senator Canavan.
>> Thank you Mr. Betts and we will shall now go to questions. Senator Chandler.
>> Thank you uh chair. Look, I just wanted to pick up uh first on some questions from last time in particular that we had a discussion about efficiency dividends. Um can I just confirm the efficiency dividend for this year is 1% this
>> Just ask our chief finance officer to
>> Thank you, Senator Charardoski, first assistant secretary, chief financial officer. Um, thank you, Senator. In relation to your question on the efficiency dividend, yes, it is still 1%. Um, that's the baseline uh efficiency dividend applied to um all government departments.
>> Yeah. Okay. And I think at the last estimates we heard that it was uh that amounted to something like $5.5 million, maybe 5.6 from memory. >> Y >> uh are you on track this financial year to achieve that that efficiency dividend?
>> Um thank you Senator. Yes, we are on track because the efficiency dividend is removed from our appropriation. Um so the money that is appropriated to us from government um is reduced already by the efficiency dividend.
>> Right. Okay. Have you had to make any staffing reductions because of that uh reduction in appropriation appropriated funding?
>> Um so so senator we um apply because it's a consistent approach that we use in applying that efficiency dividend. So that's applied across all groups. Um and we base that into our forecasting into the way we manage our internal budgets. Um so as a result of that um Senator we haven't had to have any sort of widespread staffing reductions but we are um always looking at our priorities and ensuring that the organization is running efficiently and effectively
>> but staff me numbers have reduced haven't they financial year
>> um so for this financial year Senator um let me just pull out that page um staffing does move um year on year so I can confirm that at the portfolio the additional estimate statement. So page 24 um the department's average staffing or the reportable average staffing level in the pays is 2354. Um so in relation to that that is an additional um staffing of 62 um that came out of our um so there were some changes in our staffing apologies let me re rephrase that. So since the um May budget or the March budget last year, our ASL um number has increased by 76 um that number includes an additional 62 from the um the administrative arrangement orders. So that's as a result result of the MOG last year on the 13th of May. Okay. >> Um and we also did get 14 ASL as a result of the recent Mayifo and that relates to supporting transport priorities and that's also on page 278 of the Mayifo.
So maybe Secretary Betts wants to add something here.
>> Yeah. So just to be clear, it's the picture is a bit confused by the machinery of government change which involved the importation of the office of sport from the department of health which is about 76 staff and then the transfer to treasury of staff related to housing and urban policy which is about 14. Um the assumption uh going from 2425 into 2526 would be was that our ASL would reduce by 47. Um
>> yes that's what I I was about to raise that. So so the 47 reduction is
we've managed that as as we've previously discussed we have an attrition rate of around um 12 to 13%. So we're able to manage relatively modest reductions of that kind um through a natural process of attrition without the need to uh have widespread redundancies or anything like that. But
so the 47 reduction that's if you like on a all other things being equal basis is it if you separating out the MOG changes to some
degree >> that's based around the tally which is kept by the expenditure review committee and updated each budget.
>> Okay. Right. Right. And that hasn't changed. You're still you you're able to meet your your budget with just that 47 reduction this financial year.
>> That's right. But then I should add in my EO uh an additional 14 ASL. >> Right. Um but um to answer your fundamental question as I understand it, yes, we are able to balance our budget this year and we'll be able to do that without the need for significant staffing reductions.
>> Okay. So just to take so I'm clear uh 47 was the number at the last time we met. Uh I suppose we had two rounds of it in supple I think it was still called supplementary estimates in December. Uh so since supplementary estimates there was 47 at supplementary estimates there's been since another forteing. So for this financial year, the accumulative reduction in ASL is 61 for the ERC purposes. Is that right? Am I
>> 47? Um and then we add back 14. I mean minus back 14. So um about 34.
>> Oh, sorry. It's the other way. You've added for 14. Sorry, I misheard. Okay. So you you added back the 13. So um now 34. Thank you. Thank you. Okay. Um uh have you received any additional correspondence from the Department of Finance or the Minister for Finance around an efficiency dividend for 2627? >> Um since we last spoke.
>> So Senator, I can confirm for you and I'll just pull out my page. Um I I can confirm that we did have um the additional saving that was applied at the mifo. So that was the uh I think at probably the last hearing or possibly the October hearing we talked about um the additional saving and that was in relation to the $6.8 billion election commitment. So I can confirm this was published and it's in um our pays on page 28. So for 2526 Senator we have an additional $10 million that's been applied to our appropriation or reduced from our appropriation. We have um 15 million into 2627, 15.3 in 2728 and 14.8 in 289 um 2829. So that's in a total additional savings of 55.1 million from the current year in the forwards and that was the measure that was applied at the Mayifo.
>> So that's on top of the 1% efficiency
dividend. Yes, that is in addition to that
>> and that and those those amounts are from your um uh departmental um appropriation.
>> Yes, it is Senator.
>> Okay. Right. Okay. So that >> sorry.
>> So it's applied to our departmental but also applies to some of our agencies as well
>> and to those figures that I've read out
to you are directly for the department.
>> Right. Okay. So that that that does seem quite a substantial cut is that because so the efficient 1% efficiency dividend is 5 million odd round numbers and this additional um additional cut to your expenses is three times that amount on annual basis roughly. Is that right?
>> Uh so senator that we as we do each and every year we consider the budget that has been provided to us by government. Um and we work really hard to live within our means. Um and that um has meant that the department has gone through a number of prioritization processes. We've always looking at ensuring that um we are operating as efficiently effectively whether that be our operating costs, procurement costs, consulting etc. um as well as um ensuring that you know we manage our ASL um within um that limit as well.
>> Right. Okay. So uh um I understand the evidence is that the uh efficiency dividend this year the 5 million odd was able to be met through natural attrition the 34 reduction those higher numbers the 15 million presumably on top of already a 1% dividend as well are they able to be managed with natural
attrition? Yeah, they are. And it was announced during the election campaign. So, as we planned our budget for the year, we were cognizant of the fact that we would be in all likelihood asked for further savings which then crystallized at my EO. So, we um baked that into the financial disciplines that we um put around our budget as we planned it at the beginning of the financial year.
>> Right. Okay. So, you're saying you got a 10% attrition rate across 2,000 odd staff. So, about roughly 2 to 300 staff a year
>> recognizing. Yes, that's right. So, but recognizing that um staffing costs are not the only cost. They're about 60% of our cost base, but we are able to secure savings as Miss Jordan Oski has explained through um procurement through um tightening up travel um through holding vacancies um through we had a staff recruitment freeze for a period of time which enabled the attrition to deliver significant savings.
>> But given those those additional savings being quite significant uh uh do you have a staffing freeze on now? Well, no
we don't. But we have quite a lot of discipline around making sure that when vacancies arise that the first um recourse is to see whether there are staff who may be coming off um uh ceasing programs or terminating measures elsewhere in the department who'd be a priority for redeployment. So we are stringent in making sure that we only go to external recruitment where we need
>> Okay. And what about the um the uh the other 40% of your costs? Have you got specific measures in place at the moment to reduce costs there?
>> So Senator, we have over the course of the last I think almost I've been in this role now three years, Senator um being prudent and ensuring that our delegates are very conscious of their spending. Um and that includes you know um some strong disciplines around travel expenditure ensuring there's appropriate oversight by appropriate levels for consultancy and um contract expenditure um as well as you know internally um you know when we are cutting up those when we are applying our internal budgets that kind of accountability that sits with the SCES as well is really um driving all of this too. So this has been an ongoing process for the department. Um and um this work is um you know built into what we do and also you know very conscious that we have to live within the means our means and within the budget that government provide us.
>> Can you give me some specific measures say on travel? Y
since probably the last few years, we have um an internal process. It's a guidance on um internal budget management. Um and that particular guidance does go to ensuring only essential travel um is undertaken and you need to get um oversight by your first assistant secretary for that travel. So then generally staff put forward a a short business case to explain why um the travel um is necessary and essential. And I can say Senator I over the last 12 months we have reduced our travel expenditure for by about um 6% as a result of that. So a lot of this stuff really is ongoing um and it's really trying to uh instill that fiscal discipline into our delegates and and managers.
>> Another another example would be our use of external contractors. So if you go back to mid 2022, we had 283 external contractors on our books. That's come down um to 105. So we're now within the um 8% range. We're at 4 and a half% of our ASL for contractors. So 50 of those uh contractors were um translated into full-time public servants which saves money but the aggregate um number of contractors has reduced very significantly.
>> Okay. Um last time uh last estimates we spoke a little about the uh proposal for a 5% efficiency dividend for 2627 been well reported in the news. Uh have you received any further correspondence from the department of finance about efficiency dividends for 2627?
So the uh the um thing that we discussed last time which was the subject of some commentary in the media was around not a 5% efficiency dividend applied to departments but an exercise where departments were uh asked to consider um uh how they how they would go about rep prioritizing um 5% of their expenditure. And as we explained last time that is an input to the budget process. Um obviously the budget process is kicking off across um government right now. I'm not aware of having received myself any specific correspondence in relation to that exercise but as we explained last time that is um caught up in cabinet and budget processes so we're unable to talk about the detail of that.
>> Okay. But but yeah, I'm not asking for the detail, but u just to be clear, you haven't or the department hasn't, I suppose, putting it a broader net. The department the department hasn't had correspondence from the department of finance about 2627's efficiency
>> No, Senator, I have we have not received any correspondence in relation to any changes to the efficiency dividend.
>> Okay. All right. I've just Yeah, I suppose it's a question for finance. I'm a little worried given the amount the the the contribution of public spending to inflation and interest rates. But just to be clear, the Department of Finance has not contacted you uh to seek uh options to reduce government spending to tackle inflation.
>> Well, we're in um early February now. Um the budget process is about to kick off. Um we can't comment on that budget process but obviously um uh the treasurer and the finance minister and other senior ministers are talking about um the budget situation in aggregate.
I realize a few years ago uh uh when inflation was out of the the band the 2 to 3% band uh there was an explicit attempt uh from the government to defer infrastructure spending as one means uh to help reduce inflationary pressures in the economy. Uh has there been any consideration given to deferring infrastructure spending now that again inflation 3.8% 8% while outside the
>> If there were any consideration, it would be uh in budget processes which have yet to occur.
>> Okay. All right. Well, we'll wait and see. Um uh I might move on to um uh your leasing arrangements. Um uh how many leases are expiring in this year and next year for the department? Property leases. Yeah, probably
>> in general or are you specifically interested in CRA?
>> Uh, I I probably I suppose let's start in CRA because my next questions will be about Alinga Street and the like, but yep, let's start in CRA.
>> Okay, so we have four leases on foot in CRA at the moment and we can talk you through the timelines of those.
>> Good morning, Senator Marie Bridger, chief operating officer. We currently have two leases uh that are expiring uh this financial year. Our Olympus Street and our Northbborne uh buildings near the bus interchange.
>> Okay. How many you say four?
>> We have two expired this year.
>> And what about next year?
>> And then next financial year we have uh our lease at our Nishi building >> we also have anou with the atto before some space um that we call narellan but I think thatou uh expires beyond that time but we do have the right to uh exit thatou prior to its expiry. I just don't have that on hand. >> And just to clarif oh it expires May 27th. So it is next
year as well. But that just to be clear and to clarify what I said before, we are not the lei there. We have anou with
>> Can you tell me how many staff at each of those four locations? I suppose
>> we don't have that information on hand at the moment, but we'll get it for you through the course of this morning.
>> Might not be too hard to chase up. Okay. Um uh so uh can you give me the dates that the leases are um expiring?
>> Uh hi um Susan Charles, first assistant secretary for enabling services. Um if I I'll run through them. So the um the 11 uh 111 Alinga Street lease expires on the 30th of June 2026. Um the Northbborne 62 Northbborne expires on the 30th of June 2026 and the Nishi building expires which is to Philip Law Street in CRA on the 14th of December 2027.
>> Right.
>> I can tell you we have um 1,763 CRA based staff but we'll break that down by the buildings.
>> Okay. Okay. All right.
>> Excuse me, Senator. We do actually have a couple of other leases. uh for example uh warehouse space out at Mitchell and we also lease some car parks as well. So for completeness I just wanted to call those out.
>> Yeah, I'm more interested in the office space here. >> Um okay. Um so and where and and my saying is you have run a process in recent years to find a new location. Is that correct?
>> Yes, that's
>> okay. What's the latest on that?
So we have uh we've approached uh new our new premises as a precinct model because we had leases across all of those four premises uh expiring at different times. Um and uh we've signed a lease to uh take up space at seven London Circuit uh uh in a couple of months. We'll start the process of transitioning staff uh probably next month. Um and then uh we're currently in the process of settling the second building of that precinct model. We haven't signed a lease. Uh, and that is at one city hill and we're at the public works committee for that on Friday.
>> So, sorry, the first one is in London Circuit. Is that right?
>> Yep. Seven London Circuit.
>> Seven London Circuit. And there's another building as well.
>> Yes. In very close proximity about 5 minutes walk away at One City Hill.
>> One, what was the name?
>> One City Hill.
>> City Hill.
>> So, that means then the >> Okay. when we're expiring leases for Nishi and ourou at Narellan, we sort of it all lines up.
>> Okay. How many staff will be at those two locations or plan to be?
>> Um I can provide um an indication. We're we're expecting in seven London circuit around 800 oh sorry 843 um staff >> and in um one city hill we're um anticipating about the 1,200 staff that will be located in those places.
>> Okay. And you said you're at public works for city hill.
>> That's correct. Last Friday.
>> Um what about London circus already gone
>> that has completed at um uh and we've got approvals there. Um we are due to com we have started construction on seven London circuit with the fit out. Um and that started in December of last year and we're on track um for a completion around May June of this year for move for us to move in.
>> Okay. How much is the fit out costing
>> for seven um London circuit? Um the estimated fit out cost is 23.4 million.
Okay. Um, how much is that per square
>> It's uh 2,413,
>> right? That seems higher than normal. Is that I thought it was usually sub 2,000,
>> um it is a um considered a premium grade um building. Um and so it's meeting the um requirements in relation to um the Commonwealth property manual um size, Oh, the thank you. I was trying to remember the end uh Nab neighbors um requirements as well.
>> That's the energy efficiency, is it?
been through a business case and been scrutinized by the public works committee um and obviously by our finance colleagues as well.
>> yeah I'm just wondering I mean obviously we got a cost of living crisis, we got an inflation crisis. What's the rationale for the department of infrastructure having a premium grade office fit out?
So the office fit out allows greater flexibility in terms of um ensures that we've got um uh collaboration spaces and workspaces that adapted to flexible ways of working. So, we're seeing that um staff um need more um or we're we're encouraging staff to um have when we did some consultations with staff, they wanted more spaces where they had flexible and hybrid ways of working. And so, we've looked at a fit out that meets those requirements and we've worked with our um uh networks as well around what requirements they need.
>> Just to be clear, this is going to save money. This is consolidating from four down to two and it's a 40% reduction in leased office space in CRA. Um so part of the benefit is as um as Charles has described is having contemporary office space. Um there's nothing great about our building at Alinga Street right now.
>> Yeah, I'm going to get to that.
>> Yeah. Yeah. Um so that needs significant improvement. Um but we will save money over the term of these leases.
>> And that's that's very admirable. Um I suppose my question is we could save even more potentially and we do need to save more. We need to take pressure off uh inflation. And so I've just come back to the question just because you're saving money doesn't that's not a justification to spend uh $413 per square meter more than I I thought the range was $1,500 to 2,000. So just I mean these hybrid workspaces what does that mean in practice? Like that's it's a it's a fair increase above the
>> guidance. Yeah. So our current um um layouts of our current building is around four 19 m on average per square um individual 19 um we're moving down to um roughly about averaging 11 square meters per person. So that's a significant reduction in space. Um we are moving to areas where there are um hybrid and collaboration spaces. So um that allows people to and we're also moving to a reduced footprint. So we're moving to 7 to 10 staff desk ratio. So that allows greater flexibility for how staff may want to work. We've got um spaces where the acoustics and um um light sensitive spaces for staff who have special needs or workplace adjustment. So it is allowing that we're accommodating our staff in a place where they're more likely to um feel that the workplace is adjusting to their
requirements. So this is this is just a contemporary standard office building. It's not particularly goldplated. We've taken it through the public works committee. We're reducing our office um uh footprint by 40%. Um we're moving towards a 7 to 10 desk ratio to reflect the flexible working that's in place. So we will save money and I and I do think that we are ering on the side of value for money and economy in the decisions
>> they used to I mean I was it's been a while since it's been in public works but there's different grades isn't there at fit out office fit out
>> senators Sonia Bradley assistant secretary um just to clarify it's a premium grade building which means that it goes um you know it goes to the neighbors ratings that um my colleagues were previously speaking to so it in the end it's much more efficient it saves money in terms of the fit out. It's a standard fit out, but it it speaks to the the hybrid working areas which allows for spaces for us to go to a 7 to 10 ratio rather than a 1:1 ratio. It's um as the secretary said, it's a 40% reduction in space overall.
>> So,
>> it was also um our um colleagues from the Department of Agriculture used to be in the building previously. So, we're taking over a building that they >> uh were in previously. When did they >> That we would need to take that on notice. They've been in their new building on North Avenue for some time.
>> How old is this building?
>> Oh, it would be over 10 years old, but again, we'll take it on notice.
>> So, their fit out is less than 10 years
old. I >> I could not tell you. We'll have to take that on notice, Senator.
>> Okay. I'm just wonder why couldn't you if the Department of Agriculture was there, why couldn't you just use what they'd already had? I mean, I haven't had my Senate office. It hasn't been >> I'm just trying to understand because if they were already in there, wouldn't they have already had it fitted out for a department?
>> Currently, the floors, there's no fit out on the floors.
>> Oh, sorry. So, I thought you said Yeah. >> Okay. Sorry. Okay.
>> I was going to say, Senator, they left and they had to uh they stripped it. So, when we took the lease on, all the floors were vac.
>> Why did they strip it?
>> We'd have to take that on notice. You
asked it
>> probably.
>> Hang on. So just just okay
>> to save money by moving equipment into
furniture. >> And again my experience on public works not always a lot of communication between
>> so we'll we'll take on notice one we'll just clarify which department was in that building will also clarify the fit out but currently um when you walk into that building it is
>> okay I got that now. So it's done. That's that's it's spilled milk so to speak but but okay just let's take a step back. So when did the department of agriculture leave?
>> So I we will also confirm the department. Um I'm not um I just need to make sure that is correct that it was the department of agriculture. Um I will also get on notice when the last tenant was in that building. Um there are currently two other tenants, government departments in that building. Um but we're going to occupy
>> but they're not they're staying there.
>> They're staying we're occupying the bulk
of that space. Yeah. Did you just talk to the Department of Agriculture before signing the lease?
>> Uh, no. They had long since vacated the building and were in their new premise.
>> So, it was a long time ago.
>> Yes. And we we will
>> I suppose that's just my concern that if
can get these details this morning and bring them back to you. We'll provide what we can this morning and then we'll take the others on notice.
>> Yep. All right. Um, okay. Um but just coming back to that point what's the different classes of fit out there's different you can
>> I don't think there's different classes
of fit out I remember that when I had my set I remember my set office being below the class the department of finance got I remember remember that very distinctly um so there isn't classifications anymore for different types of fit out I thought it was like
>> there's a there's a classification of the building premium grade I'm talking
about the fit out there was definitely a classification of fit outs maybe it's changed all right I might come back to it Um just on um and and after this next set I'm happy to rotate the call but they're just a bit related. So I might just ask um uh on a lingera street I noticed there's on FOI disclosure uh a fair correspondence about some issues that seem to be keep happening. It's FOI um 26-69. So what's happened there? Um what's been there been major problems with that building?
>> Uh Senator uh on 11th of July 2025 on level one of 111 Elinga Street there was an occurrence of concrete sping. That means that there's uh spoing is when there's flakes and um you know partial layers of the concrete within the ceiling uh fell onto the underside of the concrete slab onto the top of the ceiling tiles. So not into the workspace but onto the ceiling tiles. The landlord was responsible for all assessments and remediation works while the department focused primarily on staff safety. So we were we were focused on ensuring work health and safety for our teams. Uh the landlord engaged a structural engineer who inspected the entire building and identified areas on level five and six of 111 linger street where concrete spooling was present. So we were communicating this to the staff uh and we move staff out of those areas just for um safety sake as a as a a you know risk prevention a preventative measure uh and we've provided uh flexible workspace uh for those teams on in different areas of the building.
>> So how many staff were impacted?
>> there were approximately 25 work points on level one. >> That's correct. And there were around um two on level six. So round 25 work
>> this happened at two different levels as >> the same issue?
>> The spoiling was on the first level. >> And then when we when the landlord did the engineering uh assessment they found that there was um you know there was signs of it in level five and six. So as a precautionary measure we moved stuff from that area as well. That was only two in that area.
>> So no one was injured. >> No. When we when you say concrete fell down, was it like
>> onto the ceiling tiles? So, it didn't come into
>> Didn't come into the actual workspaces at all. Okay. Yeah. >> All right. How was it found then?
>> Uh, they heard a noise.
>> They heard it. Okay. Right. Okay. All right. Um, and were there any costs? So, to the department or not to the department? No. Apart from the disruption.
>> Correct.
>> Okay. All right. Chair, I'm happy to rotate the call. I think Senator S.