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Department of Immigration wants to spend $250 million on unprecedented office upgrade

Adam Gartrell
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Immigration bosses want to spend more than a quarter of a billion dollars revamping their Canberra headquarters in what is thought to be the most expensive office fit-out in Australian government history.

While the supercharged Department of Immigration and Border Protection - the result of a 2015 merger between immigration and customs - insists much of the $255 million cost of its "Headquarters Project" will be rolled into the lease costs, the politicians asked to approve the plan have raised major concerns. 

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Peter Dutton's Immigration department has put forward a proposal to spend more than $250 million fitting out its Canberra offices.

Under the proposal, the number of buildings the department inhabits in the national capital would shrink from 12 to five, with the main office located inside a new state-of-the-art structure next to Canberra Airport.

The fit-out would include "a unified watch floor, situation rooms, briefing rooms, incident rooms, operation planning rooms, associated intelligence support rooms, and surge rooms". The new building would include an armoury, conference and training facilities, evidence rooms and map rooms. The department envisions an "innovative" and "modern" new office with "large efficient floor plates to support future flexibility" and an open environment that will "promote collaboration and positive cultural renewal".

But it won't come cheap. The price tag for the 85,700 square metre multi-building fit-out suggests the renovations will cost nearly $3000 per square metre - well above the $1200 to $1800 government average.

The government has budgeted $22.6m for the fit-out, and another $20.5m will come from the department's operating budget. The remaining $212m will come from landlord "incentives", effectively meaning that cost will be incorporated into the lease arrangement with the government. 

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But Labor senator Alex Gallacher believes taxpayers will end up paying much more through hidden costs in the lease deal.

"Only half of the $212 million is actually a lease incentive," Senator Gallacher revealed in the Senate on Wednesday.

"The other half is a loan - capital advanced up front by the landlord and amortised over the period of the lease."

A member of the Joint Parliamentary Standing Committee on Public Works - which has to approve the proposal before it can proceed - Senator Gallacher said the department has failed to answer simple questions about the proposal and points to its "unenviable record" of poor contract management and cost blowouts.

Taking the rare step of circumventing the committee to raise his concerns, Senator Gallacher said he wanted "full transparency" from the department.

"It is the biggest single fitout the public works committee has looked at in six years. We're probably going to find out it's the biggest single fitout of all time," he told the chamber. "And we're asked as a committee to just tick off $250-odd million of expenditure because there's a lease incentive from a landlord?

"Well I don't think we're going to do that."

Senator Gallacher was left furious last year when the Department of Finance told the committee a lease on its new state-of-the-art offices would cost $194 million but the true cost was later revealed to be of $376 million.

Turnbull government MP David Coleman also raised concerns about the lease incentives at a committee hearing last week.

"It is a lot of money. It suggests that the rent must be a very large number," he said to departmental officials. "It is only really truly a lease incentive if you are paying a low rate for the lease in the first place."

Officials were unable to tell Mr Coleman what percentage of the department's rent they would get back in the form of lease incentives, saying only "the rent rates per square metre are very competitive".

The department refused to reveal other details, citing commercial-in-confidence concerns.

The fit-out is due to begin in August this year and be completed by February 2021. The upgraded buildings would accommodate 6000 staff.

There will also be $12 million worth of new security upgrades.

At the hearing last Friday, departmental officials said the cost per square metre of the fit-out would be approximately $2250 - still well above average - but did not explain how they arrived at that figure.

The department had originally wanted to bring all its Canberra-based public servants under one roof but a successful lobbying effort from commercial interests at the department's present location in north Canberra forced a backdown.

- with Noel Towell