The Australian Government Property Ownership Framework
Index
- Introduction
- Application
- Rationale
- Objective
- Addressing the Government's Objectives
- Value for Money
- Assessment of Proposals
- Management
- Other Policies and Frameworks
Introduction
As of 1 July 2005, the Australian Government Property Principles were replaced by the Australian Government Property Ownership Framework (the Framework). The Framework applies to all Departments of State and agencies under the Financial Management and Accountability Act 1997 (FMA agencies) [
] and all general government sector Commonwealth authorities that are subject to the Commonwealth Authorities and Companies Act 1997 (CAC bodies) []. It does not apply to Government Business Enterprises.
The Framework applies to decisions involving proposals, by FMA agencies and CAC bodies in the general government sector, for the Australian Government to own property or where such entities propose that Australian Government divest property. The Framework requires that proposals to own property (as opposed to leasing it) or to divest property must be justified in terms of the need to do so, taking into account specific government objectives.
Application
The Australian Government Property Ownership Framework is applicable to all departments, agencies and statutory bodies, but not Government Business Enterprises.
Rationale
The government's core business excludes property ownership unless particular circumstances apply. Property should be viewed as an input to the government's core business.
Objective
When making ownership related decisions on property, the decision to own or divest property must be driven by the necessity for that decision to support specific government objectives. Alternatively ownership or divestment may be appropriate because it delivers the best value for money outcome. These must be addressed in a business case that is prepared in accordance with Estimates Memorandum 2005/31: Australian Government Property Ownership Framework and Estimates Memorandum 2007/28: 2008-09 Budget Round - Australian Government Property Ownership Framework: Discount Rates.
Where divestment is proposed because a property is surplus to requirements, disposal of that property should be conducted in accordance with the Commonwealth Disposals Policy.
Addressing the Government's Objectives
In addressing the government's objectives (how the project meets the strategic aims and stated outputs of government) a case for ownership or divestment must be made on the basis of one or more of the following criteria:
- ownership is necessary because of national symbolic status;
- ownership is necessary because of national heritage status;
- ownership is necessary to meet environmental requirements;
- ownership is necessary because of the highly specialised nature of property;
- ownership is necessary to comply with stated national security requirements;
- ownership is necessary to meet other strategic interests of the government; or
- ownership is appropriate because it delivers best value for money for the Australian Government on a whole-of-life basis when compared to leasing and taking into account the particular characteristics and long term risks of property ownership.
Value for Money
Value for money in the context of property is defined by an appraisal of associated risks over the long term including but not limited to:
- planning, design, development and construction risks;
- capital risk;
- market risk;
- environmental risk;
- residual value risks; and
- change of strategic requirement risk.
It is the responsibility of the proposing agency to clearly demonstrate the characteristics of the property that warrant government ownership or divestment.
Assessment of Proposals
Departments and agencies will be responsible for the implementation of the Framework, and will continue to receive guidance from the Department of Finance and Deregulation (Finance). Proposals will be assessed by Finance against the identified criteria and based on a rate of return commensurate with the exposure to risks associated with the nature of the property. In this sense, the rate of return would be one factor, among the identified criteria of the Framework, for consideration when assessing property proposals.
The discount rate used will vary according to the nature of the property asset and its associated risk level (high, medium, low). Finance will specify multiple rates to accommodate different property asset types. This will help ensure rate of return requirements are commensurate with the nature of proposals put forward. The rates are calculated annually and published on Finance's website. Finance have published guidance to assist agencies to identify the nature of the property asset and its associated risk level and to select appropriate discount rates for proposals brought forward. Agencies need to ensure Finance agrees to both the risk assessment of the proposal and the discount rate used prior to consideration by government.
The discount rates for assessment of high, medium and low risk property proposals brought forward after 1 July 2007 will be 12 per cent, 10 per cent and
8 per cent respectively.
Management
A commercial basis for property is to be retained such that:
- Landlords will continue to operate on a commercial basis; and
- Market based leases continue to be in place.
Other Policies and Frameworks
Aside from the identified framework, Australian Government property management is subject to the following legislation, guidelines and principles:
- Financial Management and Accountability Act 1997 [] and Regulations [];
- Commonwealth Procurement Guidelines;
- Occupational Health and Safety Act 1991; []
- Commonwealth Disposals Policy;
- Lands Acquisition Act 1989; [] and
- Public Works Committee Act 1969 [] and Regulations [].
Where Can You Find Further Information?
In the first instance, you should contact the relevant Agency Advice Units in Finance who can provide further guidance on the preparation of property related proposals.
The Special Claims and Land Policy Branch in Finance can also provide guidance on the Australian Government Property Ownership Framework. The contact for these matters is:
Michael Matthewson
Director
Land Operations And Public Works
Phone: (02) 6215 2095
email: Michael.Matthewson@finance.gov.au
Contact for information on this page: Contact Officers