PROPERTY AND CONTRACT MANAGEMENT

Finance manages the Commonwealth's non-Defence global property portfolio, comprising approximately 330 properties in 50 countries valued at $2.5 billion. The portfolio includes Australian embassies and residences overseas, commercial office buildings, law courts and laboratories within Australia.

Strategic Alliance

After a CTC process, a contract for the ongoing management of the Commonwealth's non-Defence global property portfolio was signed with PricewaterhouseCoopers Process Solutions Pty Ltd (PwCPS) on 3 August 2000. This property management and maintenance contract is one of the most extensive of its type in the world, and is an example of Finance's commitment to innovation and excellence in its business. The strategic alliance is based on the sharing of risk and reward between Finance and PwCPS.

Once the contract was signed, a six-month transition period enabled a smooth hand-over to PwCPS. From 1 March 2001, PwCPS assumed responsibility for the full delivery of services under the contract. Finance remains responsible for the overall performance of the property portfolio, and has retained a small management team to provide policy advice and alliance management, in a manner similar to a commercial property trust.

An integral part of the corporate governance structure of the strategic alliance project is a Joint Alliance Board with representatives from both Finance and PwCPS. The Board follows a commercial joint venture model. Its functions include setting strategies, goals and objectives for the strategic alliance. The Board reviews the provision of services, compliance with the service level agreement, the annual budget and strategic plan for the property portfolio.

Property Portfolio Performance

During 2000–01, Finance finalised the application of commercial leasing arrangements across the Commonwealth's non-Defence property portfolio, ensuring that the full cost of managing the Government's property assets is transparent.

Commensurate with its role as a manager of commercial property, Property Group now measures its performance on the basis of the industry wide accepted measure of return on investment (ROI). This year the property portfolio achieved a ROI of 11.2 per cent, which compares very favourably with similarly diverse and geographically spread commercial property portfolios.

The property portfolio returned budgeted dividends of $117.3 million, and paid a special dividend of $24.7 million for a total of $142 million. In addition, Property Group paid out a number of installment purchase arrangements, entered into a number of years ago, to reduce its interest liability and enhance the portfolio's future performance.

Property Sales

In line with Government policy, Finance continued to divest under-performing properties where no public interest reasons justified their retention. Finance anticipated returning sales of $257 million for 2000–01, including some $63 million from sales that took place in late 1999–2000. However, due to delays in selling a few properties, total sales revenue of $198 million was returned to Government. Since 1997–98, the divestment programme has returned equity of approximately $1.5 billion to the Government.

This year, Finance, on behalf of Defence, also divested the two Defence Plaza office properties in Melbourne and Sydney, achieving total proceeds of $113.8 million. The sale of Defence's Russell Office Complex has been deferred by the Government to 2001-02, so that complex leasing issues can be fully addressed before the property is put to the market.

Property and Construction Refurbishment

Finance undertook a number of major construction projects, both in Australia and overseas, during 2000–01.

Appropriately, in the year Australia celebrated its Centenary of Federation, a highlight was the refurbishment of the heritage property at 4 Treasury Place, Melbourne, at a total cost of $19.4 million, including $9 million from the Federation Fund. The balance was funded internally by Departmental resources. It was built in 1912–13 and was the first building constructed for the Commonwealth. It is therefore closely associated with the early history of Federation and is on the register of the National Estate.

In 2000–01 the construction of a Chancery, Head of Mission residence and recreational facility in Brasilia, Brazil was also completed, at a cost of $5.8 million.

The Treasury Building in Canberra is currently being refurbished. Completion is expected in late 2001, at a cost of $43.1 million.

Refurbishment of an historic building in Berlin for use as a Chancery continues, with a planned completion date in late 2002, at a cost of $37.3 million. The Berlin project is challenging because of a requirement to maintain the building's heritage features, while creating a workable modern office development.

All are subject to commercial leases with Federal agencies.

Antarctic Profiling

Since May 2000, Finance has been responsible for the management of a project to define the limits of the extended continental shelf off the Australian Antarctic Territory (AAT) and beyond Australia's 200 nautical mile Exclusive Economic Zone (EEZ). This Australian Antarctic Southern Ocean Profiling Project (AASOPP) will help Australia preserve its rights under the United Nations Convention on the Law of the Sea (UNCLOS). This work has challenged and developed our people's capabilities.

Fixed price contracts were finalised with industry for the project surveys and support, as were service level agreements with other Government agencies. The key agencies involved in AASOPP are the Australian Geological Survey Organisation, the Australian Survey and Land Information Group, Australian Antarctic Division of the Department of Environment and Heritage, the Department of Foreign Affairs and Trade (DFAT) and the Attorney-General's Department.

This unique project gives Finance the opportunity to develop project management expertise across a diverse range of activities, and has given our people the opportunity to develop new skills while working with other agencies.

AUSTRALIAN ANTARCTIC TERRITORY

Map of the AAT and adjacent ocean basins showing the 2000-01 AASOPP survey lines. The solid orange line indicates the limit of the potential EEZ at 200 nautical miles from the coastal base line. The dashed line represents the maximum possible limit to any possible Extended Continental Shelf at 350 nautical miles from the coastal base line.

Australian Antarctic Southern Ocean Profiling Project pop-up window | Text-only