Australian Government entities use real estate such as offices, shopfronts and special purpose facilities to assist in delivering outcomes.
Within the non-Defence domestic property portfolio, 94 per cent of office accommodation is leased rather than owned. In 2016–17, expenditure on leased office property (excluding capital costs) was around $2 billion.
Under the Public Governance, Performance and Accountability Act 2013, accountable authorities are responsible for the proper management and use of resources under their control. At the same time, the Department of Finance (Finance) has a broader role to administer the Commonwealth Property Management Framework. This Framework provides guidance and requirements on various aspects of leased or owned Commonwealth property in Australia.
Since 2014, Finance has pursued a ‘program of work’ on leased office property that has included three main activities:
- an initiative to reduce surplus or vacant office space, focussing initially on the Australian Capital Territory (ACT) — known as Operation Tetris;
- establishing coordinated procurement arrangements for property services, which are mandatory for non-corporate Commonwealth entities (NCEs); and
- improving the collection and use of property data to support decision-making and reporting.
The Minister for Finance has announced savings of $300 million for Operation Tetris, and a further $100 million in savings from the coordinated procurement arrangements.
This topic was selected for audit because leased office property represents a significant recurrent expense to the Australian Government and due to the significance of Finance’s program of work. Key initiatives being pursued in this area of public administration are part of a broader government agenda to create a smaller, smarter and more productive and sustainable public sector. The audit was intended to provide assurance on whether significant funding on leased office property is being managed effectively at a whole-of-government level.
The objective of the audit was to assess whether effective arrangements have been established by Finance to achieve value for money outcomes for Commonwealth leased office property.
To form a conclusion against the audit objective, the ANAO adopted three high-level criteria:
- Was Operation Tetris executed effectively?
- Were good processes followed and sound advice provided to government to inform the establishment of the coordinated procurement of property services?
- Are whole-of-government arrangements supported by relevant property data and a suitable performance framework?