Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

by leave—On behalf of the Parliamentary Standing Committee on Public Works I present the 76th Annual report 2012.

In accordance with standing order 39(f) the report was made a parliamentary paper.

The committee is required to present a report of its proceedings during the calendar year just ended, under section 16 of the committee's act. The year 2012 was a very busy one for the committee, having reported on 20 works. The combined cost of the approved works was $3.25 billion. Appendix A of the report lists all inquiries completed by the committee in 2012, and their individual costs.

The committee also approved 31 medium works projects, with individual budgets of between $2 million and $15 million. In 2012, the combined cost of all medium works notifications was $248.5 million. These projects are listed at appendix B of the report. The committee held 35 meetings and hearings throughout Australia during 2012, at Canberra, Sydney and surrounding areas, Melbourne, Brisbane, Ipswich, Darwin, Katherine, Sale and Townsville. These meetings are listed in appendix C of the report.

There are a few matters I would like to highlight. The committee takes very seriously its obligation to consider and report on each work as quickly as possible. In 2012, the average time from the referral of a work to tabling the report was around 17 weeks. However, time frames varied considerably between individual projects, from 10 to 30 weeks. Time frames are dependent on the parliamentary sitting pattern. However, in some cases, further delays were due to insufficient or unclear evidence provided by the proponent agency. Generally speaking, however, the committee was pleased by the quality of evidence provided during inquiries. Similarly, most medium works notifications provided adequate detail for the committee to consider the proposal. However, in some instances, further information was requested and provided before approval was granted.

Accurate cost estimates for public works projects are essential if the committee is to effectively exercise its legislative responsibility. During 2012, the committee was notified of several instances of significant cost increases to both medium works proposals—thereby leading to full referrals—and major works previously approved by the committee.

While estimating project costs is not an exact science, the committee is concerned that there appears to be a tendency to underestimate risk and therefore the level of contingency needed. The committee is concerned about cost overruns, particularly when these relate to prevailing market conditions which should have been accounted for. The committee reminds agencies that robust assessment of risks and appropriate contingency allowances should be incorporated into cost estimates to reduce the risk of cost overruns.

With regard to the proposed regional processing facilities on Nauru and Manus Island, Papua New Guinea, urgency motions were passed by the House in November 2012. These motions allowed for the commencement of preliminary capital works at both sites, with the remainder of the works to be referred to the committee for full inquiry. This approach allows a balance between urgency and scrutiny.

I would like to give special thanks to officers of the Special Claims and Land Policy Branch of the Department of Finance and Deregulation who assist agencies in preparing their proposals for committee consideration. I thank members and senators, past and present, for their work throughout 2012. I particularly thank the previous chair of the committee, the Member for Page. I would also like to thank the hardworking secretariat that supports the committee so well.

I commend the report to the House.

by leave—On behalf of the Parliamentary Standing Committee on Public Works, I present Referrals made May to November 2012.

In accordance with standing order 39(f) the report was made a parliamentary paper.

This report deals with four referrals, with a total estimated total cost of $405.22 million. It also reports on a change to budget and time line for a CSIRO project that was originally considered by the committee in 2008. The CSIRO's Australian Square Kilometre Array Pathfinder, or ASKAP, radio telescope project was originally referred to the committee in 2008. The budget was $111 million and the scope was for up to 36 parabolic antennas, each with phased array feed receivers, or PAFs. The cost of the project is now $188 million. This is partially due to cost overruns but also allows CSIRO to fulfil the full scope of the project.

CSIRO accepted that its original costings had significant deficiencies, including the absence of any contingency for the research and development of the PAFs, and inadequate estimates of the costs of delivering complex infrastructure in a remote location. CSIRO stated that it has addressed these issues by implementing new internal risk and cost assessment processes. The committee acknowledges and approves the extension to budget and time line, and expects CSIRO to provide updates throughout the remainder of the project.

The first inquiry I will address examined the Australian Nuclear Science and Technology Organisation, or ANSTO, Nuclear Medicine Project. The purpose of the project is to process Molybdenum-99, called Mo-99, for Australian hospitals and to process waste by-products into a synthetic rock material called Synroc. The overall project cost is $168.8 million. The project will allow Australia to increase its production of Mo-99 as global production decreases and to treat waste from nuclear medicine production. The committee's visit to Lucas Heights provided insight into Australia's innovation and production of nuclear medicine. The committee acknowledges ANSTO's commitment to ongoing consultation with the local council, the Sutherland Shire Council. The committee is satisfied with this project and recommends that it proceed.

The second inquiry examined the Australian Federal Police, or the AFP, proposed new forensic facility at Majura, ACT. The purpose of the facility is to provide the AFP with forensic and technical intelligence operations capabilities for the next 20 years. The overall project cost is $106 million. The AFP's current forensic science and technical intelligence facility at Weston has many constraints. The new facility will enable more efficient business processes and increase the capabilities of the AFP. The committee commends the AFP for its clear, comprehensive, accurate and succinct presentation of information throughout the inquiry. The AFP set a high standard for future proponent agencies. The committee is satisfied with this project and recommends that it proceed.

The third inquiry I will address examined the Australian War Memorial redevelopment of the First World War galleries. The redevelopment will be completed before the Anzac centenary from 2014 to 2018. The overall project cost is $32.52 million. The redevelopment will address deficiencies in the current facilities to enhance visitors' experience of the galleries and understanding of the First World War. The memorial has consulted with the appropriate stakeholders for the project. The committee is satisfied with the project and recommends that it proceed.

The last inquiry I will address today concerns the proposed work at the new National Archives Preservation Facility for the National Archives of Australia, or the NAA, at Mitchell in the ACT. The committee reported on this inquiry in November 2012 and declined to recommend expediency. The committee reopened the inquiry and held a third public hearing on 15 February this year with the NAA and the Department of Finance and Deregulation. Given that this project has been in development for many years, the committee is unimpressed that the NAA was not able to adequately explain the precommitment lease, or PCL, funding model and did not provide comparative figures until asked. The provision of this information at the beginning of the inquiry would have allowed the committee to make a determination on whether paying for the fit-out component up-front would provide better value for money than the PCL option.

Ultimately, the NAA relied on the Department of Finance and Deregulation to substantiate the claims that the decision to pursue a PCL funding model was a decision of the Australian government, that the PCL model was a valid project delivery model and that the comparative costs were the same. While the NAA did include this information, it was not sufficiently emphasised or explained. This is the responsibility of the proponent agency.

Given that the Australian government has declined to provide upfront funding for the fit-out, the Department of Finance and Deregulation and the NAA have reassured the committee that the comparative costs are the same. The committee has reconsidered the proposed funding model. The committee is now of the view that value for money has been demonstrated. As the need for the project has already been established, the committee is now in a position to recommend expediency.

This report contained examples of proponent agencies acquitting their responsibilities to an exceptional standard. I particularly praise the Australian Federal Police and the Australian War Memorial for their provision of clear and comprehensive written and oral evidence. The committee encourages future proponent agencies to aim to meet a similar standard throughout inquiries. I would like to thank members and senators for their work in relation to these inquiries, along with, of course, the secretariat. I commend the report to the House.