Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Parliamentary Standing Committee on Public Works, I present the committee's report No. 3 of 2016, incorporating a dissenting report, relating to a referral made in February 2016.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—On behalf of the Parliamentary Standing Committee on Public Works, I present the committee's third report for 2016.

This report addresses the fit-out of the Australian Embassy in Doha, Qatar. The project was referred to the committee in February 2016. The estimated cost of the project is $7.04 million.

This project was originally submitted to the committee as a medium work—that is, a project valued between $2 million and $15 million.

Medium works are not usually subject to a full inquiry by the committee; however, when the committee considered this project as a medium work it found the square metre cost of the fit-out appeared excessive relative to other fit-outs.

The initial information provided to the committee was considered insufficient to allow the committee to be satisfied that the cost of the fit-out was justified.

The committee subsequently sought referral of the project from the Assistant Minister for Finance, the Hon. Dr Peter Hendy MP.

The context of the project is worthy of mention. In May 2015, the Minister for Foreign Affairs announced that the Australian government had committed $98.3 million to open five new overseas missions.

This is the single largest expansion of Australia's diplomatic network in forty years and would include new posts in Papua New Guinea, Indonesia, Mongolia and Thailand.

Doha, Qatar is the fifth location.

An estimated 5,000 Australians currently reside in Qatar, and Australian visitor numbers are increasing by nine per cent per year. Over 80 Australian companies already have a presence in Qatar. Australia is currently the only G20 member country which does not have a diplomatic presence in Doha.

The committee received a briefing on the project and held public and in-camera hearings on 3 March 2016. At the public hearing, DFAT staff advised that opening a post in Qatar would facilitate Australia's growing political and commercial links with an increasingly important economic and political player in the pivotal Middle East region.

The committee heard that Qatar has a highly centralised government system and strong links between business and government, which lends greater importance to the role of government in facilitating business links than is usual in Australia.

The presence and activity of an Australian embassy will raise the status, profile and appeal of Australian companies working or seeking to establish businesses in Qatar.

Qatar's sovereign wealth fund is a valued source of foreign direct investment in Australia, and Qatar has invested significantly in Australia's wheat, barley and other grain-producing farms, and sheep properties, to support its food security strategy. Two-way trade between Australia and Qatar was worth $1.75 billion in 2014-15 and is growing strongly.

This important point was reinforced by the Secretary of DFAT during Senate estimates in February 2016, when he said:

I think it is fair to say that not only is the trade and investment agenda with Qatar an evolving one but the political and strategic engagement that we have is also at a much higher level now that it would have been … I do not see that diminishing. In fact, if anything, I can see it increasing.

In addition to the very obvious future trade and commercial imperative, Australia's engagement on security in the Middle East, including Qatar, will be critical in meeting the challenge of foreign terrorist fighters.

DFAT advised the committee that Australia is increasingly having to work closely with Qatar on foreign fighters transiting through Doha.

The committee heard from senior DFAT officials that their work has been:

… particularly focused on … the increased prospect that we will need to work closely with Qatar to handle foreign terrorist fighters. One of the things about the geography of Australia and the region in the Middle East where foreign terrorist fighters have to go is that most of them transit the Gulf on the way there. We are increasingly having to work closely with … Qatar on people transiting through Doha to get to the Middle East, and also on their way back … but more broadly there is an awful lot of work that we can do on the counterterrorism front with our Qatari counterparts.

The critical nature of this issue was further reinforced by DFAT who advised that Australia is working with Qatar towards a bilateral counter-terrorism memorandum of understanding to increase cooperation on this critical national security issue.

Regarding the scope of works, DFAT intends to lease 875 square metres on level 21 of the Tornado Tower building, initially for 10 years. DFAT will take over the tenancy as a complete floor. The works under consideration will be completed in two stages; firstly demolition of the existing fit-out, and following local authority approvals, a fit-out to meet DFAT's requirements.

In terms of the location, the committee was assured by DFAT that the Tornado Tower was by far the best option from a security perspective for embassy staff.

It is a sad reality of the times we live in that security is a major consideration when Australia makes decisions about opening official posts abroad. This does not mean security of information, as it may have in times past.

Members will recall that our own Australian Ambassador to Turkey had a fortunate escape just this week: he was only metres from a car bomb that exploded in Ankara's diplomatic district, and killed 34 people. Diplomatic installations are prime targets for terror attacks. We owe it to those serving our nation in diplomatic roles, and their staff, to ensure the highest level of safety and security.

As I mentioned, initially the committee was concerned that the cost per square metre appeared higher than the committee would have ordinarily expected.

DFAT explained that there is not a single per-square-metre fits-all cost when considering office space, noting buildings differ in their floor plate size and configuration. In the workspace there are a number of variables at play, including the type of work performed, the materials in use at people's desks and how much storage is required. These factors, together with the need for public access to the embassy and security considerations, influence how much space will be required, the overall tenancy size and the fit-out costs.

At the in-camera hearing, DFAT went into greater detail about the various components that make up the total per-square-metre fit-out costs, including the cost of additional security.

In the context of further detailed information provided on the per-square-metre costs, the committee is satisfied that the square metre cost is acceptable.

The committee notes that the inclusion of a multipurpose facility at the embassy which can be used for representational functions will result in cost savings during the selection of an ambassador's residence. The committee has requested that DFAT keep it informed on progress and arrangements for the ambassador's residence and that DFAT advise the committee of the cost savings achieved due to the subsequent reduction in the requirement for representational space at the residence.

The committee is satisfied that the project has merit in terms of need, scope and costs.

After careful scrutiny the committee is of the view that this project signifies value for money for the Commonwealth and constitutes a project which is fit for purpose, having regard to the established need.

I commend this report to the House.