Government Property Advisory – Insights
February 8, 2019

Stephen Oxford joined Synergy Group in October 2018, to lead the firm’s Government Property Advisory capability. Having held senior roles in the Department of Finance with responsibility for Whole-of-Government Commonwealth property policy, Stephen is a preeminent expert with a strong strategic and operational understanding of contemporary Government property requirements.

Having also led the Whole-of-Australian-Government coordinated procurement arrangements for property services, the Commonwealth leasing strategy as well as the Government’s domestic property portfolio – Stephen will add value to any entity seeking efficiencies in property management or to navigate the Commonwealth Property Management Framework. 

At the recent Property Council of Australia’s launch of the ACT Office Market Report, we were asked to consider whether a change of Government would bring about a change in approach to Commonwealth Property Management.

It is our view that policy measures introduced under the current Government have largely been successful and it is our expectation that these policies would continue to be supported by an incoming Government.

The Strategic Approach to leasing has generated over $100 million in savings, following on from the success of Operation Tetris, which reduced the Commonwealth’s spend by over $300 million over ten years. What we are seeing now is a more proactive approach from entities prior to their leases expiring, which is the combined result of improved planning at a Whole-of-Government level and entities proactively seeking to implement the required savings in practice.

We expect that driving efficiencies in Government spending will remain a focus – and ensuring a robust Whole-of-Government lease strategy is in place will deliver savings that are most profound.

The Coordinated Procurement of Property Services, mandated for the 96 non-corporate Commonwealth entities, is in its initial phase of implementation. With the contracts continuing until 2021, and savings being a key driver behind the Governments decision to mandate the arrangements, entities and service providers will focus on achieving the forecasted savings (particularly over the next 12 months).

In 2018, the Government announced a further $200 million of savings were targeted and reducing the Commonwealth’s footprint would be one way to achieve these savings. With the 2.8 million square metre portfolio of leases at 17.8 square metres per work point, and with only 25 per cent of entities meeting the Department of Finance’s 14 square metre target – there are clear opportunities for improvement.  Especially when we consider the private sector trend towards 10 square metres, and the evidence from other government jurisdictions supporting a 10 – 12 square metre target. We expect to see the occupational density target reviewed as the Government seeks to achieve the expected savings.

Broader Government policy in relation to the structure and operating model of its workforce may also have associated property implications. The recent establishment of the super portfolio of Home Affairs under the roadmap for APS reform provides a good case study of benefits and opportunities likely to arise from this approach to structure. We have seen this decision trigger leasing activity in the Canberra market as the entity seeks to consolidate.

In the medium term, the transactional elements of property services form part of the Government’s planning for a broader shared service’s offering, with this strategy intended to free up public sector resourcing. Whilst this change in operating model may not directly impact the Commonwealth property footprint, it should create greater cohesion and collaboration by entities, with a focus on multi-entity solutions.

It is our view that there is potential for all the above property related policies to drive genuine savings for the Commonwealth. We therefore expect these measures would continue to be supported by an incoming Government.