Treasurer Kevin Foley was wasting millions of taxpayer dollars on ‘dead rent’ in buildings for public servants due to the Labor Government’s decision to delay the Shared Services project.
Liberal Member of the Legislative Council, Rob Lucas, said today that in July last year the Rann Government announced the lease of nine floors of Westpac House at 91 King William Street to accommodate and centralise all the staff as part of the Shared Services project.
In evidence given this week to the Legislative Council Budget and Finance Committee, Under Treasurer Jim Wright agreed that the Government was paying ‘dead rent’ for office space but asked for time to prepare a detailed answer:
Hon R.I. Lucas: “Is it true that most of those floors are vacant?
Mr J. Wright: “I think that would be true.”
Budget and Finance Committee (30 June 2008)
Mr Wright also confirmed that the Government was spending $9 million on fitting out new office space at 77 Grenfell Street before people were ready to move in. He said:
“This is one of the logistical difficulties that probably was not recognised as clearly as it could have been…………and the best choice we could make was to take 77 Grenfell Street, even though that will involve some dead rent for a while.”
Mr Lucas said that property industry sources had estimated the Government would be paying up to about $4 million per year for the Westpac building lease.
“Given the delays in the Shared Services project, a significant number of public servants will not be moved into the office space until the end of this year or possibly early next year,” he said.
“The Rann Government has already been forced to admit the supposed savings of $60 million per year from the Shared Services project will not be achieved in the original timeframe.
“However, it is now clear there has been a massive blowout in the implementation costs side of this project,” Mr Lucas said.
“The original implementation costs budget was to be $60 million, but Mr Foley has now allocated an additional $37 million which means total implementation costs up to 2012 will now be $97 million.
“Whilst Mr Wright believes some of the increase can be recovered from departments in the longer term, he accepts there will be difficulties with that process.”
Mr Wright’s evidence concluded in a nicely understated way:
“…the process turned out to be a little more arduous and a little more complicated than we thought. There have been a number of issues we have discovered as we go forward with the business case, not surprisingly, had not fully anticipated.”
“What this is really saying is that taxpayers again will have to pay millions of dollars extra for the Rann Government’s financial mismanagement and incompetence,” Mr Lucas said.