Asbestos, Delays, and a Billion-Dollar Price Tag
The Reserve Bank of Australia's (RBA) headquarters renovation project has become a costly and time-consuming nightmare, riddled with asbestos, exceeding budget by almost 290%, and facing delays of over four years.
Documents obtained through Freedom of Information (FOI) reveal the challenges and unexpected expenses associated with renovating the central bank's flagship office at 65 Martin Place in Sydney, built in 1964.
The project has become so complex and expensive that the RBA considered selling the iconic heritage-listed building and moving elsewhere. Instead, they opted to rent office space nearby and bear the additional costs.
The renovation project, dubbed 65MP, explored various options, including selling the property and leasing it back, selling and leasing elsewhere in the Sydney CBD, or selling and buying elsewhere in the city. Ultimately, the RBA chose the first option, with staff already relocated to an office at 8 Chifley Square.
The original plan in 2020 was to have staff back at their desks by October 2025. However, due to unforeseen circumstances, they are not expected to return to Martin Place until November 2029.
A major factor contributing to the delays and cost overruns is the extensive presence of asbestos. Initial timelines and costs were based on reports describing the building as having "minimal amounts of asbestos." However, detailed investigations revealed significant asbestos contamination, requiring substantial project changes.
The asbestos, commonly used as a fire retardant during the building's construction, is found in various locations, including the concrete soffits and between layers of concrete within work floor slabs. Most of it is loose and requires removal.
The presence of asbestos necessitates extensive safety measures, with entire floors designated as "exclusion zones" and workers required to wear full hazardous material protection gear. The building will need to be stripped to its steel frame to eliminate the toxic substance.
Adding to the complexity, the walls surrounding the fire escape stairs and the lift are not reinforced and do not meet fire resistance standards. This means they are less likely to protect people in the event of a disaster.
Despite the challenges and additional costs, the RBA's analysis indicates that removing the asbestos and refurbishing the building remains the most cost-effective option. However, the project has already incurred significant expenses, including $108.8 million in office rental costs over six years and an additional $86.3 million in contingency costs.
The RBA's renovation project serves as a cautionary tale, highlighting the unforeseen challenges and costs that can arise during major renovations, particularly in older buildings. The project's impact on taxpayers remains to be seen, as the RBA's expenses can affect the size of the dividend it returns to the federal government.