RBA’s horror $1bn black hole

It appears that the organisation responsible for managing Australia’s finances, and yours, isn’t so good at managing money themselves.

It appears that the organisation responsible for managing Australia’s finances, and yours, isn’t so good at managing money themselves.

The Reserve Bank of Australia who apart from deciding what interest rate you pay on your mortgage, is also charged with “ensuring the economic prosperity and welfare of the Australian people”.

But they have just dug a $1 billion black hole for themselves.

The cost of renovating the RBA’s head office in Sydney’s Martin Place in the CBD has blown out from an initial figure of around $260m to one of around $1.2 billion of taxpayers’ money, according to the Australian Financial Review.

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The RBA building at Martin Place is facing a massive refurb blowout. Picture: NCA NewsWire / Simon Bullard

That figures puts it at one of Australia’s most expensive renovations in history.

By comparison, the renovations costs of Menulog founder Leon Kamenev’s Sydney waterfront property, which combined three different sites and is one of Australia’s most expensive homes, was around $35m.

However, despite the huge new cost of the redevelopment amid calls to rein in out of control government spending, the RBA is going full steam ahead with its plans.

“After careful analysis of all available options, the RBA has determined that retaining ownership and undertaking a full remediation and refurbishment is the most responsible and cost-effective long-term solution,” the central bank said.

The 22-storey building at 65 Martin Place, Sydney dates back to 1962.

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Most of the banks workers including RBA Governor Michele Bullock work out of the Martin Place office. Picture: John Feder/The Australian

When the refurb project was announced in 2019: the aim was to ensure the building would be “structurally, functionally and operationally viable over the long term”.

As for the building itself: “It is a unique building by virtue not only of its heritage value but also its highly secure function which is supported by an armed guard force, purpose built bank vaults, a data centre running national payments infrastructure, and valuable archives,” the bank said.

“The majority of the RBA’s staff (1,230 or 90 per cent of the RBA’s current 1,371 employees, including RBA Governor Michelle Bullock) and key functions operate out of the head office building.”

In applying for money from the government for the redevelopment, the RBA said the refurb was needed because the building has fallen behind in compliance and sustainability standards.

The decision was made to stay at Martin Places because of the claimed low costs and because “A number of the Bank’s highly specialised functions integrated into the building [mentioned above] would be cost prohibitive to relocate and replicate in another building”.

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The RBA building with temporary fencing around it. Picture: Rohan Kelly

Other options that were decided against included, selling the building and leasing it back, selling the building and leasing elsewhere in the Sydney CBD and selling and buying another property in the Sydney CBD.

According to the RBA, the massive cost blow out is due to the amount of asbestos found in the building.

“Initial works revealed that the building contains four to five times more asbestos than typically found in buildings of its era,” the RBA said in a statement.

“The extent of this contamination, which was not fully appreciated until 2023, requires the building to be stripped back to its steel frame to ensure safe and complete removal.

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The building dates back to the 1960s. Picture: NCA NewsWire / Simon Bullard

“In addition to the asbestos issue, the current building structure does not meet building codes, is energy inefficient, and no longer fit for purpose.”

Completion of the renovations were first estimated to be competed by October with a capital construction cost of $244.6m.

The building is now not scheduled to be finished until at least 2029.

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