The Reserve Bank has more than doubled its Auckland office space and is stumping up $14.5 million for the fit-out, even as it’s preparing to cut a fifth of its staff.
The new 10-year lease, which came into effect on August 1, covers over 4800sq m across three floors of premium commercial space at 16 Takutai Square, in the stylish waterfront area of Britomart.
Its scale is significantly more grand than the bank’s current 1734sq m of offices at 205 Queen St, where its Auckland staff remain housed until the end of the year.
Other tenants in the Takutai building include the New Zealand head office for Westpac and the Financial Markets Authority and across a central atrium is the professional services firm EY – lawns and a fountain are features of the public square in front.
Asked under the Official Information Act, the bank refused to disclose the lease cost. A spokeswoman said the information was withheld to protect the commercial position of a third party.
Once an office fit-out is complete, the space will accommodate up to 252 workstations (the current Queen St site can hold 125). The move-in date is planned for mid-November.
“We believe this new space is a cost-effective project for a long-term lease. Budget and cost efficiency are essential, and any fittings and facilities are being carefully considered and are restrained,” the spokeswoman said.
The Herald asked if the board investigated any short term measures such as the possibility of extending the Queen St. lease, in order to delay locking in a long-term agreement before finalising funding for the 2025-2030 period with the Government.
The spokeswoman did not address the question; she said the new offices are “secure” and “future proof” and in a key location close to the financial stakeholders.
The estimated capital expense for the fit-out is $14.5m excluding GST, across fiscal years 24/25 and 25/26.
The spokeswoman described the cost as “mid-level”.
The budgeted figure does not include contingencies.
The central bank’s new five-year funding agreement with the Government, signed in March, provides for capital expenses of $13.6m in the current fiscal year and $4m in the next.
The office fit-out will consume the vast majority of that allocation, and it constitutes well over half of the total capital budgeted for the full five years (some expenses were carved out of the general agreement).
The new lease was signed last November when the bank’s board and the previous governor Adrian Orr anticipated a fattened five-year budget of over $1 billion.
However, the funding hadn’t been agreed to by the Government, which ultimately rejected it. A dispute ensued – including at least one indecorous outburst by Orr – and was followed by his resignation.
The budget was ultimately reduced to operating expenses of $750m and capital expenditure of $25.6m for the period. It came into effect on July 1.
The Herald asked Finance Minister Nicola Willis if the bank’s final budget retained too much fat, in light of the scale of the redundant office space and the fitout cost.
Willis emphasised her dissatisfaction with the arrangements: “Frankly, I don’t think any New Zealander would think this level of spending on office space for fewer than 200 staff was reasonable.”
She called the offices a, “legacy of the previous government which presided over a massive increase in bank funding and staff numbers.”
She also noted that, “Ministers of Finance don’t personally approve the bank’s expenditure on individual items; that’s the job of the Governor and the Reserve Bank board.”
Willis said she expects the bank to “now explore options to generate revenue from the space it no longer requires...”
The Herald asked the bank’s board if it is considering subletting or otherwise reducing the size of offices; the spokeswoman said only that the bank’s focus is on meeting its planned move-in date.
Board minutes from July last year note that the Takutai space, leased by Britomart East Company, involved an “uplift in lease costs per annum” over the Queen St cost; the amount was redacted.
The current Queen St premises cost $1m per annum, which covers both the lease and the operating fees.
The Herald has asked the Ombudsman to review the bank’s decision not to disclose the lease cost in light of the public interest in transparency around how public money is spent.
The bank’s Auckland-based staff, both fulltime and part-time and including contractors, numbered 164 at the end of June. The majority of bank staff work from home at least part of the week.
Moreover, those staff numbers are expected to fall considerably in the next two months as the bank finalises a restructuring plan.
The spokeswoman said the bank cannot currently provide an estimate of the number of Auckland-based staff likely to remain after the end of next month.
More broadly, out of a total of 625 FTEs (fulltime equivalent employees) as of June, the bank is consulting on eliminating 142 roles across the whole organisation (including 35 vacant positions).
The number of bank staff has more than doubled in the last six years: FTEs rose to a peak of 660 at the beginning of this year from below 300 in 2019.
Over the period, the bank’s remit, spelled out in law, has also expanded – though critics argue the expansion of staff numbers and spending has outstripped the additional work.