Inland Revenue's $30 million plan for office renovations called 'out of touch' by National's Nicola Willis

Inland Revenue estimates it will spend more than $30 million on the refurbishment of many of its offices.

National's Nicola Willis is calling the department "out of touch" in a cost of living crisis and spotlights $46,000 being spent on a meeting pod. But IRD Commissioner Peter Mersi believes it's a good use of money to ensure offices are effective and welcoming.

Information provided to the Finance and Expenditure Select Committee shows a little more than $30 million has been budgeted for the 2023/24 year for renovations, refurbishments and redecorations across 11 IRD sites.

The biggest cost is associated with the department's premises in Wellington's Asteron Centre, which had to be cleared of staff in 2021 due to structural risks. Another seismic assessment led to some of the building's fittings being removed.

"The seismic upgrade required the floor plates to be cleared and removal or partial demolition of a substantial proportion of Inland Revenue's 12-year-old fitout," the committee was told.

"This has provided the opportunity for Inland Revenue to refurbish the site ahead of reoccupation in the second half of 2023. Once complete, the site will support activity-based working and a more collaborative, agile way of working."

Just under $10 million in capital and operating costs have been budgeted for refurbishing the site, including $46,325 for the purchase of a four-person meeting pod and $7510 for four-person seating pods. These are being added in lieu of constructing meeting rooms.

Nearly $7 million will go towards either refurbishing IRD's current Christchurch site or fitting out a new site, while about $5 million is budgeted for refurbishment on Auckland's North Shore.

Most of the planned refurbishments aren't expected to be completed until next year or 2025.

"New Zealanders are enduring a prolonged cost of living crisis while having to pay more tax than ever," Willis, National's finance spokesperson, told Newshub.

"Meanwhile, the tax department is embarking on a $30m spend-up to redecorate its own offices. It's out of touch, wasteful and yet another example of this Government's reckless spending."

Willis asked Revenue Minister David Parker at a meeting of the committee on Wednesday whether the costs were appropriate in a cost of living crisis. 

He initially called it an operational matter and said "substantial work" was necessary due to the earthquake strengthening.

As Parker tried to pass the question over to his officials, Willis pushed the minister for his view.

The minister replied by saying he was "really miserable" about how much government departments spend on their premises. 

He went on to give an anecdote about how his father, as a "reasonably successful small business person", would complain about the quality of his fitout being inferior to IRD's.

"I wear that lesson from my father every day, but I am aware that they had to respond to the fact that they had earthquake problems," Parker said.

Mersi explained the situation with the Asteron Centre.

"In many ways, we had no choice because everything had to come out, almost everything had to come out for the work to be done. We are not gold plating anything. In fact, we're using what we can of old fittings, but it was inevitable because of the requirements to upgrade the building."

He believed it was a "good use of taxpayers' money" and the changes had been in the pipeline for some time. 

"It is important that we retain offices that are effective and also are very conscious that we have a front of house. It is important that is welcoming for people who wish to come in and talk to us, but also protect staff," Mersi said.

"A lot of our systems now, it's an online system, but people don't necessarily have access to online so the front of office is being set up in a way which enables them to do that under supervision and with help.

"Without these changes, we aren't able to deliver the sort of services and actually to help people get it right from the start. That is our purpose if you like."

Willis picked up on Mersi's assurance that there's no "gold plating" and asked him if he was aware IRD was proposing to spend $46,000 on a four-person meeting pod.

The IRD Commissioner replied that there was a cost to the pods, but a net saving overall due to the department reducing the number of floors it's using.

"With the shift in working styles, if you look at Asteron again as an example, when we move back into that building, we will be relinquishing two floors. That reflects the fact that the way in which people, our staff are working is very different," Mersi said.

"One of the ways we achieve that is to create spaces where they're able to go and have those conversations without disturbing other people in what is now a very, very open plan and indeed flexible working environment."

Willis has previously raised the costs of Kāinga Ora doing up its office. Last year, Newshub reported the department spent more than $24 million over four years on renovations, which Willis said Kiwis would struggle to see as being a priority.