High price of a high-rise

By the Editorial Team · Monday, September 21, 2026

The Australian government’s decision to relocate its Sydney defence headquarters from Victoria Barracks to leased offices at Defence Plaza is under parliamentary scrutiny after analysis revealed the move could cost the government over $100 million more than maintaining the existing site. Critics argue the relocation risks undermining defence capability and operational readiness in Sydney, prompting calls to reconsider the plan amid an ongoing inquiry.

The Australian government’s plan to move its Sydney defence headquarters from Victoria Barracks to leased office space in the central business district has faced renewed scrutiny amid questions over the cost-effectiveness of the decision. Documents obtained ahead of a federal parliamentary inquiry suggest that continuing operations at Victoria Barracks could save the government close to $100 million compared with the expenses associated with the new Defence Plaza offices.

Defence Minister Richard Marles announced a major disposal of military sites earlier this year, citing significant maintenance costs at Victoria Barracks in Paddington. He referenced a $50 million maintenance spend over the past five years and projected another $200 million in upkeep over the next decade, asserting that shifting operations to Defence Plaza, a modern office building located about two kilometers away on Pitt Street, was fiscally prudent.

However, internal government figures reveal that the Department of Defence’s ten-year lease for Defence Plaza, initiated in February 2023, is priced at $231.4 million. When combined with a $44 million contract for office fit-out services prior to occupancy, the total investment in the city-centre site exceeds $275 million. By comparison, projected maintenance costs for Victoria Barracks over the 2023–2033 period—estimated at $10 million annually from 2023 to 2025, increasing to $20 million per year through 2033—would amount to roughly $170 million.

Opposition to the plan has come from multiple quarters, including politicians, community organizations, and former defence officials. Victoria Barracks, historically regarded as the spiritual home of the Australian Army, remains on the list of military properties targeted for sale under a divestment program aimed at raising $1.8 billion in asset sales. The parliamentary inquiry, headed by New South Wales Senator Jess Collins, has criticized the business case underpinning the relocation and expressed concerns about the impact on defence capability.

Senator Collins argued that the government’s justification for relocating to Defence Plaza is unfounded, stating that it costs more and serves fewer personnel. She further contended that the new office space fails to comply with occupancy standards set by the Department of Finance and that the move undermines operational readiness and counterterrorism capacity in Sydney. These operational risks were highlighted by former Chief of Army Lieutenant General Ken Gillespie, who warned that vacating Victoria Barracks could jeopardize regional security.

Assistant Defence Minister Peter Khalil has dismissed these concerns, but critics maintain that the lease agreement was ill-advised and represents a misallocation of resources. Senator Collins urged the government to reconsider and consolidate defence functions back at Victoria Barracks to ensure cost efficiency and maintain defence effectiveness in the Sydney region. The inquiry into the sale and relocation program is expected to continue until February.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.