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The possibilities of reducing rental costs for the Government.

PHILIPSBURG:--- The General Audit Chamber submitted its report entitled “Audit on the possibilities of reducing rental costs for Government” to Parliament today. The report explores the feasibility of reducing the Government's rental costs by 20% over five years, as stated in the country packages. The 2020 budget is the baseline for the reduction.

In their report, the General Audit Chamber questions whether the 2020 budget is a feasible benchmark noting that the 2020 financial statements are unreliable, making it challenging to determine the figures to calculate the 20% reduction effectively. In addition, the report highlights how the increases in annual rental costs in the 2020-2022 budgets further complicate the calculation.

To achieve a 20% reduction, relocation (to Government property) or termination of leases is likely. The Audit Chamber advises the Government to consider (or investigate) the costs associated with relocating government organizations and review the expenses related to remodeling spaces used by various departments based on their individual needs and office requirements.

With its findings mentioned in the report, the Audit Chamber questions if the goal outlined in the Country Packages is realistic. The Audit Chamber believes there was a need for an impact study before setting a 20% reduction goal for rental costs in the Country Packages. Furthermore, terminating leases might result in long-term office building vacancies. The aim is to reduce costs; however, the potential negative economic impact should not be underestimated and requires research.

The report includes the findings of a short survey issued to landlords of the Government to determine the level of willingness surrounding rent reduction. Almost two-thirds (64%) of respondents indicated a willingness to (possibly) renegotiate existing leases. Although not statistically representative, the survey provides some insight for the government to pursue a dialogue with lessors to better understand the challenges and feasibility of reducing rent.

Although efforts to lower rent are underway, such as relocating departments and terminating leases, it is unclear what cost of relocation is required to accurately assess the relocation's feasibility compared to the termination of lease agreements.

Both the English and Dutch versions of the report are available on the website of the General Audit Chamber (www.arsxm.org) and the General Audit Chamber’s social media platforms, Facebook, and LinkedIn.

 

Click here for the report.

 

 

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