It can be revealed the tax office has agreed to a 52-month, $25 million deal to lease an office in Traralgon, which was previously used by ASIC.

It comes nearly eight years after former finance minister Mathias Cormann set out on a tough crusade against government wastage, aiming to cut down unused space.

The 8386-square-metre office space, which provides space for just 220 employees, will cost taxpayers around $484,000 per month over the four years.

In 2013, the government introduced a target to help reduce building space and encourage efficiency - each agency and department should strive for 14 square metres per public servant.

But the tax office's latest lease blows that figure up to 38 square metres based on information made available to The Canberra Times.

The building is shared with a small team of ASIC employees absorbed into the workforce by a machinery of government change, but conservative calculations of the agency's use of space bring it to a minimum of 25 square metres per person, with the potential figure up to 38.

Steve Oxford, an expert in government office leasing at Australian Strategic Property Advisors, said the government could improve the efficiency of its properties through effective planning, which would help it to get better use of its office space and achieve value for money.

"There is no doubt that 38 square metres of space per person is not an effective use of space," Mr Oxford said.

"But opportunities to sublease in regional markets, or to relocate to smaller premises, likely don't exist in some of these regional markets.

"It's challenging, but these challenges can be overcome through effective planning."

The Finance Department, which helps to make sure leases are efficient, deliver value for money and meet the operational requirements of entities, collects data on how many agencies' leases meet the target, and releases it in an annual report.

Its latest report, containing figures from 2019, show only three of the tax office's 22 leases around the country met the density target.

An ATO spokesperson defended the tax agency's track record, explaining a number of factors affected the result.

"This includes natural fluctuations in staffing levels, the length of commercial leases (10-15 years) which makes it difficult to reduce or increase office space quickly, and fit-outs that were constructed prior to the implementation of the government target that are generally at a lower density and are not replaced until end of life due to cost considerations," the spokesperson said.

The spokesperson said the ATO's latest figures as of the end of May this year, which are yet to be published publicly, indicate its average office space across its sites now met the government's target.

Mr Oxford said opportunities to make better use of office space were not unique to the tax office.

"Many Commonwealth entities are seeking efficiencies when they approach the market for new leases," Mr Oxford said.

"In some recent cases, this can be as much as a 30 per cent reduction in footprint.

"This demonstrates a real attempt by entities to reach compliance with Commonwealth property policy.

"Despite this policy being in place for over a decade, only a third of entities currently meet the target."

In the ACT, where a market exists with more than two million square metres of office space, and the leases are generally larger and easier to design efficiently, the government is only achieving the 14 square metres in a quarter of its tenancies.

The top offenders included the Department of Defence where only 12 of its 45 leases met the target, while around 42 per cent of Services Australia's 153 leases met the requirement.

The Finance Department said it had no mechanism to issue warnings, fines or penalties to agencies who hadn't complied with the target density.

Finance Minister Simon Birmingham confirmed it still remained a priority of the government and that there had been gradual improvements each year to the average rate.

Density wasn't the only way the government measured value for money, he said.

"The target applies to new leases and major new fit outs in existing leases. As many leases cover a number of years, reductions in actual occupational density are incremental over time," Senator Birmingham said in a statement.

"Some leases can also have 10-to-20 year lifespans, and therefore reductions to density will improve over time.

"Density is also not the only measure of value for money, as lease arrangements may also provide value in terms of price or landlord contribution to fit-out."

But Labor's public service spokesperson Senator Katy Gallagher felt that didn't explain the potential waste of millions in taxpayer money across the government's more than one hundred agencies.

"It is really concerning that there are leases for office space being signed up to that are well in excess of the government's own occupational density targets," Senator Gallagher said.

"With significant debt and deficit facing the budget we cannot allow any wastage of public funds, including by leasing more office space than is needed.

"The Minister for Finance needs to explain how multi-million dollar contracts for excessive spaces represent value for money."

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Mr Oxford said the government's density target was still well above what was conventional in the private sector.

With better planning and compliance, the government could save millions, he said.

"There is huge opportunity to reconsider the traditional office space and how the APS works," he said.

"Private-sector businesses are allocating 8-10 square metres per employee, and often assuming an 8:10 desk-to-worker ratio - which applied to the public sector could result in significant savings."

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