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Thursday, 20 September 2001
Page: 27475


Senator CROSSIN (10:05 AM) —I rise to provide a contribution from the opposition members of the Joint National Capital and External Territories Committee in relation to the report on the Christmas Island casino resort that was just tabled by Senator Lightfoot. This inquiry examined in some detail the circumstances surrounding the tender process of the disposal of the failed Christmas Island casino resort and its subsequent sale to a company known as Soft Star. The salient facts in this business process are that the Christmas Island casino resort was granted a 99-year crown lease for a 47-hectare block of land upon which the facility was built. The resort was a major employer on Christmas Island and a major stimulus to the Christmas Island economy. The closure of the resort in 1998 has had a devastating effect upon the social and economic structure of Christmas Island, with up to 250 people leaving the island immediately after the casino's closure.

The Christmas Island Chamber of Commerce estimates that the island's population has fallen from 2,600 to 1,300 since the closure of the casino. It has been 15 months since the sale of the facility and over three years since the start of the sale process, and the casino and the resort remain largely closed. Let us be quite clear in presenting the report about what the closure of the resort and the sale of the casino have meant for Christmas Island—the island depended very much on the operation of the casino for income, economy and livelihood—and what it now means for those people who are still awaiting the realisation of the promise that the casino be reopened. Our dissenting report highlights the opposition's many concerns relating to this process, such as the purpose clause of the lease; the conversion of the leases from leasehold to freehold title and the conduct of the negotiations with ComsWinfair—the company that I believe would have by now opened the resort and the one, it seemed on the face of it, to which the resort should have been sold. Of course, the casino and the resort was sold to Soft Star Pty Ltd. People reading this transcript, and who want to know about this process, should be aware that Soft Star Pty Ltd is connected to the APSC—the owners of the space base—to which this government last month appropriated many millions of dollars to assist in getting the space base operating.

Much hinges on the interpretation of the purpose clause of the Christmas Island resort lease, which is now where the focus of the future of this resort is placed. The lease says:

The Lessee shall use the premises only for the purposes of a hotel-casino and ancillary thereto, for personal services, retail and non-retail shops, recreation, accommodation and entertainment facilities or such purpose as may be approved in writing by the Commonwealth.

Evidence was presented to the committee that the purpose clause of the lease is permissive and not mandatory and that therefore failure to reopen the casino does not appear to constitute a breach of this lease. We do not accept that. Even if this interpretation were accepted, non-government members could not understand why this government failed to ensure that the operation of a casino and resort was mandatory within the purpose clause of the lease, remembering the importance and the contribution of the casino and resort to Christmas Island's economy and social infrastructure.

However, our interpretation suggests that the purpose clause of the lease means that it was mandatory, that there was an obligation on the Commonwealth government to ensure that, in the sale of the casino and resort, the future owners—Soft Star in this case—were mandated and that they must open and operate it as a casino. It appears to non-government members of the committee that the current leaseholder is in breach of the lease by failing to reopen the casino and resort. Opposition members on the committee do not accept the assertion made in the majority report that the committee understands that the Commonwealth has no ability to compel the owner of the facility to use it for the purpose of a casino and resort. We do not accept that. We believe that the Commonwealth has an absolute ability and an absolute obligation to compel the owner of the facility to open it as a casino. We say that the current operator should be given 12 months to do so or that the lease be revoked. We know, of course, that that will lead to court action.

I draw the Senate's attention to an article in the Weekend Australian of September 15 and 16 where Soft Star say that negotiations are under way with potential managers to reopen the casino and that they are `doing what they need to do and will see how quickly it can be done.' Who with? Who is Soft Star talking to? What is the time line? We have heard this time and time again. In fact, Soft Star put out a press release in June saying they were about to reopen the resort, but we are still waiting for that to happen. We are continually being led around. The people on Christmas Island are being continually misled by Soft Star's promises to reopen this casino.

The other important issue is the conversion of the lease from leasehold to freehold. Given the importance of a functioning casino resort to the tourism and small business sectors of the island economy, we feel that it would be highly inappropriate to approve the conversion of the resort leases from leasehold to freehold title, even on a conditional basis. Non-government members are concerned that the loss of direct control over the lease by the Commonwealth would impact negatively upon the community's ability to influence the use of the casino and resort by the current owner or by any other subsequent owners. We are also concerned at the lack of consultation with the Christmas Island community, again, and the lack of consultation with the Christmas Island Shire Council, again, regarding the conversion of the resort lease from leasehold to freehold—which is a prospect that this government is currently considering.

In short, the opposition members of the committee feel that in light of continuing uncertainty in the redevelopment of the complex, and its reopening as a fully operational casino and resort, the approval of Soft Star's application for conversion of the leases from leasehold to freehold title would remove any influence the Christmas Island community could have over the management of such a vital economic resource. Further, the non-government members of the committee were concerned about the result of the tender process and the subsequent sale to Soft Star. We believe that ComsWinfair clearly emerged from the tender process as the only viable tenderer with the experience, financial resources and intent to refurbish and reopen the casino and resort to its full operational capacity. It would appear that any outstanding conditions between ComsWinfair and the Commonwealth were and could have been essentially resolved as of January 2000, and that ComsWinfair anticipated resolving all outstanding issues in the shortest time frame possible.

The other thing is that, in relation to the sale to Soft Star Pty Ltd, the opposition members of the committee did not think it was appropriate to begin negotiations with Soft Star before the termination of the tender process, nor was it appropriate that probity and financial background checks were not applied to Soft Star before the sale of the property. In short— and there are many more things I would like to say about this report—we believe the tender process for the sale of the Christmas Island resort was flawed from the outset. We believe the Commonwealth's handling of its role in the process and its responsibilities to the Christmas Island community have once again been totally inadequate.

In closing, I would like to add my thanks to the committee secretariat, to the secretary Richard Selth and to the people who work in that committee, in particular to Emma Herd for the work in producing this report. (Time expired)


Senator Crossin —I seek leave to continue my remarks later.

Leave granted; debate adjourned.