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Monday, 13 May 1985
Page: 1868

(Question No. 12)


Senator Puplick asked the Minister representing the Minister for Aviation, upon notice, on 25 February 1985:

(1) Has the contract held by Allders International Pty Ltd for the operation of duty free shops at Kingsford-Smith Airport been renegotiated since its original awarding; if so:

(a) was any such renegotiation undertaken at the request of Allders International; if so, upon what basis was such a request made;

(b) how do the terms of the new contract vary from those of the preceding contract; and

(c) when it was decided to allow a new contract to be renegotiated, why were the originally unsuccessful tenderers not invited to resubmit tenders on the same basis.

(2) Is Allders International an entirely foreign-owned company.

(3) In how many other instances have similar commercial contracts let by the Department of Aviation been renegotiated.


Senator Gietzelt —The Minister for Aviation has provided the following answer to the honourable senator's question:

(1) Yes-for a twelve month trial period only from 1 December 1984 to 30 November 1985 subject to termination on two months notice by either party.

(a) the renegotiated trial was jointly concurred in consultation between my Department and Allders International Pty Ltd to overcome uncompetitive pricing on branded merchandise in particular photographic and electronic products and to more effectively compete in the commercial market place with off-airport Duty Free Shops, to provide the travelling public with cheaper prices and enhance the Commonwealth's long term revenue prospects. Following these consultations Allders International Pty Ltd were invited to place a formal proposal before my Department for consideration.

(b) the terms of the agreement with Allders International Pty Ltd for five years commencing on 1 March 1983 are-

Year 1 $120,000.00 per annum base rent plus $541,667.00 per month plus 36.10 per cent of any amount by which the actual gross revenue in that year exceeds $16,560,000.00.

Year 2 $120,000.00 per annum base rent plus $583,334.00 per month plus 36.10 per cent of any amount by which the actual gross revenue in that year exceeds $18,600,000.00.

Year 3 $120,000.00 per annum base rent plus $625,000.00 per month plus 36.10 per cent of any amount by which the actual gross revenue in that year exceeds $20,472,000.00.

Year 4 $120,000.00 per annum base rent plus $666,667.00 per month plus 36.10 per cent of any amount by which the actual gross revenue in that year exceeds $22,548,000.00.

Year 5 $120,000.00 per annum base rent plus $708,334.00 per month plus 36.10 per cent of any amount by which the actual gross revenue in that year exceeds $24,828,000.00.

With a further guarantee that payment in respect of turnover achieved in excess of the nominated levels shall not be less than $500,000 in any year.

The terms of the renegotiation are for a 12 month trial period only from 1 December 1984 to 30 November 1985 the rent and consideration payable to the Commonwealth to be: Base Rent $120,000 p.a. plus minimum guaranteed payments of 1.12.84 to 31.10.85-11 months at $7,100,008 p.a.-$6,508,340, 1.11.85 to 30.11.85-1 month at $7,600,000 p.a.-$633,333 or 5 per cent of gross turnover from photographic and electrical sales and 45 per cent of gross turnover for all other sales whichever is the greater.

Lease and Authority to revert to current agreement at conclusion of trial (1.12.85) or after 2 months notice by either party.

(c) Such action was deemed inappropriate, as the variation to the existing contract for the trial period enhances the guaranteed rental return to the Commonwealth on which tenders were originally assessed.

(2) Allders International Pty Ltd is a company incorporated in New South Wales and is a wholly owned subsidiary of a foreign company.

(3) From time to time my Department deems it desirable to review its business arrangements in keeping with commercially accepted and motivated practices. No consolidated record of such instances has been maintained.