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Thursday, 26 March 1987
Page: 1426

Senator MICHAEL BAUME(6.45) —By way of interjection on Monday of this week, the Leader of the Government in the Senate (Senator Button) raised the question of the Australian Industry Development Corporation when I was speaking on the Commonwealth Guarantees (Charges) Bill. I responded by suggesting that perhaps the Government could do the Senate the courtesy of explaining the extraordinary investment made by AIDC in what I described as `an extraordinary venture' in Melbourne. That extraordinary venture was Figgins Diorama Ltd, and in today's newspapers an advertisement appears announcing an auction to be held on 6 May of `one of the most prestigious retail complexes in Australia'-the freehold of Figgins Diorama. This company went into voluntary receivership on 10 December 1986 and I understand that one of the reasons for its failure was the fact that the cost of rebuilding this shopping centre, or major retail commercial property, located in Melbourne, had doubled to about $22m.

I raise this matter because of a Press release issued by the AIDC on 11 December 1986 which said:

As has been reported in this morning's press, Figgins Diorama have placed themselves in voluntary receivership and have appointed Deloitte Haskins and Sells as Receivers and Managers.

The Australian Industry Development Corporation (AIDC) has assisted the development of the Diorama store by providing part of the finance for the building.

It does not say how much that part is, nor does it say how much is at risk. There are some suggestions that it is $19m and others that it is $12.5m. The Press release continues:

AIDC decided to assist the Figgins group for several reasons:

Don Figgins is an Australian entrepreneur who has established a successful retail chain selling locally manufactured and imported goods. In particular, he has given a great deal of impetus to the Australian shoe industry by encouraging local shoe manufacturing.

Figgins Diorama is a unique development which has introduced many new and important skills both during the construction phase and now in its operational phase.

Assistance to the building industry that flows from such projects.

The benefits to Melbourne from the tourist interest created by such a well known, world class store.

The Diorama business problems stem from an initial delay of six months in opening. The building costs by this stage had doubled, making the total project cost in excess of $22m-

that is an extraordinary increase-

As a result of the delayed opening the first summer and winter seasons' trading was missed, but advanced buying meant that further merchandise was already in transit. An additional problem was that the Australian dollar had fallen by some 40 per cent between the time when orders were placed and merchandise arrived.

AIDC is continuing to work with Don Figgins to resolve the store's short-term difficulties, and believes there are good prospects that this can be achieved.

Behind those bald statements there seems to lie an extraordinary situation. The AIDC has gone right away from its basic stated objectives. As the Senate is well aware, these are to concentrate on the advancement of Australian industry. I underline the word `Australian'. The AIDC's corporate objectives are to actively seek out opportunities to encourage and assist the establishment and growth of viable, internationally competitive Australian industries, particularly Australian owned industries, with prime emphasis being given to industries in the priority areas set out in the Australian Industry Development Corporation Act. I do not know where in the Act or in this set of priorities there exists a suggestion that the AIDC should use Australian taxpayers' money to create building largely made from imported items-very expensive imported items-and committed to the sale of imported goods. As I understand it, there was very little interest at Figgins in selling Australian goods.

Senator Chaney —Perhaps it is where the Treasurer buys his suits.

Senator MICHAEL BAUME —As the Leader of the Opposition in the Senate says, perhaps it is where the Treasurer (Mr Keating) get his imported suits. This place has been described in the Australian Financial Review as `selling a range of expensive designer fashions in super opulent surroundings'. In his column in the Sydney Morning Herald Leo Schofield said--

Senator Tate —I have understood your point, Senator, and I will pass it on to the Minister.

Senator MICHAEL BAUME —I am glad you will, because I have some other points that you might also pass on which are part of the same matter. As I was saying, Leo Schofield said:

Richard Marcus, the Dallas-based retailer, thought it one of the most impressive stores he'd seen anywhere in the world but doubted its long-term survival. So do many Melburnians. Stories that the business (the freehold to the Collins Street property has already been sold) has been acquired by Japanese interests are rife.

The point I want to make is that behind all this is the serious question of why on earth AIDC got involved in this in the first place. The Age reported back in December 1986 that in fact the AIDC was not advised that Figgins Diorama was going into voluntary receivership. In fact, the AIDC found out when an Age reporter rang it up and told it. That strikes me as another extraordinary matter. At that stage the Age described Figgins Diorama as `Australia's most expensive and exclusive shop' and that it was going into voluntary receivership 19 months after opening. To underline the point that I am making, the AIDC backed the building because it was going to be something special. The Age reported:

Not only does it stock the most exclusive fashion labels in the world, but every fitting was custom-made. Pink marble was imported from France, a revolving door made to exacting specifications was shipped from the US and a custom-built Rolls-Royce Phantom Six was purchased to ferry clients to and from the store.

This is the sort of thing that the AIDC has been involved in funding. A letter to me from Mr John Hunt of Hunt Leather makes these points about what he describes as `the controversial loan to the failed Figgins Diorama in Melbourne':

This loan of a reported nineteen million dollars was made to establish a new, untried retail outlet for ultra-luxury non-essential imports, on what appears to be dubious security. As such it has been made without regard either to the national interest or to commercial prudence.

I believe the Figgins loan warrants not only an investigation into the circumstances of the loan itself, but also a complete re-examination by Government, Opposition and the media of the reasons for the continued existence of the Australian Industry Development Corporation.

. . . If the AIDC is not restricted to making loans and investments only in the national interest, as the Figgins loan clearly demonstrates it is not, surely its functions would be better performed by the myriad of private financial institutions now established in this country. On the other hand, if the Corporation is to be obliged to make loans only according to non-commercial, national interest criteria, this will lead to discretionary subsidisation of industry which all our economic advisers tell us we should abandon.

The workings and control of the two billion dollar pork barrel of our money is something I think will concern all taxpayers.

Another interesting point that emerges from this is that the latest annual report of AIDC reveals its overseas borrowings-in other words, its overseas exposure, which is one of the major problems the Government tells us we are facing at the moment as our foreign debt has reached $101 billion. In the last financial year the AIDC alone has doubled its foreign currency borrowings to almost $900m. It seems to me that in these circumstances the points that were made by Mr Hunt are totally valid. I certainly will not keep the Senate longer by describing the extraordinary nature of this building which is being funded by taxpayers. Perhaps a release from the Waste Watch Committee could dilate on the excitement of taking oneself to Pandora's box, a mirrored and marble lined perfumery which has been funded in part by the AIDC. I am glad that the Special Minister of State (Senator Tate) has given me an assurance already that the Government will look into this matter and I hope to receive an early explanation.