Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Thursday, 11 March 2004
Page: 21394


Senator HUMPHRIES (2:48 PM) —My question is to the Special Minister of State, Senator Eric Abetz. Will the minister advise the Senate of the current financial implications of various leases entered into in the Barton area of Canberra between 1989 and 1994? Will the minister also inform the Senate of the government's response to the ANAO recommendations against ratchet clauses in leases?


Senator ABETZ (Special Minister of State) —I can inform Senator Humphries that I have been examining leases in Barton entered into by the previous Labor government between 1989 and 1994. The examination was undertaken with an eye to the vital elements of any lease: the initial term and options for renewal, the frequency and basis of rent reviews and the cost at commencement. I can inform Senator Humphries that the following was revealed. A building owned by the Salvation Army at 2 Brisbane Avenue had a six-year lease with no renewal option. It had its rent reviewed to market rates every two years with no ratchet clause. It had an initial rent of $325 per square metre. Another building, owned by the Australian Democrats at the time, at 10 Brisbane Avenue, had a five-year lease. It had its rent reviewed to market rates every two years with no ratchet clause. It had an initial rent of $250 per square metre.

The general lease terms during that period were about five years and options were very hard to come by, although I note that the Democrats got one. The rent reviews were every two years to market rates. So senators can imagine my surprise at noting a lease for 10 years with a six-year option and another for 15 years with a five-year option. At the time they were signed, both leases contained the highest commencement rent: $327.50 in one case and one substantially higher, more than 10 per cent higher, at $368 per square metre. However, honourable senators will understand my lack of surprise at finding that the two buildings in question with these favourable lease terms were owned by the Transport Workers Union and the Australian Labor Party respectively.

I table a chart that sets out 13 Commonwealth leases in Barton between March 1989 and December 1994. One landlord stands out as having achieved the longest lease term, the highest commencement rent, the only annual rental review and the only guaranteed annual rental increase. Guess who that landlord was. Mr Latham's Labor Party, the same Mr Latham who said on 17 September:

Only Labor ... stands for competitive capitalism—open, free and fair trading, where companies are treated on their merits rather than on the striking of special deals and favouritism.

If the Centenary House lease were to be judged on Mr Latham's own professed standards the rort would be stopped today. The lease was a rort in 1993. It is an even worse rort today. A Labor government signed a lease of its party's national headquarters on outrageous terms in 1993, with clauses ensuring that the outrage compounds each year. Yet the would-be Prime Minister sees nothing wrong. The reason Mr Latham is blinded to this rort is the rivers of gold provided to Labor's election coffers. I am sure that the University of Tasmania would like to have a $36 million income stream. I might add that the Transport Workers Union just happened to donate $340,000 to the Australian Labor Party during the last financial year. Mr Latham owes an explanation to the Salvos, to the Democrats and to the Australian people about this rental rort, how it came into existence and how it justifies—(Time expired)


Senator HUMPHRIES —Mr President, I ask a supplementary question. Can the minister give the Senate more information about the government's response to the ANAO recommendations against ratchet clauses in leases?


Senator ABETZ (Special Minister of State) —Senator Humphries is quite right to mention ratchet clauses because at the very heart of the Centenary House rort is the ratchet clause, which allowed a nine per cent per annum increase each and every year. I just happened to be browsing through old ANAO reports the other day, and what should I find? In 2001 the ANAO said about ratchet clauses:

Agencies should seek to avoid ratchet clauses ... to ensure that they are only exposed to normal market rentals.

... ... ...

The effect of a ratchet clause ... prevents a `true market' rental being reflected in subsequent rent reviews ...

What could the ANAO possibly be thinking of with comments like that? We all know what they were thinking about: Centenary House and the rental rort rip-off over which Mr Latham now presides. Mr Latham needs to explain why the Salvos, the Democrats and the TWU were given—(Time expired)