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House of Assembly - Fifty-First Parliament, Second Session (51-2)
2008-04-29 Daily Xml
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ADELAIDE FESTIVAL CENTRE TRUST (FINANCIAL RESTRUCTURE) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 3 April 2008. Page 2587.)

Mrs REDMOND (Heysen) (16:16): I indicate to the house that I am the lead speaker (although, potentially, not the only speaker) on behalf of the opposition in relation to this bill. I also indicate with pleasure—for the minister, I am sure—that the opposition will support the bill. Hopefully this will assist its speedy passage through this place.

It is a great joy to me that I have, fairly recently, been made shadow minister for the arts, and this is the first bill I have had in that capacity. In fact, I think it was more of a joy to my children, a couple of whom are fairly heavily involved in the arts. One is a heavy metal band member, although with a classical background, and the other thoroughly enjoys musical theatre—and, indeed, would like to pursue a career in that area. In fact, it is a wonder both my house and I survived on Saturday night, because the local production of Victor/Victoria at the Stirling Community Theatre finished its season and the cast party was held at my place.

As far as I know that went all night (there were certainly some bodies lying around when I got up in the morning, and there were a few empty bottles), but everyone had a good time. I find, from my daughter's involvement in particular, that one of the great things about musical theatre is that it mixes people from a range of backgrounds and of a range of ages. In fact, musical theatre in Adelaide is largely amateur, and the quality of these amateur musicals is a great credit to the city.

I am a great believer in supporting theatres; indeed, I believe we would not be a true city without a good cultural backing. Of course, whilst the Labor side of parliament often tries to claim credit for our wonderful Festival Theatre it was actually Steele Hall who initiated that place, so I am pleased to be able to claim the credit, on behalf of this side of the house, for the development of the Festival Theatre in the first place. It is now some 36 or 37 years since that occurred, and the whole time I have lived in Adelaide I have enjoyed attending the Festival Theatre for numerous productions. It is a great venue.

However, we are here today to discuss the fact that we need to do a bit of financial restructuring for that facility, and I would like to thank those who came to my office to advise me on the reasons for the bill. In particular I would like to thank Greg Mackie for the advice he gave me about the background of this matter, which I will run through briefly. The original intention was that the Festival Theatre would own itself, that the Festival Theatre Trust would own its own land and buildings; however, that meant there was always a $20 million debt on the construction. I have to say that $20 million seems a small sum of money these days, but I was living in Sydney when they were building the Opera House there and I remember that at one stage that was only going to be $10 million.

It is testament to how much things have increased in price, if we contemplate how much it would cost us these days to build that facility. When governments today are reluctant to invest in infrastructure I often think that if they had stopped during the Depression and had not built the Harbour Bridge and so on, we would not have so many of those wonderful structures. I love the Festival Theatre, I love the Sydney Opera House, I love a lot of those things that really are part of our whole cultural heritage.

However, we have this $20 million debt and, during the 1990s, for some reason musicals were not doing too well. I have not yet researched that very thoroughly but, as it happens, I bought my daughter a wonderful book for her birthday this month, A Chronicle of American Musical Theatre, which goes through from its origins in the 1840s. It was the only copy of the book in Australia and I had to go to considerable effort to get it. I have not yet read it (it is a very thick book), but I will be interested to see if there is any indication in there regarding what happened world wide in terms of musical theatre.

In any event, the advice I received was that, because of the downturn in musicals in the 1990s, the Festival Centre Trust obtained a further loan from the government of about $10 million to $11 million, which it has had to service ever since. So, in spite of running fairly successfully over the past few years and in spite of running what would otherwise be a financially sound enterprise, the Adelaide Festival Centre Trust still has a debt of some $28 million on its books. Last year the government announced its intention of forgiving that debt but, of course, there are also ongoing issues about how one maintains a building such as the Festival Theatre, which has now been heritage listed. I know that the (Don) Dunstan Playhouse (which, it seems to me, should really have been called the Steele Hall Playhouse) has just been refurbished at a cost of some $8 million. It is perhaps still currently undergoing some refurbishment.

My limited knowledge of theatres indicates that because of their being (hopefully) successful and therefore putting more bums on seats, bums on seats equals seats wearing out which in turn equals the need to constantly refurbish and replace curtains, improve backdrops, check on acoustics and do all sorts of things, so that there is a constant need for maintenance. What has now occurred, as I understand it, is that the Festival Centre Trust has requested that overall responsibility for ownership be taken away from it and placed with Arts SA.

Arts SA manages a whole lot of other buildings around the state—72 in all, of which some 30 are heritage-listed—so it presumably has some experience and expertise in managing heritage-listed theatres and heritage-listed arts venues around the state. That all makes a fair bit of sense. There is, of course, a need to sort out who will do what, because obviously while Arts SA will take over the ownership and the overall control of the Festival Theatre, there is still the issue of day-to-day management. One would not want to have to contact Arts SA simply to change a light bulb or whatever has to be done on a minor scale. I understand that that will be dealt with via some sort of memorandum of understanding between the Festival Centre Trust and Arts SA.

It did occur to me, when I was considering this bill, that although the Minister Assisting the Premier in the Arts is present in the chamber today to deal with it, the Premier himself is technically the Minister for the Arts in this state, and it occurred to me that with his love of being involved in film (as he so often seems to be) maybe the only way he could actually get to tread the boards was to take over the ownership of the Festival Theatre, because he thus far (as far as I know) has not been invited to actually act on the stage of the Festival Theatre.

Ms Chapman: Thank goodness!

Mrs REDMOND: And we should all be thankful for small mercies! I know that it is said from time to time that politics is actually theatre for ugly people, and I am inclined to agree with that—I will include us all in that group. It did occur to me that there might have been some subversive motive on the part of the Premier in wanting to undertake the ownership of this building so that he could get a guernsey as an actor for some appearances at the Festival Theatre. In any event, as I understand it, the bill does not actually transfer the ownership, but it does allow for a proclamation that will have that effect.

I have indicated to the minister that I do not intend to go into committee on the issue, but there are a couple of questions that I would like him to address when he responds. The first is that, as far as I know, the government has given no guarantee to Arts SA that additional funding will be provided to Arts SA for what it will clearly need to undertake in relation to this building. I understand that the debt of the Festival Centre Trust is forgiven, but, once the building is actually transferred by proclamation into the ownership of Arts SA, I assume that will be its biggest and therefore most costly asset in terms of maintenance, and so I do seek from the government some sort of indication as to what provision there will be for managing the ongoing maintenance.

As I said, while the Don Dunstan Playhouse is currently undergoing its refurbishment, it is almost like the Sydney Harbour Bridge in the sense that there will need to be ongoing refurbishment through the range of theatres, and I seek to understand just how that will be managed. It would seem to me unfortunate, to say the least, if Arts SA were expected within its current budget constraints to manage the Festival Centre which will clearly be quite expensive.

I also wonder about other debts that other organisations might have. The SA Ambulance Service for some years had a debt, as did the CFS and the like. Does the government have a policy of forgiving the debts of statutory authorities generally? It strikes me as a little odd that the government has picked out the Festival Theatre as the object of its beneficence and allowed it to have its debt wiped out. Hopefully it will have a great effect, and the Festival Theatre will go on and have many years of success in running fantastic shows as it has to date and we will see a financial turnaround once it has knocked off that debt on its books. I am curious about whether the government has a program of forgiving all the debts of statutory authorities around the place.

I note that the new arrangements are intended to commence at the beginning of the new financial year, and I think that is only sensible if we can manage to get this bill through both houses and put that proclamation in place so that the transfer occurs well and truly in time for commencement on 1 July. With those few words, I indicate the opposition's support for the bill.

Mr GRIFFITHS (Goyder) (16:29): I also wish to speak briefly on this measure, and it is a pleasure to indicate my support for the bill also. As a young man growing up in a regional community, sadly my opportunity to be involved in the arts was quite minimal. I took more of a sporting line of things until my body started to give way and it was necessary to follow other pursuits, but in the last five years, in particular, I have enjoyed every opportunity that I have had to visit the Festival Theatre and the Festival Centre, and to enjoy performances there.

Indeed, I think it was only on Monday of last week when Minister Hill, as the Minister Assisting the Premier in the Arts, officially welcomed guests who were there for the Chinese spectacular, which was rather interesting. It certainly brought a lot of people together, many of whom were members of parliament, from both the Legislative Council and the House of Assembly, and we all had the opportunity to witness a production that highlighted much of China's history.

I support the member for Heysen's comments in relation to the efforts of Steele Hall in this regard. I was actually at a function at the Festival Centre, at which the Hon. Steele Hall was also present, and we spoke for probably about 10 minutes, during which he recounted to me the history of how the Festival Centre was established and some of his involvement in it. Certainly it was strongly evident to me that Steele Hall was very supportive of it and wanted to do everything that he possibly could to ensure that the structure that was built would service the needs of Adelaide and South Australia for many years to come.

There is no doubt that the Festival Centre is an iconic structure for Adelaide and for South Australia. I think—and I stand to be corrected on this—that previously the Adelaide Baths were located where the Adelaide Festival Centre is now. Having been born only in 1962, I have no first-hand knowledge of those things, but I would love to see some photos of the area and compare what it was with what it is now.

The Hon. J.D. Hill interjecting:

Mr GRIFFITHS: The minister indicates he will provide me with that, and I look forward to seeing it. It is an iconic building that stands there now and, even though I was brought up in a community where the arts were not pursued, I believe it is important that the Festival Centre be supported as much as possible.

One of the great pleasures for me as a member of parliament was in August of last year to have the opportunity to open the Balaklava Eisteddfod. It is very small in comparison, but over the course of three days it probably brings 1,000 people to Balaklava, involving about 100 volunteers and hundreds of performers. In opening that function, I said that the arts and music really define all that is good about the human species. There is no doubt that the Festival Centre provides a great opportunity not only for people to perform but also for those of us who cannot perform to go and witness the talents of these artists.

I commend the bill to members. From the briefing provided by the shadow minister on this matter, it is obvious that the financial responsibility will probably never be removed, unless there is a restructure in some way. It is hard to imagine that something like the Festival Centre could be built for $20 million. I recognise that the Festival Centre Trust has invested enormous effort and a lot of dollars in maintaining the buildings to a good standard and ensuring that it is refurbished as and when necessary. While it was assumed that the structure would be profitable in its own right and able to repay that debt, it is a recognition I think of those of us in this place that the arts are an area where there is a social responsibility to ensure that financial support is provided and to acknowledge that the ability for an enterprise such as the Festival Centre to pay its own way may not always be there.

I will be interested to hear the answer from the minister to the shadow minister's question about the philosophy of the government on the restructuring of debt from statutory authorities. It is an important issue that the state faces and, as a person who has an interest in the finance of our great state, I am keen to hear what the government's position on it is. With those few words I support the bill and look forward to its swift passage. I look forward to the restructuring that will take place and to support from the South Australian Government for Arts SA in ensuring that in future this great facility remains as important to Adelaide and South Australia as it is now.

The Hon. J.D. HILL (Kaurna—Minister for Health, Minister for the Southern Suburbs, Minister Assisting the Premier in the Arts) (16:35): I thank both members for their contribution and for their indication of support for this bill. I think the fact that the opposition is supporting it in this strong way does indicate the relatively bipartisan support that the arts in general enjoy in our state—

Mrs Redmond interjecting:

The Hon. J.D. Hill: —certainly you and I, that's right—which I think is a very good thing. I think it also demonstrates that the Festival Centre did enjoy support from both sides of parliament, and we can be pleased that it is there and that it has been a success in our state since it was constructed and this legislation went through in 1971. I will attempt to answer the questions, particularly questions that the member asked, but she made a couple of other points that I refer to.

I am not too sure that the problem was that the Festival Centre chose to put on musicals at a time when musicals were no longer the flavour of the time. That may well have been part of the case, but I understand they lost money on one particular musical, Show Boat, which was a high-risk enterprise, I am told. It was probably reviving a musical from many years ago. An American musical just was no longer of interest to a contemporary Australian audience and, in addition, they invested a lot of money and lost it trying to establish a Madame Tussauds exhibition in South Australia which equally, I am advised, was not a great—

Mrs Redmond: There were no famous people.

The Hon. J.D. HILL: No, there were no famous people—no dummies around in South Australia. We are in the process of refurbishing the Dunstan Playhouse. There is still a little work that needs to be done on the seats, but the outside area, the foyer area, will also be refurbished. That could not be done, I understand, before the festival so it has been done in stages, and by the end of this year it should be completed and will look pretty good, I think. The difference in the playhouse now is fantastic. I do recall going to see a show there a year or two ago in an official capacity I think at the time and there was a gentleman, admittedly perhaps in the overweight or obese category, who went to sit down and fell through the seat onto the floor in the middle of a performance. So there was clearly a problem with those seats.

Mrs Redmond interjecting:

The Hon. J.D. HILL: No. I think the arrangements that the Festival Centre Trust has entered into with the government are very sensible, and I pay particular tribute to Barry Fitzpatrick, the new chair of the trust, who obviously has a very strong background in financial management and banking. He was able to convince the Treasurer as to the merits of making these arguments. It was really a debt on the books of the Festival Centre which was a dead weight around its neck. It was never going to be paid back, but there were repayment schedules in relation to the interest which were becoming more and more burdensome, and that has all been put to one side. There was no good benefit in the members of the Festival Centre Trust worrying about those issues, because it was really an administrative or accounting procedure. So, all that has been taken away. They have been given extra money to run programming so that they can get on with the job—and what they want to do, under the leadership of Douglas Gautier, is to be an arts-focused organisation, not just a hall for hire. They want to put on shows and create art in our community, and that is certainly the role that the government wants them to play.

In relation to the two questions that were asked, the responsibility for maintaining the building will now rest with Arts SA; that is, with the government of South Australia. However, I put it to the house that, whether it is held and owned by the trust or Arts SA, the responsibility is still with the government of South Australia. The decisions about how much money we put into maintenance of that building compared to other capital projects that we may have from time to time will be made during the normal budget process and, of course, they will have to compete.

However, in terms of day-to-day matters, currently I am advised that the AFCT spends about $3.62 million per annum operating and maintaining the centre and Her Majesty's Theatre. Of that amount, about $1.14 million each year will in future be paid to the AFCT to recognise the maintenance services it will provide on behalf of the minister (that is the memorandum of understanding to which the member referred). The remaining funds—about $2.1 million—will also be provided to the AFCT to cover costs incurred as occupier and operator of the building, such as electricity and cleaning, and about $378,000 will be retained by Arts SA to cover landlord's expenses—for example, insurance—and to fund work related to management of the assets.

As occupier of the building, the AFCT will be charged a market value rental fee. While this will appear on the trust's financial statements as an expense, with an equivalent increase in the government's grant, this will in fact be a book entry to recognise the revenue and expenditure. No additional cash will be provided to the AFCT.

So, it is really a straightening up of financial arrangements or procedures that have been a burden on the Festival Centre, with no public benefit to anyone: it is straightening out those arrangements. From another point of view, any money that we spend on capital now will be able to be depreciated; it will be a capital expense. In the past, I think it was considered an operating expense. So, it just changes the way that money is spent. They will be competing for money out of a different bucket, which sometimes is a little easier.

The other matter raised was the government's policy about debts owed by statutory authorities to government. With respect to debts owed by statutory authorities to others, it is clear they are debts owed to others, but I am not too sure that there is a general government policy with respect to statutory authorities. I will have to ask the Treasurer. If I can obtain some advice in relation to that before this bill goes to the other place, I will certainly attempt to do so. However, my understanding (and this is not the Treasury position) is that it is examined on a case-by-case basis and, in this particular case, it just made no sense at all.

In relation to the health services, we are now in the process of getting rid of the statutory authorities and the boards, and so on, and they will all be brought into the health service. So, whatever debts individual entities have, they are debts that I guess the government has to deal with. In the past, particularly in health, as members would know, when health services have spent more on the provision of services than they were given in the budget those debts have been allowed to accumulate.

Once again, it is a book entry, it is a way of accounting for that amount, and from time to time those debts have been written off. I think that was a procedure that occurred under the former government, and I understand that it still occurs. There are ways in which, for whatever reason, treasuries deal with these matters to make their books balance and appropriately account for the matters that have to be accounted for, according to the appropriate accounting standards. I am not an expert on that, and I will certainly try to obtain advice.

Mrs Redmond interjecting:

The Hon. J.D. HILL: Absolutely, yes; that is right. I congratulate the member for Heysen on being appointed as shadow minister for the arts. I was never shadow minister, but I certainly enjoy being Minister Assisting the Premier in the Arts. I hope that she has a very long tenure in the position of shadow minister for the arts, and I look forward to seeing her around the place.

In conclusion, can I thank the officers of Arts SA and the Festival Theatre, who have worked on this arrangement. It looks like a simple piece of legislation, but behind it is an enormous amount of work, because part of the process of transferring items is to work out what items we own that ought to be transferred. That was a very thorough, demanding, time-consuming and lengthy piece of work, which took many officers a lot of time. I would like to thank those officers and, in particular, Janet Worth and Helen Richardson from Arts SA and, of course, Greg Mackie, and also parliamentary counsel, Richard Dennis.

Bill read a second time and taken through its remaining stages.

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