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House of Assembly - Fifty-Second Parliament, First Session (52-1)
2010-11-25 Daily Xml
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UNIVERSITY OF ADELAIDE (TRUST PROPERTY) AMENDMENT BILL

Introduction and First Reading

Ms CHAPMAN (Bragg) (10:32): Obtained leave and introduced a bill for an act to amend the University of Adelaide Act 1971. Read a first time.

Second Reading

Ms CHAPMAN (Bragg) (10:33): I move:

That this bill be now read a second time.

I move the University of Adelaide (Trust Property) Amendment Bill with a heavy heart. However, it is supported by the Liberal opposition and I am pleased to have its support. It is a bill to amend the University of Adelaide Act 1971. Members will be aware that the University of Adelaide was established by an act of this parliament, the first in South Australia and the third in Australia. It has a proud and respected history as an institution in this state.

In 2003, the structure and independence of the governance of our universities was debated as a result of introduced bills for our three public universities in South Australia by then minister Lomax-Smith and supported by the opposition. An essential element of that bill was to provide greater autonomy in the handling of the university's own affairs, including its financial affairs and, in particular, the capacity to be able to buy, sell, lease, encumber or deal with its assets, and particularly real property. However, the reform retained in it an obligation to secure cabinet approval for very substantial property it owned, including the North Terrace precinct, Roseworthy and Waite campuses. It owned a number of other properties that it sought to be able to deal with.

Members will be aware that the people of South Australia have had government grants (both state and federal) and very substantial gifts and bequests from famous South Australian families, including Sir Langdon Bonython (who not only contributed to the Adelaide university but, of course, provided £100,000 to build half of this parliament house). The Mortlock family joined with them, and many others have made very substantial donations for the public benefit of South Australians.

In relation to the assets on the financial accounts of the University of Adelaide, members can read page 1,694 of the Auditor-General's Report which details the financials to 31 December 2009. But we are talking about a public institution which, on its own financial records, has real property and assets of around $0.9 billion. It has a combined income, largely again from both federal and state government, and a turnover of $0.7 billion a year. This bill has the effect of adding any other trust to a list of assets that already need cabinet approval.

Why is this necessary? Essentially, it is to ensure the transparency of decisions made by the council and that the sale of assets given to it by generous benefactors will not be possible without cabinet approval. Why was this not raised in the 2003 debates? In short, this is because the university—and I say 'the university' and not the minister because I think I can safely say this was not at the behest of the then minister—failed to give a full and frank disclosure of what assets this would apply to. It did provide a list and it did not have these very significant assets, which I will refer to, on the list.

Thirdly, how does cabinet approval help in these circumstances? I suggest it is there because it requires a submission to be put by the council of the university to cabinet disclosing the basis of its proposition and, ultimately, that process involving these very important decisions, in a small way via this parliament, lets the sunshine in on disclosure and accountability to the people of South Australia.

I will try to summarise the history of this matter. First, in late 2009 it became public that the University of Adelaide proposed to sell three Mid North rural properties—Martindale Farm, near Mintaro; Mundunney Station, near Jamestown; and Moralana, north of Hawker. The estimated value of these properties (I will not give the full figure) was in the tens of millions of dollars, and they were earmarked for sale. In 1950 John A.T. Mortlock bequeathed Martindale Farm, and John Stanley Davies bequeathed Mundunney and Moralana stations. These were subject to certain trust terms, and it should be noted that there was a minority interest to other beneficiaries, including Prince Alfred College. Substantially, however, these assets were left to the university.

It is also to be noted that not only did the Mortlock family leave a very substantial bequest of property but also annually over many decades there were bequests from John Mortlock, his mother before him and also his widow. Then media outlets covered concerns that were raised in the rural community, particularly in relation to the proposed sales, and elicited comments such as, 'Surely this will be the last nail in the coffin of philanthropy.'

In the 2003 debates these assets were not disclosed for consideration during our deliberations. These issues were raised in the parliament, and I refer members to the contribution I made on 12 May 2010 which sets out the chronology of the events that occurred at that time, which assets were disclosed, and confirmation that these very substantial properties were not disclosed.

Subsequently, at a meeting with the Vice Chancellor, Professor James McWha (a person for whom I have enormously high regard), and also others (including a former Treasury official who now works for the university), it was confirmed to me that the university had investigated my inquiry as to why this had not been disclosed, and it seemed they simply, and I quote, 'forgot' to list these properties. I do not know how you can possibly forget tens of millions of dollars worth of property, but that was their answer.

I then turn to the properties themselves. They have been operating as going concerns over a number of decades, largely in livestock and cropping. They have secured a very significant tenant, BTG Australasia (associated with and wholly owned, in fact, by a British pharmaceutical company), which is part of the Martindale property, and these properties together are operated by a controlled entity of the university, namely, Martindale Holdings Pty Ltd.

Over the last 60 years, these properties have continued to increase in value and have provided a healthy annual income to the university—and, again, I refer members to the financial accounts. The university's response to all this is as follows. I am summarising this and I hope that I do so accurately. First, it is confident that this action on its part will not adversely affect further donations to the university.

The university also says that, in financial terms, it considers these assets to be 'lazy assets' of the university. It also says that it remains committed to agriculture and the education and research thereof. It says, essentially, that times have changed and that there need to be new amalgamated undergraduate agricultural degrees. Part of that process of modernisation has taken place. The university maintains that it is committed to building new infrastructure at the Waite and Roseworthy campuses, including the plant genomics centre and the veterinary school; the latter, of course, being at the Roseworthy campus.

These are impressive new facilities, I might say, and I have no direct criticism of them. The university also says that it has applied the proceeds, in part, to the benefit of students in this discipline for scholarships, research opportunities and the like. I also note a recent announcement by the vice-chancellor that the council has decided that 60 per cent will be applied to capital works and 40 per cent to the aforesaid aspects that I have outlined.

Personally and in writing I have had conveyed to me disquiet about these decisions and considerable distress, particularly with respect to the secrecy in which they have been made. I remind members that this is a public university, these are public assets and this is public money. As a member of this parliament, in the correspondence that I have received from the public, former and current academics, former and current students, family members of benefactors, other members of the parliament and members of the community in general, they have expressed concern which has graduated into outrage.

University decisions have been based on premises which are controversial, and I will list a few of them. There are highlighted concerns (which were announced in the Stock Journal recently) of the decision that is underway to amalgamate SARDI (the research and development aspect of PIRSA) with the Adelaide university. I think this is code for a difficulty for future applied research and development for this industry. I think it indicates the government's abandonment of its commitment to primary industry and its expectation that industry is going to foot the bill for any of this in the future, notwithstanding the fact that nine out of the 10 income earners for South Australia in this state are in primary industries, with the 10th being the car industry.

Secondly, never before has the food industry been under such enormous pressure, obviously because of water restrictions and other issues which are well known to members, such as climate change and the need to be able to operate within modern sustainable principles and those sorts of parameters as part of the education of our future students. In this regard, the University of Western Australia is taking the lead and has bought another rural property to enable it to operate within those principles.

Thirdly, there is a case, which I think is worthy of consideration, that, at a time when the government is selling out of this area, the university should be buying up. One idea that has been put to me is the Flaxley Research Centre, which is about to be flogged off by the government. We want that to be retained. I should say that a number of people want this to be retained, and I think that, in light of the new dynamics here, there is a case for that to be pursued.

There is clearly dispute over whether there is a need for soil classrooms, not just test tube research. The varieties of soil and climate across the state need to be recognised, and it is simply not adequate to rent or lease private land for periods of time, or just to say that everything can be done at Roseworthy, when all the practical and field aspects of agriculture could not possibly be developed in those restricted circumstances.

There is controversy about the fact that these properties have actually been used. From 1965 to 1986, as the Mortlock Experiment Station, the Martindale Farm (contrary to recent publications, which I note even in the recent literature published by the university) has hosted hundreds of projects in this area over a number of decades. Sixthly, I mention that Roseworthy is about to have housing developments, if the 30-year government plan goes ahead, where there will be tens of thousands of people built up all around it. How we are going to continue to operate on that campus for these requirements is beyond me.

The university is already in the middle of a $400 million capital works program for which, I tell members, they have borrowed $200 million from the bank. Clearly, they are expecting to recover from the sale of assets and receive government grants to be able to bankroll this. Some of this development is very meritorious. I am not here to criticise that, but I simply say that to sell off assets for the short-term relief of their financial circumstances will produce a long-term issue. How you can possibly go from an appreciating asset together with a healthy income stream and invest it into depreciating assets (buildings) to prop up the income stream that is necessary for the expenses is beyond me.

I also register recent concerns of the university, which surely must be facing this. Notwithstanding the mantra of the government as to the success of international students, the reality across Australia and across the world is that there is a reduction in international students, which in the case of some universities in Australia will have a devastating impact on the revenue base. I am told that for one it now amounts to about a third of that university's income, and even a 5 or 10 per cent shift could be devastating.

I have had assurances here in the house that this is all running according to Hoyle—the universities in South Australia. Why that is any different from anywhere else in Australia is beyond me. Frankly, if the government were really serious about this, the Premier would be over in Canberra making sure that we turn around what have become oppressive requirements for visa applications for international students and do something useful to try to arrest this problem.

This bill comes at a time when the university has already sold part of the Martindale property and received $13.7 million. They sold to BTG Australasia, which is the pharmaceutical company and the tenant on the property. Moralana has also recently been sold. The balance of Martindale remains, and Mundunney remains, to the best of my knowledge, not yet sold.

With the passage of this bill, I am reliably informed that it will ensure that these assets will be protected and, very importantly, that it will protect future bequests. Whatever the merits of the arguments that have been put by the stakeholders on these issues, they need to be discussed, they need to be disclosed and we need to have a transparent process in which that can occur. I would urge the members to support it.

Can I say in closing that when the Premier ultimately retires, whether he is shoved out of this place or goes of his own volition, I have no doubt that he will be lining up to the universities, probably looking to the University of Adelaide to provide a degree, an honorary doctorate for his service to politics. Let me place on the record that the only thing he will be entitled to receive is a master's degree in synchronised spin.

Debate adjourned on motion of Mrs Geraghty.

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