Ernst & Young (ABN 75 288 172 749)

GPO Box 1271

Adelaide SA 5001

Attention: Mr Tony Smith

Managing Partner
South Australia

18 September 2006

Dear Mr Smith

Re: Contract for consultancy services to undertake a comprehensive review of the

Adelaide Festival Centres operating model.

I am writing to offer your company Ernst & Young (ABN 75 288 172 749) (the Consultant), a
consultancy with the Department of the Premier and Cabinet Arts SA (Arts SA) on the following
terms and conditions.

1. Services and deliverables

The Consultant must provide consultancy services to undertake a comprehensive review of

the Adelaide Festival Centres (The Centre) operating model, within the context of the role
of the Centre in the broader arts marketplace.
The specific objectives of this review, as outlined in the revised list of objectives as provided
to the Consultant on 24 August 2006, will be to:
revisit the core purpose of The Centre, within a policy objective of re-positioning the
Centre as a key driver and initiator in performing arts on a State and national basis, as
well as the home of the arts in South Australia, as currently set out in the incoming
CEOs new directions policy (May 2006)
determine the effectiveness of the current business model including an analysis of the
current marketplace with regard to competitive neutrality factors and Trade Practices Act
criteria
examine the impact of The Centres charging regime on overall subsidy costs to the arts
portfolio, and assess the incentives and disincentives that apply to SA-subsidised and
community-based arts organisations in hiring The Centres performance spaces
review the effectiveness of The Centres internal business disciplines and practices
identify barriers to attracting audiences and opening up new market sectors
identify possible efficiencies that would be achieved by The Centre operating as a
business services hub, providing aggregated back end business services (eg accounts /
human resources / payroll / occupational health, safety and welfare / marketing / box
office) to key SA performing arts companies, such as the State Opera of South Australia,
the State Theatre Company and Windmill Performing Arts.

The Consultant may retain its working papers and one copy of information received from or
provided to Arts SA, subject to its confidentiality obligations under this contract.

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 Arts SA acknowledges and agrees that the deliverables provided to it by the Consultant may
be relied upon by Arts SA for the purpose set out in this contract. The Consultant will not be
liable to any other party for any loss or liability that the other party may suffer or incur arising
from, or relating to, or in any connected with, the contents of the deliverables provided to
Arts SA by the Consultant, the provision of those deliverables to the other party, or the
reliance upon those deliverables by the other party.

2. Term

The Consultant must commence the services on 25 September 2006 and must complete
them and deliver the deliverables by 17 November 2006 to Mr Greg Mackie, Executive
Director, Arts SA, GPO Box 2308, Adelaide SA 5001.

3. Consultants personnel

The services must be carried out by Mr Justin Bokor, Senior Manager; Mr Paul Dosanjh,
Manager; Ms Sue Nattrass, Arts Consultant; Mr Terry Evans, Special Counsel; Mr John
Morgan, Senior Manager; Mr Tom Farrant, Consultant; Mr Tony Smith, Partner; and Mr Colin
Dunsford, Partner.

4. Premises and facilities

The services are to be carried out principally at the Consultants premises, and the
Consultant must provide all necessary facilities for carrying out the work. Some visits to Arts
SAs premises and to the Centre will be necessary for the purpose of consultation, reporting
and taking instructions.

5. Project manager

The project manager for the Department is Ms Alexandra Reid. The Consultant must report
to and take instructions from the project manager. The project manager does not have the
authority to extend or amend the contract.

6. Copyright

Copyright in the deliverable and any interim or incidental documents provided to Arts SA in
the course of performing the services, is owned by the Crown in right of the State of South
Australia.
Arts SA grants to the Consultant a non-exclusive, irrevocable, royalty free licence to use,
copy, modify and exploit those deliverables so long as doing so would not disclose any of
Arts SAs or the Centres confidential information.
The Consultant (and its vendors and subcontractors) retain:
(a) as confidential information the processes, ideas, concepts and techniques
developed in the course of providing the services; and
(b) all copyright and other intellectual property rights in:
a. data, designs, models, methodologies, analysis frameworks, leading practices,
specifications and other elements of the deliverables which were owned or
developed by the Consultant (or its vendors or sub-contractors) before, or
independently from, the services; and
b. all tools (and any enhancement, improvement or other derivative of those tools)
including but not limited to software and working papers (whether or not these are
supplied to Arts SA) used by the Consultant (or its subcontractors) in performing
the services.

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 All working papers prepared by the Consultant in connection with the services will remain the
property of the Consultant.

7. Confidentiality

The parties agree to take reasonable steps to maintain (within their respective organisations)
the confidentiality of any proprietary or confidential information of the other.
The Consultant may disclose information:
(a) which it is legally required to disclose
(b) to its partners, officers and employees to the extent necessary to enable it to provide the
services; or
(c) to its legal advisers for the purposes of obtaining advice in relation to its rights or
obligations in respect of this contract or any matter arising from this contract.

8. Fee and payment

Arts SA must ensure that The Centre pays the Consultant $122,604 including GST (fixed
fee) on completion of the services.
This includes the out-of-pocket expenses listed in the Consultants amended tender
response dated 25 August 2006. Any further out-of-pocket expenses must be agreed in
writing between the parties before they are incurred.
Subject to the requirements of the GST set out below, the Consultant must invoice The
Centre for services provided, and correct invoices must be paid by the The Centre within 14
days.
Invoices must be addressed to the Adelaide Festival Centre Trust, GPO Box 1269, Adelaide,
SA 5001 and marked to the attention of Mr Geoff Bishop, Deputy CEO.

9. Goods and Services Tax

On and from 1 July 2000, if a supply of services under this contract is a taxable supply within
the meaning of the A New Tax System (Goods and Services) Act 1999 (ANTS GST Act),
then:

The price must be adjusted by deducting from the price any cost reductions enjoyed by
the supplier as a result of the reduction or elimination of other taxes associated with the
introduction of GST; and multiplying the resulting figure by one hundred and ten percent
(110%); and

Any invoice for payment under this contract must be a tax invoice within the meaning
defined in the ANTS GST Act; and

The recipient is not obliged to make any payment under this contract unless the supplier
has provided a tax invoice in respect of that payment.

10. Obligations

Arts SA and the Adelaide Festival Centre Trust must instruct the Consultant fully and, in a
timely fashion, give the Consultant each of the following (as they are ordinarily reasonably
required to perform the services):

accurate information which can be relied upon without independent verification;

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 access to files, records and information technology systems, to premises and to
people (whether management or staff) with relevant skills and experiences;

all resources that are reasonably necessary to ensure timely approval, development
and sign-off of all project plans, specifications, accounts and deliverables.

11. Delays

The Consultant will not be liable for any failure or delay in performing the services if that
failure or delay arises from anything beyond its control, including the untimely performance
by Arts SA or the Centre of their obligations, in which case, the Consultant is entitled to
review its fees and, if the delay is substantial, terminate this agreement.

12. Non-performance

If the deliverable, or any reasonable interim targets required by the project manager are not
produced to a satisfactory standard, or is not produced on time (or in the case of interim
targets are not produced within a reasonable time having regard to the time set for
completion), then Arts SA may withhold payment until the deliverable is produced to a
satisfactory standard, or Arts SA may terminate the contract. If Arts SA terminates the
contract it must pay only a proportion of the fee commensurate with the part (if any) of the
deliverable produced by the Consultant.

13. Dispute resolution

If there is a dispute relating to the services or this contract, the parties must submit to
mediation before having recourse to any other dispute resolution process. Written notice of
the dispute will be given for it to be submitted to mediation before a mediator chosen by the
parties or, where the parties cannot agree, by the Australian Commercial Disputes Centre
(ACDC). The parties will use their best endeavours to settle the dispute promptly. The
mediation will be conducted in accordance with the ACDC Mediation Guidelines to the extent
that they do not conflict with the provisions of this clause. If the dispute is not resolved within
60 days after notice of the dispute, the mediation will terminate unless the parties otherwise
agree.

14. No employment relationship

There is no contract of employment between Arts SA and the Consultant or the Consultants
personnel.

15. Governing law and jurisdiction

All aspects of the services and this contract are governed by, and construed in accordance
with, the laws of the state of South Australia. The parties irrevocably submit to the exclusive
jurisdiction of the Courts of that state.

16. Severance

If any provision of this contract is found to be illegal, unenforceable or otherwise invalid, this
contract will remain in full force and effect to the extent permissible, and that provision will be
deemed to be deleted and substituted by a valid one which in its economic effect comes so

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 close to the invalid provision that it can be reasonably assumed that the parties would have
contracted also with this new provision.

17. Disclosure of government contracts

The Consultant agrees to disclosure of this contract in accordance with the Department of
the Premier and Cabinet Circular 27 as amended from time to time (a copy of which is
available from the Governments website at
http://www.premcab.sa.gov.au/dpc/publications_circulars.html.

Nothing in this clause derogates from:

(a) the consultants obligations under any other provision of this contract; or
(b) the provisions of the Freedom of Information Act 1991.

18. Powers of the Auditor General

Nothing in this contract derogates from the powers of the Auditor-General under the Public
Finance and Audit Act 1987 (South Australia).

19. Insurance

The Consultant must maintain insurance cover of $10M public/products liability and $5M
professional indemnity. Certificates of currency (Chubb Insurance Company of Australia,
policy number 93389983 and Gloucester Insurance Ltd, policy number EY 100/2006) for
acceptable insurance policies have been sighted.

20. SA Government Contracting Policy

The Consultant acknowledges that the South Australian Government has a policy of
ensuring that all persons (employees) who do work in South Australia under or in
connection with any contract with an agency of the South Australian Government, whether
employed by a consultant or any subcontractor, are employed on terms and conditions no
less favourable than those contained in:

the State Award which applied or was capable of application to work of the nature the
consultant or subcontractor engaged the employees to perform, as in force at 26
March 2006, as that State Award is varied from time to time by an Industrial Tribunal;
or

if no State Award applied to the employment of such persons at 26 March 2006, the
relevant State industrial instrument as in force at that date and capable of application
to work of the nature the consultant or subcontractor engaged the employees to
perform, as that instrument is varied from time to time by an Industrial Tribunal; or

if the employees of the consultant or subcontractor have at any time entered a collective
agreement, howsoever named, capable of application to work of the nature the
consultant or subcontractor engaged the employees to perform that provides for wages
and conditions of employment more favourable than a State Award, that collective
agreement,

while such persons are engaged in duties directly in connection with the performance of the
contract (the policy).

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 The Consultant must ensure that all employment policies, contracts of employment and
subcontract arrangements in connection with this contract, comply with the policy.

The Consultant must not engage a subcontractor to assist in the performance of its
obligations under this contract, without the prior written approval of the Department of
Treasury and Finance, which approval may be given conditionally.

The Consultant must on the request of the Department of Treasury and Finance provide
access to:

subcontract conditions of contract;

records of payments to employees who have done work under or in connection with
this contract;
records of payments by a subcontractor to employees who have done work under or
in connection with this contract.

The Department of Treasury and Finance must take all reasonable steps to preserve the
confidentiality of information received pursuant to this clause that is of a personal nature
relating to any employee.

The Consultant must, within 7 days of receipt of a written request from the Department of
Treasury and Finance, provide the Department of Treasury and Finance with a compliance
certificate (in a form approved by the Department of Treasury and Finance) certifying that the
Consultant has complied with its obligations under this clause.

For the purposes of this clause:

State Award means an award that:

(a) concerns the relationship between an employer and the employer's employees;
(b) provides for wages and conditions of employment for employees; and
(c) is approved or varied by the Industrial Relations Commission of South Australia.

Industrial Tribunal means:

(a) the Industrial Relations Commission of South Australia;

(b) the Industrial Court of South Australia; or
(c) any court that determines an appeal of a decision of the tribunals in (a) and (b).

To the extent that any provision of this clause is illegal, void or unenforceable, then the effect
of this clause shall so far as possible, be limited and read down to the extent necessary for it
to be legal, valid and enforceable.

The Consultant releases the Department of Treasury and Finance from any claim arising out
of or in connection with the requirements of this clause.

21. Variation and survival

This contract may be varied by written agreement of the parties. Provisions of this contract
that are capable of having effect will survive its termination.

22. Assignment

This contract may not be assigned without the prior written consent of each party, which
consent may not be unreasonably withheld.

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If you wish to accept the offer of this contract, please sign the duplicate letter in the space provided
and return it to Ms Alexandra Reid, Director Strategy, Policy & Initiatives, Arts SA, GPO Box 2308,
Adelaide SA 5001.

SIGNED for and on behalf of Ernst & Young (ABN 75 288 172 749)

..

Yours faithfully

Greg Mackie OAM

Executive Director

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