RENT REVIEW & ADJUSTED CPI

As you are no doubt aware the Goods and Services Tax ("GST") introduced pursuant to the New Tax System (Goods and Services Tax) Act 1999 ("GST Act") has had a direct impact on the Consumer Price Index ("CPI").

The CPI continues to measure final transaction prices, inclusive of indirect taxes and therefore reflects the net effect of the tax changes flowing through the economy as a result of the GST Act.

However, the Australian Competition and Consumer Commission ("ACCC") has repeatedly warned owners of land and buildings that when adjusting rentals they should not rely on CPI figures that have been inflated as a result of the introduction of the GST so as to achieve rentals that are greater than those that would have been achieved if the impact of any inflation spike induced by GST was ignored.

Independently published CPI figures for the June 2001 quarter which exclude the GST effect on inflation were released on the 27^th day of July 2001.

These figures show that whilst there was a percentage change of 5.9% in the CPI All Groups Index number for Adelaide for the year ended 30^th June 2001 the GST adjusted percentage change in the CPI for the same period for Adelaide was 3.1%.

These figures should be used by all owners of property when reviewing rental in accordance with increases / decreases in inflation.

In an effort to assist property owners to comply with ACCC guidelines data which excludes the effect of GST in the CPI will be independently published until June 2002.