Department of State Development, $674,320,000

Administered Items for the Department of State Development, $7,629,000

Minister:

Hon. J.W. Weatherill, Premier.

Departmental Advisers:

Dr D. Russell, Chief Executive, Department of State Development.

Ms J. Parkinson, Executive Director, Office of the Economic Development Board.

Mr R. Janssan, Executive Director, Strategy and Business Services, Department of State Development.

The CHAIR: I declare the proposed payments open for examination and refer members to Agency Statements, Volume 3, and ask for an introduction of the advisers.

The Hon. J.W. WEATHERILL: To my right is Dr Don Russell, Chief Executive of the Department of State Development. To my left is Julianne Parkinson who is the Executive Director of the Office of the Economic Development Board, and Rick Janssan, head of corporate services for the Department of State Development.

The CHAIR: Do you have a question, leader, that you were going to ask me before the introductions?

Mr MARSHALL: No, just that the reference is actually Budget Paper 4, Volume 4.

The CHAIR: I am only reading, you see. I am just a reader. Let me just change that 3 to a 4.

Mr MARSHALL: It is Budget Paper 4, Volume 4, page 62 onwards.

The CHAIR: Page 62. Is that going to be your first question?

Mr MARSHALL: Yes, thank you. In relation to the additional $1 million in expenditure for the expanded role of the office, can the Premier explain how the office's role has been expanded, what new functions are being undertaken and what additional activities have been performed?

The Hon. J.W. WEATHERILL: Sorry, which line are we talking about?

Mr MARSHALL: We are talking about page 62. If you are looking at the first dot point, for example, in that last paragraph, 'The $1.8 million increase in expenses is primarily due to: additional expenditure for the expanded role of the Office of the Economic Development Board ($1.0 million).'

The Hon. J.W. WEATHERILL: The role of the EDB has substantially expanded. Fundamentally it now has a much closer connection with the Economic Development Cabinet Committee, so the chair and deputy chair sit on that committee, so they are incorporated in a sense into the decision-making of government in that way, so that has been the first significant expansion. A lot has flowed from that. There is the new investment attraction agency which has been designed through the work of a subcommittee of the Economic Development Board.

There has been the work of a further subcommittee on the Unlocking Capital for Jobs fund which is another discrete component of our economic priorities. There are the references that occurred in particular industry areas such as the work in promoting the Future Submarines project, and a very substantial element of work has been undertaken in that regard. There is also the expanded work in relation to the promotion of Brand SA which has also been led by members of the Economic Development Board.

There has also been specific references that have been undertaken on the Economic Development Board concerning closer collaboration between the universities. So essentially, unsurprisingly, given the very substantial challenges facing the South Australian economy, the work of the EDB has become more significant, more important and we have sought to expand its role in a number of significant respects, and these are just some of the areas that we have pushed into.

Mr MARSHALL: Premier, given your answer and the increasing need for the Economic Development Board, can you explain why there has been a more than 20 per cent cut to the funding for the EDB for this current financial year?

The CHAIR: Is that still on page 62?

Mr MARSHALL: Yes, it is quite clear there: $3.986 million last financial year down to $3.111 million this financial year.

The Hon. J.W. WEATHERILL: I think that is just the shifting of a function that had previously been undertaken under the auspices of the Economic Development Board, so I think—

Mr MARSHALL: So what, of the $870-odd thousand—

The Hon. J.W. WEATHERILL: I have not finished answering the question. There has also been some one-off expenditure that was provided in the previous year which is not present in the current year. For instance, funding was provided specifically in respect of the Future Submarines project which was an intergovernmental transfer which occurred in last year's funding and is not present here in this year's funding.

Mr MARSHALL: It also shows that there was a cut in staff of 1.2 FTEs. What positions have been cut and what functions will be diminished?

The Hon. J.W. WEATHERILL: I think it is not a substantial change. It is more the way in which corporate overheads have been allocated across various elements of the Department of State Development agency. There is a decrease of 1.2 full-time equivalents which primarily relates to corporate overhead allocation.

Mr MARSHALL: You mentioned earlier that one of the programs that the EDB is working on is increasing the usage of the new state brand. Can the Premier outline to the committee how many of the 146,000 registered businesses in South Australia are currently using the new South Australian logo?

The Hon. J.W. WEATHERILL: I do not have the precise number but it has been a very substantial increase, which we are seeking to continue to drive. The brand has been very successfully promoted and taken up and continues to grow every month. I will bring back the precise numbers.

Mr MARSHALL: I note that the campaign to increase the numbers using the South Australian brand is currently being advertised quite extensively online. Can you outline to the committee how much is being spent on this campaign, how many firms are currently signed up to it and what the target is? Does the government have a target for the number of companies that are going to be using the brand?

The Hon. J.W. WEATHERILL: I will bring back an answer to those questions, but there is a two-year funding agreement with Brand SA which was completed on 30 June. The value of that agreement is $2.984 million for two years.

Mr MARSHALL: What is that, sorry?

The Hon. J.W. WEATHERILL: $2.984 million, over two years. The funding was provided from a range of government agencies and that includes milestone payments. I will bring back the details about that.

Mr MARSHALL: Sorry, I am just missing you there. Are you suggesting that people are paying to use the logo?

The Hon. J.W. WEATHERILL: No, this is what we are funding Brand SA. Brand SA was always funded. It had different iterations. Obviously, there was SA Great which preceded it and then Advantage SA. There was always a funding arrangement between the state and various organisations promoting the state. It has morphed into Brand SA and is now part of a funding agreement. But, no, people only have a certain number of obligations they need to commit themselves to and the brand is essentially free.

Mr MARSHALL: Does that almost $3 million over a two-year period appear in the Office of the Economic Development Board accounts that we are currently looking at, or in another agency?

The Hon. J.W. WEATHERILL: No, it would be embedded in a range of agencies because it is funding from DPC, State Development, Tourism Commission and Department of Primary Industries and Regions.

Mr MARSHALL: In round terms, we are spending about $1.5 million a year on promoting that logo. Is that the gist of it?

The Hon. J.W. WEATHERILL: No, we are spending $1.5 million a year in our agreement with Brand SA, which is about a whole range of things beyond just the logo. It is about promoting South Australia.

Mr MARSHALL: Who is Brand SA?

The Hon. J.W. WEATHERILL: Formerly Advantage SA, formerly SA Great. It is a non-government organisation and there is an independent board which includes some government representatives. Previously, it was supervised by Business SA but now has its own independent board and its own governance arrangements.

Mr MARSHALL: So the total government spent with Brand SA is about $1.5 million a year. Is that the subject of a contract?

The Hon. J.W. WEATHERILL: Yes.

Mr MARSHALL: What is the term of the contract?

The Hon. J.W. WEATHERILL: Two years. It is a two-year funding agreement.

Mr MARSHALL: When does that conclude?

The Hon. J.W. WEATHERILL: In June 2017.

Mr MARSHALL: So it is just a new contract: there is a brand-new contract?

The Hon. J.W. WEATHERILL: What I have in front of me is that a two-year planning agreement with Brand SA was completed on 30 June 2015, but I might take on notice when it expires. I am not sure to what extent that covers a period which began before the formal agreement was entered into. So, it may well be that—

Mr MARSHALL: You have completely lost me.

The Hon. J.W. WEATHERILL: I think the formal agreement was signed on 30 June. It is a two-year agreement. I just do not know when it started, so it may well be it spanned that period of time, but I will have to bring—

Mr MARSHALL: So, it is not a two-year agreement that concluded on 30 June 2015.

The Hon. J.W. WEATHERILL: That is the question I do not know the answer to which I will take on notice.

Mr MARSHALL: But there is a continuing agreement in place, and it is in the order of magnitude of $1½ million a year.

The Hon. J.W. WEATHERILL: Yes.

Mr MARSHALL: What do we get for that?

The Hon. J.W. WEATHERILL: We get the promotion of the state. Remember, there has always been a certain amount of contribution to the promotion of the state through a range of mechanisms; Brand SA is the latest, I suppose, coming together of a whole range of brand promotion activities under the heading of Brand SA. What we get is an increasing campaign to get more and more companies to sign up and use the brand, and we get the supervision, if you like, of that whole process and a series of networking events that occur between Brand SA and a range of businesses that come together and seek to promote South Australia both interstate and overseas.

Mr MARSHALL: Which agency manages that contract for Brand SA?

The Hon. J.W. WEATHERILL: The Department of State Development.

Mr MARSHALL: I would like to clarify something. Have they transferred the Advanced Manufacturing Council in or out of the EDB budget? It was not clear to me, even though I read it several times.

The Hon. J.W. WEATHERILL: It says here 'the transfer of the former Advanced Manufacturing Council budget from the industry and innovation program'.

Mr MARSHALL: So it is in?

The Hon. J.W. WEATHERILL: Can I go back to clarify the previous answer I gave. The two-year funding agreement with Brand SA, that agreement actually concluded. I think I suggested that the agreement was completed; it is more accurate to say that the actual funding agreement concluded, and there has been a further year's funding in that same order of magnitude—$1.5 million—which is going for a further year until June 2016.

Mr MARSHALL: And the government plans to evaluate whether we are getting value for money before looking at a further term of that agreement?

The Hon. J.W. WEATHERILL: Well, we are continuing to evaluate the way in which Brand SA works, and that is an ongoing process.

Mr MARSHALL: But was is envisaged that there would be a two-year contract that was scaled down to one year?

The Hon. J.W. WEATHERILL: What has really happened is that this is an evolving change. Essentially, Brand SA was an initiative of the government. We already had Advantage SA. We have essentially blended those two programs together so that we did not have a plethora of organisations out there promoting the state. We are reviewing, in a sense, the effectiveness of the bringing together of those organisations, and so we established just a 12-month funding agreement while that process of review, if you like, is underway.

Mr MARSHALL: Are we getting value for money?

The Hon. J.W. WEATHERILL: I think we are. I have been incredibly pleased with the way in which Brand SA has been taken up. I think it is now receiving a level of awareness and use which I think exceeds probably what we expected when we began. We knew that there would be some scepticism about the new brand for South Australia.

We are surprised about how quickly it has been taken up unused on a voluntary basis. It is becoming a little self-perpetuating now: some people are using it is almost a de facto made in South Australia brand. We have really positive feedback about it when we use it in interstate and international events. It is a powerful idea to use the icon of Australia.

It is a better known image than any individual image of any of the states, and so to leverage off Australia and take South Australia into that position is, I think, clever and has been recognised as such. The use of red is also pretty clever. In the basic principles of marketing, make it big or make it red. We own red as a colour in terms of the—

Mr MARSHALL: I prefer blue myself.

The Hon. J.W. WEATHERILL: That was one of the pieces of the analysis. If you actually look at all the states and which colours they own in terms of iconography, South Australia largely owns red.

Mr MARSHALL: Well, red is the international colour for debt and deficit, so I think you are probably right. I agree with you on that point.

The Hon. J.W. WEATHERILL: And in China—

Members interjecting:

The CHAIR: Order, everybody!

The Hon. J.W. WEATHERILL: In China—

Mr MARSHALL: Distress! International distress.

The Hon. J.W. WEATHERILL: No, in China it is regarded as a very propitious colour.

Mr MARSHALL: Mayday! Mayday!

The Hon. J.W. WEATHERILL: The fact that we—

The CHAIR: No, no. In China, it is very lucky.

The Hon. J.W. WEATHERILL: The fact that we own it is a very good thing.

Mr MARSHALL: Nevertheless, Premier, back to the question that was before you which was about the Advanced Manufacturing Council. I think you have indicated to the committee that the Economic Development Board has taken on the work of the Advanced Manufacturing Council which has some concern for us because, although we have already outlined that there is an $870,000 decrease in the money that is provided, you are taking on $700,000 worth of additional work, unless you plan to diminish that work of the Advanced Manufacturing Council which is obviously a $1.5 million turnaround in just a 12-month period.

The Hon. J.W. WEATHERILL: I will just take you through what is happening with the Advanced Manufacturing Council. The budget for 14-15 was originally $670,000. The AMC budget of $507,000 was transferred to the EDB in September 2014 after $163,000 was offered up as savings as part of the whole-of-government efficiency effort.

Mr MARSHALL: The what efficiency?

The Hon. J.W. WEATHERILL: The initial budget for the EDB for 2014-15 was $2.986 million. The budget for the EDB in 2014-15 with the AMC addition was $3.493 million, effectively $2.986 million plus the $507,000. So, the budget for the EDB and AMC combined for 2015-16 is $2,910,920 of which the EDB is $2,403,920 and AMC is $507,000.

Mr MARSHALL: What was that last figure?

The Hon. J.W. WEATHERILL: $507,000.

Mr MARSHALL: So that is quite a significant decrease after the transfer. What particular—

The Hon. J.W. WEATHERILL: $163,000.

Mr MARSHALL: So what is going to be cut from the AMC's work?

The Hon. J.W. WEATHERILL: They would be accommodated because of the reductions that occurred to board fees, so the AMC was one of the bodies that was slated for removal when we rationalised boards and committees, so we were able to make the savings without disturbing any of the essential functions given that in a sense the AMC has been morphed into the EDB because some of the key players are obviously represented on that body and it is a central part of the EDB's work to promote advanced manufacturing.

Mr MARSHALL: Is there still an Advanced Manufacturing Council which meets and, if so, how often does it meet?

The Hon. J.W. WEATHERILL: It was abolished through the boards and committees process but it does represent an important part of the sub-committee work of the EDB.

Mr MARSHALL: Does the Advanced Manufacturing Ministerial Taskforce still exist?

The Hon. J.W. WEATHERILL: I might just take that question on notice.

Mr MARSHALL: When you are looking at that question on notice, can you perhaps outline to the committee who were the members of the Advanced Manufacturing Ministerial Taskforce, how often they met and when they were essentially formed and then ceased to operate?

The Hon. J.W. WEATHERILL: Yes.

Mr MARSHALL: The Economic Development Board itself, what is the total remuneration for that board?

The Hon. J.W. WEATHERILL: You mean board members?

Mr MARSHALL: Board members, correct.

The Hon. J.W. WEATHERILL: I will take that on notice.

Mr MARSHALL: Are board members paid for attendance on that board, or is it just an annual fee?

The Hon. J.W. WEATHERILL: It is an annual fee.

Mr MARSHALL: How often did the board meet last financial year?

The Hon. J.W. WEATHERILL: The board as a board meets quarterly and then there are some special meetings in addition to that, but a lot of the work of the board is actually carried out through subcommittees, so we will tally those up and bring back an answer.

Mr MARSHALL: Under the highlights outlined on page 63 it talks about the food park initiative. The government has already gone into quite a lot of detail on that in the parliament so we do not need an update on that, but I am interested to know, under the highlights where it states 'site selection process', where the government is in terms of the site selection for that particular food park.

The Hon. J.W. WEATHERILL: I am advised that there is a panel that has been formed for the purpose of assessing the potential sites for the food park. I understand there are three short-listed sites. That process is still underway and there will be further meetings about that held shortly. A final decision has not been taken but we expect it to be made soon.

Mr MARSHALL: Who is on that site selection committee?

The Hon. J.W. WEATHERILL: I think it is known as the food park site selection panel. It is chaired by Mr Terry Burgess, who is a member of the EDB, and there are relevant government agencies and some private sector representatives on that panel.

Mr MARSHALL: Should we be concerned when we read dot point 11 on page 63, which states:

Provide advice to government on the proposed Food Park project…should the project proceed.

How committed is the government to the project, with that wording?

The Hon. J.W. WEATHERILL: Are we committed to the project? It is not one that has been concluded and to some degree it is out of our hands. We are promoting it but it involves considerations that are not directly capable of being influenced by government. For instance, we are looking at choosing sites which the government does not necessarily own but is seeking to promote and may support in a range of ways. So, these things are not directly within our control.

Mr MARSHALL: Finally on the EDB, before I pass over to my colleagues, the Unlocking Capital for Jobs program, this was a program that I think the Premier was talking about in the lead-up to the state election; is that correct?

The Hon. J.W. WEATHERILL: Yes.

Mr MARSHALL: And the pilot program is a target for the coming financial year. What has been the delay in establishing this program that you have been talking about since 2013?

The Hon. J.W. WEATHERILL: It has not been delayed. It is up and running and the first project has taken advantage of it, which has led to a very important first result. Australian Fashion Labels has been able to secure a commitment from the fund which has permitted them to relocate and expand their operations on North Terrace, which is a very beneficial outcome for them, for jobs and for our ambitions to open up North Terrace as a lively precinct. One of the other objectives, of course, was to make sure that all those old buildings along North Terrace had been activated, and this advances that objective as well.

Mr SPEIRS: Just one question from me on the same reference, page 62. Premier, for a number of years, the Economic Development Board was led by a director. I note that Ms Parkinson's title is executive director. Why the change, and is there any additional cost to providing the expanded executive role?

The Hon. J.W. WEATHERILL: The role has been upgraded from director to executive director, which is consistent with the upgrading of the role of the relationship between the EDB and the government through the chair and the deputy chair also sitting on the economic development cabinet committee.

Mr SPEIRS: And the additional cost?

The Hon. J.W. WEATHERILL: I will bring back an answer to you. There is an additional remuneration which is attracted to the executive director level as opposed to the director level. We will bring back the difference between those two costs.

Mr MARSHALL: I propose now to move to the Department of the Premier and Cabinet and, in particular, Agency Statements, Budget Paper 4, Volume 3.

The CHAIR: Before we get to that, can I just ask if you have any questions on the State Governor's Establishment?

Mr MARSHALL: No, I have already made that clear.

The CHAIR: That was dispensed with, so I need to close that line, just as a technicality to keep everybody happy. We are going to close the line of State Governor's Establishment, which is $3,531,000, as there are no further questions. We are going to also close, as there are no further questions, the line of Department of State Development and the Administered Items for the Department of State Development.