Department of Treasury and Finance, $55,722,000

Administered Items for the Department of Treasury and Finance, $1,592,537,000

Membership:

Mr van Holst Pellekaan substituted for Ms Chapman.

Mr Knoll substituted for Mr Speirs.

Minister:

Hon. A. Koutsantonis, Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business.

Departmental Advisers:

Mr B. Rowse, Under Treasurer, Department of Treasury and Finance.

Mr D. Reynolds, Deputy Under Treasurer, Department of Treasury and Finance.

Mr A. Blaskett, Executive Director, Public Finance Branch, Department of Treasury and Finance.

Mr S. Hocking, Executive Director, Economic and Commercial, Department of the Premier and Cabinet.

Ms T. Pribanic, Executive Director, Budget Branch, Department of Treasury and Finance.

Mr G. Jackson, Deputy Commissioner of State Taxation, Department of Treasury and Finance.

Mr P. Williams, Director, Financial Services, Department of Treasury and Finance.

The CHAIR: In welcoming everyone this morning, I have a few things to read out as procedural matters. This estimates committee is a relatively informal procedure and, as such, there is no need to stand to ask or answer questions, although members are reminded that normal standing orders for conduct in the chamber remain in place. I understand that the minister and the lead speaker for the opposition have agreed an approximate time for the consideration of proposed payments, which will facilitate a change of departmental advisers. Can the minister and lead speaker for the opposition confirm that today's timetable, previously distributed, is accurate? Are you happy with it, minister?

The Hon. A. KOUTSANTONIS: Yes.

The CHAIR: And leader?

Mr MARSHALL: Yes, thank you.

The CHAIR: Changes to committee membership will be notified as they occur. Members should ensure the Chair is provided with a completed request to be discharged form. If the minister undertakes to supply information at a later date, it must be submitted to the committee secretary by no later than Friday 30 October 2015. This year, estimate committee responses will be published during the 17 November sitting week in corrected daily Hansard over a three-day period.

I propose to allow both the minister and the lead speaker for the opposition to make opening statements of about 10 minutes each should they wish. There will be a flexible approach to giving the call for asking questions based on about three questions per member, alternating each side. Supplementary questions will be the exception rather than the rule. A member who is not part of the committee may ask a question at the discretion of the Chair. Questions must be based on lines of expenditure in the budget papers and must be identifiable and referenced at the beginning of each question. I would also ask members to please wait for the answer to be completed before asking their next question.

Members unable to complete their questions during the proceedings may submit them as questions on notice for inclusion in the House of Assembly Notice Paper. There is no formal facility for the tabling of documents before the committee. However, documents can be supplied to the Chair for distribution to the committee. The incorporation of material into Hansard is permitted on the same basis as applies in the house, that is, that it is purely statistical and limited to one page in length. All questions are to be directed to the minister and not the minister's advisers. The minister may, however, refer questions to advisers for a response.

During the committee's examination, television cameras will be permitted to film from both the northern and southern galleries. I remind anyone in those galleries that the noise can be heard very clearly down here, so we would ask them to please cooperate and keep their movements to a minimum.

I will now proceed to open the lines for examination for the Department of Treasury and Finance. The minister appearing is the Treasurer. I declare the proposed payments open for examination and refer members to the Agency Statements in Volume 4. I would ask the minister if he is going to make an opening statement?

The Hon. A. KOUTSANTONIS: No.

The CHAIR: Is the leader going to make one?

Mr MARSHALL: No, thank you.

The CHAIR: In that case, could we proceed to the introduction of your advisers and then we will move to questions.

The Hon. A. KOUTSANTONIS: Thank you very much, Madam Chair. Appropriately to my right is Mr Andrew Blaskett and Mr Brett Rowse, the Under Treasurer, and inappropriately to my left is David Reynolds.

Mr MARSHALL: That’s your left. You don't even know your left from your right; they're on your left.

The Hon. A. KOUTSANTONIS: I also introduce Stuart Hocking, the Executive Director from DPC; Tammie Pribanic from Budget Branch; and the newly-appointed Commissioner for State Taxation, Mr Graeme Jackson; and Mr Paul Williams, who is Director of Financial Services. I have no opening statement.

The CHAIR: We will move straight to questions then.

Mr MARSHALL: Just one opening question: do you know the difference between left and right?

The Hon. A. KOUTSANTONIS: I do, that is why I am in the Labor Party.

Mr MARSHALL: Why did you just get it mixed up?

The CHAIR: Order!

The Hon. A. KOUTSANTONIS: Why is someone like you in the Liberal Party?

The CHAIR: Order!

Mr MARSHALL: Why did you just get it mixed up?

The CHAIR: Members, I am asking you to come to order.

The Hon. A. KOUTSANTONIS: I don't go to karaoke with the Greens.

The CHAIR: We only have a limited time before us—

The Hon. A. KOUTSANTONIS: What did you sing?

The CHAIR: —and I would ask the leader to reference his first question.

Mr MARSHALL: This is embarrassing.

The Hon. A. KOUTSANTONIS:Never Tear Us Apart, was it?

Mr MARSHALL: It's embarrassing. My first question to the Treasurer is from Budget Paper 3, page 104, and deals with table 7.1. How did Treasury arrive at the employment forecast contained in table 7.1?

The Hon. A. KOUTSANTONIS: First and foremost, it was not the Department of Treasury that came up with that number: it was the Department of the Premier and Cabinet. I will ask Stuart Hocking to elaborate to the committee.

Mr HOCKING: Thank you, Treasurer. These forecasts are prepared taking into account a range of factors, including the national economic situation and the international economic environment. In the federal budget, we have seen that the federal government expects that the national economy will improve over the forward estimates period. We are not factoring in as much improvement in the South Australian economy over the forward estimates period. We have taken into account the fact that there will be job losses in the auto sector over coming years and we have reduced our forecasts accordingly.

Mr MARSHALL: In fact, you have increased your forecast, haven't you?

Mr HOCKING: No, not since the last—

Mr MARSHALL: The forecast for the previous year was ½ per cent and it is now going up to 1 per cent. That's a decrease, is it?

The Hon. A. KOUTSANTONIS: The modelling is given to us independently by the department, and we accept it.

Mr MARSHALL: Do you have confidence in that modelling?

The Hon. A. KOUTSANTONIS: I have complete confidence in the department.

Mr MARSHALL: Do you realise that last financial's employment estimate was revised down four times?

The Hon. A. KOUTSANTONIS: If the agency comes to us with revised forecasts, where things change—the Australian dollar goes up and down, there are decisions made at a national level that impact, whatever the forecasting is; it is an inaccurate science—the department give us their very best estimates and we have full confidence in them.

Mr MARSHALL: So you are quite confident that we will achieve 1 per cent jobs growth this current financial year?

The Hon. A. KOUTSANTONIS: I am confident that is the best estimate that the department can give us.

Mr MARSHALL: Given that you have just handed down what you yourself referred to as a 'jobs budget', why is it that you have a jobs forecast which is in fact the lowest on mainland Australia?

The Hon. A. KOUTSANTONIS: We have been very conservative in not attempting to influence the independence of the Public Service. The tax cuts we have introduced are unprecedented in Australia. Never before have transactional taxes been removed from commercial and business transactions on real and non-real properties. The idea that somehow you could accurately forecast the impacts would be very difficult and unfair on a department.

The approach I think we have taken has been very prudent. What we have attempted to do through the budget is give business every opportunity to succeed, but what I am not going to do is then turn up and try to put pressure on the agencies to say, 'Well, look, these tax cuts will create X number of jobs. We want you to forecast that into your forecasts.' I think what the department has done has been very prudent, by being very cautious.

I do not think that anyone can give us numbers, given what is going on internationally, that would give any confidence to the opposition. The truth is that these tax cuts, which make us one of the lowest taxing jurisdictions in the nation, something that no government has been able to achieve in South Australia's past, are unprecedented. The impacts on employment could be dramatic; they could be overestimated or underestimated. We will have to wait and see, but the truth is that it has created a great deal of interest interstate, and I think it has created a very good climate for South Australian business to succeed.

Mr MARSHALL: Were these tax cuts which you talk about, which are going to come in the future, made clear to the independent agency which did the employment forecast?

The Hon. A. KOUTSANTONIS: Well, of course every branch of the government knows of the budget. Stuart is an integral part of our economic team. I do not attempt to influence him on his assessments, and that is the way it should be: a fearless Public Service giving us frank advice.

Mr MARSHALL: In other words, the fearless, frank, independent advice was that your tax cuts are not going to work and that we are going to have the lowest employment growth rate on mainland Australia?

The Hon. A. KOUTSANTONIS: You may think that is a criticism of me; others may find that a damning criticism of Treasurer Hockey. The truth is that South Australia is going through unprecedented structural change. Your party's decision not to invest in the automotive industry has led to the de-industrialisation of an entire industry in the north of Adelaide.

They have not followed up with investments to try to help restructure or retool that industry into a diversified industry that can find other work. It has basically been left to disintegrate, and the state government is doing all it can to try to help that industry in lieu of your party's dramatic attack on it. What we need to see happen now with that industry is for them to consolidate, we need to see them survive and we need to see them diversify, and that is why the tax cuts are aimed squarely at them.

The first thing we have done by removing duty on non-real property transfers is give them the ability to buy IP, goodwill and plant and equipment of other operations that may be able to be used to diversify their own operations, where they might not be interested in buying the entire operation. By the time Holden eventually leaves, thanks to the inaction of your party, what we will see then is duty on real property also removed so it gives them the ability then to go out and buy that property without tax being a factor.

That type of competitive advantage no other jurisdiction in Australia will have. It will give South Australian manufacturers an opportunity to consolidate and grow the likes of which no jurisdiction offers them, and we think it is very hard to model. I am not going to turn up and demand that Stuart factor in what that means. He does his very best. As conditions change, we will update them.

Mr MARSHALL: When Deloitte did their independent modelling of the government's tax change package, was there modelling specifically commissioned relating to jobs outcomes?

The Hon. A. KOUTSANTONIS: Could you repeat the question?

Mr MARSHALL: Deloitte did modelling on your tax package. Did you commission specific modelling regarding job creation?

The Hon. A. KOUTSANTONIS: My advice is: no.

Mr MARSHALL: Your tax change package which you have advocated was the centre point of your jobs budget which will create jobs, the independent company asked to do the modelling with regard to that did not do any modelling for jobs?

The Hon. A. KOUTSANTONIS: I will answer it by posing this question. The Leader of the Opposition says the tax cuts that I am advocating and he says I will create jobs are the same tax cuts that you have called on me to bring forward to stimulate the economy. I suppose, again, that goes to show the lack of political skill you have. The truth is that the tax package we have introduced is unprecedented.

Mr MARSHALL: You do not even know if it is going to create a job.

The Hon. A. KOUTSANTONIS: The ones you called on me to bring forward? That is the problem with the Leader of the Opposition's leadership style: he speaks and thinks a week later about whether he should have spoken. So, here you are today saying that the tax package—

Mr KNOLL: Point of order, Chair.

The CHAIR: Yes, member for Schubert.

Mr KNOLL: You outlined at the beginning that your standing orders still apply and so the minister reflecting on the views of the opposition is not appropriate.

The CHAIR: He is not going to any longer.

The Hon. A. KOUTSANTONIS: Yes. So, I find—

Mr Marshall interjecting:

The CHAIR: Order!

The Hon. A. KOUTSANTONIS: —it remarkable that the Leader of the Opposition is now criticising—

Mr KNOLL: Point of order, Chair. The Treasurer is defying your ruling.

The Hon. A. KOUTSANTONIS: —criticising me for—

The CHAIR: I was listening to the aside of your leader which was naughty of me. I shouldn’t listen to him, but I am going to ask the Treasurer to continue.

The Hon. A. KOUTSANTONIS: I do believe the tax cuts will create jobs, as did the Leader of the Opposition last week but apparently not today.

Mr MARSHALL: Why didn't you commission jobs modelling on your tax package?

The Hon. A. KOUTSANTONIS: The modelling that we were interested in was obviously which taxes do the most harm to the economy, which are the most inefficient taxes? It is interesting to note that the tax package that the opposition took to the election had some of the most efficient taxes and they were the ones they were proposing to cut. Inefficient taxes that cause the most harm to the economy were the ones they were prepared to leave in place and they have never ever talked about cutting, even though most recently the Leader of the Opposition called on me to bring them forward which I find ironic.

We have decided that we wanted to have Deloitte do some work for us on the basis of their experience. Mr Chris Richardson is someone who has long experience in helping political parties develop tax packages, most famously he worked on Fightback! for John Hewson, someone the Leader of the Opposition has a lot in common with. I felt that he was well placed to give us a lot of advice on which taxes cause the most harm.

The modelling we asked Deloitte to do was largely about: what are the inefficient taxes? If we were going to make changes to our tax system, how could we create a tax system that still protected our base where we could actually invest in health and education when we have a commonwealth government that is attacking those very services we want to deliver while also encouraging business? The ones that stood out the most were those inefficient transactional taxes that Deloitte modelled, and we proceeded to cut those. I note that the Leader of the Opposition took a policy of cutting land tax and payroll tax—

Mr KNOLL: Point of order, Chair.

The CHAIR: Order! If there is a problem, I am sure that the leader can raise it himself.

Mr MARSHALL: I do not think it is necessary for me to raise the point of order.

The CHAIR: Well, then if you—

Mr KNOLL: It is not in the standing orders.

The CHAIR: Order!

Mr MARSHALL: It is not our practice in the house.

The CHAIR: Order! I won't have you argue with me. I am advised that if the leader is offended in any way, he can raise that point of order himself.

Mr MARSHALL: Sorry, is this a new ruling for the Parliament of South Australia that points of order cannot be raised by members other than the person who is speaking?

The CHAIR: I have been advised that if there is a quarrel between members, then the problem is between the member—

Mr MARSHALL: This is a point of order for the Parliament of South Australia.

Mr KNOLL: It is a point of order—

Mr MARSHALL: You can't just make up a rule.

The CHAIR: I can't hear what the member for Schubert is saying because you are talking over him.

Mr KNOLL: Sorry. Chair, the point of order is about the Treasurer entering into debate. It has nothing to do with improper motives or anything like that.

The CHAIR: I'm sorry. Okay, back to the answer then.

Mr MARSHALL: So, if—

The CHAIR: Just a second. Is he looking for an answer? I think he is talking to one of his advisers, so maybe there is an answer coming.

The Hon. A. KOUTSANTONIS: Obviously, the modelling Deloitte did for the government was on the basis of what we thought were inefficient taxes, but we did ask the Australian Workplace Innovation and Social Research Centre at the University of Adelaide to assess the short-term economic impacts of the government's tax reform package and WorkCover changes. Tax reforms can have an additional short to medium-term impact over and above any long-term efficiency improvements where there is spare capacity such as unemployed labour within an economy.

Given that there is spare capacity within the South Australian economy, reducing taxation on businesses and households can generate additional activity in the economy without taking resources from other areas. The short-term modelling suggests that the government's tax reforms and WorkCover changes will increase gross state product by $140 million and increase employment by 1,030 full-time equivalent jobs in 15-16. Now, by 2018-19—

Mr MARSHALL: One thousand?

The Hon. A. KOUTSANTONIS: Hang on a second. In 2018-19, when the reforms are fully implemented, it is expected that an additional 2,500 thousand people will be employed in South Australia on a full-time equivalent basis and the gross state product will be $320 million higher as a result of these reforms. Based on the modelling, the sectors of the economy expected to have the largest increases in employment are retail trade, professional scientific and technological services, manufacturing, transport, postal and warehousing and administration support services.

That is a very broad assessment of what the impacts of the tax changes will have through removing the dead weight loss to the economy. Over and above that, obviously there is great potential, especially through South Australia achieving its per capita share of investment in commercial properties from interstate investors. Currently, South Australia does not do exceptionally well from its per capita share, as it were, of this investment.

I have been spending a lot of time with our largest trading partners, Victoria and New South Wales, letting super funds and private equity investors understand the tax changes, getting them in front of our planning laws so that they understand them and really attempting to increase South Australia's per capita share of interstate investment in terms of national investment by these funds. If we can achieve our per capita share of that type of investment, which is basically my aim in the short term, in the long term I would obviously like to have above our per capita share of investment, like New South Wales and Victoria seem to achieve regularly, it would be billions of dollars of investment into South Australia.

Whenever anyone buys a commercial property that is in competition with a commercial property in Queensland, Victoria or New South Wales there are various factors that influence that sale. Removing government taxes and charges from that transaction is a stimulus, it is money that can be used for a rental campaign, it is money that can be used to refurb the building, it is money that can be used in rental assistance to try to attract clients to that building.

From the people I have spoken to, especially the Property Council and someone who is well known to the opposition, Mr Daniel Gannon, and Mr Ken Morrison, the national chief executive, they tell me this is a game changer, a game changer for South Australia. Happily, it seems as if other jurisdictions are prepared to follow. I have recently had meetings—

Mr MARSHALL: Are you filibustering?

The Hon. A. KOUTSANTONIS: No, I am just answering your questions.

The CHAIR: Order!

Mr MARSHALL: You are not answering at all. You have not even gone near the answer.

The Hon. A. KOUTSANTONIS: Trust me, the one person I am not afraid of is you.

The CHAIR: Leader!

Mr MARSHALL: Well, let me tell you you are just waffling on now.

The CHAIR: Leader!

Mr MARSHALL: I mean, it is starting to get very boring.

The Hon. A. KOUTSANTONIS: You poor thing. It is alright, you will be home soon.

The CHAIR: Leader, I call you to order.

Mr MARSHALL: Are you scared to answer questions?

The Hon. A. KOUTSANTONIS: You will be home soon.

Mr MARSHALL: Are you scared to answer questions?

The Hon. A. KOUTSANTONIS: You will be home soon.

The CHAIR: I call all members to order.

Mr MARSHALL: Why don't you get to the point then?

The CHAIR: If we do not have order I will have to suspend the sitting of the committee.

Mr MARSHALL: I think he is scared.

The CHAIR: No, I think you are out of order and if we could just listen to the answer and get on with it.

The Hon. A. KOUTSANTONIS: You are doing such a good job of—

The CHAIR: Order! Order! Back to the answer.

The Hon. A. KOUTSANTONIS: You are—

The CHAIR: Order!

The Hon. A. KOUTSANTONIS: —one of the best Liberals in the nation, are you not?

The CHAIR: I think we will have to suspend the committee for five minutes.

Sitting suspended from 11:53 to 11:58.

The CHAIR: Now, do you have a question, leader?

Mr MARSHALL: Yes, thank you. In Budget Paper 3, page 29, there is a table regarding the general government investing expenditure. Again, the table shows that the government has an investing expenditure budget of $1.327 billion for this current financial year. This compares with an average investing expenditure budget of $1.926 billion per annum over the last five years. If this is a jobs creation budget, as the government claims, why is the government promising to spend less on capital projects than it has over the average of the past five years?

The Hon. A. KOUTSANTONIS: The Leader of the Opposition is not giving an accurate reflection of what is occurring. If he goes back over a longer period of time, say—I do not know—2000 or 2001 when they were last in office, there is a dramatic increase. The commonwealth stimulus, of course, has ended. I note also that, in the most recent commonwealth budget, there was not an extra dollar announced to be spent in South Australia, so South Australia is doing what it can to invest in infrastructure, and we are doing it well.

Mr MARSHALL: Nevertheless, there is a massive reduction in the amount that South Australia is spending on capital projects. If I just look at recent history—let us not go back more than a decade as the Treasurer suggests—in 2008-09, there was in excess of $2 billion; 2009-10, almost $4 billion; 2010-11, $3.6 billion; and 2011-12, $3.4 billion. These are numbers which are two and three times the current year's expenditure. The Treasurer and the government have been at some length to suggest that this is a jobs creation budget, but how does he explain that the government, at the time when our state is in the midst of a dangerous jobs crisis, has essentially turned off the tap of capital investment in this state.

The Hon. A. KOUTSANTONIS: It is three times what it was when the opposition was last in office. I also point out, again, that the Leader of the Opposition claims that this budget does not deliver jobs, yet calls on me to bring forward measures in this budget to create jobs. Quite frankly, I think his argument is confused.

Mr MARSHALL: Budget Paper 3, page 55, in the first paragraph: has the federal government given in-principle approval for the $459.2 million dividend payment from the Motor Accident Commission into the Highways Fund in 2014-15 to be treated as eligible for the purpose of the Asset Recycling Fund?

The Hon. A. KOUTSANTONIS: I cannot speak for Treasurer Hockey, but they have agreed in principle that the privatisation of the Motor Accident Commission does qualify.

Mr MARSHALL: You are saying you cannot speak for Treasurer Hockey but you have advice that—

The Hon. A. KOUTSANTONIS: Your question was whether the proceeds from the sale of the Motor Accident Commission to be put into the Highways Fund have been approved by the commonwealth as funds eligible for asset recycling. What I am telling you is that Treasurer Hockey has agreed in principle to the privatisation of the Motor Accident Commission as being eligible. Whether he has approved the actual funds is a matter for him.

Mr MARSHALL: For clarity, the $459.2 million dividend payment that was received last financial year and deposited in the Highways Fund—

The Hon. A. KOUTSANTONIS: I have answered that in principle the privatisation of the Motor Accident Commission and the proceeds that have been received from that are eligible for asset recycling.

Mr MARSHALL: Have you sought that advice in writing?

The Hon. A. KOUTSANTONIS: Treasurer Hockey and I, when he first announced asset recycling, sought jurisdictions to support his move and South Australia supported it.

Mr MARSHALL: Has the federal government given any—

The Hon. A. KOUTSANTONIS: Can you wait for me to finish?

Mr MARSHALL: Sorry.

The Hon. A. KOUTSANTONIS: So you should be. What Treasurer Hockey wanted was bipartisan support for his asset recycling scheme to encourage governments to privatise assets that return dividends and reinvest that in productive infrastructure. I find that a good policy and we have supported it. Whether we take up the option of actually activating that is another matter.

Mr MARSHALL: Has the federal government given in-principle approval for the $393.7 million return of surplus net asset payments from the Motor Accident Commission to the Highways Fund as eligible—

The Hon. A. KOUTSANTONIS: Same answer as before.

Mr MARSHALL: Same answer, thank you. Has the government given in-principle approval for the $300 million return of surplus net assets proposed payments from the Motor Accident Commission into the Highways Fund in 2016-17 to be treated?

The Hon. A. KOUTSANTONIS: I am not sure how long asset recycling will last as a policy with the commonwealth government, but while it lasts—

Mr MARSHALL: It is eligible?

The Hon. A. KOUTSANTONIS: It is eligible unless Treasurer Hockey changes the criteria.

Mr MARSHALL: Has the state government asked the federal government whether the $100 million dividend payment from the Motor Accident Commission in 2012-13 was also asked to be treated as eligible for the purposes of the Asset Recycling Fund?

The Hon. A. KOUTSANTONIS: I am advised that was before the introduction of the policy.

Mr MARSHALL: What is your intention with that opportunity, that eligibility? Will you be taking up that offer from the commonwealth and using it in that way?

The Hon. A. KOUTSANTONIS: I am not going to have detailed discussions publicly that are being held in private with the commonwealth.

Mr MARSHALL: My understanding of the eligibility of the asset recycling opportunity is that it is to be used for new projects and projects which are brought forward. Will you be using this for the Torrens to Torrens/Darlington project? Will funds on this be used on the Torrens to Torrens/Darlington project?

The Hon. A. KOUTSANTONIS: You need consent from the commonwealth. The commonwealth will apply a 15 per cent bonus, if you will, to what you spend from the proceeds of an asset sale on a project that they approve. None of those projects are approved by the commonwealth.

Mr MARSHALL: None of those projects are approved at this stage? What infrastructure projects is the state government now proposing for spending out of the Asset Recycling Fund?

The Hon. A. KOUTSANTONIS: I am not going to detail to the house what negotiations we are having with the commonwealth.

Mr MARSHALL: So negotiations are ongoing?

The Hon. A. KOUTSANTONIS: Yes; you might have noticed the Premier and Prime Minister were at a retreat in Sydney, where we talked about the future of the federation, and talked about infrastructure, and talked about taxation—all those things you get to do when you win elections.

Mr MARSHALL: Do current forward estimates include any estimates of funds to be received from the federal government's Asset Recycling Fund?

The Hon. A. KOUTSANTONIS: I am advised they do not.

Mr MARSHALL: Has the state government asked the federal government to consider any other proposed privatisation or divestment of assets for possible payments under this scheme?

The Hon. A. KOUTSANTONIS: It is the other way around: the commonwealth have advised me of assets they would like me to privatise. Treasurer Hockey, on the first day I met with him at a commonwealth treasurers and finance ministers meeting, had a great deal of information on SA Water. He intimated to me that he felt it should be sold, and he said that if it would be sold we could reinvest the money into productive infrastructure, and I told him that the South Australian government had no intention to privatise SA Water.

Mr MARSHALL: Does that include the Aldinga treatment works?

The Hon. A. KOUTSANTONIS: You would have to speak to minister Hunter.

Mr MARSHALL: I have asked you the question: has the state government asked the federal government to consider any other proposed privatisations or divestment of assets for possible payments under the scheme? You have told me what Treasurer Hockey may or may not have suggested to you, but that was not my question.

The Hon. A. KOUTSANTONIS: I understand that the opposition had discussions with the commonwealth about what they might have privatised if they had been elected, but I have not had any conversations with the Treasurer or written to him about any further privatisations.

Mr MARSHALL: So, just for confirmation, on the record, the state government has had no discussions with the commonwealth regarding privatisations or divestment of assets for possible payment under this scheme?

The Hon. A. KOUTSANTONIS: We are in conversations with the commonwealth about investing in South Australia and investing in infrastructure. We are currently in the midst of the sale of the Victoria Square precinct that the government owns. We are in discussions with the commonwealth about the north-south corridor. The Premier has been very clear about his discussions with the commonwealth about our view on the Strzelecki Track and our view on productive infrastructure, which the opposition leader calls a false economy. So, yes, we are in discussions with them, but I have not written to Treasurer Hockey advocating or proposing any further privatisations.

Mr MARSHALL: You have not written to the Treasurer, but you have had discussions regarding the privatisation and divestment of assets for inclusion in the federal government's asset recycling program?

The Hon. A. KOUTSANTONIS: I have told you earlier, the Motor Accident Commission, and I have said that to the parliament.

Mr MARSHALL: But over and above those which have been publicly disclosed at this point?

The Hon. A. KOUTSANTONIS: Not to my advice, not to my knowledge, no. If I have, I will come back and correct the record, but I do not think I have.

Mr MARSHALL: Thank you. Budget Paper 3, page 45. Has the Treasurer now changed his view on extending GST or increasing the GST rate?

The Hon. A. KOUTSANTONIS: We are in conversation with the commonwealth.

Mr MARSHALL: Previously, you indicated that you were not keen on extending the GST; you are now—

The Hon. A. KOUTSANTONIS: When did I say that?

Mr MARSHALL: On numerous occasions.

The Hon. A. KOUTSANTONIS: Could you please give me a reference?

Mr MARSHALL: I am asking the questions.

The Hon. A. KOUTSANTONIS: No, you have based your question on a reference you claim I have made; what is it?

Mr MARSHALL: Is it the Treasurer's—

The Hon. A. KOUTSANTONIS: You do not have the reference?

The CHAIR: Order! You can deny it shortly. Leader.

Mr MARSHALL: Thank you. Is it the Labor Party's policy in South Australia to extend the GST to cover financial services?

The Hon. A. KOUTSANTONIS: The Premier made what I thought was a very good speech to the Press Club, where he talked about how South Australia has got its affairs in order: our budget is back in balance, we have reformed our tax system, making us one of the lowest-taxed jurisdictions in the nation, and we are now talking about tax reform.

Currently, there is a government white paper, released by Treasurer Hockey, inviting comment, and we are going to participate. We are not locked into one position or another; what we are saying is that we are prepared to have the conversation. I note the Leader of the Opposition has ruled out any conversation about tax.

Mr MARSHALL: Back to my question, which was about financial services, was it a captain's call by the Premier?

The Hon. A. KOUTSANTONIS: No, the Premier and I are at one.

Mr MARSHALL: Was it discussed by cabinet and agreed by cabinet?

The Hon. A. KOUTSANTONIS: I do not talk about cabinet deliberations, but the Premier has the full support of his cabinet and his caucus.

Mr MARSHALL: You fully support the imposition of GST on financial services?

The Hon. A. KOUTSANTONIS: Again, you are trying to verbal me—not very well, but you are trying. The Premier has the full support of the cabinet. We are a united party and have been for a long time. We have had two leaders in over 20 years, unlike the good people opposite.

Mr MARSHALL: What will the—

The Hon. A. KOUTSANTONIS: I have not finished. When the Premier embarks on a national debate about the future of the federation and South Australia's role in it, yes, his colleagues and his caucus are fully supportive of the Premier entering into that debate—of course we are. We are a united team. What we do not do is what the Leader of the Opposition has done and just rule it out day one.

Mr MARSHALL: On the record, can you confirm to the committee that the Premier discussed his plans to extend the GST to financial services with you and got agreement with you prior to him making public statements.

The Hon. A. KOUTSANTONIS: I have complete confidence in the Premier.

Mr MARSHALL: Well, why not just answer the question?

The Hon. A. KOUTSANTONIS: I am. I have complete confidence in the Premier—

Mr MARSHALL: That is not the question.

The Hon. A. KOUTSANTONIS: I have complete confidence in the Premier. He is doing exceptionally well. He is leading the nation in terms of reforming the federation.

Mr MARSHALL: He did not discuss it with you first, did he?

The Hon. A. KOUTSANTONIS: He is someone who I have a great deal of admiration for.

Mr MARSHALL: It was a captain's call.

The Hon. A. KOUTSANTONIS: We talk often, and I have complete support in what the Premier is doing, and we have discussed many, many aspects of the tax reform package.

Mr MARSHALL: Except this very, very large one.

The Hon. A. KOUTSANTONIS: Well, I suppose looking at a successful team is foreign to you because you have never seen or been part of one. The Premier and I and his cabinet are at one.

Mr MARSHALL: With this extension of the GST onto all financial services, can you confirm which financial services it will apply to? It will apply to withdrawals and deposits, to advice, financial planning advice, superannuation advice. What will it apply to?

The Hon. A. KOUTSANTONIS: You would have to ask the commonwealth government.

Mr MARSHALL: I am asking you; you just agreed to it. You are at one with the Premier who has proposed it. Who is it going to hit?

The Hon. A. KOUTSANTONIS: I will give you a quick lesson in the federation: the acts governing that are legislated in the commonwealth parliament—

Mr MARSHALL: I am fully aware, but you have a position—

The Hon. A. KOUTSANTONIS: —and to speak—

Mr MARSHALL: You do not know.

The CHAIR: Order! It would be a really sad day for me to pour any dampener on passion, and I know you are both passionate about the good of South Australia, but I must insist that the committee proceeds in an orderly fashion, and I hope I can count on your cooperation in that—both of you.

The Hon. A. KOUTSANTONIS: Yes, ma'am. I am not in the commonwealth parliament. I do not have a say in the way that act is constituted or drafted. That is a matter for the commonwealth government.

Mr MARSHALL: Given that the Premier has outlined in the earlier committee what he thinks this will cover, can you outline to this committee what you think this extension of the GST onto financial services will cover?

The Hon. A. KOUTSANTONIS: No, and I will not, and I will not debate it publicly.

Mr MARSHALL: You just agree with the leader. It is like this Bill Shorten YouTube clip.

The Hon. A. KOUTSANTONIS: The what?

Mr MARSHALL: 'I just agree with the leader.' 'What does the leader think?'

The CHAIR: Order!

Mr MARSHALL: 'Well, I don't know, but I agree with the leader.'

The CHAIR: We have limited time. Let's proceed to the next question.

Mr MARSHALL: You do not even know what you have agreed to.

The CHAIR: Let's proceed to the next question.

The Hon. A. KOUTSANTONIS: All I can think of is you just—

Mr MARSHALL: What have you agreed to?

The Hon. A. KOUTSANTONIS: All I can think of is you are in front of the mirror thinking, 'Please someone say that about me,' but no-one ever does.

Mr MARSHALL: What have you agreed to?

The Hon. A. KOUTSANTONIS: What the state government is doing is we are talking about the future of the federation—

Mr MARSHALL: You do not want to answer the question.

The Hon. A. KOUTSANTONIS: —and we are prepared to talk with Premier Baird, who showed a great deal of courage—

Mr MARSHALL: That is not the question.

The Hon. A. KOUTSANTONIS: —in my opinion.

Mr MARSHALL: Here we go again.

The Hon. A. KOUTSANTONIS: I think Premier Baird is one of those fine Liberal leaders. He is a reformist Liberal leader—something that is the complete antithesis of what the current Leader of the Opposition here is. Mr Baird is someone who proposes things that are risky, things that are not necessarily electorally popular, and he is happy to have a debate. The South Australian government and our Premier are not prepared to slap him down simply because it is politically expedient; he is prepared to hear and listen to the debate. I think South Australians and Australians are yearning for that. That is why the Leader of the Opposition languishes so badly in the polls, because he cannot bring himself to come up with an idea that may be difficult or not popular.

Mr MARSHALL: Is this acceptable?

The CHAIR: It is not acceptable.

Mr MARSHALL: Has the government done any jobs modelling on its stated position regarding extending the GST to financial services?

The Hon. A. KOUTSANTONIS: Not that I am aware of. We have done some NATSEM modelling—

Mr MARSHALL: So we are in the midst of—

The CHAIR: Order, leader! He is trying to answer your question. Please wait.

Mr MARSHALL: He said no.

The Hon. A. KOUTSANTONIS: He is having a bad day.

The CHAIR: 'No' and drew a breath.

Mr MARSHALL: Do we have another five minutes of filibustering?

The CHAIR: We could stop right now if you want to.

The Hon. A. KOUTSANTONIS: It is almost over. Don't worry, it will be over by Christmas. We have done some NATSEM modelling on the regressive nature of some parts of the GST. In terms of any positive or negative impact on jobs in financial services, I am not aware that we have, but if we have I will get back to the committee. I do not think we have.

Mr MARSHALL: So no jobs modelling has been done on extending the GST on financial services and no jobs modelling has been done on the government's state budget tax review request. Have you done any jobs modelling for South Australia?

The Hon. A. KOUTSANTONIS: It would be redundant for us to attempt to do any modelling on one small aspect of any overall reform package. What you would need to do is obviously nut out what the entire reform package will be, noting the Prime Minister's remarks that he wants unanimous support of all jurisdictions—all the states and the territories. You would have to wait until we came up with a uniform package, whether it be GST, whether it be the Medicare levy or whether it be income tax changes, and do the modelling then. What the Leader of the Opposition is trying to do in a very narrow way is attempt to score some populist point on the GST and that is why he will fail ultimately in his political career, because he cannot rise above it.

Mr MARSHALL: I refer to Budget Paper 3, page 34. Has Treasury considered the likelihood that some non-residential real property transactions are likely to be delayed until the duty is completely removed or substantially removed?

The Hon. A. KOUTSANTONIS: That is a risk, but I also think that by 1 July next year we will have the lowest conveyance duty on commercial properties in the nation. Local buyers and sellers will be up against interstate competitors who in their own states will be looking elsewhere because of the competitive advantage here in South Australia, so that should alleviate a great deal of that. I did say on budget day that I reserve the right to bring those tax cuts forward if necessary to avoid any distortions in the market. Yes, it is always a risk, but the truth is that people take a very long-term view of these things and I believe it is going to create a competitive advantage for vendors and that you will see a lot more activity in the market on the basis of these tax cuts. We have done it in a way to try to avoid the very thing you have brought up.

Mr MARSHALL: If the duty rate is not being reduced until 1 July 2016, why is there a $9.7 million reduction in the operating revenues forecast in 2015-16? Is this evidence that the government believes that investors will defer transactions until after the duty rate reduction takes effect?

The Hon. A. KOUTSANTONIS: We have allowed for a deferral, I am advised, for the last month of the financial year as people restructure to take into account the tax changes. However, as I said, I reserve the right to bring the tax cuts forward.

Mr MARSHALL: So in fact, in reality, it is going to cost us $10 million this year in deferred revenue over and above the cost in terms of reduced revenue from 1 July 2016 onwards?

The Hon. A. KOUTSANTONIS: It is reflected in the forward estimates. I cannot believe I am actually in this alternative universe where the Leader of the Opposition and the leader of the Liberal Party is complaining about a loss of revenue from tax cuts.

Mr MARSHALL: No, I am making it clear—

The Hon. A. KOUTSANTONIS: No wonder industry just laugh at you. Anyway, go on.

The CHAIR: Order! Next question please leader.

Mr MARSHALL: Your own budget provides that there is going to be reduced transactions this financial year. Is that not correct?

The Hon. A. KOUTSANTONIS: Reduced transactions?

Mr MARSHALL: Yes; that's the basis of it. When the number goes down and you are not changing the weight, and there has to be a reduction in volume.

The Hon. A. KOUTSANTONIS: I just said, for the last month some will be deferred, but I reserve the right to bring them forward.

Mr MARSHALL: Has any work been done on understanding the likely impacts of the staged approach to the introduction of the removal of some of the conveyance—

The Hon. A. KOUTSANTONIS: Can you repeat the first part of that?

Mr MARSHALL: Has any independent work been done to model how the property markets are likely to respond to this staged introduction of the conveyance due to reduction?

The Hon. A. KOUTSANTONIS: We have not done any independent modelling. What we have done is spoken to the professional associations about what they think the impacts will be, because they are the best qualified to know and understand the market. We have spoken to a number of people involved in the commercial property sector about what the potential impacts will be, and we have had a very diverse review. I think it is fair to say that the majority of the view was that it would create a lot more activity. We have been prudent and thought there may be some delays and deferrals by the end of the financial year, but, of course, we think, given the anticipated tax cuts, it will create more activity rather than less.

Mr MARSHALL: Can we take a look at Budget Paper 3, page 149, and in particular look at interest? The interest on state debt—and I presume this is the net interest; it is not the gross interest, because we do have offsetting investments that diminish this number quite considerately—it is envisaged that we are paying $482 million this current financial year in net interest. That goes up to $700 million next financial year. Has that increased substantially due to the new Royal Adelaide Hospital coming online?

The Hon. A. KOUTSANTONIS: I am advised yes.

Mr MARSHALL: What is the quantum of additional interest next financial year that will be specifically attached to the new Royal Adelaide Hospital?

The Hon. A. KOUTSANTONIS: I am advised that it is $211 million.

Mr MARSHALL: Can you advise what sensitivity analysis has been done around interest rates to form the estimate that is provided over the forward estimates?

The Hon. A. KOUTSANTONIS: Budget Paper 3, page 95: Interest rates. I will read to you from that. It states:

Changes in interest rates would affect the budget positions of the general government and public non-financial corporation…sectors through changes in interest payments.

…A 1.0 percentage move in the average interest rate applying to general government sector net debt would change net interest expense by approximately $42 million in 2015-16 rising to $58 million in 2018-19.

A 1.0 percentage point move in interest rates applying to the PNFC sector would change net interest expense by approximately $70 million in 2015-16. This would affect contributions received by the general government sector from PNFCs.

To give you a broader answer, I would refer you to the session later on when SAFA are here and Mr Kevin Cantley can give you a more detailed answer.

Mr MARSHALL: Thank you. Given that over the forward estimates we are going to be paying in excess of $2.5 billion in net interest, can you advise the committee whether you are going to be continuing with your plan to establish a future fund for South Australia?

The Hon. A. KOUTSANTONIS: Yes, we will proceed with it, and I refer you to the answer the Premier gave you this morning.

Mr MARSHALL: When do you envisage that you will be bringing legislation to the parliament?

The Hon. A. KOUTSANTONIS: Soon.

Mr MARSHALL: Has the Under Treasurer changed his advice to the government, or does he still think that it is inappropriate to establish a future fund when there is such an enormous amount of interest payments ($2.5 billion worth) over the next four years?

The Hon. A. KOUTSANTONIS: I have a great deal of respect and admiration for our Under Treasurer. Indeed, this is his last estimates because he will be leaving us. His views are frank and fearless, and he has been a fabulous servant of the people of this state. If he disagrees with the government from time to time—

Mr MARSHALL: Which he does on this point.

The Hon. A. KOUTSANTONIS: That is entirely his prerogative. I celebrate a system where a public servant of the quality of Mr Brett Rowse can disagree with his Treasurer and have absolutely no consequences for it.

Mr MARSHALL: Do you think it is prudent to establish a future fund for South Australia?

The Hon. A. KOUTSANTONIS: Yes.

Mr MARSHALL: When do you envisage that the first money will be paid into this future fund?

The Hon. A. KOUTSANTONIS: You will have to wait and see the legislation.

Mr MARSHALL: Is this another captain's call from the Premier?

The Hon. A. KOUTSANTONIS: No, this is something we decided together in a collegiate way and took it to the election. You might remember the election. We took it to the people of South Australia and they endorsed it, overwhelmingly, in a majority of seats.

Mr MARSHALL: Thirty-six per cent of people actually supported it.

The CHAIR: Order! What budget line does that come under?

Mr MARSHALL: I have a line. It is Budget Paper 4—

The CHAIR: The election result does not come under any of that.

Members interjecting:

The CHAIR: Both of you, back onto the questions, now.

The Hon. A. Koutsantonis interjecting:

The CHAIR: Now! Do not defy me.

Mr MARSHALL: Budget Paper 4, Volume 4, page 185. I want to look at contingency provisions. Can you outline to the house why there is such an enormous increase in the contingency provisions for supplies and services?

The Hon. A. KOUTSANTONIS: No doubt, one day, the member for Schubert will be in a position to understand why contingencies are kept very quiet, but I do not suspect you will ever have that opportunity. Traditionally, they do fluctuate but, while the level of 2015-16 is higher than the past two years, it is not out of line with our historical contingencies. I think the graph in the budget shows we are having prudent management of our finances.

Mr MARSHALL: Certainly, it is almost 10 times what it was two years ago. Is there something, in particular, that you are providing a contingency against?

The Hon. A. KOUTSANTONIS: No, I am just a very prudent Treasurer who is always worried, constantly worried. Treasurers are always worried—something you will not have to worry about, you will be fine.

Mr MARSHALL: What about your investing contingencies? I presume this is contingencies against capital projects? We are seeing a major diminution of capital projects at the same time as a tenfold increase in the contingency. What have you got wrong?

The Hon. A. KOUTSANTONIS: You will have to wait and see by the end of the term if you are right or wrong and, no doubt, whoever replaces you, soon enough, will be able to ask me those questions in 2017.

Mr MARSHALL: I just make the point that it is an enormous increase. Have you some advice that a major capital project requires a contingency which is, in fact, more than $110 million higher than the contingency that was provided for capital projects last financial year, or do you not know the answer to the question?

The Hon. A. KOUTSANTONIS: No, it is just prudent management and making sure we have enough money in place in case things change. It is only appropriate.

The CHAIR: Do you have a question, member for Schubert?

Mr KNOLL: Yes, ma'am.

The Hon. A. KOUTSANTONIS: Finally, I have been waiting.

The CHAIR: Stop now, stop right now. All of you, let's just hear the questions please.

Mr KNOLL: If we go to Budget Paper 3, page 23—or it may be page 23 when we get through the question, maybe the Treasurer can update me. The Treasurer, through the Economic and Finance Committee, brought down the new emergency services levy rates—or not the rates necessarily but the distribution of funding across different regions—and does that every year. In 2015-16 regions 1, 2 and 3 for this 2015-16 year have a total of $48.3 million worth of expenditure across those regions, and those regions 1, 2 and 3 are the country regions with region 4 being Adelaide.

Back in 2014-15 regions 1, 2 and 3 had direct emergency services expenditure of $30.1 million, so it is saying that from last year's budget to this year's budget there is an increase of $18.2 million. Treasurer, if I look at page 23 and the different emergency services agencies there, I do not get anywhere near that $18 million, and also with the MFS most of that expenditure will be in region 4 which is in metropolitan South Australia. According to the Economic and Finance Committee report, you are going to increase expenditure of $18.2 million and can I ask, where is the money?

The Hon. A. KOUTSANTONIS: We are spending more in the regions. If you look at the expenditure, we have gone from 2015-16—

Mr KNOLL: Sorry, what budget paper are you looking at now, Treasurer?

The Hon. A. KOUTSANTONIS: I am looking at extemporaneous notes, and those notes show 87.8 per cent expenditure of $217.7 million in 14-15, that increases to $222.1 million, so we go from 87.8 per cent down to 82.1 per cent—a decrease in region 4. In region 1 the increase is from 7.5 per cent to 10.1 per cent; region 2, 4.3 per cent up to 6.7 per cent; region 3, 0.4 per cent up to 1.1 per cent.

Mr KNOLL: So, you have given those figures in percentage terms—

The Hon. A. KOUTSANTONIS: I can give you real numbers, if you like. It is $18.5 million in region 1 in 2014-15 to $27.2 million in 2015-16; that is region 1.

Mr KNOLL: Sorry, Treasurer—

The Hon. A. KOUTSANTONIS: Hang on. Region 2, $10.7 million in 2014-15 up to $18.2 million—that is, from 4.3 per cent to 6.7 per cent. Region 3 is $0.9 million to $2.9 million from 0.4 per cent to 1.1 per cent. We are spending more in the regions, you are right.

Mr KNOLL: Certainly, that is what the Economic and Finance Committee handed down. My question was: where is that money in the budget? Because when I looked at selected Agency Statements, when I look at Budget Paper 2 and the different agencies—

The Hon. A. KOUTSANTONIS: You just want a breakdown. Okay, I will get that for you.

Mr MARSHALL: My question relates to Budget Paper 3, page 38, and relates to payroll tax projections over the forward estimates. What assumptions are being made to support forecast real growth in payroll tax revenues at or above 3 per cent for most of the forward estimates, three times the rate of the forecast employment growth rate over that period?

The Hon. A. KOUTSANTONIS: I am advised you have, obviously, employment growth, you have wages growth and you have bracket creep. Brackets are fixed, not indexed, so people come into the payroll tax regime.

Mr MARSHALL: What proportion of that 3.7 per cent real growth rate is bracket creep for this current financial year?

The Hon. A. KOUTSANTONIS: We have not broken it down.

Mr MARSHALL: Can you do that work for us?

The Hon. A. KOUTSANTONIS: I will have a look.

Mr MARSHALL: Is it fair to say though that the majority of the 3.7 per cent over and above the employment growth rate of 1 per cent is in fact bracket creep for this current financial year?

The Hon. A. KOUTSANTONIS: I am not sure. I could not give you an accurate answer.

Mr MARSHALL: Budget Paper 3, page 62. I just have a couple of questions with regard to the new Royal Adelaide Hospital and the timing of the commercial acceptance of that financial liability for South Australia. Who provided the independent advice to Treasury which has led you to the opinion that in fact the hospital will not be handed over until the second half of next year? Sorry, second half of this year. No, sorry, I was right originally, the second half of next year. Sorry.

The Hon. A. KOUTSANTONIS: Mr Lucas will be very disappointed, this answer is on the way to him.

Mr MARSHALL: What is that, sorry?

The Hon. A. KOUTSANTONIS: Mr Lucas will be very disappointed, this answer is on the way to him on the Budget and Finance Committee. I am advised it was Tracey Brunstrom and Hammond Pty Ltd. They have been engaged to report periodically to the new Royal Adelaide Hospital steering committee.

Mr MARSHALL: What month does that advice suggest we will take occupancy of the hospital?

The Hon. A. KOUTSANTONIS: I cannot find that they have given us a month, they have just told us the financial year.

Mr MARSHALL: Presumably, to come up with a budget for the next financial year and the expenses that are related to occupation of the new Royal Adelaide Hospital, you must have factored in a month that those payments would start. So, which month have you started those payments in your forward estimates?

The Hon. A. KOUTSANTONIS: I am advised it will be very early in that financial year.

Mr MARSHALL: Which month?

The Hon. A. KOUTSANTONIS: The best advice I have is very early that financial year.

Mr MARSHALL: Can you advise the committee or the parliament later today or parliament when it resumes tomorrow what month the government has currently budgeted to start paying payments to the consortium for occupation of the new Royal Adelaide Hospital? Surely, you must know it. If you put it into your budget you must know what month it is. Either you know it or you are trying to keep it from the people of South Australia.

The Hon. A. KOUTSANTONIS: It is one of the largest infrastructure projects anywhere in the world and it is pretty visible to everyone who drives past it, so we are not trying to hide the new Royal Adelaide Hospital, even though you called it a false economy spending. We have contingencies in place from 1 July if it comes on line then, but we are told, we are advised, the very best advice we have is that it is early in that financial year.

Mr MARSHALL: So, you will not be advising this committee later today as to which month you have started the—

The Hon. A. KOUTSANTONIS: I do not have the advice here.

Mr MARSHALL: I am not saying whether you have it here, but can you provide it? I mean, you are in estimates for the rest of the day, as am I.

The Hon. A. KOUTSANTONIS: I understand the funding is in place from 1 July.

Mr MARSHALL: So, we will occupy the hospital—

The Hon. A. KOUTSANTONIS: No, that is not what I said. I said that we have funding in place, ready to go, from 1 July, and that we are advised that it will be ready early that financial year.

Mr MARSHALL: In the first quarter?

The Hon. A. KOUTSANTONIS: When it comes online, we have the funding in place to take possession of the hospital.

Mr MARSHALL: Are you aware that the Minister for Health told his estimates committee earlier in the week that they are prepared to take it over when it is due to be handed over which is, of course, in less than 60 days, so that they can begin the 90 days of clinical trials? Why is it that one minister thinks that he is taking it over in less than six months and another minister thinks in more than 12 months?

The Hon. A. KOUTSANTONIS: Again, it is a very poor attempt by you to verbal another minister. I think what minister Snelling said was, if the consortium are ready to hand over the hospital, we will be ready to take it, but we are planning for commercial acceptance of the hospital in financial year 2016-17, and we have funding in place from 1 July.

Mr MARSHALL: You have funding in place from 1 July but, at this stage, you do not envisage it being ready for 1 July but sometime in the first quarter; is that correct?

The Hon. A. KOUTSANTONIS: We are told it is early that financial year.

Mr MARSHALL: So, would it be logical to assume the first quarter?

The Hon. A. KOUTSANTONIS: I hope it is the first quarter but, of course, things get delayed on fit-outs. Anything can happen.

Mr MARSHALL: Just for clarity, you keep saying funding is available. Are you suggesting that you have not actually put a month start date into the forward estimates—you just refuse to do that? You have been given advice as to what month it is going to be but—

The Hon. A. KOUTSANTONIS: This is not a perfect world. When you are building infrastructure projects, there are delays. Weather gets involved.

Mr MARSHALL: I am not debating that.

The Hon. A. KOUTSANTONIS: There can be delays on product delivery; there can be delays in final fit-out; there can be all sorts of delays that occur. It is only prudent to plan ahead, and that is what we are doing.

Mr MARSHALL: Yes, but do you refuse to answer the question as to what month—

The Hon. A. KOUTSANTONIS: No, I do not refuse to answer any question. I am answering it as best I can. You just do not like the answer.

Mr MARSHALL: The question is: what month does the funding begin, not when is it available. In your forward model, what month have you put into your forward estimates for first payment?

The Hon. A. KOUTSANTONIS: On 1 July 2016, the funding will be available.

Mr MARSHALL: No, again—

The Hon. A. KOUTSANTONIS: I understand what you are trying to get me to say, but I am not going to—

Mr MARSHALL: So, you refuse to tell the committee?

The Hon. A. KOUTSANTONIS: No, I am answering it the best I can. You are just trying to make, again, another cheap political point and, meanwhile, going outside and demanding we build more infrastructure then complaining about infrastructure we are building.

Mr KNOLL: I refer to Budget Paper 4, Volume 4, page 156. Treasurer, it says in here 'Ministerial office resources'. Can you confirm that all of your ministerial travel expenses come out of this budget line, out of this $1.94 million?

The Hon. A. KOUTSANTONIS: That is the advice I have, yes.

Mr KNOLL: Last year, your ministerial office had a budget of $1.92 million and 15 staff, and this year, we have $1.94 million for 12 staff. Can I ask whether this means, as you have three less staff, the remaining staff are being paid more, or is there another expense within your office that takes up that extra money?

The Hon. A. KOUTSANTONIS: I am advised that the $1.940 million expenditure for 12 FTEs reflects the cabinet-approved funding allocation. The reporting treatment for the Treasurer's office sub-program as reported in the 2014-15 DTF Agency Statements has been amended in the 2015-16 DTF Agency Statements structure. Former Sub-program 6.2: Ministerial Support Services—Treasurer has been reprofiled as a corporate overhead for the 2015-16 Agency Statements. As a result, sub-program 6.2 does not appear as a sub-program in the 2015-16 Agency Statements.

The corporate overhead promise comprises a corporate budget allocation which is allocated across the DTF program structure based on programs allocated of FTEs. The DTF corporate overhead includes an allocation of departmental corporate services, incorporating the executive branch, the Treasurer's office, human resources, OHS&W, ICT and finance, etc. I hope that is clear.

Mr KNOLL: It is indeed. Can I ask what proportion of that $1.94 million in this year's budget was corporate overhead allocation?

The Hon. A. KOUTSANTONIS: I will take that on notice.

Mr KNOLL: Can you also take on notice whether there has been any increase in staffing costs, also as part of that budget line, or are you suggesting that only some of it is from that corporate overhead allocation?

The Hon. A. KOUTSANTONIS: I will take that on notice.

Mr KNOLL: On the same budget line, Treasurer, what was the reason that your $52,000 trip was undisclosed until today and had not been published through the normal proactive disclosure process?

The Hon. A. KOUTSANTONIS: You mean why is it published online? I try to hide it by publishing it online. I do not know why it was not published earlier. When we were made aware that it was not published, we made sure that it was. It was a very important trip to Canada to attend the largest mining conference in the world. It is important to meet with a number of people about issues relating to the state's mining and resources wealth.

I had a series of meetings. I met with Codelco, Antofagasta, Uranium One, Atlas Copco, Teck, and the Canadian Association of Mining Equipment and Services for Export, and I also met with Mr Mikael Groning, who is the Swedish Secretary for Mining and Deputy Director, Research, Innovation and Development.

I went to the Ontario government reception and hosted a dinner where there were presentations by Mr Steve Hill and Richard Hills. It was all about refreshing confidence in the state's resources sector. It was important that I attended a number of investment lunches with the Hon. Mr Andrew Robb, who also attended, the Minister for Trade and Investment; the Australian High Commissioner; and representatives of the Australian Trade Commission.

The truth is that three staff and $52,000 sound like a sensational number: it is not. I think when members of parliament attempt to gain political points for travelling to important seminars like PDAC, it belittles all of us in the public's mind. I encourage the shadow minister for mining to visit as many mining countries as he can. He should go to Chile, he should go to the United States, he should travel interstate and meet as many shadow mining ministers and mining ministers as he can.

South Australia ranks very highly amongst the Fraser Institute's rankings for regulatory approaches to mining, and I encourage the opposition to travel abroad and sell South Australia to the world and open us up for investment and let them know that there is a bipartisan framework in place in this state for mining investment. I see absolutely no problem with South Australia's mining minister travelling to the largest mining conference in the world. I think the bigger criticism would have been if I did not go, and the question would be, 'Why didn't you?'

Mr KNOLL: That is a wonderful answer, Treasurer. Of those three staff, were they departmental staff or ministerial staff?

The Hon. A. KOUTSANTONIS: Ministerial staff.

Mr KNOLL: Do you have a breakdown of the cost of the actual conference as opposed to the rest of the trip?

The Hon. A. KOUTSANTONIS: I am not sure what you mean. The registration fees?

Mr KNOLL: The cost of being involved with the conference.

The Hon. A. KOUTSANTONIS: I think the registration fee was $1,500 per person, but I will check that and get back to you.

Mr KNOLL: Thank you, Treasurer.

Mr MARSHALL: My questions related to Budget Paper 3, page 58, and in particular the table the budget contains regarding federal government impacts. There was quite some discussion at least year's estimates, and indeed in last year's budget and in the public discourse thereafter. In fact, the government themselves embarked upon quite an extensive campaign highlighting federal government cuts.

In the cold, hard light of day, when we have had an opportunity to now review how much we have received and how much we are likely to receive going forward, can the Treasurer confirm to this estimates committee that if we compare the original Labor federal budget handed down in May 2013-14 for the last financial year, this financial year and the next financial year, there is in fact a $2.2 billion uplift in the distribution from the commonwealth to South Australia, there is no cut and there is in fact a $2.2 billion increase?

The Hon. A. KOUTSANTONIS: When the commonwealth government cut $80 billion over the next 10 years starting from their first budget, members opposite said that was unbudgeted expenditure they had cut, so therefore it was not a cut. Yet, the opposition now turns up and says to me, 'From the last commonwealth Labor government's budget in their forward estimates there has been an uplift from here to here; therefore, there has been an increase in spending.'

Quite frankly, the idea that I can somehow move tied grants as discretionary funding wherever I like is ridiculous, and the Leader of the Opposition knows that and he is attempting to make points. If he does not believe me, that is fine: believe Premier Baird, believe Mr Colin Barnett. There have been substantial cuts made by the commonwealth. Believe the commonwealth government's own budget papers, where they talk about the cuts they have made to health and education.

It seems to me the that only people who do not believe that the commonwealth have made cuts to health and education are the South Australian Liberal Party. It probably reflects why they are doing so badly in the polls.

Mr MARSHALL: Nevertheless, I am not talking about the Coalition's cuts; I am just trying to establish an agreement with the Treasurer that, in fact, we have ended up with $2.2 billion more over last year, this year and next year, which are the final three years of the forward estimates provided by the federal Labor government in their May 2013 budget. I would just like the Treasurer to acknowledge that very significant increase in funds over and above what Labor had promised to South Australia.

The Hon. A. KOUTSANTONIS: Again, you are just not listening and attempting to defend the undefendable. Mike Baird has moved on from this and acknowledges that there are dramatic cuts to the states—

Mr MARSHALL: But this was before Mike Baird was even the Premier of New South Wales.

The Hon. A. KOUTSANTONIS: I understand you are not interested in what other Liberal leaders are saying, especially successful ones; you prefer to remain unsuccessful. The truth is that there are dramatic cuts being made by the commonwealth. The commonwealth themselves acknowledge it. They are the ones who are out telling the business community that they have made dramatic cuts to the states. They have put it in their own budget papers.

Premier Baird is out there talking about GST on the basis that there have been dramatic cuts made by the commonwealth. The only person who refuses to accept that is the Leader of the Opposition. Quite frankly, it does not serve you or your party any good not to agree that Treasurer Hockey has made substantial cuts to South Australia and, indeed, the entire nation.

Liberal leaders around the federation agree. The only Liberal leader who will not accept it and continues to defend Treasurer Hockey is the Leader of the Opposition. That explains entirely why the most successful Liberal Premier in the country, Mr Baird, acknowledges that there are cuts and wants to do something about it, and then the Leader of the Opposition sits there with his head in the sand—

Mr KNOLL: Point of order, Chair: I ask you to rule that the Treasurer has been entering into debate for some time, and I ask you to bring that to order.

The CHAIR: I will listen to his answer and ask him to finish it off quickly so we that can get onto the next question.

The Hon. A. KOUTSANTONIS: I have finished.

The CHAIR: It is finished.

Mr MARSHALL: It seems to me, from a fundamental analysis of what was promised, what has been delivered and what plans to be delivered from the commonwealth, that in fact last financial year we ended up $273 million better off than was envisaged by Labor; this current financial year, $671 million better off than was promised under Labor; and next year a whopping $1.256 billion better off in a single year. Why has it been with this unbudgeted, unexpected increase in funding from the commonwealth that the Treasurer has not been able to return the budget to surplus?

The Hon. A. KOUTSANTONIS: First and foremost, GST is not a policy decision made by the commonwealth cabinet. They do not sit in their room deciding how much they are going to allocate towards the state.

Mr MARSHALL: I can break it down for you: GST and non-GST.

The Hon. A. KOUTSANTONIS: I am sure you can.

Mr MARSHALL: I can.

The Hon. A. KOUTSANTONIS: What you are not doing is giving the committee the full picture of the entirety of the cuts over the 10-year program, and what you have done is focus on a narrow band.

Mr MARSHALL: What—this year, next year and the year after?

The Hon. A. KOUTSANTONIS: Do you want me to answer the question—

The CHAIR: Order!

The Hon. A. KOUTSANTONIS: —or doesn't it suit your narrative?

The CHAIR: Order! Let's just go on with the answer to the question.

The Hon. A. KOUTSANTONIS: The truth is that the cuts are real and the opposition refuses to accept them. The cuts increase dramatically year in, year out over the forward estimates. The reason we have a leaders' retreat and the reason we are talking about the GST and the Medicare levy is to deal with these dramatic cuts your party has made in Canberra. Liberal premiers, like Colin Barnett and Mike Baird, are prepared to accept that there needs to be some difficult discussions about what we do to provide these services because the cuts are dramatic. The Prime Minister accepts that they have made dramatic cuts to health and education—he said so himself, yet the only person with his head in the sand is the Leader of the Opposition.

The CHAIR: Order!

Mr MARSHALL: Given that the state received almost $300 million more from the commonwealth than was envisaged under the previous Labor federal government and a transfer of approximately $850 million from the Motor Accident Commission last year, why is it that with these two extraordinary uplifts in revenue to the budget our state still was not able to return to surplus last financial year?

The Hon. A. KOUTSANTONIS: We are returning to surplus this financial year.

Mr MARSHALL: No, last financial year.

The Hon. A. KOUTSANTONIS: Yes, well I am talking about now.

Mr MARSHALL: Something else, not the question.

The CHAIR: Order! The Treasurer is answering the question.

The Hon. A. KOUTSANTONIS: Some of us live in the past, some of us live in the now, and the Leader of the Opposition lives in the past. We are returning to surplus; we have large surpluses projected forward and we have returned $670 million in tax cuts to the people of this state, and I am very proud of that. I am very proud of the fact that, even under the worst-possible modelling, South Australia goes to the top of the tree of all the states in terms of affordability when it comes to taxation.

The Commonwealth Grants Commission view us as having one of the lowest taxing efforts in payroll tax. The IPA forecast that, using their own modelling, by the end of this process we will be the cheapest state in the country for tax effort, and I am very proud of that—something the Leader of the Opposition never aspired to.

Mr MARSHALL: Sorry, I just lost my train of thought.

The Hon. A. KOUTSANTONIS: That's okay, you have plenty of time; you have at least until Christmas.

Mr KNOLL: I refer to Budget Paper 3, page 80, table 5.4. The minister responsible for Renewal SA informed this committee that the board of Renewal SA had received approval from Treasury to not pay the $11.6 million dividend which is in there in the estimated 2014-15 result. Can the Treasurer confirm whether he gave this approval and, if so, when this approval was given?

The Hon. A. KOUTSANTONIS: I am advised that the Urban Renewal Authority did not make a dividend payment of $11.6 million in 2014-15, as forecast in the budget. As required under the Urban Renewal Authority Act 1995, the Urban Renewal Authority Board considered the payment of a dividend before the end of the financial year. The board recommended to the Minister for Planning and Urban Development that no dividend be paid. The board would prefer to use the funds to pay down their debt rather than pay a dividend to the government.

I am aware that in this estimates committee the minister indicated he is supportive of the Urban Renewal Authority retaining these funds. As required under the act, the minister is required to consult with the Treasurer prior to this matter being finalised and I understand that the minister has recently written to me on the issue. I will consider his correspondence.

Mr KNOLL: The second part of that question was whether you can confirm when this approval was given, or certainly when the Renewal SA board sought that advice?

The Hon. A. KOUTSANTONIS: I do not have the date of the board meeting and I would refer you to the Minister for Planning and Urban Development.

Mr KNOLL: I refer to Budget Paper 2, page 7, in the first sentence. During your speech you referred to the government's spending on justice, including police, courts and prisons. However, you failed to mention the cost of the government's failed courts precinct development. Can the Treasurer confirm whether the South Australian government paid any form of compensation to any of the bidders involved in the court precinct PPP process after the state government decided to cancel the procurement, the value of any compensation paid and whether any liabilities or commercial arrangements exist in relation to this project?

The Hon. A. KOUTSANTONIS: I would refer you to minister Mullighan.

Mr MARSHALL: Going back to Budget Paper 3, page 58, table 3.23, which is essentially a reference to commonwealth budget impact lines. Is there any particular reason that you failed to outline the GST money coming from the commonwealth under that table?

The Hon. A. KOUTSANTONIS: For the reason that the commonwealth government do not control the distribution of GST; that is done independent of any policy decision made by the commonwealth cabinet.

Mr MARSHALL: Sure. Nevertheless, it is money coming from the commonwealth to South Australia.

The Hon. A. KOUTSANTONIS: No.

Mr MARSHALL: How much is the extra—

The Hon. A. KOUTSANTONIS: No. Again, you completely—

Mr MARSHALL: Look, I am asking the question.

The Hon. A. KOUTSANTONIS: —misunderstand the GST. One minute you say it is the states' tax and you like the GST, and I can refer you to the Hansard where you said how much you like the GST and what a good tax you thought it was before you decided to tell us all how opposed—

Mr MARSHALL: I am asking a question; what is he even asking?

The Hon. A. KOUTSANTONIS: Sorry, is this embarrassing you again?

The CHAIR: Order!

Mr MARSHALL: Well, I have not asked the question.

The Hon. A. KOUTSANTONIS: You asked why it is not included.

Mr MARSHALL: No, I am sorry, Treasurer—

The Hon. A. KOUTSANTONIS: You should be sorry.

The CHAIR: No, I am sorry.

The Hon. A. KOUTSANTONIS: You should be sorry to all your colleagues.

The CHAIR: Just a moment.

The Hon. A. KOUTSANTONIS: You should apologise to all of them for the appalling job you are doing.

The CHAIR: I would like to take this opportunity to welcome today visitors to the parliament from the Leigh Creek Area School. I welcome them and hope they enjoy their time with us today. I know they will be very impressed by the behaviour going forward.

Mr MARSHALL: My question to the Treasurer is: how much extra revenue is the state government receiving in GST revenue grants for the period outlined in this table?

The Hon. A. KOUTSANTONIS: In Budget Paper 3, pages 46 right through to 49, we detail our GST revenue grants.

Mr MARSHALL: But not in the same format compared with the original budget.

The Hon. A. KOUTSANTONIS: Because they are not policy decisions of the commonwealth government.

Mr MARSHALL: So you are not aware of what that difference in GST uplift is?

The Hon. A. KOUTSANTONIS: From what point? What is your reference point?

Mr MARSHALL: From the same reference point that the commonwealth government budget impact is done.

The Hon. A. KOUTSANTONIS: Can you be more specific?

Mr MARSHALL: Exactly the same basis as you have used in 3.23.

The Hon. A. KOUTSANTONIS: It is a different comparison, I am advised.

Mr MARSHALL: In which way is it different are you advised?

The Hon. A. KOUTSANTONIS: Give me the reference point you want to know the uplift from. Is it the MYEFO, is it the last commonwealth budget or is it the state budget? Which budget are you interested in the uplift from?

Mr MARSHALL: When I tell you, are you going—

The Hon. A. KOUTSANTONIS: Be clear and I will give you a clear answer.

Mr MARSHALL: When I—

The Hon. A. KOUTSANTONIS: Do you want five minutes to go and speak to your advisers about what the question should be?

The CHAIR: Order! Let's hear what the leader has to say?

Mr MARSHALL: Is the Treasurer advising that, if I give him that starting date, he will do the comparison for me, because that is what he committed to in last year's budget estimates and I am actually still waiting.

The Hon. A. KOUTSANTONIS: I do not think there is even a question there.

Mr MARSHALL: Are you committing that when I give you that—because I would like it from multiple perspectives. I would like it from a comparison in the GST distribution for each of the forward estimate years when it is possible, from the May 2013 federal Labor government budget—certainly I would like it from then—and I would like it from every state budget thereafter.

The Hon. A. KOUTSANTONIS: If you go to Budget Paper—

The CHAIR: Why don't we just hear the answer when you have had advice.

The Hon. A. KOUTSANTONIS: We publish a detailed analysis of the variations in GST. I refer the Leader of the Opposition to Budget Paper 3, page 13, variations in revenue estimates (parameter and other), which gives a very detailed account of the variations—

Mr MARSHALL: Well, it does not against the federal Labor—

The CHAIR: Order! The Treasurer is still answering the question.

The Hon. A. KOUTSANTONIS: Unfortunately for the Leader of the Opposition—

Mr Marshall interjecting:

The CHAIR: No.

The Hon. A. KOUTSANTONIS: —but fortunately for the people of this state, Treasury are not political. They do not do an analysis of what you are attempting to make them do, which is to say that in the 13 May budget, delivered by Treasurer Swan, in their forward estimates they had GST revenue as being X. When Treasurer Hockey delivered his budget, the forward estimates showed South Australia getting Y in GST in the same period.

What is the difference? Treasury does an analysis in the Mid-Year Budget Review, the state budget, about what we get from GST, and they do it in a non-political way. If you want to politicise the Public Service, you will have a fight with the people of this state, and I think you would find that it would be a very bad outcome for the people and the government.

Mr MARSHALL: No answer there. My question now is regarding Budget Paper 3, page 54, and specifically deals with SA Water dividends. The government has ruled out an independent inquiry into water pricing in South Australia. We note from comments made by the Treasury in evidence that has been given to the Budget and Finance Committee that a huge proportion of the total revenue, or allowable revenue under SA Water, is determined by the value of the regulated asset base that is provided, in fact, from Treasury—not by any independent body, not with any level of scrutiny by the people of South Australia, but in fact from Treasury.

Can the Treasurer outline to this committee the basis that he uses to determine the regulated asset base which is relied upon by SA Water when they set water prices for South Australia going forward?

The Hon. A. KOUTSANTONIS: There is an independent inquiry. It is conducted by ESCOSA. They are independent. I note the Leader of the Opposition's claim that they are not independent: they are. The process for determining the regulated asset base was a process agreed to by ESCOSA.

Mr MARSHALL: Are you suggesting that ESCOSA independently sets the regulated asset base for SA Water?

The Hon. A. KOUTSANTONIS: No; the advice I have is that the process was agreed to with the independent regulator.

Mr MARSHALL: Nevertheless, that was not the question. Who does set the regulated asset base value for SA Water that is relied upon both by ESCOSA and SA Water in determining water prices for South Australians?

The Hon. A. KOUTSANTONIS: I am advised that that process, which was agreed to by ESCOSA, was determined by the then treasurer.

Mr MARSHALL: Who does that valuation and what methodology do they use?

The Hon. A. KOUTSANTONIS: I understand that is consistent practice with what is conducted interstate. You are asking for the methodology?

Mr MARSHALL: I am asking: who does the work and what methodology is used?

The Hon. A. KOUTSANTONIS: I will get you a detailed answer on the methodology because I think a detailed answer will give it more justice than I will.

Mr MARSHALL: What format will that come in?

The Hon. A. KOUTSANTONIS: Can you just let me finish?

The CHAIR: The answer is not finished.

The Hon. A. KOUTSANTONIS: I also point out that—

Mr Marshall interjecting:

The CHAIR: The answer is not finished.

Mr MARSHALL: I am going to ask questions about cars, ministerial and cars—

The CHAIR: Well, we are back on methodology.

The Hon. A. KOUTSANTONIS: It is okay, Chair. A large part of SA Water's revenue is determined by the return on and depreciation of the regulatory asset base. Consistent with regulatory practice in other jurisdictions during the transition to independent economic regulation, the government set the initial value of the regulatory asset base at $11.35 billion as of 1 July 2013 in December 2012 dollars and the pricing order dated 17 May 2013.

I am advised that the value involved some element of back-solving on the basis of the existing revenue stream. This was consistent with the regulatory practice and advice from ESCOSA. Some back-solving is involved because the regulatory asset base is generally different from the accounting value of the assets as represented in the utility's financial statements. The accounting values are established, and revalued in accordance with international accounting standards, and audited annually by the Auditor-General.

In the 2005-06 Transparency Statement, the regulatory asset base was set consistent with its accounting value. The regulatory assets were valued at $6.463 billion as of 1 July 2004, comprised of infrastructure assets of $6,671 million (that is SA Water 2004, page 102) and tradeable water entitlements of $14 million (SA Water 2004, page 99) less the estimated value for proposed corporatisation of attributed assets as of 1 July 2004 of $222 million.

After that, the regulatory asset value was rolled forward each year consistent with NWI pricing principles. When the initial value of a regulatory asset base was set in 2013, pricing water at $11.35 billion, the book value of the infrastructure assets was $13.3 billion and the book value of water entitlements was $31.6 million.

The initial regulatory asset value has been set as at 1 July 2013. ESCOSA will determine the method of inflation, depreciation and value of additions to the regulatory asset base, new capital expenditure and sales of assets. Therefore, over the life of the assets, the value of the initial regulatory asset base as set by the government will become less significant. I also point out that the Auditor-General's own value of the assets is higher than the government's regulatory asset base value.

Mr MARSHALL: In what point did he provide that advice to you and in what format? Is that a document which can be tabled?

The Hon. A. KOUTSANTONIS: I am advised that he signs off annually on SA Water's accounts and that the value of those assets is included in those summaries.

Mr MARSHALL: But you just provided advice to the committee that the Auditor-General had given a higher valuation of the regulated asset base. Can you just evidence that?

The Hon. A. KOUTSANTONIS: No, the advice I gave the committee was that the Auditor-General's value of the asset base was higher than the government's regulated asset base value.

Mr MARSHALL: What is the evidence of that?

The Hon. A. KOUTSANTONIS: You can compare the two numbers in the reports, but I can give you a detailed answer on notice, if you like.

Mr MARSHALL: I would like. Does the Treasurer accept that there is quite a deal of public controversy regarding the regulated asset base, with former ESCOSA directors publicly stating that the regulated asset base is approximately $2 billion overvalued and that in fact water consumers are paying the highest water prices in the nation because we do not have a fair regulated asset base value which SA Water and ESCOSA are using?

The Hon. A. KOUTSANTONIS: I note the controversy you speak of by the resignation of Mr Kerin, and others, and the controversy by some other former directors. They offer no methodology which would give account for the value that they place on the assets. They simply work backwards from a principle that we should have the lowest prices in the country and that the way to do that is to simply set an arbitrary value on the assets, rather than the true cost of delivering the water.

Mr MARSHALL: Nevertheless, do you accept that there is controversy?

The Hon. A. KOUTSANTONIS: No.

Mr MARSHALL: Well, you just did a minute ago.

The Hon. A. KOUTSANTONIS: No, I don't think I did.

Mr MARSHALL: I think you did.

The Hon. A. KOUTSANTONIS: No, I said you said 'controversy'.

Mr MARSHALL: So what is the best way to clear this up, when you have former directors who are saying that the regulated asset base is overvalued, when there is a lack of transparency with regard to the determination for the regulated asset base, when you have reports that Treasury officials were asking ESCOSA to model up the impacts upon water prices based upon a 5, 10 and 15 per cent increase in the regulated asset base and thereafter provided a very neat 10 per cent increase in the regulated asset base? To clear this up, shouldn't either, one, an independent water price inquiry be undertaken in South Australia or, two, the Auditor-General be tasked with bringing down a report into the value of the regulated asset base?

The Hon. A. KOUTSANTONIS: First and foremost, the process for determining the value of the regulated asset base was determined by ESCOSA. We followed their process. Subsequent comments from former directors do not serve any real purpose other than to sensationalise the process. I have complete faith in the current ESCOSA board and the current leadership at ESCOSA. They are fine regulators and they do an exceptional job and, if the opposition does not have confidence in them, they should say so.

Mr MARSHALL: Nevertheless, that was not my question.

The Hon. A. KOUTSANTONIS: Well, that was my answer.

Mr MARSHALL: Well, are you prepared to instruct the Auditor-General for an inquiry into the regulated asset base or are you inclined to support the Liberal Party's independent inquiry into water pricing in South Australia?

The Hon. A. KOUTSANTONIS: Again, there needs to be a methodology that the independent inquiry would follow to determine the regulated asset base. We followed the process that ESCOSA set out. What the Leader of the Opposition is attempting to do is politicise this. Good luck to him. It won't work.

Mr MARSHALL: With respect, the methodology is that Treasury determines the regulated asset base. When you have Treasury officials asking ESCOSA to model up the impacts upon water prices of 5, 10 and 15 per cent variations in the regulated asset base—

The Hon. A. KOUTSANTONIS: That was the process ESCOSA agreed to.

Mr MARSHALL: Be that as it may, is it ideal for the people of South Australia to have an incorrect regulated asset base which leads to high water prices in South Australia?

The Hon. A. KOUTSANTONIS: So the Leader of the Opposition's thesis is: the independent regulator set out a process, we followed it, be that as it may we should have ignored that. I mean, quite frankly, I think you are confused about the role ESCOSA and Treasury play here. ESCOSA set out a process, we agreed to it and followed it.

Mr MARSHALL: Well, how do you—

The Hon. A. KOUTSANTONIS: If the Leader of the Opposition wants to change the regulated asset base, let him set out the methodology he thinks should be followed.

Mr MARSHALL: How do you account for several directors now, several former directors of ESCOSA, coming out publicly and stating that the regulated asset base is wildly overvalued leading to incredibly high increased water prices on consumers in South Australia who can ill afford it? I am talking about household water bills and, of course most importantly at the moment, with the very high unemployment rate in South Australia water costs on business.

The Hon. A. KOUTSANTONIS: I would say to the former directors who are making sensational comments that they have not been able to identify to the public which assets are overvalued and by how much.

Mr MARSHALL: Okay. I refer to Budget Paper 5, page 8—or it could be Budget Paper 3 because of my writing, sorry. This paragraph is essentially to do with payroll tax. This refers to an estimated 2,200 employees who will benefit from the government's one-year payroll tax rebate. How has this estimate been produced?

The Hon. A. KOUTSANTONIS: I am advised from the data that we have from Revenue SA that estimate is how many employers or corporations there are who have payrolls within that span.

Mr MARSHALL: What is Treasury's estimate of the number of South Australian businesses paying payroll tax in South Australia?

The Hon. A. KOUTSANTONIS: We do not have it here but we will get that number for you.

Mr MARSHALL: The Treasurer quite often states that we have 140,000 businesses in South Australia but how many of those are actually employing people?

The Hon. A. KOUTSANTONIS: I will get some data and get back to you.

Mr MARSHALL: Is the government insisting on pursuing its current policy, which is essentially to remove the payroll tax concession at the end of this financial year?

The Hon. A. KOUTSANTONIS: You will have to wait and see the next budget.

Mr MARSHALL: In your budget paper it states that the budget that has been handed down and the tax arrangements—in fact, on page 3 of Budget Paper 3 it states that:

The 2015-16 Budget includes the government's response to the State Tax Review.

Is this the total response to the state tax review, or are there other anticipated changes to the state taxation arrangements?

The Hon. A. KOUTSANTONIS: Despite the federal Liberal Party's attraction to a broadbased land tax, which I note Treasurer Hockey has talked about again subsequent to the South Australian budget, we rule out any broadbased land tax on the family home in exchange for removing stamp duty. South Australians are not ready for broadbased land taxes. I think it would not serve the purpose we intend, which is to stimulate activity, but in terms of other inefficient transactional taxes, if there is a tax that is doing harm, I am keen to remove it.

Mr MARSHALL: Payroll tax?

The Hon. A. KOUTSANTONIS: All the evidence I have from all the independent experts we spoke to from every major accounting firm we spoke to charts payroll tax as a very efficient tax that does very little harm to the economy and removing it would simply see an increase in wages growth.

Mr MARSHALL: Has there been any modelling done by Treasury or by the government more broadly on what a payroll tax reduction would mean in terms of jobs?

The Hon. A. KOUTSANTONIS: I refer you to the government's budget paper response to the state tax review. KPMG and Independent Economics rank conveyance duty as being very inefficient. The more efficient taxes are: payroll tax. Deloitte Access Economics 2015, KPMG 2010 and the commonwealth Treasury 2015 rank, I am advised, payroll tax as a very efficient tax, up there with gambling taxes and land tax. So, in terms of its dead weight to the economy, it is relatively minor, and reducing payroll tax would simply see it passed on in wages growth, which would make South Australian businesses less competitive.

Mr MARSHALL: Nevertheless, have you done any specific jobs modelling regarding payroll tax and the removal of payroll tax?

The Hon. A. KOUTSANTONIS: We have not modelled the impact on jobs. We have modelled the impact, I understand, on economic activity.

Mr MARSHALL: But not on jobs?

The Hon. A. KOUTSANTONIS: Not on jobs. We did find that the opposition's tax package at the last election offered very little gains in comparison to tax cuts the government announced, but again, it is very difficult to model the impacts on what are, quite frankly, unprecedented tax cuts. There is no jurisdiction in Australia that does not charge conveyance on real and non-real property consecutively, so it is hard to model.

Mr MARSHALL: Budget Paper 5, page 9, just a couple of questions regarding some Stamp Duties Act amendments. In relation to the exemption on motor vehicle transfers where the parent or legal guardian of an incapacitated person who is a minor purchases a vehicle to transport the minor, can the Treasurer define 'incapacitated' as it is not currently defined in the act, and can the Treasurer confirm whether similar exemptions apply to incapacitated non-minors?

The Hon. A. KOUTSANTONIS: I am advised by the deputy state tax commissioner that there is a definition in the act of 'incapacitated'.

Mr MARSHALL: Can you share that with us?

The Hon. A. KOUTSANTONIS: I can get the act out for you.

Mr MARSHALL: And also whether or not the exemptions apply to incapacitated non-minors?

The Hon. A. KOUTSANTONIS: Yes, they do, I am advised.

Mr MARSHALL: In relation to the exemption on motor vehicle transfers where disability service providers purchase vehicles to transport persons with disabilities, can the Treasurer confirm whether this exemption will apply to persons with intellectual disabilities or only to people with physical disabilities, as well as how service providers will qualify and if there will be restrictions on the type of vehicle purchased?

The Hon. A. KOUTSANTONIS: I will take that on notice.

Mr MARSHALL: This is with regard to the disability service providers.

The Hon. A. KOUTSANTONIS: I understand.

Mr MARSHALL: I just have one more on that, if possible. In relation to the concession to the registration fee component of a vehicle where the vehicle is used mainly for transporting an incapacitated minor, can the Treasurer explain what is meant by 'incapacitated minor', whether a family car that has been modified for a wheelchair will be included and whether reductions will be extended for modified family vehicles used to transport people over the age of 18?

The Hon. A. KOUTSANTONIS: For people in their care who are over the age of 18, that is already incorporated. For minors, yes, modified vehicles will be incorporated—that is the advice I have. If they are not, if they somehow are slipping through the cracks, we will make amendments, because the intent of the changes is to make sure that everyone who is incapacitated gets this exemption. We will get a more detailed answer to—

Mr MARSHALL: With a minor or over the age of 18, whether it is intellectual or physical disability, and whether or not it is the family vehicle or whether it is a service provider—that is the range of issues.

The Hon. A. KOUTSANTONIS: My advice is service providers already have an exemption. We are talking about people who are in families with private ownership of vehicles. I will get you a detailed answer on that, so we have got everything clear.

Mr MARSHALL: Thank you. Referring to Budget Paper 5, page 7, it states:

The specific measures funded by the Save the River Murray Levy will continue to be delivered.

Can the Treasurer provide a guarantee that all programs previously funded by the levy, including the River Murray improvement program, the South Australian River Murray salinity strategy and the South Australian environmental flows strategy will continue to receive the same level of funding in real terms?

The Hon. A. KOUTSANTONIS: That is a matter for the minister in the budget process. There are some programs that are time-limited. They will be funded but, yes, we have replaced the levy with government appropriations through the budget process. The minister will bring to us programs and we will decide in the budget process whether we fund them or not.

Mr MARSHALL: But where it says quite specifically in your budget document that 'The specific measures funded by the Save the River Murray Levy will continue to be delivered,' is that conditional in any way? Are you giving a guarantee to the people of South Australia that that funding, in real terms, will be preserved, or are you saying you are not prepared to give that guarantee?

The Hon. A. KOUTSANTONIS: No, what I am saying is that, when the levy was in place, there were different programs that were funded at different times, so it is up to the department to come up with a quantum of programs that they wish to be funded. We are not attempting to spend any less on this important work. What we are simply attempting to do is benefit households by giving them a cost-of-living benefit by removing this regressive tax.

Mr MARSHALL: No guarantee.

The Hon. A. KOUTSANTONIS: I think I just made it pretty clear.

Sitting suspended from 13:29 to 14:30.

Membership:

Mr Tarzia substituted for Mr van Holst Pellekaan.

Departmental Advisers:

Mr B. Rowse, Under Treasurer, Department of Treasury and Finance.

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

Mr D. Reynolds, Deputy Under Treasurer, Department of Treasury and Finance.

Mr G. Jackson, Deputy Commissioner of State Taxation, Department of Treasury and Finance.

Mr K. Cantley, General Manager, South Australian Government Financing Authority, Department of Treasury and Finance.

Mr A. Blaskett, Executive Director, Public Finance Branch, Department of Treasury and Finance.

The CHAIR: I refer members to Agency Statements, Volume 4. I call on the minister—are you making an opening statement, sir?

The Hon. A. KOUTSANTONIS: No.

The CHAIR: What about you, leader?

Mr MARSHALL: No.

The CHAIR: Minister, would you like to introduce your advisers.

The Hon. A. KOUTSANTONIS: Mr Kevin Cantley, the General Manager of SAFA; Mr Brett Rowse, Under Treasurer; and Mr David Reynolds, Deputy Under Treasurer. Behind me is Dr Don Russell, the Chief Executive of the Department of State Development, and Mr Blaskett is there also.

The CHAIR: Questions. Leader?

Mr MARSHALL: My question is on Budget Paper 3, page 41, which deals with guarantee fees, which are expected to grow modestly from 2016-17. What will be the driver for that increase in guarantee funds from 2016-17 onwards?

The Hon. A. KOUTSANTONIS: The advice I have is it is predominantly as SA Water's debt rolls over. We have changed our guarantee fee from 1 to 1.6 per cent.

Mr MARSHALL: What was that, sorry?

The Hon. A. KOUTSANTONIS: From 1 to 1.6 per cent.

Mr MARSHALL: I did not hear any of it, sorry.

The Hon. A. KOUTSANTONIS: I am advised that the growth in debt guarantee fees is because as SA Water's debt is being rolled over, the guarantee fee goes from 1 to 1.6 per cent.

Mr MARSHALL: Who has determined the increase from 1 to 1.6 per cent guarantee fee?

The Hon. A. KOUTSANTONIS: I am advised that ESCOSA assume that SA Water's credit rating is BBB. The increase from 1 per cent to 1.6 per cent is the difference from what we borrow the money at and what they BBB rated the organisation would borrow the money at.

Mr MARSHALL: You have said there is going to be an increase in 2016-17 from 1 to 1.6 per cent. What has actually driven the 0.6 per cent or 60 per cent increase in the guarantee fee?

The Hon. A. KOUTSANTONIS: I am advised it will occur on a gradual basis as SA Water refinances.

Mr MARSHALL: But that was not the question. The question is: what is the driver for the increase?

The Hon. A. KOUTSANTONIS: I think I just gave it to you earlier.

Mr MARSHALL: What is the driver for the increase in the guarantee rate, Treasurer? Do you know?

The Hon. A. KOUTSANTONIS: I explained it to you earlier. You are just not interested in listening.

The CHAIR: Order!

Mr MARSHALL: That is not the case. Can you explain it again, please?

The Hon. A. KOUTSANTONIS: ESCOSA assume that SA Water have a credit rating equivalent to BBB. The change in the rate is the assumption that we borrow at for them, and that is the difference in the rate that they would be paying.

Mr MARSHALL: But that will not come into account until 2016-17?

The Hon. A. KOUTSANTONIS: That is the advice I have, yes.

Mr MARSHALL: On other guarantee rates, who determines what that guarantee rate is?

The Hon. A. KOUTSANTONIS: I do, or Treasury.

Mr MARSHALL: On what basis?

The Hon. A. KOUTSANTONIS: On recommendations I receive from the SAFA board.

Mr MARSHALL: What is the average guarantee rate across all of the guarantees provided?

The Hon. A. KOUTSANTONIS: I am advised the average is 1.6.

Mr MARSHALL: Does Nyrstar or any government agency pay a guarantee fee for the state government's guarantee of a portion of Nyrstar's debt in relation to the redevelopment of the smelter at Port Pirie?

The Hon. A. KOUTSANTONIS: I am advised that if Nyrstar do draw down on the guarantee fee they will be paying the guarantee fee.

Mr MARSHALL: And what will that be determined to be at?

The Hon. A. KOUTSANTONIS: I would have to consult with Nyrstar before I made that figure public.

Mr MARSHALL: It is not an aspect of the arrangement that you have already determined with them? Is it something still yet to be determined?

The Hon. A. KOUTSANTONIS: I would have to consult with Nyrstar before I made that publicly available.

Mr MARSHALL: Are there any other guarantee fees which are paid by entities other than government departments or statutory authorities?

The Hon. A. KOUTSANTONIS: I am advised that people taking advantage of the Unlocking Capital for Jobs program will pay a guarantee fee.

Mr MARSHALL: What will that be set at?

The Hon. A. KOUTSANTONIS: I am advised initially it is at 2 per cent and it increases over the period of the process.

Mr MARSHALL: Decreases?

The Hon. A. KOUTSANTONIS: Increases.

Mr MARSHALL: Increases. What is the peak guarantee rate paid by the people receiving those grants?

The Hon. A. KOUTSANTONIS: I will get back to you and give you a detailed answer.

Mr MARSHALL: Thank you. Just with regard to that Nyrstar guarantee, if Nyrstar are paying the guarantee, what is the risk to government for providing that? Is it just if Nyrstar do not proceed with the project whatsoever, or if they default on their payments? What is the magnitude of the risk for South Australia?

The Hon. A. KOUTSANTONIS: The risk to the government or the taxpayer is if Nyrstar cannot meet its obligations and repay the $291 million.

Mr MARSHALL: What will be the total risk to the South Australian taxpayer if they default?

The Hon. A. KOUTSANTONIS: I am advised it would be $291 million plus any outstanding interest.

Mr MARSHALL: So we have not insured against that potential default? There is no cost associated with that, we are just wearing that risk ourselves?

The Hon. A. KOUTSANTONIS: There would be no market that would take insurance.

Mr MARSHALL: I refer to Budget Paper 3, page 72. In relation to funds not required to meet SAFA's day-to-day operational cost, what was the value of accumulated reserves transferred across from SAFA to Funds SA in 2014-15?

The Hon. A. KOUTSANTONIS: I think there is a bit of confusion about the intent of your question. We invest with Funds SA, we do not transfer money to them.

Mr MARSHALL: Does it not say here, 'Funds not required to meet day-to-day operational costs or short-term claim costs are invested in the tax exempt multisector growth product of Funds SA,' and I just asked the question: what amount of money was transferred across from SAFA to Funds SA in 2014-15?

The Hon. A. KOUTSANTONIS: We do not have that number here so we will get it for you.

Mr MARSHALL: You will take that on notice?

The Hon. A. KOUTSANTONIS: Yes.

Mr MARSHALL: Returning to guarantees, my understanding is that QBE provided building indemnity insurance for South Australia some years ago; they advised the government that they would not be continuing with that and the government chose to continue to underwrite. Can the Treasurer update the committee on the status of the building indemnity insurance guarantee provided by the state government?

The Hon. A. KOUTSANTONIS: It is in place and it continues.

Mr MARSHALL: What time frame was originally envisaged when the state government took on that building indemnity insurance risk?

The Hon. A. KOUTSANTONIS: There is a substantial market failure in this area, and while that market failure continues the government will maintain its indemnity. When a market provider returns to the field we may consider stepping out of the market.

Mr MARSHALL: Are we the only state in Australia which provides building indemnity insurance on behalf of a lack of interest from the market?

The Hon. A. KOUTSANTONIS: I am advised that nearly all states do.

Mr MARSHALL: What is the magnitude of the risk to the taxpayer?

The Hon. A. KOUTSANTONIS: We do not have that number; I will get it for you.

Mr MARSHALL: Can you advise who provides the insurance? Is it the state government through one of its insurance arms or is it, essentially, an underwriting by the state government?

The Hon. A. KOUTSANTONIS: I am advised that QBE and Calliden issue the insurance policies and we underwrite them.

Mr MARSHALL: QBE issues the insurance, they manage the insurance—

The Hon. A. KOUTSANTONIS: And Calliden.

Mr MARSHALL: There are two is what you are saying?

The Hon. A. KOUTSANTONIS: Yes.

Mr MARSHALL: Just for clarity, have there been any costs to the taxpayer associated with this ongoing building indemnity insurance underwriting?

The Hon. A. KOUTSANTONIS: To date we have not had any major drawdowns, but I will get you a detailed analysis because I am happy for this to be open.

Mr MARSHALL: So there have been drawdowns, but no major drawdowns. What about the cost of providing the indemnity itself?

The Hon. A. KOUTSANTONIS: We do not have the annual cost here; we will get it for you.

Mr MARSHALL: When was the last time you negotiated with QBE to take back the product and remove the government guarantee?

The Hon. A. KOUTSANTONIS: We have arrangements in place, I am advised, until 2016 and we are involved in negotiations with them as we speak.

Mr MARSHALL: Originally, this arrangement was put in place, I think, in 2011. It was for a year and then extended to two years, and it is now going to be a five-year arrangement; is that correct?

The Hon. A. KOUTSANTONIS: Like I said, while there is market failure and while most jurisdictions are engaged in this type of process, it is important to keep the construction industry going, and this is one part of the government's role.

Mr MARSHALL: When was the new arrangement reached with QBE?

The Hon. A. KOUTSANTONIS: I am advised 30 June 2014.

Mr MARSHALL: For a two-year period?

The Hon. A. KOUTSANTONIS: For a two-year period.

Mr MARSHALL: Is there any consideration provided by QBE or the insured for the underwriting that the state government provides?

The Hon. A. KOUTSANTONIS: No.

Mr MARSHALL: Is that the same in other states, where a state government provides an underwriting, that there is no consideration given by the insured?

The Hon. A. KOUTSANTONIS: I cannot speak for other jurisdictions, but SAICORP are coming in later on this afternoon. You can ask them the same questions, and they will have a more detailed answer for you.

Mr MARSHALL: I see, so this is managed under SAICORP?

The Hon. A. KOUTSANTONIS: It is part of SAICORP, yes.

Mr MARSHALL: I can ask them. Let's move on to Budget Paper 4, Volume 4, page 163. The bottom target for 2015-16, under Program 3: Treasury Services, says, 'Successfully transition to a new treasury management system.' What is that, Treasurer?

The Hon. A. KOUTSANTONIS: I would like to hand over to the Under Treasurer, Mr Brett Rowse, to give you a more detailed answer.

Mr ROWSE: I think I will actually have to hand over to Kevin because he understands the system better than I do.

Mr MARSHALL: Are you going to hand it over to somebody?

Mr CANTLEY: SAFA has a core Treasury system which manages our borrowings from the market and loans to clients. Our existing system has been in place since the late nineties. We have been going through a process to implement a new Treasury system which obviously will meet our requirements for the next 10-plus years. That target there is to complete the implementation of the system and turn off the old system.

Mr MARSHALL: What is the old system called?

Mr CANTLEY: Quantum Treasury Management System.

Mr MARSHALL: What is the budget cost for the new Treasury management system?

The Hon. A. KOUTSANTONIS: I am advised over the next 10 years it is $6 million.

Mr MARSHALL: What part of that is the up-front capital versus the ongoing licence fee and operational expenses?

The Hon. A. KOUTSANTONIS: We do not have that detail here; we will get it for you.

Mr MARSHALL: Have you decided who the vendor for this system is?

The Hon. A. KOUTSANTONIS: I am advised that it is OpenLink Findur. They are the successful vendors.

Mr MARSHALL: What country are they from?

The Hon. A. KOUTSANTONIS: We do not know; I will find out.

Mr MARSHALL: Do they have an office in South Australia?

The Hon. A. KOUTSANTONIS: No, I am advised.

Mr MARSHALL: Are there any other treasuries around Australia which use this product?

The Hon. A. KOUTSANTONIS: The advice I have is no; no other treasuries are using this organisation.

Mr MARSHALL: Who was responsible for making the decision on this and what input did they have?

The Hon. A. KOUTSANTONIS: I imagine it would have been an open tender process—which has been confirmed—and the selection panel was made up of—

Mr MARSHALL: Hopefully, not Treasury, given RISTEC and a few other disasters that have occurred.

The Hon. A. KOUTSANTONIS: Obviously, the tender process was conducted in accordance with government procedures, and there were SAFA representatives involved. I have full confidence in their decision-making processes.

Mr MARSHALL: Can you advise who was on that selection committee?

The Hon. A. KOUTSANTONIS: I will get that for you.

Mr MARSHALL: When do you envisage that this new system will be operational?

The Hon. A. KOUTSANTONIS: I am advised, this financial year.

Mr MARSHALL: This financial year? Is there anything closer than just 'this financial year'?

The Hon. A. KOUTSANTONIS: If I get an update, I will let you know.

Mr MARSHALL: Just for clarity, this is not something which, even though it is quite a large project, has not gone before the Public Works Committee. Given the failure of many IT projects by this government over the last 14 years to achieve the original scoped time frame and cost, do you think it would be prudent to put this project and the selection before the Public Works Committee?

The Hon. A. KOUTSANTONIS: Well, if the department were required to, they would have. That is my experience of Treasury. If there were no requirement to go before the Public Works Committee, then they would not have done it; plus, they had a competitive process.

Mr MARSHALL: That was not the question though.

The Hon. A. KOUTSANTONIS: Yes, it was.

Mr MARSHALL: No, the question was: do you think that it should go before it? You said there is no requirement. I am aware of that, and that is why I raised the question.

The Hon. A. KOUTSANTONIS: No, I have complete faith in the way Treasury conduct themselves.

Mr MARSHALL: Very good.

The Hon. A. KOUTSANTONIS: It is not as if they are running a Wokinabox or anything.

Mr MARSHALL: No, exactly. On the second to bottom point on page 163, 'Extend further the South Australian Government Financing Authority…debt profile with increased investor penetration,' can you provide some more details on that? What other investor penetration are you looking for, what sort of numbers and what sort of increase to the debt profile?

The Hon. A. KOUTSANTONIS: I am advised that we are simply increasing the length of period that we issue bonds for, so we are trying to extend the time. I understand some have gone out to 2025.

Mr MARSHALL: With existing clients, just increasing the length of their current product in South Australia?

The Hon. A. KOUTSANTONIS: No, not necessarily the same owners for the bonds.

Mr MARSHALL: Sorry?

The Hon. A. KOUTSANTONIS: Not necessarily the same clients, no.

Mr MARSHALL: I still do not have much clarity, given your first and second answers do not really reconcile. So, what are you doing? What is this all about?

The Hon. A. KOUTSANTONIS: The SAFA board simply advise that longer term borrowings are better prudent management of the state's borrowings.

Mr MARSHALL: Essentially, what that target is saying is that SAFA will be looking to increase the debt profile by offering more of these 10 or longer year bonds to investors in the coming 12 months?

The Hon. A. KOUTSANTONIS: I am advised that is correct.

Mr MARSHALL: What is the value of that increased offer?

The Hon. A. KOUTSANTONIS: I will ask Mr Cantley to give you a summary of the next 12 months.

Mr CANTLEY: SAFA's gross funding task for next year is around $4.2 billion and we will be looking to issue around $2 billion, a little bit more than that, in longer term debt and we will be looking to roll over around $2 billion in short-term programs that we have.

Mr MARSHALL: That long term, I presume you are referring to the 10-year bond, or are you talking about a 15-year bond?

The Hon. A. KOUTSANTONIS: I will ask Mr Cantley to answer.

Mr CANTLEY: Clearly, the focus will be looking at some of our 2025 bonds, also looking at increasing our borrowings in our 2023 line, and we may look at a new 2026 bond over the next 12 months or so.

Mr MARSHALL: What rate are we paying on those bonds?

Mr CANTLEY: At the moment, our April 2000 bond is 3.27, our November 2023 bond is 3.06 and, obviously, the 2026 or a longer maturity will be priced at the time and they will be decisions we make at an operational level as to whether the costs are suitable for our overall debt portfolio.

Mr MARSHALL: If we could move to Budget Paper 4, Volume 4, page 158, in particular the RISTEC system, can the Treasurer explain the split between the investing and operating expenditures associated with the RISTEC system with the total project costing $55.9 million, according to this table? It says that there is a split of $34.8 million in investing expenditure and $21.1 million operating expenditure. Can you outline what the difference is between those two classifications?

The Hon. A. KOUTSANTONIS: I am advised that it is consistent with the accounting standards about what can be capitalised and what can't be.

Mr MARSHALL: And what are they?

The Hon. A. KOUTSANTONIS: The accounting standards?

Mr MARSHALL: What are you capitalising?

The Hon. A. KOUTSANTONIS: The things you can under the accounting standards. That is as clear as I can be for you.

Mr MARSHALL: For example, the implementation of the software itself, is that capitalised or not? It is not clear to me that there is any accounting standard that really covers government on a range of issues.

The Hon. A. KOUTSANTONIS: We will get back to you with a breakdown of what we have capitalised and what we have not.

Mr MARSHALL: Thank you very much. With regard to RISTEC, because this is a project which has been, let's face it, spectacularly unsuccessful in terms of its cost management and its time frame management, is it currently operational?

The Hon. A. KOUTSANTONIS: I will ask the Under Treasurer to answer that.

Mr ROWSE: Yes, the payroll element of it has been operating for over 12 months now and the release 2 is now operating as well which covers land tax and ESL.

Mr MARSHALL: Can you just clarify that? Phase 2, when it went live and what elements of it went live on that date?

Mr ROWSE: Sure. What went live is the ability to issue land tax and ESL bills this year using the new system.

Mr MARSHALL: What are the plans? That certainly was not the entire scope of what was planned or have you basically ruled a line under RISTEC now?

Mr ROWSE: The taxes which will be covered by that will be payroll tax, land tax and ESL. There are a number of other taxes with which we are still running with an existing system and that will continue to operate under those existing systems until we reassess what we may or may not want to do going forward.

Mr MARSHALL: Is there any concern regarding the currency of the software licences going forward for any of the legacy products?

The Hon. A. KOUTSANTONIS: Can you explain your question?

Mr MARSHALL: I made it pretty clear.

The Hon. A. KOUTSANTONIS: There is none that Treasury is aware of.

Mr MARSHALL: Sorry?

The Hon. A. KOUTSANTONIS: None that they are aware of.

Mr MARSHALL: Has there been any audit done? There are other agencies at the moment coming before estimates committees that have been forced to make it very clear that they are actually operating using software which is completely out of licence.

The Hon. A. KOUTSANTONIS: Treasury do not believe it is an issue.

Mr MARSHALL: What legacy systems currently remain and what taxes or fees do they collect?

The Hon. A. KOUTSANTONIS: I will ask my adviser to answer the question.

Mr JACKSON: The legacy system is for stamp duty. Stamp duty is one tax. The legacy system is called Storms. Also we use RevNet for stamp duty but that is also part of the RISTEC environment as well. The other tax is the First Home Owner Grant. That is run on a system called FHOG Online which is used by all of the states and territories. Obviously those systems back up with an internal masterpiece and things like that.

Mr MARSHALL: Are there any plans to graduate those taxes to the RISTEC system?

The Hon. A. KOUTSANTONIS: No, not currently.

Mr MARSHALL: Last year's budget provided that the project would be completed for $54.1 million, this year $55.9 million. Can you outline to the committee what was the reason for the further $1.8 million blowout in the revised down scope of this project?

The Hon. A. KOUTSANTONIS: I am advised that there were enhancements made to the program which caused some of the additional expenditure.

Mr MARSHALL: Sorry?

The Hon. A. KOUTSANTONIS: Enhancements made to the program which caused additional expenditure.

Mr MARSHALL: Enhancements made, what were they?

The Hon. A. KOUTSANTONIS: We will come back to you with what the enhancements were.

Mr MARSHALL: You have said there has been a certain amount that was capitalised and then a certain amount which has been expended as operating expenditure. Have there, in fact, been any write-offs against the capitalised value of the RISTEC program to date?

Mr ROWSE: Some initial work was done towards release 3, which is the taxes which will no longer be part of the RISTEC process, and any work done on that which was previously capitalised had to be written off when the decision was made not to progress with those arrangements under RISTEC.

Mr MARSHALL: What was the value of that write-off and when did it occur?

Mr ROWSE: Sorry, we do not have that number here.

Mr MARSHALL: Sorry?

Mr ROWSE: We do not have that number here but we will see if we can provide it.

Mr MARSHALL: So, you can provide us with the value of the write-off and the time in which—

Mr ROWSE: I believe it was contained in last year's budget, so it is a publicly available—

Mr MARSHALL: Was it in fact a $4.5 million write-off?

Mr ROWSE: We will have to check. I do not have the number here.

Mr MARSHALL: And it was done last financial year?

Mr ROWSE: No, it was done in 2013-14.

Mr MARSHALL: 2013-14 it was a write-off?

Mr ROWSE: Yes.

Mr MARSHALL: Do you envisage there to be any further capital write-offs from the $34.8 million which these documents say have been capitalised to date?

Mr ROWSE: No.

Mr MARSHALL: Budget Paper 4, Volume 4, page 166. Has the government produced an estimate of the number of self-funded retirees who will not be receiving the general remission on the emergency services levy charged on fixed properties and who do not live in properties coded as retired and aged care accommodation or as independent living unit?

The Hon. A. KOUTSANTONIS: No, I am advised we have not.

Mr MARSHALL: Has the government given any consideration to addressing the concerns of the self-funded retiree sector who will not be subject to the general remission on the emergency services levy on fixed properties?

The Hon. A. KOUTSANTONIS: Are you talking about self-funded retirees in retirement villages? Are you talking about self-funded retirees—

Mr MARSHALL: More broadly, you said that you had done no—

The Hon. A. KOUTSANTONIS: So, a self-funded retiree living in a rental or a self-funded retiree living in a retirement village or a self-funded retiree who owns their own property?

Mr MARSHALL: At first I asked whether there was any analysis done on the numbers associated with self-funded retirees who were living in retirement villages or, in fact, in properties coded as retired and aged care accommodation or as independent living unit. You said you had not done any numbers on that and I said whether there was any further consideration regarding providing a remission to people of the emergency services levy who were self-funded retirees.

The Hon. A. KOUTSANTONIS: Yes. So, we have reinstated, I am advised, the remissions for all retirement villages and retirement villages will have some self-funded retirees in there who get the benefit of the general remission because they live in a retirement village. The question I asked you was: which self-funded retirees are you talking about? Are you talking about ones who own their own property? If they are in a retirement village, they have the general remission.

Mr MARSHALL: If they are in a retirement village or an independent living unit, they will receive the remission; is that correct?

The Hon. A. KOUTSANTONIS: That is the advice I have, yes.

Mr MARSHALL: But if they are living in their own accommodation or rented accommodation, they will not receive the remission.

The Hon. A. KOUTSANTONIS: It depends on what kind of self-funded retiree they are. Do they receive any commonwealth benefits? Self-funded retirees do still receive benefits.

Mr MARSHALL: Which classification of self-funded retiree will be receiving the emergency services levy remission under your new arrangements?

The Hon. A. KOUTSANTONIS: If a self-funded retiree receives a commonwealth concession card, they would be entitled to the general remission.

Mr MARSHALL: They would be a pensioner, would they not?

The Hon. A. KOUTSANTONIS: No, they can be a self-funded retiree and get a concession card.

Mr MARSHALL: I see, a concession card, yes. I refer to Budget Paper 4, Volume 4, page 166. The second dot point talks about the implementation of an internet payment channel to allow credit card transactions via the internet for land tax and emergency services levy payments. Is this the sort of payment that would be subject to GST on financial services as envisaged by the Premier and announced by the Premier, if it was to pass with the approval of other states?

The Hon. A. KOUTSANTONIS: That is a highly hypothetical question.

Mr MARSHALL: When the government has come out and the Premier has said that he supports this, is this a payment that would be subject to that GST?

The Hon. A. KOUTSANTONIS: You would have to speak to the Prime Minister and Treasurer.

Mr MARSHALL: The Premier made the comment.

The Hon. A. KOUTSANTONIS: The Premier does not control the commonwealth parliament.

Mr MARSHALL: Correct.

The Hon. A. KOUTSANTONIS: We have no vote in the commonwealth parliament other than our state senators, and our state senators vote independently of the wishes of this house and the other house. You are asking me about whether a hypothetical transaction would be taxed in a future regime. No-one knows what the final package is or would look like, so you are just, in a really clumsy way, attempting to verbal me.

Mr MARSHALL: Really? That is your answer?

The Hon. A. KOUTSANTONIS: Yes.

Mr MARSHALL: That you are intimidated by a question as to whether your Premier is—

The Hon. A. KOUTSANTONIS: No, you misunderstand me. You do not intimidate me. In fact, I want you to survive but, unfortunately, I do not have a vote in your caucus.

The CHAIR: Okay, do you have a question, leader?

Mr MARSHALL: I have asked my question.

The CHAIR: He has answered it, so you need to move on to the next question.

Mr MARSHALL: I am sorry, I will ask again.

The CHAIR: He has answered that question.

Mr MARSHALL: What was his answer?

The Hon. A. KOUTSANTONIS: Now he is verballing you.

Mr MARSHALL: I am just asking.

The CHAIR: I am clearly not popular with either side today, so there it is.

Mr MARSHALL: Have you been told off by the government as well?

The CHAIR: No.

Mr MARSHALL: Why did you say you are not popular on either side?

The CHAIR: Do we need to go into that now?

Mr MARSHALL: Yes, why not?

The CHAIR: It is not a question to do with the budget—that is the first reason we will not be doing it.

Mr MARSHALL: It sounds like the Chairman of Committees has been told off by the government, there you go.

The CHAIR: Not at all.

Mr MARSHALL: We are very interested to know whether or not the government envisages, with its position announced by the Premier, that GST should be extended to financial services, which you reiterated in this committee only this morning, so it is not exactly 10-year-old news. This morning, in this place, he said it should be extended to financial services. I asked the question to the Treasurer of South Australia whether or not this would be the type of transaction which would be subject to the GST. It is a pretty simple yes or no.

The Hon. A. KOUTSANTONIS: No, it is a disorderly question because it is hypothetical. You are attempting to verbal the government, and it is not working. It still amazes me that the party that introduced the GST and introduced the ESL are now arguing against it.

Mr MARSHALL: I just do not know why you are very worried about answering the question. My question is related to the last dot point on the same page 166 with regard to the Casino Duty Agreement of 11 October 2013. It has been high profile in the media that the Adelaide Casino is looking to make a decision regarding the expansion of their facility, and it has been suggested in the media that this could be a $300 million or $350 million investment in the South Australian economy. Can the Treasurer update whether or not the Treasury forecast for gambling revenue includes the likely flow-on from an increased Adelaide Casino?

The Hon. A. KOUTSANTONIS: The suspicion is, no, we have not factored in—

Mr MARSHALL: You have not?

The Hon. A. KOUTSANTONIS: But we will go back and check just to be certain.

Mr MARSHALL: But is that last dot point there suggesting that you have implemented a collection and compliance regime without actually factoring in what the increased revenue is likely to be?

The Hon. A. KOUTSANTONIS: On page 42—

Mr MARSHALL: Page 166 I was looking at.

The Hon. A. KOUTSANTONIS: Yes, but I am going to read out from page 42 of Budget Paper 3. It says:

Revenue from the Adelaide Casino in 2014-15 has been revised down since the 2014-15 Budget mainly due to lower than expected growth in net gambling revenue. Adelaide Casino revenue estimates also reflect the key taxation and regulatory conditions that commenced during 2013-14. These conditions are expected to contribute to higher gambling tax revenue from the casino over the forward estimates period.

We will go back and check to see whether or not that includes any redevelopment, but Treasury's instincts are that perhaps we have not, but we will go back and check.

Mr MARSHALL: Just to check that, was the change in legislation with regard to gambling tax rates not predicated on an investment in expanding the Adelaide Casino?

The Hon. A. KOUTSANTONIS: Yes, we want Adelaide Casino to expand and invest their money, but ultimately it is a matter for the board of the Adelaide Casino. We have done everything we can to give them a stable regulatory framework within which they can invest. That is one of the most important tools the government has—a stable regulatory framework. We have given it to the Casino and we are awaiting their decision.

Mr MARSHALL: This change to the taxation rate was not in any way linked to a commitment for a redevelopment at the Adelaide Casino? This stands regardless of any redevelopment going ahead or not.

The Hon. A. KOUTSANTONIS: I was not Treasurer when this taxing arrangement was entered into. I will have to go back and check, but I doubt very much that we would have locked in a decision on the basis of a tax regime. What we have attempted to do is give them a very stable regulatory regime to encourage the investment.

Mr MARSHALL: So you will check that?

The Hon. A. KOUTSANTONIS: I will check that and get back to you, yes.

Mr MARSHALL: What is the status of that project? Is the Treasurer aware?

The Hon. A. KOUTSANTONIS: You would have to speak to the Casino board. I know you speak regularly with the Adelaide Casino. They can give you a better update than me on the benefit or the timeliness of their investment.

Mr MARSHALL: It is just that you have put in your highlights that you are putting in a new arrangement regarding the collection of—

The Hon. A. KOUTSANTONIS: No.

Mr MARSHALL: —casino duty. We only have one casino that I am aware of.

The Hon. A. KOUTSANTONIS: What I said to you was that we have given them a stable regulatory regime. It is like the oil and gas sector: we give them a stable regulatory regime to do everything we can to attract investment in the state.

Mr MARSHALL: Their board met in Adelaide some months ago. We just assumed that they would be making a positive announcement regarding that development. Do you think that is in jeopardy?

The Hon. A. KOUTSANTONIS: I am advised that the highlight that you brought up is about a move from the collection of taxation to RevenueSA.

Mr MARSHALL: You have moved the collection. It does not say that there: it just says, 'Implemented a collection and compliance regime,' but the regime is actually to transfer it to somebody else.

The Hon. A. KOUTSANTONIS: I am advised it used to be the Liquor and Gambling Commissioner who collected the gambling taxes. It is now RevenueSA and that is what that point highlights.

Mr MARSHALL: Do you think that Casino redevelopment will go ahead?

The Hon. A. KOUTSANTONIS: I hope it does.

Mr MARSHALL: When did you last get an update from them?

The Hon. A. KOUTSANTONIS: I met with the board I think two months ago.

Mr MARSHALL: Is that when they were in Adelaide?

The Hon. A. KOUTSANTONIS: I think so, yes.

Mr MARSHALL: Surely that is when they would have made an announcement if they were going to make an announcement.

The Hon. A. KOUTSANTONIS: There is a lot of international uncertainty in the world. Industries are very concerned about the way that you, as Leader of the Opposition, have thrown around sovereign risk with the oil and gas sector, and they are worried that might occur with other controversial issues like gambling. I imagine that you would cause some sovereign risk personally, Leader of the Opposition, but I think after Christmas, when there is a change of leadership, that will all be settled down pretty nicely.

Mr MARSHALL: You do not think it would be more to the point that we have the highest unemployment rate in the nation and stagnant economic growth—

The Hon. A. KOUTSANTONIS: Again, condemning South Australia to being a basket case because it suits your political ends is appalling and probably shows why South Australians are rejecting your style of leadership. What people want is a plan, and you have yet to articulate to anyone what you would do if you were in government, so your little hollow accusations about what you think is an appalling economy, rather than—

Mr MARSHALL: This is outstanding.

The Hon. A. KOUTSANTONIS: —ever talking the state up does more harm than good.

Mr MARSHALL: This is really outstanding. It is all on Hansard.

The CHAIR: The whole day is really outstanding.

Mr MARSHALL: No, I'm sorry; it is all on Hansard.

The CHAIR: No, you are not sorry at all. The whole day has been unsatisfactory, and if you are both going to keep doing it there is not much we can do about it.

Mr MARSHALL: Who has been in the chair?

The CHAIR: If you could both just stick to the point, it would be great. I cannot be fairer than that.

Mr TARZIA: Minister, getting on to Budget Paper 4—

The CHAIR: The member for Hartley has some questions, does he?

Mr TARZIA: Yes, I do. I notice that the government successfully issued a new 10-year bond, attracting 37 investors. I think the South Australian people would be interested in who is investing in their state. Are you able to provide a list to the house of exactly who those investors are?

The Hon. A. KOUTSANTONIS: We do not have it here; we will provide it for you.

Mr TARZIA: Getting to page 164, I notice that when you look at the percentage of clients satisfied with the SAFA services, the estimated result this year is 90 per cent. It was actually 95 per cent, which means 5 per cent down. I am just wondering if you could expand on that a bit more? Why are the extra 5 per cent not happy with the SAFA service?

The Hon. A. KOUTSANTONIS: I think 90 per cent is a pretty good result.

Mr TARZIA: I know it is hard to keep everyone happy, minister.

The Hon. A. KOUTSANTONIS: I have just been advised that that was an estimate of what the survey result would be. The actual number, which I assume we received after the time of the printing, is 100 per cent satisfaction. Do you have any more questions like that?

Mr TARZIA: Moving on to page 166, I notice in Sub-program 4.1: Revenue Collection Management, for full-time employees the estimated result for 2014-15 is actually above that of the budget (221.9 as opposed to 245.4). Could you give the house an update as to why that has blown out?

The Hon. A. KOUTSANTONIS: Can you repeat the question?

Mr TARZIA: Page 166, Sub-program 4.1: Revenue Collection Management, relating to full-time employees as at 30 June, the estimated result for 2014-15 was 221.9, and the budget—sorry, the estimate is lower.

The Hon. A. KOUTSANTONIS: Yes.

Mr TARZIA: What is the reason for that?

The Hon. A. KOUTSANTONIS: Because the Commissioner of State Taxation, Mr Walker, is a very efficient and diligent public servant. I suppose that wrecks the argument you have been trying to make about a blowout in Public Service numbers.

Mr KNOLL: No.

The Hon. A. KOUTSANTONIS: No?

Mr KNOLL: Not at all.

The Hon. A. KOUTSANTONIS: Ride to the rescue.

Mr KNOLL: Treasurer, is any of that decrease in numbers within the revenue collection department to do with the scrapping of stage 3 of RISTEC?

The Hon. A. KOUTSANTONIS: I am advised no.

Mr KNOLL: I will read in the omnibus questions, if that is okay.

The CHAIR: You can do them at the end of the day, I am advised, but if you want to do them now do them now.

Mr KNOLL: The omnibus questions are:

1. Will the minister provide a detailed breakdown of expenditure on consultants and contractors above $10,000 in 2014-15 for all departments and agencies reporting to the minister listing the name of the consultant, contractor or service supplier, cost, work undertaken and method of appointment?

2. For each department or agency reporting to the minister in 2014-15, please provide the number of public servants broken down into heads and FTEs that are (1) tenured and (2) on contract and, for each category, provide a breakdown of the number of (1) executives and (2) non-executives.

The Hon. A. KOUTSANTONIS: I will answer those now if you like.

Mr KNOLL: Well, I have to ask them before you can answer them:

3. In the financial year 2014-15, for all departments and agencies reporting to the minister, what underspending on projects and programs (1) was and (2) was not approved by cabinet for carryover expenditure in 2015-16?

4. Between 30 June 2014 and 30 June 2015, will the minister list the job title and total employment cost of each position with a total estimated cost of $100,000 or more—(1) which has been abolished and (2) which has been created?

5. For each department and agency reporting to the minister, please provide a breakdown of attraction, retention and performance allowances as well as non-salary benefits paid to public servants and contractors in the years 2013-14 and 2014-15.

6. For each year of the forward estimates, please provide the name and budget of all grant programs administered by all departments and agencies reporting to the minister and, for 2014-15, provide a breakdown of expenditure on all grants administered by all departments and agencies reporting to the minister listing the name of the grant recipient, the amount of the grant, the purpose of the grant and whether the grant was subject to a grant agreement as required by Treasurer's Instruction 15.

7. For each year of the forward estimates, please provide the name and budget for each individual program administered by or on behalf of all departments and agencies reporting to the minister.

8. For each year of the forward estimates, please provide the name and budget for each individual investing expenditure project administered by or on behalf of all departments and agencies reporting to the minister.

9. For each department and agency reporting to the minister, what is the budget for targeted voluntary separation packages for the financial years included in the forward estimates by year, and how are these packages to be funded?

10. What is the title and total employment cost of each individual staff member in the minister's office as at 30 June 2015, including all departmental employees seconded to ministerial offices and ministerial liaison officers?

Membership:

Mr Williams substituted for Mr Knoll.

Departmental Advisers:

Mr B. Rowse, Under Treasurer, Department of Treasury and Finance.

Mr A. Chia, Chief Executive, Motor Accident Commission.

Mr A. Blaskett, Executive Director, Public Finance Branch, Department of Treasury and Finance.

Mr D. Price, Director, Market Projects, Department of Treasury and Finance.

The CHAIR: We will now proceed with estimates for the Motor Accident Commission. If the minister could introduce his new advisers, that would be helpful.

The Hon. A. KOUTSANTONIS: David Price is the Director of Market Projects in DTF, and Mr Aaron Chia is the Chief Executive of the Motor Accident Commission.

The CHAIR: Leader.

Mr MARSHALL: My question relates to Budget Paper 3, page 61. Will the Motor Accident Commission retain responsibility for managing its portfolio of assets and liabilities once it ceases to write CTP policies from 1 July 2016?

The Hon. A. KOUTSANTONIS: I am advised that there will be some assets that they still manage, yes.

Mr MARSHALL: What will they be?

The Hon. A. KOUTSANTONIS: We have not determined that as yet, I am advised.

Mr MARSHALL: So you will be retaining the Motor Accident Commission post 1 July 2016 when the Motor Accident Commission ceases writing CTP insurance and there will be a complement of Motor Accident Commission staff. Do you have any indication of what number of staff and what their duties will be?

The Hon. A. KOUTSANTONIS: We have not decided on a final number as yet.

Mr MARSHALL: How many staff are in the Motor Accident Commission at the moment?

The Hon. A. KOUTSANTONIS: There are 39 FTE.

Mr MARSHALL: What is it likely to be after 1 July?

The Hon. A. KOUTSANTONIS: We do not know yet. When I am advised I will let you know.

Mr MARSHALL: So there is no estimate, even though over the forward estimates for most of the government departments and many of the statutory authorities we do have those FTE equivalent projections?

The Hon. A. KOUTSANTONIS: This is not a government department.

Mr MARSHALL: And statutory authorities. So there is no forward estimate regarding the number of FTEs in the Motor Accident Commission going forward?

The Hon. A. KOUTSANTONIS: I am advised that we are still yet to determine the structure going forward.

Mr MARSHALL: Has the government received any further advice in relation to the value of the Motor Accident Commission's net assets once the claims as of 30 June 2016 have been finalised?

The Hon. A. KOUTSANTONIS: No, we have not.

Mr MARSHALL: Have you sought that advice?

The Hon. A. KOUTSANTONIS: The government is constantly seeking advice about the Motor Accident Commission and the privatisation of it. Once we have a clearer picture I will happily inform the house.

Mr MARSHALL: What is the value of the—I do not know what the technical term would be, but essentially the overprovision or the overaccumulation in the Motor Accident Commission over and above the actuarial advice as to what the value of the claims would be?

The Hon. A. KOUTSANTONIS: It would be very hard to answer that at a point in time, because it depends ongoing on—

Mr MARSHALL: On the most recent advice from the actuaries.

The Hon. A. KOUTSANTONIS: It is very difficult to ascertain. Bond markets change, interest rates change, investments change, so it is very difficult to give an answer.

Mr MARSHALL: When was the last time the Motor Accident Commission was in a position to determine what that overaccumulation was?

The Hon. A. KOUTSANTONIS: I have been advised that very shortly the Motor Accident Commission will be providing me with their end of financial year report and I will be tabling that in the parliament. I understand you will have the answers there.

Mr MARSHALL: What was the most recent advice that was provided to the Treasurer regarding the overaccumulation?

The Hon. A. KOUTSANTONIS: I do not have that here.

Mr MARSHALL: Can you provide the most recent?

The Hon. A. KOUTSANTONIS: The most recent one will be the one that I provide the parliament—that will be the most accurate one; will be the end of financial year report.

Mr MARSHALL: Last year's end of financial year report?

The Hon. A. KOUTSANTONIS: No, the one I am going to table when it is handed to me soon.

Mr MARSHALL: That was not my question.

The Hon. A. KOUTSANTONIS: Well, that is my answer.

Mr MARSHALL: But what was the most recent advice that the Treasurer received regarding the overaccumulation?

The Hon. A. KOUTSANTONIS: The advice I have is that the end-of-year result is the most reliable estimate that we will have and that will be in the end of financial year report of the Motor Accident Commission.

Mr MARSHALL: Is there some problem with the Treasurer providing that advice? I mean, you seem to be—

The Hon. A. KOUTSANTONIS: I have just told you I am going to table it in the parliament. I am not trying to hide anything.

Mr MARSHALL: I have not been asking you about the future results, I have been asking about what was the most recent result.

The Hon. A. KOUTSANTONIS: The end-of-year reports.

Mr MARSHALL: So there is no advice provided to the Treasurer outside of the annual reports?

The Hon. A. KOUTSANTONIS: I didn't say that. I said the most accurate ones, I am advised by Treasury—

Mr MARSHALL: I did not ask you about the most accurate; I asked you about the most recent.

The Hon. A. KOUTSANTONIS: I will be giving you the ones that I will table in the parliament.

Mr MARSHALL: But, can't you just tell the committee now? Are you obstructing the work of the committee? Are you refusing to provide it? Can you give a valid reason as to why you would not provide the committee with that information?

The Hon. A. KOUTSANTONIS: I will say it in simple terms: the advice I have is the most accurate.

Mr MARSHALL: I am not asking that.

The Hon. A. KOUTSANTONIS: Okay; you asked me about the result—

Mr MARSHALL: No, the most recent advice that the Treasurer has received.

The Hon. A. KOUTSANTONIS: —and I am telling you that the most accurate results I can give you will be tabled in the House of Assembly.

Mr MARSHALL: Is the Treasurer—

The Hon. A. KOUTSANTONIS: I can't be any clearer than that.

Mr MARSHALL: Is the Treasurer refusing to provide—

The Hon. A. KOUTSANTONIS: No.

Mr MARSHALL: —this committee with the most up-to-date results that he has been provided with?

The Hon. A. KOUTSANTONIS: No; what I am saying to you is that I want to provide you with accurate information, and the advice I have is that the most accurate information I can give you is the end of year results.

Mr MARSHALL: What was the most recent update that you received?

The Hon. A. KOUTSANTONIS: I do not have that here, but I will happily give the committee and the parliament the end of year results for the Motor Accident Commission.

Mr MARSHALL: What does the government envisage with regard to the over accumulation? Will it all be transferred to the Highways Fund or to the Consolidated Account?

The Hon. A. KOUTSANTONIS: The Highways Fund is what the government has publicly announced.

Mr MARSHALL: So all of the over accumulation that occurs will be transferred?

The Hon. A. KOUTSANTONIS: Yes.

Mr MARSHALL: Will any remaining assets be retained by the Motor Accident Commission to fund its road safety and related activities, or will they be somehow transferred to another state government department?

The Hon. A. KOUTSANTONIS: I am advised—and I think I have told the parliament as well—that we will be structuring a levy within the CTP premiums that will be issued to help the Motor Accident Commission fund its road safety initiatives.

Mr MARSHALL: Okay; just on that, have you determined what that mechanism for the levy is?

The Hon. A. KOUTSANTONIS: No, we have not announced it yet. It is all part of our process of going out to expressions of interest within the market.

Mr MARSHALL: Do you know what the total value of that non insurance-related expenditure per year at the moment?

The Hon. A. KOUTSANTONIS: I advised it is 13.5 million.

Mr MARSHALL: So, 13.5 covers all of the road safety and sponsorship and advertising-related activities that are currently undertaken—$13.5 million?

The Hon. A. KOUTSANTONIS: That is the advice I have received, yes.

Mr MARSHALL: But no mechanism has been determined yet—even though the government has committed that that money will continue—as to how it will be generated?

The Hon. A. KOUTSANTONIS: My preferred model is to levy CTP premiums issued by the private sector to fund road safety initiatives within the Motor Accident Commission, but we are out to the market now and we are developing a model.

Mr MARSHALL: Previously, the government has advised that there is a further $300 million payment to be made to the Highways Fund. When is that due to be made?

The Hon. A. KOUTSANTONIS: I am advised that in the MYBR and the most recent budget we announced that in 2016-17 we would be delivering a further $300 million to the Highways Fund.

Mr MARSHALL: And there is no update to the value or timing of that payment?

The Hon. A. KOUTSANTONIS: No.

Mr MARSHALL: Will the payment be made to the Highways Fund or to the Consolidated Account?

The Hon. A. KOUTSANTONIS: To the Highways Fund.

Mr MARSHALL: With regard to the new CTP arrangements referred to here, has the government made any progress in establishing an industry-specific regulator to monitor CTP premium pricing?

The Hon. A. KOUTSANTONIS: We will be bringing legislation to the parliament soon.

Mr MARSHALL: Is the industry regulator going to be established by an act of the parliament?

The Hon. A. KOUTSANTONIS: That is my preferred option, yes.

Mr MARSHALL: Are there other options that you are considering?

The Hon. A. KOUTSANTONIS: It depends entirely on the parliament. Bills get amended.

Mr MARSHALL: What are the other options that are available to the government if they fail to get their legislation through?

The Hon. A. KOUTSANTONIS: My preferred option, and industry's preferred option, is a legislated independent statutory officer who is a regulator. That is, I think, the best protection for the consumers. If that fails in the parliament, we will have to regroup and look at other models.

Mr MARSHALL: Have the terms of reference been set for this regulator?

The Hon. A. KOUTSANTONIS: We are still developing them.

Mr MARSHALL: Will they be monitored or modelled on any other state jurisdiction at the moment?

The Hon. A. KOUTSANTONIS: We are currently collating a lot of information with other jurisdictions about what they think best practice is and we have independent advisers. PwC and Treasury are working together to develop the terms of reference for an industry-specific independent regulator.

Mr MARSHALL: You said that you have independent advice. Who is providing the independent advice?

The Hon. A. KOUTSANTONIS: PricewaterhouseCoopers.

Mr MARSHALL: Has that advice already been tabled with the board?

The Hon. A. KOUTSANTONIS: With the board? Which board?

Mr MARSHALL: The government has requested the information, has it?

The Hon. A. KOUTSANTONIS: Yes, the government is running the privatisation.

Mr MARSHALL: Has that advice been received from PwC?

The Hon. A. KOUTSANTONIS: We have received the advice, yes.

Mr MARSHALL: What was the total value of the advice?

The Hon. A. KOUTSANTONIS: How much did we pay the consultants?

Mr MARSHALL: Correct.

The Hon. A. KOUTSANTONIS: We have not finalised the work.

Mr MARSHALL: Has the Treasurer had any cause to reflect on the previous contrary advice provided by the Motor Accident Commission board regarding the future of the Motor Accident Commission?

The Hon. A. KOUTSANTONIS: Have I reflected on it further?

Mr MARSHALL: Yes.

The Hon. A. KOUTSANTONIS: No.

Mr MARSHALL: Is the Treasurer still standing by the fact that he does not want to release the advice that was provided by the board to him regarding the ongoing management—?

The Hon. A. KOUTSANTONIS: I think it has been released, hasn't it?

Mr MARSHALL: I do not think it has been released.

The Hon. A. KOUTSANTONIS: I think it has. I think a large body of work done has found its way into a very successful journal that is published every day in Adelaide.

Mr MARSHALL: Are you happy to release that advice, then?

The Hon. A. KOUTSANTONIS: I do not think it serves any purpose.

Mr MARSHALL: When you have one of the most successful statutory authority boards in South Australia giving advice which conflicts with the direction of the government, would it not be prudent for the people of South Australia to know what advice was received by the Treasurer and rejected by the Treasurer?

The Hon. A. KOUTSANTONIS: No, I do not accept that the advice given to the government as the 'alternative option' is necessarily the unanimous view of the Motor Accident Commission board. What it was was a request to me by the board to look at alternatives. We looked at them, we gave them the respect of actually putting them into the system, gave them to the commercial advisers that the government has established to advise the government on this (who are independent of me), and they came back with the unanimous view that it was not prudent to proceed with the alternative offer.

What I did was give the board the opportunity to submit it to me. I gave it to the commercial advisers—even after the budget had been announced, even after we had announced the privatisation of the Motor Accident Commission—and I could not find anyone who was working for the commercial advisers or within Treasury who found the alternative offer to be of good value to the people of this state.

Mr MARSHALL: Is the Treasurer aware of what happened in New South Wales in the mid-1990s following the deregulation of CTP pricing after the period of fixed pricing ceased?

The Hon. A. KOUTSANTONIS: In what respect?

Mr MARSHALL: There was an increase.

The Hon. A. KOUTSANTONIS: Yes.

Mr MARSHALL: Is the Treasurer aware of this?

The Hon. A. KOUTSANTONIS: I also point out to you that, during the period that the Motor Accident Commission had been setting premiums, there had been increases also.

Mr MARSHALL: Sure.

The Hon. A. KOUTSANTONIS: You say 'sure', but the truth is I believe that this is a government monopoly that is not giving motorists the best value that they can achieve through private insurers issuing compulsory third-party premiums. I think the private sector can do it better than the government and I am stunned that the opposition do not agree with me.

Mr MARSHALL: So you think that, in fact, insurance premiums will decrease as a result of privatising the market.

The Hon. A. KOUTSANTONIS: No, I think that private insurance companies are better at issuing premiums than we are. They get the maximum value for their policy holders and they do everything they can to ensure an efficient system. I think government guarantees and government monopolies are inherently inefficient.

Mr MARSHALL: We have just outlined to this house considerably this afternoon the massive advantage of providing government underwriting. Now, is it not the case that when that government underwritten CTP insurance is removed and replaced with the market that the prudential requirements on the private providers will be such that we will all end up paying much higher CTP insurance premiums in South Australia as a consequence?

The Hon. A. KOUTSANTONIS: That sort of thinking was prevalent in the 1980s when we started the State Bank and thought that a government guaranteed bank would do better than the private sector. I disagree. I believe that the private sector is better at running these types of operations than the government. I think it is unfair on the taxpayer to be issuing that type of guarantee and I am surprised that the leader of the Liberal Party in this state does not agree with me.

Mr MARSHALL: Well, that was not really my question. My question was—

The Hon. A. KOUTSANTONIS: That's my answer.

Mr MARSHALL: —about whether or not motorists would end up significantly worse off when the government guarantee is removed.

The Hon. A. KOUTSANTONIS: I think the private sector will ensure that motorists are better off in the long term than they would be under a government-run monopoly.

Mr MARSHALL: What evidence do you have of that when you reference other schemes around Australia, some which are controlled by the private sector and some the government?

The Hon. A. KOUTSANTONIS: Well, again, you are not comparing apples with apples, you are not comparing the performance of the Motor Accident Commission over a long period of time.

Mr MARSHALL: Did you contemplate selling the Motor Accident Commission?

The Hon. A. KOUTSANTONIS: We may have, yes.

Mr MARSHALL: And what conclusion did you reach?

The Hon. A. KOUTSANTONIS: We took the course of events that would maximise the value for the taxpayer and bring about the best possible result for competition within the market. Remember that we compel people to buy compulsory third party premiums, so there is a compulsion on the motorist to do so. If I had sold the Motor Accident Commission entirely to one other operator, I think that would have disadvantaged motorists because we would have been handing over a government monopoly to the private sector. By breaking up the government monopoly and encouraging as much private competition as we possibly can, we are giving the private sector the benefit of receiving customers on an equal risk basis but opening them up to greater competition, and I think that is good for South Australians.

I think once the initial three-year period is up, that will see insurance companies that will not be in the initial operation of the private CTP market from 1 July next year offering other packages. Why can't South Australians link their home insurance, their life insurance, their car insurance to their CTP and bundle their insurance? Why should they be denied that?

Mr MARSHALL: But I do not understand. If you could go into a little bit more detail about the analysis that the government did regarding a third option which you have just made clear now, and that is that the government did contemplate selling the Motor Accident Commission. It has never made sense to me that there has not been a full and frank evaluation tabled in this parliament regarding the three options: firstly, continuing to operate as it is; secondly, to privatise it as envisaged by the government; and thirdly, to sell the asset which is the Motor Accident Commission.

At the moment you are essentially ceasing to operate on 30 June next year and transferring any over accumulation to the Highways Fund. There is no realisation of the assets which we as a state have invested in, essentially the goodwill associated with the brand and the name and the relationship that it has with the South Australian motorists.

The Hon. A. KOUTSANTONIS: We established commercial advisers on a steering committee to advise the government, and on that steering committee we had people with a great deal of experience from PricewaterhouseCoopers and the private sector advising the government on the best course of action. We went for the most competitive model, the model that offered South Australians the biggest competitive advantage. I do not believe government-run monopolies or privately run monopolies extract the best outcomes for consumers. I believe in a competitive free market. What surprises me is that you do not.

Mr MARSHALL: I do not think I have stated that. All I am asking is: what—

The Hon. A. KOUTSANTONIS: I have heard you on FIVEaa many times talking about how you are opposed to the privatisation of the Motor Accident Commission. I mean, why don't you just make it official and join the Greens and get it over and done with?

Mr MARSHALL: What is this?

The CHAIR: What would you like me to do?

Mr MARSHALL: Well, chair the meeting.

The CHAIR: Most estimates I have been to it has been full and frank on all sides and I do not think I am doing any worse than any of the others I have sat through for the last 20 years.

Mr MARSHALL: My point is: what consideration was given to selling the asset, which is the Motor Accident Commission, not as a monopoly but as a brand?

The Hon. A. KOUTSANTONIS: The problem is that if you sell it you sell their customers too, otherwise that is the value in it.

Mr MARSHALL: They are not compelled to stay there. I mean, we have seen that with the electricity asset.

The Hon. A. KOUTSANTONIS: The barriers will be far too large then for potential competitors. You are better off smashing the monopoly into a thousand pieces and having competition thrive. The idea that we would unleash the Motor Accident Commission on the public as a privatised option which maybe a large insurance company would buy in its entirety, with their database with all of their customers, it would be a completely unfair advantage to them. Sure, it would have returned some dividends to the government but the reality is that I want a competitive market. I want competition. I want the private sector fighting for your custom, that is what I want.

Mr MARSHALL: But what would get in the way of competition if you sold the Motor Accident Commission, if you realised the asset that we have invested in as a state and the brand and the customer database? There could be no restrictions on customers leaving the arrangement with the Motor Accident Commission and moving to another insurance provider, but we as taxpayers would at least get some, as I say, realisation on the asset that we have invested in.

It seems to me that this seems to be the worst of all possible worlds. We do not get a continuing income stream because the government is concerned regarding the ongoing risk of providing that insurance, even though it, I think, pretty much accepts that this will lead to high insurance premiums for motorists but, nevertheless, there will be lower risks for the government, but we certainly will not be realising the asset that we have invested in over such a long period of time.

The Hon. A. KOUTSANTONIS: First of all, we have not invested in it, motorists have.

Mr MARSHALL: Precisely.

The Hon. A. KOUTSANTONIS: Point two, we compel people to buy compulsory third party premiums. Point three, I do not accept that premiums will automatically increase under a complete free open market. Point four, incumbent monopolies are very hard to break up, and the experience of that is AGL. When the Liberal Party privatised our electricity asset, the retailer of last resort was AGL and a lot of customers were assigned to AGL. When it was opened up to competition the concept of sticky customers became very prevalent in this state; that is, that people stayed with AGL regardless of the tariffs that were being set by AGL and they did not enter a competitive market.

What I want is to learn the mistakes of that privatisation by the former government when it basically gave unsuspecting South Australians to a private company and most of them to this day have not moved. That is an unfortunate consequence of that failed privatisation. This privatisation is doing its very best to ensure a competitive market from day one; that is, no incumbent monopoly having the major head start.

It takes an insurance company, we are advised, about $50 per customer to attract them. You imagine 1.7 million customers in South Australia, if we sold the Motor Accident Commission to one insurance company and then said, 'You are open up to free competition,' the market realities of South Australia would mean that a competitor would have to spend a great deal of money to get into the market and actually take customers off whoever the monopoly purchaser was of the Motor Accident Commission and we would be doing consumers and motorists a disservice. What we want is to smash the monopoly up and make sure that people can get access to a competitive market. That is what we are trying to do and I thought the Liberal Party would be supportive of it.

Mr MARSHALL: With respect, I think the market for insurance in South Australia is very sophisticated. I think nearly everybody has one or more insurance products and I think the likelihood that people are not going to move—

The Hon. A. KOUTSANTONIS: You would be the only person in the private sector and the insurance industry arguing against the privatisation of the Motor Accident Commission.

Mr MARSHALL: But I am not, that is the whole—

The Hon. A. KOUTSANTONIS: No-one agrees with you, no-one.

Mr MARSHALL: Let's be quite serious; I am not arguing against the privatisation; I would just like to see there are cost benefits.

The Hon. A. KOUTSANTONIS: Find someone who publicly says we should have sold the Motor Accident Commission to a monopoly provider.

Mr MARSHALL: Well, I am just asking whether that—

The Hon. A. KOUTSANTONIS: Just find one person to back you up.

Mr MARSHALL: It is frightening that you choose to twist the words like that. Nobody said monopoly supplier; they are your words—

The Hon. A. KOUTSANTONIS: No. How would it be—?

Mr MARSHALL: —and they are unhelpful. But we will move on.

The Hon. A. KOUTSANTONIS: Yes, you should. If I were you, I would move on too.

Mr MARSHALL: Earlier when I was asking questions about QBE, you said that I should go back to that when SAICORP were here. Are SAICORP here now?

Departmental Advisers:

Mr B. Rowse, Under Treasurer, Department of Treasury and Finance.

Mr K. Cantley, General Manager, South Australian Government Financing Authority, Department of Treasury and Finance.

Mr A. Blaskett, Executive Director, Public Finance Branch, Department of Treasury and Finance.

Mr T. Burfield, Director, Insurance, South Australian Government Financing Authority, Department of Treasury and Finance.

The CHAIR: Minister, would you introduce your advisers? Or have they just moved up from the back?

The Hon. A. KOUTSANTONIS: Mr Kevin Cantley has returned, and Mr Tim Burfield. Do you have a question?

Mr MARSHALL: I have asked the question. You said—

The Hon. A. KOUTSANTONIS: I cannot remember it. What was it?

Mr MARSHALL: It was regarding whether or not there has been any consideration provided for the underwriting that the South Australian government provides for building indemnity insurance in South Australia and, if not, why not.

The Hon. A. KOUTSANTONIS: The advice I have received is that QBE and Calliden will not enter the market. It is a loss-making operation for them and that is why there is market failure and that is why we have intervened.

Mr MARSHALL: I think we established that an hour ago. The question was whether or not there was any consideration—

The Hon. A. KOUTSANTONIS: There was none.

Mr MARSHALL: —paid for by QBE or Calliden, or indeed the insured, for the government underwriting which is provided to these insurers?

The Hon. A. KOUTSANTONIS: The insurance companies act as our agents. The revenue comes to us, and that is the process. I would be more than happy to be out of this process if there was no market failure. I have no great appeal to be involved in the insurance business. I would much rather it be done by the private sector, but it seems to me that there is structural market failure here if the government did not issue the guarantee. You asked earlier as well whether any other government has a consideration for their government indemnity schemes. I am advised that it is the same process in New South Wales, WA and Victoria.

Mr MARSHALL: Yes, we canvassed all of that information previously. My question is whether or not we as the taxpayer receive any consideration for the underwriting. You have provided new information there. Previously you indicated that QBE and the other company that you mentioned were providing the insurance and we were underwriting it; now you are saying that we are actually receiving the revenue. Is that really correct?

The Hon. A. KOUTSANTONIS: The premiums are not set at a rate high enough to cover all the risk, which is why we have the market failure and that is why we top it up. If we wanted to get government consideration for the taxpayer, we would have to dramatically increase the premiums, which I think would have a very negative impact on the industry and this is exactly not the time to be doing that.

Mr MARSHALL: But when you say dramatically increase, you are telling this committee that you are getting nothing. You are providing a guarantee with considerable risk, which you are going to outline to this committee at some future point, but there is no consideration whatsoever. In virtually every other instance when the government provides a guarantee, either internally or to a third party like Nyrstar, there is consideration for that guarantee being provided. Now you are telling us that you have entered into a five-year agreement with these two private providers to provide government guarantee with no consideration whatsoever.

The Hon. A. KOUTSANTONIS: The only people we could pass that cost on to are builders. The Liberal opposition claims that South Australian taxpayers are being dudded by this process. I am looking forward to sending the Hansard to the Master Builders Association and the HIA to let them know your views because the only people who could pay more to give us a taxpayer consideration would be builders. I am doing everything I can to ensure that the building industry is robust, and this is one way of doing it, but I will let them know of your thoughts.

Mr MARSHALL: On Budget Paper 4, Volume 4—

The Hon. A. KOUTSANTONIS: Yes, I would move on too.

Mr MARSHALL: Sorry?

The Hon. A. KOUTSANTONIS: I said I would move on too, if I were you.

The CHAIR: Budget Paper 4?

Mr MARSHALL: Budget Paper 4, Volume 4, page 192. This states that as of 30 June 2014 SAICORP had free reserves of $169.2 million. What is the estimate of free reserves as of 30 June 2015?

The Hon. A. KOUTSANTONIS: I am advised that we have not signed off on the final 30 June numbers; when we do, I will make that available to the leader.

Mr MARSHALL: What are the options available to SAICORP with free reserves? Are there statutory obligations? Is there a methodology for dealing with free reserves? Are there options which are open to the Treasurer?

Membership:

Mr Williams substituted for Mr Knoll.

The Hon. A. KOUTSANTONIS: I will ask Mr Cantley to answer that question.

Mr CANTLEY: In terms of our insurance operations, we have a policy that, where we retain assets that exceed our liabilities, we go through a process where we identify our risks to come up with a target level of assets relative to liabilities. We have recently changed how we measure that, so we now express that as a proportion of assets to liabilities.

Our current policy is to target 145 per cent of our liabilities, to have those in assets, and our range is between 125 per cent and 165 per cent. Essentially, the amount above the 100 per cent would represent our excess capital. So, we have that policy in place and we have operated at the higher end of that range over the last 12 months or so.

Mr MARSHALL: But what options are available to deal with that excess? If there is an accumulation, what are the options that are available and who makes the decision?

Mr CANTLEY: In the past it has not been the practice of SAFA to return funds to the budget from funds that have been set aside for its insurance activities. This practice accords with section 12 of SAFA's enabling legislation, the Government Financing Authority Act, which essentially says that under 12(2):

Any surplus of funds remaining after the costs of the Authority have been met in any financial year must be paid into the General Revenue of the State or otherwise dealt with as the Treasurer may determine.

Section 12(3) says:

Subsection (2) does not apply to funds related to the captive insurance function of the Authority.

So the practice has been to retain our reserves and that the insurance function does pay a tax equivalent payment on its profits that it earns, but it retains the funds in its surplus.

Mr MARSHALL: So there was no return or payment out of free reserves last financial year to any other agency or to Treasury itself?

Mr CANTLEY: No, the only payments to the budget from the insurance function was the tax equivalent payment on our operating profit.

Mr MARSHALL: What is the value of the free reserves at the moment? You are saying that is to be determined?

The Hon. A. KOUTSANTONIS: That is to be determined. We do not have a 30 June sign-off yet.

Mr TARZIA: Budget Paper 3, page 55, in relation to SAFA, the third paragraph. Has the special dividend to be paid by SAFA from the return of excess capital from its fleet business been finalised for 2015-16?

The Hon. A. KOUTSANTONIS: I am advised that it will be paid this financial year—and I also point out to the committee that the SAFA line is closed.

Mr TARZIA: When will that dividend be paid?

The Hon. A. KOUTSANTONIS: I just answered that.

Mr TARZIA: Can you do any better than that, minister?

The Hon. A. KOUTSANTONIS: No.

Mr MARSHALL: When did we close the SAFA line?

The CHAIR: This afternoon at 3.30pm and this was agreed to this morning, so I am not sure what I can do.

Mr TARZIA: I missed the fun. Budget Paper 3, page 72, the second to last bullet point. What was the value of medical malpractice claims liability as at 30 June 2015?

The Hon. A. KOUTSANTONIS: We are still finalising the 30 June accounts. When we do, you will know.

Mr TARZIA: Has the government sought advice as to whether insurance premiums paid by the Department for Health and Ageing to SAICORP should increase in relation to changes in the models of care proposed in Transforming Health?

The Hon. A. KOUTSANTONIS: I am advised no.

Mr TARZIA: Budget Paper 3, page 72, the third bullet point. What is the total cost of the state's reinsurance program in 2014-15 and budgeted cost in 2015-16?

The Hon. A. KOUTSANTONIS: We do not have that number with us. We will provide it to you.

Mr TARZIA: Budget Paper 3, page 72: what would be the total cost of administering the state's insurance program?

The Hon. A. KOUTSANTONIS: What would the cost be?

Mr TARZIA: Yes, the total cost, and when you get that cost, how does that cost—

The Hon. A. KOUTSANTONIS: What do you mean?

Mr TARZIA: Total cost. I am interested in how it would compare with other industry benchmarks. I am interested in the total cost.

The Hon. A. KOUTSANTONIS: We have very different clients, so I do not think there are industry benchmarks we could match ourselves against. I am not sure we can give you an accurate answer.

Mr TARZIA: Budget Paper 4, Volume 4, page 192, in regard to the SAICORP Insurance Fund 1: as at 30 June 2014, SAICORP had free reserves of $169.2 million. What is the estimate of free reserves as at 30 June 2015?

The Hon. A. KOUTSANTONIS: We have not got that finalised yet. We just told you that.

Mr TARZIA: Does the government have the option of transferring any or all of these reserves as either a dividend or a return of surplus assets?

The Hon. A. KOUTSANTONIS: We just answered that earlier.

Mr TARZIA: Budget Paper 3—revenue. The paper makes some predictions. It says, 'Royalty revenue is expected to grow moderately over the forward estimates largely reflecting the resumption of full production at Olympic Dam and changes in commodity prices.'

The Hon. A. KOUTSANTONIS: We are not on resources yet, Vincent.

Mr TARZIA: So we can't raise that?

The Hon. A. KOUTSANTONIS: No.

Mr WILLIAMS: Treasurer, I refer you to Budget Paper 4, Volume 4, page 171, targets for 2015-16: 'Develop and finalise the revised State Procurement Board policy framework'. Can you inform the committee what proposals, if any, you have to try to, I guess, better balance the position of subcontractors versus lead contractors in major government procurements?

I note the Treasurer smiles because I have had this conversation with him previously. I now have more people coming to me with not dissimilar situations to those that he and I have discussed previously. We have the situation where small subcontractors, who run very small businesses employing only a handful of people, are being put up against major national and sometimes international players and, to be quite frank, from the information I have been given, are getting done over.

The Hon. A. KOUTSANTONIS: The Procurement Board does not cover large-scale capital programs; it just covers goods and services. But I have a lot of sympathy for what the member for MacKillop is saying, and I am also very concerned about local small businesses missing out on procurement of large capital programs on the basis of, one, their ability to tender, and two, their competitiveness versus very large contractors who then subcontract out to these smaller contractors anyway. So, yes, I am very concerned about that problem.

We have had many private conversations about contractors in his electorate that he has advocated on behalf of quite forcefully. As a former transport and infrastructure minister, I do have a great deal of sympathy for what he is saying. I would like to see more of our contracts broken up into smaller chunks to see procurement go to smaller operations so everyone gets a feed at the watering hole, but the problem, of course, is that we also want to maximise value for the taxpayer.

This really is a matter for minister Mullighan. I know he shares our concerns and he is working within DPTI to ensure that we are doing all that we can to make sure that local South Australians are getting the opportunity to bid for this work and doing it in a sustainable way, that is often the key. I am always very concerned about small companies gearing up for large projects and then, when that work has gone, they have geared up and they cannot sustain; or whether they become a subcontractor to a larger contractor and the margins just are not there for them to make any money. I do share his concerns and I am looking at it.

Mr WILLIAMS: Minister, it is even more difficult for small operators that have come to me than what you have just described. In relation to large head contractors, lead contractors—and it is not just in the transport infrastructure field—I have been told—and I will no doubt have discussions with you in the near future—that one contractor in my constituency got a subcontract at the Convention Centre and finds himself out of pocket to the tune of $50,000 or $60,000, and for a two-man operation that almost breaks his business. He is telling me that there are similar occurrences on the new Royal Adelaide Hospital site where a number of small businesses, employing in some cases up to 20 people, are finding it very difficult because of the way they are being treated by lead contractors.

The Hon. A. KOUTSANTONIS: I do not know the specifics of the contractor you are talking about—

Mr WILLIAMS: I accept that.

The Hon. A. KOUTSANTONIS: —so I cannot comment, but if that is accurate, that is very disappointing. The truth is that we are investing vast amounts of taxpayers' money to very large capital programs—$10.8 billion over the forward estimates. That is a considerable amount of money and we do want South Australians to get the benefit of that, not just from the upgrades to infrastructure but through the work as well.

There are always going to be examples and the stories you are telling me are not unique to South Australia; they occur in New South Wales, they occur in Victoria; in fact, they are probably more pronounced in Victoria and New South Wales given the large operations that are there. We are doing what we can to make sure that everyone gets a feed, but the problem is always going to be that some people go in because their eyes are larger than their stomach. We do what we can to educate people about tendering and procurement, and we do try and look at capability. Where we can, we do well, but we do not always get it right, I accept that, and the more you can feed through to me privately about examples, the better we will be able to get an understanding of where we are getting it wrong.

Mr WILLIAMS: I will certainly be doing that.

The Hon. A. KOUTSANTONIS: Thank you.

Mr WILLIAMS: Because I am talking about what I believe is unconscionable behaviour.

The Hon. A. KOUTSANTONIS: I completely understand.

The CHAIR: The member for Hartley has one final question.

Mr TARZIA: Yes, I found the tenders and contracts website quite easy to use—$100 million in SA government work has gone interstate this year since January 2015. So Budget Paper 4, Volume 4, what has been the result of the completed 11 procurement compliance reviews and the eight procurement accreditation reviews?

The Hon. A. KOUTSANTONIS: The government is spending $17 billion a year on goods and services—

Mr TARZIA: On government contracts?

The Hon. A. KOUTSANTONIS: —so $100 million going interstate it is going to happen, and I will also caution you about this protectionist view that the Liberal Party is developing.

Members interjecting:

The CHAIR: Order!

The Hon. A. KOUTSANTONIS: My point is that the New South Wales government's budget is much larger than ours, as is their procurement, as is the Victorian budget, as is the Queensland government's budget, as is the Western Australian government's budget, indeed, as is the commonwealth government's budget, so a protectionist wall-up approach does not work. We are an exporting state, we will always be a free-trade state, as much as we possibly can, and I support it.

We do as much as we possibly can to incentivise local companies to win procurement, but there are plenty of South Australian companies winning interstate work and I would hate to see retaliation from larger jurisdictions into South Australia with this type of isolationist policy that the Liberal Party in South Australia is espousing.

Mr TARZIA: What do those reviews say? There are 11 procurement compliance reviews and eight procurement accreditation reviews. What have those reviews said? What have they done? What have they come up with?

The Hon. A. KOUTSANTONIS: Well the budget is about $17 billion a year. We spend—

The CHAIR: Order! We are way beyond time. Can we just hear this final answer?

Mr TARZIA: Can we see the results of the reviews or the recommendations?

The Hon. A. KOUTSANTONIS: I do not have it; I will get it for you on notice.

Mr TARZIA: Thank you.

The CHAIR: There being no further questions, I declare the examination of the proposed payments completed. In accordance with the agreed timetable, I advise that the committee stands suspended until 16:30.

Sitting suspended from 16:20 to 16:32.