South Australian Tourism Commission, $80,371,000

Minister For Tourism $4,916,000

Membership:

Mr Pisoni substituted for Mr Pederick.

Minister:

Hon. L.W.K. Bignell, Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Tourism, Minister for Recreation and Sport, Minister for Racing.

Departmental Advisers:

Mr R. Harrex, Chief Executive Officer, South Australian Tourism Commission.

Mr C. Miller, General Manager, Finance and Business Services, South Australian Tourism Commission.

Mr N. Jones, Destination Development, South Australian Tourism Commission.

Mr N. Cayzer, Motor Sports, South Australian Tourism Commission.

Mr J. Ali, Corporate Affairs, South Australian Tourism Commission.

Mr H. Rasheed, Events, South Australian Tourism Commission.

Mr B. Hill, Marketing, South Australian Tourism Commission.

Mr A. Kirchner, Chief Executive, Adelaide Venue Management Authority.

The CHAIR: Good afternoon, everyone. Welcome to committee A. I dare say that it is not necessary to read the whole preamble again, as you are all familiar with estimates and what is required. I declare the proposed payments open for examination and refer members to the Agency Statements, Budget Paper 4, Volume 4. I call the minister to introduce his advisers. Is there an opening statement, minister?

The Hon. L.W.K. BIGNELL: Thank you, Chair. I welcome you and the members of the committee who are here this afternoon. Today, I am delighted to announce that tourism jobs in South Australia increased by 3,000 in the year to June 2015, after growing by more than 1,000 the previous year. Direct employment in the industry has reached 35,700 people, an increase of 13.8 per cent during the past two years, according to the latest data from Tourism Research Australia. This is an outstanding result for South Australia, and we are well on our way to achieving our goal of 10,000 additional tourism jobs and to growing the visitor economy to $8 billion by 2020.

South Australia's tourism industry is a major contributor to our state's economy. The 2015-16 financial year has seen our visitor economy reach a record high thanks to this government's unprecedented investment in tourism. The state's visitor economy has grown to a massive $5.73 billion, with growth of $370 million in tourism expenditure in the past year alone. Through the tireless efforts of our government and the people and businesses which make up our tourism industry, we are seeing unprecedented results internationally, domestically and in the events sector.

Tourism contributes not only to Adelaide but to all our wonderful regions. It has a major flow-on effect to goods and services across cafes, restaurants, retail establishments, accommodation providers, transport services, bars, tour companies, the arts and, of course, our world-class events. The state government is very proud of the fantastic achievements our tourism industry has accomplished, and we are delighted to support this industry which generates export revenues, providing new dollars to the economy to create jobs and generate wealth for our state.

Tourism is a key part of the state government's economic development strategy. We recognise tourism's potential. In the 2015-16 state budget, we included a major funding package of more than $35 million in additional funding for the sector. Much of the 2015-16 state budget investment was used to help inspire the world to explore South Australia. I am very proud to say that this investment has already delivered unparalleled results in its first year.

We welcomed more than 400,000 international visitors, injecting an additional $260 million into the economy in the past year alone. This takes overall international expenditure to more than $950 million, its highest level on record. South Australia attracted 5.95 million domestic overnight visits, another record number. In the past year, our state has enjoyed more than $100 million of additional expenditure into the economy from domestic markets.

Visitor nights are an important part of the tourism story and tell us a lot about visitor behaviour and trend. International visitor nights grew by 13 per cent, to 9.8 million. Domestic nights are also close to a record high. These numbers tell the story of a booming tourism sector in South Australia. I am very proud to highlight that we have never before welcomed more visitors to South Australia and that we have never before enjoyed a higher value for our visitor economy's total expenditure.

South Australians have long known about our premium food and wine from our clean environment, nature and our wildlife, our lively cosmopolitan city and wonderful program of events. The rest of the world is now taking note. The New York Times, CNN and Lonely Planet have all been glowing in their praise for our tourism offering. South Australia's beautiful and unique regions underwrite the economic strength and social fabric of South Australia and are an integral part of the state's identity.

More than $2.4 billion in visitor expenditure was spent in regional South Australia, an increase of more than $120 million in the 12 months to March 2016. Internationally and domestically, we continue to invest in markets which provide the largest sources of revenue for our state while also tapping into the growth potential of new and emerging markets. Additional funds, courtesy of the 2015-16 state budget, enabled more than 90 international campaigns to be implemented to increase awareness and consumer demand for South Australia.

We enhanced the focus on markets like China and India, and also maintained a balanced approach in our commitment to our traditional Western markets. These continue to be the lifeblood for our regions. There are two examples I would like to mention. The global Aquatic and Coastal campaign shone a light on our unspoiled nature, food and wine, and luxury experiences, as well as our spectacular wildlife encounters. Our efforts and engagement with Tourism Australia ensured South Australia was represented more than any other state or territory in this multimillion dollar campaign.

Running Man, the number one prime-time Chinese variety program, allowed our city and regions to be viewed by more than 250 million people. These are outstanding examples of successfully implemented campaigns as a result of this government's additional funding. Popular national programs such as The Project and the Today show broadcast live from our city and regions, promoting our world-class experiences and events such as the Adelaide Fringe and WOMADelaide to millions across the nation, all aimed at increasing visibility and shining the spotlight on our state.

Our events offered the prime opportunity to get to know the essence of South Australia and the spirit of our people, our culture, our regions. Again, events proved to be a great drawcard for attracting visitors in 2015-16; in fact, the 2015 Australian Event Awards recognised South Australia as the best event state in the country. We again opened the door to the heart of our city and regions, greeting world-class athletes, both male and female, with the Santos Tour Down Under. While the peloton was challenged by each stage, the Santos Tour Down Under attracted 39,000 visitors from interstate and overseas, injected more than $49 million into our economy and generated more than 600 jobs.

We successfully relaunched the Adelaide Fashion Festival, showcasing our state's attributes in fashion and design. It helped our local fashion industry to expand internationally, particularly to Asia, further deepening our relationship with Shandong. The Major Leisure Events Bid Fund has now secured 15 events which will inject more than $60 million into the South Australian economy. Visitors and locals witnessed the best in soccer, motorsport, swimming and women's golf to name a few.

Additional funds help to secure 41 major conventions, welcoming more than 44,000 delegates to Adelaide and generating around $214 million in economic benefit. These conferences will help to transform the winter economy in our state, enhancing hotel occupancy during the traditionally slower months, but the net worth of these events far exceeds their commercial returns. They validate South Australia's business capabilities, facilitate stronger international links and showcase major redevelopments to the iconic Adelaide Oval, and the creation of one of the world's largest and most significant health and medical clusters.

The redeveloped Adelaide Oval remains the centrepiece for the revitalisation of Adelaide. It has placed our capital city on the global map for a range of international and national entertainment and sporting events. New data shows city hotel revenue is up by 48 per cent and crowd numbers are up by 49 per cent on game days since the AFL moved to Adelaide Oval in 2013.

The Oval is also adding new experiences to our tourism offering. Recently it began offering visitors the chance to walk across the top of the stadium structure on a purpose-built path from the Western Stand to the Riverbank Stand. I understand the shadow cabinet recently took time out to enjoy this experience. Good to see you all returned safely.

The Oval has transformed our city. It has created employment, enhanced revenues, added tourism product and is playing a major role in growing the visitor economy. It is an icon all South Australians can be enormously proud of and one which has paid significant return on investment for the state. Major events, both leisure and business, not only display our state as a unique destination, they attract visitors, spectators and event participants. They create jobs, increase spend and lengthen the time visitors stay here.

Our already thriving cruise industry hit another all-time high this year. More cruise ships docked in our ports, with passengers and crew dispersing into our city and regions. Thirty-seven cruise ships visited South Australian ports, with a capacity of nearly 90,000 passengers and crew, injecting more than $16 million into the economy. This result demonstrates how our state is growing in popularity as a must-visit cruise destination.

Improvement in air access will be the single largest driver of international visitation to South Australia. The state government was proud to welcome Qatar Airways to Adelaide in May this year. Qatar Airways has commenced daily flights which will generate more than $40 million for the South Australian economy, more than 200 jobs and the capacity to deliver up to 80 tonnes of cargo space a week. This is a fantastic opportunity for our producers, allowing them to export more of South Australia's premium produce—

Mr PISONI: Point of order.

The CHAIR: The member for Unley has a point of order.

Mr PISONI: In my 10 years in estimates, it has been a standard practice that opening statements are limited to 10 minutes.

The CHAIR: No, I asked you all at the beginning if you wanted me to read it all again. You all said no. It says 'of about 10 minutes'. I am aware of your eagerness to start, but unfortunately the minister does have a right to make an opening statement.

The Hon. L.W.K. BIGNELL: You just cost a minute with your interruption.

The CHAIR: Order! Please, minister, just back to your opening statement. If you have lost your place, you will have to repeat something.

The Hon. L.W.K. BIGNELL: It is such good news that the member for Unley does not want to hear it.

Mr PISONI: You have cost those people sitting in the gallery tens of thousands of dollars.

The CHAIR: Member for Unley, I am on my feet. Do not defy the Chair, please. You are aware of what the order is here in the house. Please, let's keep on to what we are doing. You are going to lose time otherwise. Minister.

The Hon. L.W.K. BIGNELL: Thank you very much, Chair. Qatar is offering up to 80 tonnes of cargo space a week, taking our premium produce to the world. We have recently secured direct flights from mainland China to Adelaide with China Southern Airlines. China Southern Airlines transports more than 100 million passengers, ranking the carrier first in Asia and third in the world. This is groundbreaking for South Australia and will further boost our visitor economy.

This year, we activated our natural assets to enhance our tourism offering, creating one of Australia's great multiday walks on Kangaroo Island, stretching for 66 kilometres through the pristine environment of Flinders Chase National Park on the south-west corner of the island. The trail is expected to attract an additional 5,000 visitors a year to Kangaroo Island and support 46 new jobs. The state government looks forward to continuing to grow the visitor economy through working with industry, our regions and, importantly, the broader community to achieve much for our state. This is demonstrated in our actions.

We have committed an additional $60 million investment in tourism during the next three years to drive demand and to strengthen the visitor economy. We are committed and continue to be motivated in delivering real economic benefits, promoting confidence and pride amongst South Australians, helping to deliver on the principle of a vibrant city and establishing our state as the destination choice for international and domestic travellers. I would like to take this opportunity to commend and celebrate the efforts, ambition, hard work and tireless commitment of the 18,000 tourism businesses and the more than 35,000 people employed in the sector.

Tourism is above all a people business, and as the Minister for Tourism and on behalf of the state government I wish to pay tribute to their efforts in delivering the experiences and environment which make South Australia such a great place to visit. Thank you, too, to Rodney Harrex and the team at the South Australian Tourism Commission for all their hard work throughout the year supporting the private sector. This is an exciting industry and we look forward to continued growth across the state.

The CHAIR: Member for Unley.

Mr PISONI: Minister, I would like to take you to Budget Paper 4, Volume 4, tourism events, and program 2 on page 144. The question relates to the Clipsal 500. When was the minister aware that Elite Systems was in financial trouble?

The Hon. L.W.K. BIGNELL: While I am just getting that answer, I neglected to introduce Rodney Harrex, the Chief Executive of the South Australian Tourism Commission; Nick Jones to his left, the destination development director; Chris Miller, the director of finance; behind me on my left, Nathan Cayzer from Motor Sports; and, on my right, Anthony Kirchner from Adelaide Venue Management Corporation.

Thank you, member for Unley, for your question. On 27 May this year, Elite Systems Australia Pty Ltd and four other associated companies had a section 505(b) notice issued under the Corporations Act advising that an external administrator had been appointed. The South Australian Tourism Commission is aware that there are a number of suppliers in South Australia and elsewhere who are owed money by Elite.

The arrangements between Elite and its suppliers are third-party contractual arrangements that the SATC was not privy to. There are also associated entities of Elite which have also gone into administration. The South Australian Tourism Commission understands that a number of companies reported as having debts with Elite in fact had debts with these associated entities. The SATC had no contractual arrangements with these associated entities. The SATC also understands that a number of suppliers reported as being South Australian are based interstate.

The SATC was not contacted by any supplier prior to that supplier contracting with Elite. Had this occurred, the SATC would have stressed the importance of suppliers conducting their own due diligence and ensuring credit terms were appropriate. The SATC paid all accounts to Elite on time and, in order to facilitate cash flow, provided weekly as opposed to the contractually required monthly—

Mr PISONI: Point of order, Chair: can I bring the minister back to the substance of the question, which was: when was he aware that Elite Systems was in financial trouble?

The CHAIR: We are listening to his answer. I am sure he is coming to it.

The Hon. L.W.K. BIGNELL: Yes, the answer is here.

The CHAIR: Order! Just back to the answer.

The Hon. L.W.K. BIGNELL: You are a very rude person.

The CHAIR: Order!

The Hon. L.W.K. BIGNELL: Probably out of the 69 members of parliament you are the rudest.

Mr PISONI: Where is the answer?

The CHAIR: Minister.

The Hon. L.W.K. BIGNELL: You are the rudest person in this place.

Mr KNOLL: Point of order, Chair.

The CHAIR: No, no point of order. I am on my feet. I expect you all to understand the rules of how the committee works: questions and then an answer, no frivolous points of order and there is to be no fighting and no quarrelling. It is my role to make sure there is no quarrelling and I will not hesitate to suspend the committee. It is in your best interest, therefore, to make sure it moves very smoothly.

The Hon. L.W.K. BIGNELL: Thank you, Chair, for allowing me to conduct myself in a civil way, without the provocation of this man.

The CHAIR: No further comment. Back to your answer, please.

The Hon. L.W.K. BIGNELL: The SATC paid all accounts to Elite on time and, in order to facilitate cash flow, provided weekly as opposed to the contractually required monthly settlements of claims for works completed. Whilst the SATC is not responsible for the debts of Elite to the suppliers, when the SATC became aware that some staff and suppliers had not been paid in accordance with terms and while not obligated to do so, the SATC requested that Elite bring those payments up to date prior to final settlement of accounts in April.

Pursuit has contacted the SATC asking what it proposes to do about the debt. The SATC advised Pursuit that it should register its debt of approximately $82,000 with the administrator. As far as the SATC was aware, while Elite owed money to Pursuit People Solutions, those payments were not due final settlement of accounts in April. The SATC has requested that the administrator provide all assistance possible to Pursuit and other South Australian businesses affected.

It is not possible for the SATC or any other government agency to conduct due diligence processes that guarantee payment of every third-party business. While every effort is made to ensure that organisations which the government contracts are financially sound, due diligence occurs at a point in time and it is not possible for government to identify the impact of unknown future events on an organisation it contracts with.

Businesses need to conduct their own due diligence based on their own risk profile, the nature of their business and their credit terms. This point was reinforced by Nigel McBride, the chief executive of Business SA, during a recent radio interview.

Mr PISONI: I am still waiting for a date.

The Hon. L.W.K. BIGNELL: You are still being rude.

Mr PISONI: I am still waiting for a date.

The CHAIR: Order!

The Hon. L.W.K. BIGNELL: In September 2014, the South Australian Motor Sport Board issued a tender for the supply of grandstands for the Clipsal 500 Adelaide. Due diligence on Elite was undertaken as part of the procurement process in January 2015. This included inquiries into Elite as a company and analysis of its financial statements by the then South Australian Motor Sport Board finance manager. Based on the information available at that time, Elite was assessed as having suitable financial and organisational capacity to complete the required contract.

We must remember that the same company was contracted to do the Australian Formula One Grand Prix this year and last year. I have spoken to James Warburton, the head of V8 Supercars. They run 10 events around Australia, and Elite has provided services for them—

Mr PISONI: When were you told? That was the question: when did you know?

The Hon. L.W.K. BIGNELL: I am giving you an answer.

Mr PISONI: I am still waiting for a date.

The Hon. L.W.K. BIGNELL: Please stop being—

Mr PISONI: We are five minutes into the answer of the question and we are still waiting—

The CHAIR: Member for Unley, I must ask you—

Mr PISONI: —for you to answer the question.

The CHAIR: Member for Unley—

The Hon. L.W.K. BIGNELL: You are a very rude man.

The CHAIR: Member for Unley—

Mr PISONI: You are evasive.

The CHAIR: Member for Unley—

Mr PISONI: You will not answer the question. Just answer the question.

The CHAIR: Member for Unley, would you like to just look at me for a moment? I remind you that I will suspend the committee—not a good thing to do. The sooner the minister finishes his answer, the sooner you can ask your follow-up question.

The Hon. L.W.K. BIGNELL: Thank you, Chair. I am answering the question. It is a very important question and this is a very important answer, and I will do it in full. The contract to supply 16,892 seats for the 2016 to 2021 events with Elite was executed on 20 May 2015.

The contract was transferred to the South Australian Tourism Commission on 1 July 2015 on abolition of the South Australian motor sport board. In August 2015, Elite advised that a financier had pulled out as a result of the Tianjin dock fires. The Tianjin fires in August 2015 resulted in 173 deaths, 797 casualties and estimated losses of $A20 billion. In total, 304 buildings, 12,428 cars and 7,533 intermodal containers were damaged. It has been described as the biggest marine insurance loss ever.

Elite sought to identify new sources of finance which resulted in procurement delays and additional unbudgeted costs to purchase the new grandstands. At the SATC's request, Elite provided cash flow information, procurement plans, shipping documentation, and bank statements in support of its ability to deliver a reduced grandstand contract. In December 2015, the South Australian Tourism Commission reduced the contract with Elite due to these procurement delays. Another supplier was engaged to provide 4.164 grandstand seats with Elite providing 12,694 seats.

On commencement of works in December 2015, the SATC agreed to pay claims for work completed on a weekly basis, as opposed to the monthly requirement under the contract, to support Elite's cash flow. Works proceeded in accordance with the overall construction schedule for the event through the months of December, January, February and March. The South Australian Tourism Commission was contacted in April regarding delays in payments of some staff and contractors. The SATC required Elite bring those payments up to date within its terms with suppliers prior to final settlement of accounts in April.

On 27 May 2016, an external administrator was appointed to five associated companies: Elite Systems Australia Pty Ltd, Elite Systems Contracting Pty Ltd, Elite Systems Group Pty Ltd, Vertex Equipment Holdings Pty Ltd and Vertex Scaffolding Pty Ltd. The South Australian Tourism Commission has requested that the administrator provide all possible support to South Australian companies affected by the failure of the Elite group.

Elite has debts to a number of South Australian companies associated with activities at the Clipsal 500 event and through its other operations nationally. It is understood that a significant amount of debts outstanding are through an associated company of Elite, Vertex Scaffolding Pty Ltd, not Elite. The South Australian Tourism Commission does not have, nor has it had, any contractual relationship with Vertex Scaffolding Pty Ltd. The South Australian Tourism Commission is also aware that a number of companies which have been reported as being South Australian are in fact based interstate.

The South Australian Tourism Commission has been directly contacted by just one supplier, Pursuit People Solutions. The South Australian Tourism Commission referred Pursuit to the administrator and requested that the administrator provide all possible support to Pursuit and similar companies. The arrangements between Elite and its suppliers are third-party contractual arrangements that the South Australian Tourism Commission was not privy to. The South Australian Tourism Commission paid all accounts to Elite on time. All amounts owing to Elite have been paid with the last payment on 22 April 2016.

Elite has not completed the purchase of old grandstanding assets of 12,694 seats under the contract. The South Australian Tourism Commission has retained possession of the old grandstand assets totalling 16,500 seats. All other engineering, safety and other compliance requirements of Elite's contract were fully met. No suppliers contacted the South Australian Tourism Commission regarding the creditworthiness of Elite prior to contracting with Elite. If this had occurred, the supplier would have been advised that they should conduct their own due diligence and ensure that appropriate commercial credit terms were in place.

It is not possible for the South Australian Tourism Commission or any other government agency to conduct due diligence processes that guarantee payment of every third-party business. While every effort is made to ensure that organisations which the government contracts are financially sound, due diligence occurs at a point of time and it is not possible for the government to identify the impact of unknown future events on an organisation it contacts with. There was no way our government, or indeed Elite, could have foreseen that several months later, a fire that caused $20 billion damage was going to have such a major effect on their chief financier.

Businesses need to conduct their own due diligence based on their own risk levels, the nature of their businesses and their credit terms. As I mentioned before, that was a point reinforced by Nigel McBride, the chief executive of Business SA. The South Australian Tourism Commission is confident that it will be able to source suitable grandstands for the 2017 event and beyond within its budget expectations. The South Australian Tourism Commission has multiple options to do this and multiple suitably qualified and experienced parties showing interest in this work.

The South Australian Tourism Commission's options for grandstands for the 2017 events and beyond include the use of the old grandstand seating, which is 16,500 seats in the South Australian Tourism Commission's store, which would require some refurbishment (that is our least preferred option), and the use of the Elite grandstand provided by the preferred purchaser identified by the administrator (discussions have commenced with the preferred purchaser). The third option is to source different grandstand products from reputable suppliers through a procurement process, and discussions have been undertaken with interested suppliers. Due diligence will be completed with the new supplier.

Chair, I am sorry that it took so long to go through that explanation, but I think it was in the interests of everyone here, and in the interests of those people who are owed money by this company, that we needed to go through and draw up the time line and go through the circumstances that have led us to this position.

Mr PISONI: You left one thing out of the time line, minister, and that was when you were told. When did you know?

The Hon. L.W.K. BIGNELL: I have read out the whole time line and—

Mr PISONI: When did you know? It is not in the time line, mate.

The Hon. L.W.K. BIGNELL: Please stop being rude.

Mr PISONI: It is not in the time line, mate. Just answer the question.

The CHAIR: Order!

The Hon. L.W.K. BIGNELL: I am trying to answer the question.

The CHAIR: Member for Unley, look what you have done: you have turned the lights out and on again.

Mr PISONI: I have done that as well: I have turned them back on again.

The CHAIR: The minister is entitled to answer it as he has.

Mr PISONI: He has chosen not to answer the question.

The CHAIR: You need to work out whether you want to continue on that line or go to another section.

Mr PISONI: I want to know when the minister knew. Are you going to answer that question?

The Hon. L.W.K. BIGNELL: We have a meeting once a week with the South Australian Tourism Commission team and I have been kept up to date with all the things that I have outlined in this briefing today about how Elite was performing, the trouble that they were in that they mentioned to us before the race and how we changed the terms. I have regular updates. I have just put out point by point, date by date, all of the things there, and I think I have done it in a quite reasonable, calm and well-mannered way. I would really appreciate it if you would stop yelling over the top of me.

The CHAIR: Order!

Mr PISONI: When did you know that Elite Systems was in financial trouble?

The CHAIR: Order, member for Unley!

Mr PISONI: Were you advised—

The Hon. L.W.K. BIGNELL: I have answered the question.

Mr PISONI: —when the South Australian Tourism Commission contacted Elite Systems and asked for their financial papers? Were you advised at that time?

The Hon. L.W.K. BIGNELL: Yes, I was kept up to date.

Mr PISONI: So, back in August 2015 you were advised?

The Hon. L.W.K. BIGNELL: Right through the process we were kept up to date. We have weekly meetings and we discuss matters like this.

Mr PISONI: Did you advise subcontractors of what you knew, that you had concerns about Elite Systems? Did you advise those subcontractors who were working for Elite Systems that you had concerns about the financial viability of Elite Systems? That is the question, minister: did you tell subcontractors?

The Hon. L.W.K. BIGNELL: No, I did not tell subcontractors.

Mr PISONI: Why not?

The CHAIR: Order!

The Hon. L.W.K. BIGNELL: Because businesses go into their own agreements and—

Mr PISONI: So you knew—

The CHAIR: Order, member for Unley!

Mr PISONI: —that this business was at risk and so South Australian subcontractors—

The CHAIR: Member for Unley!

Mr PISONI: —were at risk of not being paid and you did not share that with them. Is that what you are telling this committee?

The CHAIR: Do not respond. Member for Unley, it has to happen that we hear his full answer, as much as you might not like it, and then you get to ask a question. You do not get to ask questions one after the other without listening to the answer.

Mr PISONI: We want the full answer, Chair.

The CHAIR: I need to give you the call, if you want to be particularly pedantic about it. How much time do you want to spend on this?

Mr PISONI: Well, we have—

The CHAIR: How much time do you want to spend on it?

Mr PISONI: Until I am satisfied, Chair.

The CHAIR: In that case, you have to wait until I give you the call. The minister has the floor to finish his answer.

The Hon. L.W.K. BIGNELL: As I have said, I have just gone through the whole time line from us going out looking for a contract, awarding that contract and the due diligence that was done at a time in history before the most devastating fire in maritime history that cost $20 billion that had an effect on this business's financier. They came to us over several months explaining the change in circumstances and how they were looking for a financier, and we worked with them. I am sure that other companies who did contracts with this company also did their own due diligence.

The CHAIR: The member for Unley is deferring to the member for Schubert.

Mr KNOLL: What was the extent of the due diligence completed by SATC in relation to Elite Systems and the awarding of the contract? What is the procedure that is followed?

The Hon. L.W.K. BIGNELL: Again as I mentioned, this is a company that has had contracts on the Australian Formula One Grand Prix and various motor sports events around Australia for some time and the then Motor Sport Board would have done their due diligence on the company that, at that stage, had things in place which were changed by that devastating fire in China in August of last year.

Mr KNOLL: Can I ask in a slightly different way then: were there any red flags at all raised at the time that SATC or the Motor Sport Board did their due diligence in relation to this company?

The Hon. L.W.K. BIGNELL: The only way a red flag could have been raised was if someone had a crystal ball and could look forward to August last year (from February last year) and predict that this most devastating fire would affect the financier. So, no, as I said, the due diligence, when you sign a contract, is done at that particular point in history.

Mr KNOLL: This is the bit that I find quite interesting: Elite Systems is awarded a contract by SATC. Presumably, we can all expect that the cost of that contract would cover the cost of providing the services of that contract. You stated in a previous answer, minister, that you were making weekly payments to Elite Systems to overcome this issue that they say they had with an external financier.

What I do not understand is that if SATC paid Elite Systems a discrete amount of money in relation to services contracted, why that money could not then flow back through to the suppliers that undertook the work in a subcontracting fashion to Elite Systems? This idea that there were external issues should not necessarily have otherwise impacted upon the provision of these services, given that SATC paid, on time, Elite Systems, and why that money then did not flow through to the subcontractors that undertook the work for this discrete project.

The Hon. L.W.K. BIGNELL: As I mentioned in my more detailed answer, there were other associated companies with Elite that we had no contractual arrangements with. I understand that much of the debt that is owed to other companies is actually through that scaffolding company.

Mr KNOLL: Can I go then, minister, to your letter dated 6 July, where you acknowledge the fact that Elite Systems had entered into external administration? You acknowledge that, obviously, there were some financial issues and requested that payments be brought forward. Can I ask then the specific date for when the bringing forward of payments was achieved, and who advised the minister of this?

The CHAIR: Just before you respond to that: who is the letter addressed to?

Mr PISONI: The letter is addressed to Narelle Hourigan, business development officer of—

The CHAIR: Just as a matter of interest, that is all. Minister?

The Hon. L.W.K. BIGNELL: Sorry, I missed who it was addressed to?

Mr KNOLL: When specifically were the payments brought forward, and who advised the minister of this?

The Hon. L.W.K. BIGNELL: I might just ask Chris Miller, Director of Finance, to answer that.

Mr MILLER: The payments were brought forward from when Elite arrived on site and commenced work in late November, early December, and that continued throughout the weekly payments against their claim throughout that period.

Mr PISONI: What process did you put in place, having known that they were in financial difficulty, to ensure that they were paying their subcontractors before you were handing over more money?

The Hon. L.W.K. BIGNELL: Again, I will ask Chris Miller to answer that question.

Mr MILLER: We were contacted by some subcontractors and also by the union on behalf of staff in April. That was the first time—

Mr PISONI: Sorry, you started the payments, minister, in November. You started the payments in November?

The CHAIR: We ignore that the member for Unley actually interrupted again.

Mr PISONI: And it was April before you were checking to see whether contracts were being paid. Is that right?

The Hon. L.W.K. BIGNELL: Excuse me, Chair, can you provide some protection for this person who is giving an answer?

The CHAIR: No-one is to say another word until the member for Unley comes to order, until he can understand that he must let people answer before he attempts another question. Do you understand the process, member for Unley?

Mr PISONI: Absolutely.

The CHAIR: So, you can wait for the gentleman? The gentleman on the end is answering your question.

Mr PISONI: And those contractors—

The CHAIR: No, you need to—

Mr PISONI: —have lost hundreds of thousands of dollars under the process as well and it has completely let them down—completely let them down.

The CHAIR: Everyone is concerned about that.

Mr PISONI: This minister has let them down.

The CHAIR: There is no need for grandstanding. The gentleman on the end is answering your question. I call you to order. Mr Miller.

Mr MILLER: In April, we became aware, so we made payments to Elite so they could pay their subcontractors, the understanding being that they were paying their subcontractors. In April, we became aware that there were some staff and subcontractors that were not paid or had not been paid. We raised that with Elite and informed them that they needed to make those payments. Those payments to the staff were subsequently made and I believe to a subcontractor as well, the payments that were due.

There were a number of payments or there were amounts owing to other subcontractors that were not due and payable. Under the standard AS 4000 contract that applied to these works, while we are able to put pressure on a contractor to make payments that are due and payable, we are not able to withhold payment against amounts that are not yet payable, and that was the case with some of those payments.

Mr PISONI: Well, hang on—

The CHAIR: The member for Unley, just a minute. Have you finished your answer, Mr Miller?

Mr MILLER: We were also only advised of a small number. A number of the creditors that have since come to light through the administration process, at no stage did they contact us and advise us that they were owed sums of money. In fact, we did not find out some of those were actually contractors until it appeared in the media.

Mr PISONI: You are quoting standard contracts. Are you saying that this was a standard contract, where the SATC had to ask for financial documents during the early days of the contract and that the terms of the contract were changed to allow for weekly payments and it was a standard contract? Minister, what you are saying is that it is standard that you do not check with people to make sure they are being paid, but I put it to you that this is not a standard contract. You were aware that this business was in difficulty and you were handing over money and you were not doing the due diligence to make sure that those who were working for this company were being paid.

The Hon. L.W.K. BIGNELL: We did not have the contract with these subcontractors. That was with Elite. That was a matter—

Mr PISONI: You were handing money over—

The CHAIR: Order, member for Unley!

Mr PISONI: —outside the terms of the contract.

The Hon. L.W.K. BIGNELL: Listen—

The CHAIR: No, nothing until the member for Unley can compose himself and let the Chair know he is ready to actually listen to questions and answers. As soon as you are ready to cooperate, member for Unley, just let me know.

Mr PISONI: I think the member for—

The CHAIR: No, your job—

Mr PISONI: —Schubert has a question.

The CHAIR: —is to behave in the committee according to the standing orders. That is all we are asking you to do. I am asking you to listen to answers before you ask your next question and not to interject until you are given the call. Can you do that?

Mr PISONI: Absolutely, madam.

The CHAIR: In that case, you need to wait for the answer to finish.

The Hon. L.W.K. BIGNELL: Thank you very much for your protection there, Chair. I might point out that it is very disappointing that this set of circumstances that is outside of anyone's control has happened. No amount of bellyaching by the member for Unley—

The CHAIR: No. Order!

The Hon. L.W.K. BIGNELL: —or rude behaviour is going to help any of the businesses. I would ask him to conduct himself—

Mr Pisoni interjecting:

The CHAIR: No. Order, member for Unley!

Mr PISONI: You are pathetic, Leon. You are pathetic.

The CHAIR: Member for Unley!

The Hon. L.W.K. BIGNELL: —in a polite and respectful manner, as I have been doing.

The CHAIR: I need you both to stop, and I do not need anybody to make comments. I just need people to stick to their answers and to their questions—no further comments, just the answer and the question. Can you both help me with that?

The Hon. L.W.K. BIGNELL: I have been doing that all day.

The CHAIR: No, I just need you to stick to the question and the answer. Can you wind up your answer and we will get to the next question.

The Hon. L.W.K. BIGNELL: I have finished my answer.

The CHAIR: The member for Schubert is going to ask a question.

Mr KNOLL: We have been advised that there was a meeting between the CFO of SATC and Pursuit People Solutions on 28 June this year in relation to this contract. In that meeting, we are advised the acting CFO stated that if Pursuit had called the SATC he would have advised them against doing business with Elite Systems. Does the minister share the same view as the acting CFO?

The Hon. L.W.K. BIGNELL: The point you put forward is incorrect, so it is erroneous to say that in here. It is not right.

Mr KNOLL: So, you are categorically ruling out the CFO offering any of that sort of opinion to Pursuit People Solutions?

The Hon. L.W.K. BIGNELL: The CFO has told me that he made no such utterance.

Mr PISONI: The acting CFO.

The CHAIR: Order! The member for Unley is out of order. Member for Schubert, do you have another question?

Mr KNOLL: I certainly do, Madam Chair. Following Elite Systems' failed contract with the government, can the minister specify the exact amount of money owed to the government or SATC by Elite Systems?

The Hon. L.W.K. BIGNELL: $528,000.

Mr KNOLL: What correspondence has the minister or his agency had with the external administrators in relation to Elite Systems (Worrells Solvency and Forensic Accountants) regarding the likelihood of this taxpayer money being repaid?

The Hon. L.W.K. BIGNELL: Of course, it is very important that we get as much taxpayers' money back as we can, and the administrators have been very open with us. There have been ongoing discussions between officers from the South Australian Tourism Commission and the administrator.

Mr KNOLL: I understand that the government is potentially looking at purchasing the grandstand assets?

The Hon. L.W.K. BIGNELL: No, that is not the case.

Mr KNOLL: Clause 3.30 of the contract requires that the contractor (in this case, Elite Systems) contract a consulting structural engineer who is a certified practising engineer (NPER-3 rates, as acknowledged by the institute of engineers) to conduct design review, provide design intent and inspection certification by the date of practical completion.

Clauses 7.1 and 4.5 of the contract prescribe that the practical completion was 5pm on Tuesday 1 March. However, Pursuit People Solutions have documentation showing that construction was underway on Wednesday 2 March, prior to the event, which was after the practical completion date, as specified in the contract. Can the minister confirm that Elite Systems failed to meet its practical completion date of 1 March at 5pm?

The Hon. L.W.K. BIGNELL: The certification was completed for all grandstands on 2 March, and certification for a hoist was completed on 3 March.

Mr KNOLL: Can the minister confirm if the superintendent instructed Elite Systems to omit any portion of the works; if so, did this include the omission of the certification required under clause 3.30?

The Hon. L.W.K. BIGNELL: Not to our knowledge.

Mr KNOLL: Can the minister confirm and produce evidence that the grandstand erected for the Clipsal event met Australian Standards and codes, as specified in clause 5.7?

The Hon. L.W.K. BIGNELL: Yes, and we have a copy of the certification.

Mr KNOLL: Thank you, I will defer.

The CHAIR: You are deferring to the member for Unley.

Mr PISONI: Were any of the payments from Elite Systems made as per government clause 4.6 of the contract in which there was a purchasing of the existing grandstands; if so, when was the first payment made, and was it made on time?

The Hon. L.W.K. BIGNELL: It was made on time, and the first payment was made on 2 April.

Mr PISONI: Of what year?

The Hon. L.W.K. BIGNELL: 2016.

Mr PISONI: That was when the first payment was due?

The Hon. L.W.K. BIGNELL: Yes.

Mr PISONI: That was the only payment made?

The Hon. L.W.K. BIGNELL: Yes.

Mr PISONI: The second payment was due when?

The Hon. L.W.K. BIGNELL: It is due on completion of the next event.

Mr PISONI: So, annual payments?

The Hon. L.W.K. BIGNELL: Yes.

Mr KNOLL: Can the minister confirm if Elite Systems as a company, or any of its representative or associated companies, purchased any corporate tickets of any description to the Clipsal 500 event in 2016?

The Hon. L.W.K. BIGNELL: We are not aware of any.

Mr KNOLL: Is the minister ruling out that the purchase of tickets was a requirement to be awarded the contract?

The Hon. L.W.K. BIGNELL: I am not aware of it.

Mr KNOLL: So the minister is refusing to rule that out?

The CHAIR: No, he is saying he is not aware of it. That is the answer.

Mr KNOLL: I understand, so can I ask a follow-up question?

The Hon. L.W.K. BIGNELL: It is the first time that this has been put to me—

The CHAIR: Order!

The Hon. L.W.K. BIGNELL: —and they have put several lies—

The CHAIR: Order!

The Hon. L.W.K. BIGNELL: —to this chamber today already.

The CHAIR: I need people to cooperate with me. That is not a refusal to answer. His answer was, 'I am not aware of it.' Next question.

Mr PISONI: Madam Chair—

The CHAIR: No, next question.

Mr PISONI: The minister has just accused both the member for Schubert and me of lying, and I would like it withdrawn.

The CHAIR: I did not hear it.

Mr PISONI: Well, I heard it.

The CHAIR: You were busy screaming on my left. I cannot hear.

Mr PISONI: I am sorry, but I was sitting here silently.

The CHAIR: We are moving on with more answers and questions. It is nearly 2 o'clock. Member for Schubert.

Mr KNOLL: I suppose that is what happens when you ask questions: you ask questions in the hope of getting an answer.

The CHAIR: No, member for Schubert, that is not necessary.

Mr KNOLL: Can I ask, minister: can you rule out that the purchase of any tickets to the event was a requirement to be awarded the contract?

The Hon. L.W.K. BIGNELL: I can confirm that it was not a requirement for them to purchase tickets.

Ms COOK: I refer you to Budget Paper 4, Volume 4, pages 142 to 143. Minister, can you update the committee on information about the economic impact of business events and conferences in South Australia?

The Hon. L.W.K. BIGNELL: I thank the member for the question. Adelaide is increasingly becoming the destination of choice for international and national business events, with more than 300 events scheduled for this year; 41 of these events are new and expected to generate more than $250 million for our visitor economy.

There are also 29 active bids pending, with a total of more than 36,000 delegates, more than 197,000 bed nights and an estimated economic value of more than $176 million. This is not just by chance. This state government has invested in the business events bid fund and targeted business conventions from around the world. None of the events was easy to secure, and we were bidding against other major cities in the United States, South Korea, China and India.

A strong visitor economy is vital to the state's economic future, and that is why for the second year in a row the 2016-17 state budget included a major funding package of $35 million for tourism. Of this, $5 million was specifically for the convention bid fund. In the 2015-16 state budget, we provided the same level of funding, and the results speak for themselves. For example, coming up later this year are:

the Land Forces 2016 Exposition, from 6 to 8 September, with 1,100 delegates and an estimated economic impact of $16.5 million;

the International Nuclear Physics Conference, from 11 to 16 September this year, with 700 delegates and an estimated economic impact of $3.3 million; and

the Asia-Pacific Space Designers Association General Assembly and Convention 2016, from 24 to 26 September, will have 500 delegates and an economic impact of $2.6 million.

For two years, across two budgets, the state government has been right on the money. What has resulted is an abundance of both national and international conventions and business events taking place in Adelaide. On average, people travelling to Adelaide for conventions spend $632 a day, which has a flow-on effect of hotels, our taxis, restaurants and retail outlets. The redeveloped Convention Centre is also a massive drawcard for Adelaide. Once it is fully completed, the venue will be able to host conferences for up to 3,500 people.

With the South Australian Health and Medical Research Institute and our universities, our focus is also on identifying and bidding for medical and health-related events and promoting our BioMed City as the largest medical precinct in the Southern Hemisphere. The spend by those convention delegates is three times the average spend by visitors to South Australia. That is why we have targeted program to go after as many of these conventions as we possibly can.

The other thing we know is that a large percentage of people who will visit a city for a convention will be return visitors. They will come here for a reason, and they will be surprised at what they have seen and they will want to share that with their family and friends. Sometimes, they will get out to places like the Barossa Valley, McLaren Vale or the Adelaide Hills, but they will want to come back and share that experience with those people they hold dear. It is a terrific thing for South Australia to have all these visitors and conference delegates in our state.

Mr KNOLL: Can I follow-up with the minister: were any tickets given to Elite Systems for the Clipsal event this year?

The Hon. L.W.K. BIGNELL: Not that we are aware of, unless they were CFS volunteers because we did give away several thousand to CFS volunteers and SES.

Mr KNOLL: Could I ask the question in a different way then? Will the minister rule out the fact that Elite Systems were given any tickets to this year's Clipsal event?

The Hon. L.W.K. BIGNELL: We have the person in charge of the Clipsal and the motorsport area, and we are not aware of anyone giving any tickets to them.

Mr KNOLL: We have been advised that the acting CFO suggested in a meeting with the small businesses that the CFMEU influenced Elite Systems to ensure workers were paid. Can the minister confirm if he was aware of CFMEU representatives contacting Elite Systems, Vertex or any other subsidiary of Elite Systems with respect to the performance and payment of workers under this contract?

The CHAIR: I am not certain that question is actually in order. Do you want to answer it, minister?

The Hon. L.W.K. BIGNELL: I have no responsibility for the CFMEU.

Mr PISONI: Well, they are your faction.

The CHAIR: Order, member for Unley!

Mr PISONI: They are your faction.

The CHAIR: The member for Unley is aware of how committees work. You are aware of how the committee works. Please do not interrupt again without the call.

The Hon. L.W.K. BIGNELL: He is not aware obviously of how to use good manners and act in an orderly way.

The CHAIR: No, minister, that is not helpful. Did you have another question, member for Schubert?

Mr KNOLL: Yes, ma'am. Can I ask then if the minister will take on notice to provide a list of corporate tickets that were provided to suppliers, either purchased or given, from this year's Clipsal event?

The CHAIR: Is that possible?

The Hon. L.W.K. BIGNELL: No.

Mr KNOLL: So, the minister is refusing to give information to the committee.

The CHAIR: No, order! Member for Schubert, do not verbal us. It is not possible I don't think.

The Hon. L.W.K. BIGNELL: We have just said that we are not aware of any tickets that were given to this entity. The only tickets I know that were given away—

Mr KNOLL: If there is nothing to hide, minister, I do not understand the issue.

The CHAIR: Order, member for Schubert! You do not have the call. If it is possible, can you take it on notice and return with a list.

The Hon. L.W.K. BIGNELL: The only tickets I know that we gave away were to the CFS and SES volunteers.

The CHAIR: Well, that is all you need to bring back on notice, isn't it?

The Hon. L.W.K. BIGNELL: I do not think we need to bring that back. I have just given the answer.

Mr KNOLL: So—

The CHAIR: Order, member for Schubert! It is not your turn to speak. Just a minute.

The Hon. L.W.K. BIGNELL: I think we have answered the question.

The Hon. S.W. KEY: I refer to Budget Paper 4, Volume 4, page 149-150. In your opening statement, minister, you mentioned international marketing, and I am wondering whether you could add to the question before last about international visitors and what the 2020 target expenditure from international visitors is.

The Hon. L.W.K. BIGNELL: Thank you very much, member for Ashford. I thank you for the question. The state government invested $35 million over two years in the 2015-16 state budget to market South Australia. Of this, an extra $7 million was allocated per year towards international marketing. In 2015-16, these additional international marketing funds were invested across key markets as follows: China, $3 million; Malaysia and Singapore, $1 million; India, $1 million; North America, United Kingdom and New Zealand, $2 million.

The additional funds support our efforts in meeting the objective of achieving South Australia's full tourism potential of expenditure from international visitors from $774 million in December 2015 to $1.24 billion by December 2020. Some key activities targeting international visitors include a major campaign run in China with a Chinese reality television show, Running Man. Running Man is the number one prime-time Chinese variety program. The show filmed an episode in South Australia featuring Adelaide and the Barossa.

When the episode aired in China in January 2016, it was viewed by more than 200 million people on television. There was also an additional 1.9 million views on YouTube in the first two weeks from outside China. When word got out that they were doing this filming here, there were almost scenes of riots down at the Central Market, and then things would change, so we had to change the location to Rundle Mall, and still hundreds and hundreds of people turned up because this show is so popular in China that people wanted to get a glimpse of the stars of the show. It caused quite a bit of chaos, but it was worth it for us to have 200 million people see Adelaide, our Central Market and our central retail precinct on their TV sets in China.

In the United States, the South Australian Tourism Commission partnered with iconic brand National Geographic Traveler magazine to promote South Australia's nature and wildlife, soft adventure, food and wine, and city experiences. The promotion featured the Barossa, Kangaroo Island, Flinders Ranges, the outback and Adelaide. Within the first two weeks of the campaign, there were 58,000 visits to the campaign website as well as high levels of engagement on social media.

In New Zealand, a purpose-built digital website was developed, inviting consumers to design their own South Australian holiday. Television and digital advertising were used to drive people to the website. Both airline and trade partners were involved in the campaign and saw growth and sales for South Australia. One retail partner reported a 30 per cent increase year on year, so fantastic numbers out of a very important market to us.

In the United Kingdom, the South Australian Tourism Commission partnered with Tourism Northern Territory and Singapore Airlines on a cooperative campaign themed Oceans to Outback. The campaign promoted the Explorer's Way touring route from Adelaide to Darwin and Singapore Airlines services to the Adelaide and Darwin gateways. In South-East Asia, the SATC undertook consumer campaigns in Singapore, Malaysia and India to increase awareness of South Australia via digital and print media. International visitation to South Australia increased 7.6 per cent, with an increase in expenditure of 38 per cent, from $690 million to $954 million for the year ended March 2016.

I think that those figures, the 7.6 per cent increase in the number of visitors and most importantly the 38 per cent increase in the spend while they are here, speak volumes to the marketing campaign of the South Australian Tourism Commission team and how they have selectively gone after that premium traveller who will spend longer here and spend more money while they are here.

The Hon. S.W. KEY: I have a supplementary question. Minister, thank you for that, that sounds really exciting. Can you explain what 'soft adventure' is? It sounds good, but I just want to know what it is.

The Hon. L.W.K. BIGNELL: What we know is that people do not want to just come and sit, static, in the environment that they are visiting. They want to get out and do things like taste the food, taste the wine, hold the koalas, go on a bushwalk, all those wonderful things that we can do here. Then you have the harder things, the more adventurous travel experience, like the mountain biking trails that we are setting up throughout the state as well, all drawcards in their own right.

We do not want people just to come here and book into their hotel room and walk around the city streets, as much as that is good fun and we have fantastic small bars for them to really enjoy themselves in. We are a very hospitable city and a wonderful state. Adventure tourism is something that we are really trying to push because we know that the best places in the world offer people things to do as well as see.

Ms WORTLEY: I refer to Budget Paper 4, Volume 4, pages 141 to 142. Minister, can you provide an update on the state government's 2020 cruise ship target?

The Hon. L.W.K. BIGNELL: I would like to thank the member for the question. South Australia will welcome 52 cruise ship visits to our ports next season, exceeding the state government's 2020 target three years early, so terrific news for the visitor economy. The state government's 2020 target is 43 cruise ship visits to our state, injecting $17 million into our economy. Our success in the cruise ship industry goes from strength to strength each year, and it is fantastic to see these record results for our state.

The fact that we are breaking the 2020 target three years early is outstanding and is a testament to the work the state government is doing to attract more visitors and create a larger demand for South Australia. Next year will see 28 cruise ship visits in Adelaide, 19 in Kangaroo Island and five in Port Lincoln. Overall, there were 37 cruise ship visits to South Australian ports in the 2015-16 season: 23 in Port Adelaide, four in Port Lincoln and 10 in Kangaroo Island, with a total capacity of 89,468 passengers and crew.

Throughout the season, some of the largest ships in Australian waters visited South Australia, including maiden visits by the Explorer of the Seas in Adelaide and the Queen Victoria on Kangaroo Island. Another highlight and first for South Australia was P&O Cruise's Pacific Eden departing from Adelaide. The 1,500 passenger ship offered six itineraries from Adelaide over a period of two weeks, including visits to Kangaroo Island and Port Lincoln. About 14,000 passengers stepped foot through the Port Adelaide Passenger Terminal throughout this time and injected up to $8 million into the state's economy.

The full economic impact of the 2015-16 cruise ship season in South Australia will be announced in September. South Australia has so much to offer to all visitors and its fantastic cruise ship companies are getting on board and matching the demand for cruise ship visits in South Australia, increasing the number of cruise ship visits by 15 for next season.

Mr KNOLL: Has SATC or any representative from the department been advised or have any knowledge either from Worrells or any other party of whether or not Elite Systems has been trading insolvent?

The Hon. L.W.K. BIGNELL: No, I am advised that we have had no advice to that effect.

The CHAIR: There being no further time, I declare the examination of proposed payments completed. I would like to thank the minister and his advisers for their attendance.

Sitting suspended from 14:16 14:31.