Department for Energy and Mining, $91,210,00

Equity Contributions for the Department for Energy and Mining, $1,484,000

Membership:

Hon. L.W.K. Bignell substituted for Ms Wortley.

Mr Hughes substituted for Hon. Z.L. Bettison.

Minister:

Hon. D.C. Van Holst Pellekaan, Minister for Energy and Mining.

Departmental Advisers:

Mr B. Adams, Manager, Financial Services, Department for Energy and Mining.

Dr P. Heithersay, Chief Executive, Department for Energy and Mining.

Ms. N. Atkinson, Acting Executive Director, Clean Energy Transition, Department for Energy and Mining.

Mr V. Duffy, Executive Director, Energy and Technical Regulation, Department for Energy and Mining.

Mr B. Goldstein, Executive Director, Energy Resources, Department for Energy and Mining.

Mr L. Pontifex, Acting Executive Director, Mineral Resources, Department for Energy and Mining.

The CHAIR: Welcome, everybody, to the afternoon session of Estimates Committee A. We are examining the Department for Energy and Mining this afternoon. The minister appearing is the Minister for Energy and Mining. I declare the proposed payments open for examination and refer members to the Agency Statements, Volume 2.

Before I invite the minister to speak, I advise that the members for Torrens and Ramsay have requested to be discharged, and they have been replaced by the members for Mawson and Giles. Given that we have a new minister and new advisers, I will briefly read some opening remarks.

The estimates committees are a relatively informal procedure, and as such there is no need to stand to ask or answer questions. Changes to the committee membership will be notified as they occur. If the minister undertakes to supply information at a later date, it must be submitted to the Clerk Assistant via the answers to questions mailbox no later than Friday 5 September.

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. Questions must be based on lines of expenditure in the budget papers and must be identifiable or referenced.

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. All questions are to be directed to the minister, not the minister's advisers. The minister may, however, refer questions to advisers for a response. Minister, I invite you to make an opening statement if you wish and introduce your advisers.

The Hon. D.C. VAN HOLST PELLEKAAN: Thank you, Chair. I will make an opening statement; it will not be anything like 10 minutes, but there are a few things I would like to put on the record. Before I do that, let me just introduce my advisers. On my left is Mr Ben Adams, Manager, Financial Services, and on my right is Dr Paul Heithersay, Chief Executive of the Department for Energy and Mining. I apologise to Hansard because that is actually the reverse order of the map that has been given to them.

The adviser behind me immediately on my left is Ms Natalie Atkinson, Acting Executive Director, Clean Energy Transition. Immediately behind me on my right is Mr Vince Duffy, Executive Director, Energy and Technical Regulation. Behind Ms Atkinson is Mr Barry Goldstein, Executive Director, Energy Resources, and behind Mr Duffy is Mr Lachlan Pontifex, Acting Executive Director, Mineral Resources.

Chair, firstly, I would just like to thank all the staff, including, of course, Dr Paul Heithersay, in the Department for Energy and Mining for the work that they do throughout the year, but particularly in preparing for estimates. It is a very big job, it is a good job, it is a healthy job, it is an important job and I appreciate the work that has gone into it.

The government and I have set the Department for Energy and Mining (DEM) a huge task to deliver a number of world-leading projects from the largest per capita rollout of home battery storage, through both the Home Battery Scheme and Tesla VVP, to the largest piece of linear infrastructure proposed in electricity for a very long time with the New South Wales/SA interconnector.

We have a huge agenda in energy, and I am proud of how DEM has embraced this. Both minerals and petroleum are contributing to our state and our budget, and I am very glad to see a continuing positive investment in South Australia in both sectors. We are doing our best to get the policies and the settings right, and, of course, ongoing regulatory responsibilities continue to be undertaken by our department.

With regard to electricity, we are keen to keep pushing on to deliver the best outcomes for consumers. We are still dealing with the legacy of higher prices and vulnerability from the previous Labor government. Prices have now crested with small reductions, and there are encouraging signs. We continue preparing to address emerging risks, especially with regard to summer readiness.

We are, in particular, seeing more risks emerging in Victoria. Having interconnection with only Victoria increases the risks and challenges in SA, and this heightens the need to deliver the interconnector to New South Wales. Further evidence is that, in order to support Victoria this summer, AGL has requested to vary its development application covering the mothballing of Torrens A power station.

AGL announced several years ago that Torrens A would be mothballed in mid-2017. This was delayed due to increasing security and reliability pressures growing in South Australia at the time. Subsequently, as part of their development consent application for the Barker Inlet power station, and in line with the age of the plant, the first two units from Torrens A were then to be mothballed this year. These two units' nameplate capacity is 120 megawatts each.

To maximise generation over summer, AGL is seeking to improve its position in Victoria this summer due to outages at its Loy Yang plant in Victoria. AGL has requested to defer the requirement to mothball the first two Torrens Island power station A generating units until 31 March 2020 rather than upon commencement of stage 1 operations at the Barker Inlet power station and defer the cessation of fuel oil firing at Torrens Island B power station until 31 March 2020 rather than upon commencement of stage 1 operations at the Barker Inlet power station.

This will be assessed at arms length; however, our government is very aware of the need to support Victoria through summer, as shortages there can affect us too. This is a legacy that we will be far better insured against when the interconnector to New South Wales is energised, providing greater security of supply and continuing development of renewable energy generation in South Australia for intra and interstate electricity consumption.

The CHAIR: Thank you, minister. Are there any questions from the committee?

The Hon. A. KOUTSANTONIS: I refer to Budget Paper 4, Volume 2, and the stated objective, 'The department's role is to deliver the government's commitment to reduce energy costs.' Is the minister on track to deliver his committed annual savings to residential electricity customers of over $300 per year?

The CHAIR: Minister, before you answer, I will ask you, member for West Torrens, and other committee members to speak into your microphone.

The Hon. A. KOUTSANTONIS: It would be in my mouth if it were any closer.

The CHAIR: No, you were directing your voice directly to the minister. You need to talk into the microphone. Minister, your call.

The Hon. D.C. VAN HOLST PELLEKAAN: Obviously, that is a very important question. We went to the last election with a firm commitment that we are determined to deliver. We have seen steadily increasing electricity prices over the last several years under the last administration, and we have also seen, along with increasing costs to consumers, reduced supply service reliability and quality of electricity delivered to consumers. The combination of these two things was completely unsatisfactory to all South Australians, I am sure.

It is not surprising at all that that was one of the highest priorities for the then Marshall opposition, and it remains one of the highest priorities for the now Marshall government. We had independent modelling done back in 2017—that was released publicly on, I think, 10 October 2017—upon which we based the development of our energy policies. That was not the only thing that was important with regard to developing those policies, but it certainly was important for us to have an arms-length, independent assessment of what we intended to do if elected and the impact that would have.

Based on that, and on many other pieces of information, we made a commitment for a $302 saving to the average South Australian household, and we remain determined to deliver that saving. Electricity affects households. It affects us socially and it affects us economically, from the smallest household through to the largest employer. Getting the price of electricity down, making it affordable, making the supply of it reliable and, of course, ensuring that it continues to be generated in a cleaner and cleaner fashion, remain incredibly high priorities for our government.

The Hon. A. KOUTSANTONIS: I want to refer you back to last year's budget where you put down highlights on page 108 of your Agency Statement and where you say:

Supported the delivery of a new electricity interconnector between South Australia and New South Wales through funding for early works and the provision of a submission to the regulatory process.

Again, in targets this year, you state:

Continue to support the delivery of a new electricity interconnector between South Australia and New South Wales.

Last year, you told the parliament that the Treasurer held $200 million worth of contingency for an interconnection program. Is that contingency still in place?

The Hon. D.C. VAN HOLST PELLEKAAN: Yes. It is probably a question you need to ask the Treasurer, but to the best of my knowledge it is, with the exception that we have already committed $14 million towards early work, of which some was for ElectraNet and some was for TransGrid. To the best of my knowledge—but again it is a question to ask the Treasurer—there should be $186 million available for this project if it is needed.

The Hon. A. KOUTSANTONIS: So it is not a contingent liability; you are saying that it is held in contingency?

The Hon. D.C. VAN HOLST PELLEKAAN: Shadow minister, given that you have referred to last year's budget and you have referred to my answer from last year, essentially my answer is exactly the same as it was last year.

The Hon. A. KOUTSANTONIS: Can you point me to where in the budget papers that $186 million contingency is held?

The Hon. D.C. VAN HOLST PELLEKAAN: Again, shadow, I refer you to my last answer because that is a question you asked me last year, and my answer this year will be the same as last year: if you are looking for more specific detail, you or one of your colleagues will need to ask the Treasurer, but it is my understanding that it is in the Treasurer's contingency—

The Hon. A. KOUTSANTONIS: Treasurer's contingency? That would be—

The Hon. D.C. VAN HOLST PELLEKAAN: Given that the shadow minister has questioned what I said and he is a former treasurer, let me take that on notice to be absolutely sure that I used the right words and give him the right answer. But, essentially, it is in the Treasurer's broader budget of unallocated money, essentially exactly the same as it was last year, with the exception of the $14 million, which has all been allocated.

The Hon. A. KOUTSANTONIS: Have you received any advice from the Australian Energy Regulator that the interconnection between New South Wales and South Australia will be a regulated asset?

The Hon. D.C. VAN HOLST PELLEKAAN: I have not received a response from the AER that it will or it will not be. The RIT-T process is in the hands of the AER at the moment, as I expect most people interested in this topic would be aware. The AER is going through that work at the moment and they will determine whether it will be a regulated asset or not. I have not had—I do not believe anybody has had—a definitive answer from them. Of course, I am optimistic that it will and of course I hope that it will. I have made many statements along those lines, but I have never said that I could pre-empt the decision that the AER would make. I look forward to them sharing that decision with us.

The Hon. A. KOUTSANTONIS: You have received no advice from the AER that they are proceeding down the path of being a regulated asset. Have you received any advice—

The Hon. D.C. VAN HOLST PELLEKAAN: I have received no advice that they are not, either.

The Hon. A. KOUTSANTONIS: Have you received any advice from the AER regarding the impact on generation in South Australia if the interconnector between New South Wales and South Australia is energised?

The Hon. D.C. VAN HOLST PELLEKAAN: No, I do not think so. There have been lots of discussions along the way about the pros and the cons. To put my answer in context for the record, there has been a debate or a difference of words between the government and the opposition, whereby the government has said that we know that generation, particularly gas generation capacity in South Australia, has been flagged by the owners and operators of that generation for many, many years—over a decade, in some cases.

They flagged that it would be removed from the South Australian market, so the government's response is to try to fill that gap, among other ways, with the interconnector. The opposition has said that the interconnector will drive generation out of the state. That is a difference of opinion that we can contain. The AER is working through its process in its way and I look forward to the answer that it gives.

The Hon. A. KOUTSANTONIS: When will the AER give you a preliminary finding?

The Hon. D.C. VAN HOLST PELLEKAAN: The AER has said to me that its determination on the RIT-T proposal will be provided no later than 9 January 2020. That was a verbal undertaking, but it was very clear. If I remember correctly, it was Monday 9 January. There was an indication that they would like to have it wrapped up before the end of this year because sooner is better than later, and they probably would all like to enjoy their Christmas and new year break, if they can, without working night and day to a deadline in the very beginning of January. I was told verbally that 9 January would be the latest.

The Hon. A. KOUTSANTONIS: When will the interconnector be operational?

The Hon. D.C. VAN HOLST PELLEKAAN: Again, shadow, from my perspective, sooner rather than later, but it is not a question I can answer until I have received the AER's determination.

The Hon. A. KOUTSANTONIS: So you have you received no construction estimates from ElectraNet or their partners in New South Wales?

The Hon. D.C. VAN HOLST PELLEKAAN: No, there are construction estimates and others. There is a lot more involved in building an interconnector than just the construction, hence the $14 million of early work that we have funded. Yes, there are construction estimates but, as you would understand, there are some things that just do not or cannot commence until the AER determination comes down, not just the preliminary determination but the actual final determination. There are some things that cannot commence until then, so it is not possible for me to give a definitive answer.

The Hon. A. KOUTSANTONIS: What will be the capacity of the interconnector?

The Hon. D.C. VAN HOLST PELLEKAAN: It is 800 megawatts, I am advised.

The Hon. A. KOUTSANTONIS: Have you received any advice from the Australian Energy Regulator that that is either too large or too small?

The Hon. D.C. VAN HOLST PELLEKAAN: No, I have not. I have to say, shadow minister, that I have minimal contact with the Australian Energy Regulator. As you know, it is a federally funded government organisation in different ways; essentially, it is an arms-length regulator. I have not sought to interfere or oppress or even seek any information that I should not from the AER. The AER has the complete package put to it by ElectraNet on behalf of ElectraNet and TransGrid. Obviously, the principle of this work is very strongly supported by our government, but it is now up to the AER to do its work, to interrogate all the information it has, ask for more if it needs it and hand down its determination when it can.

The Hon. A. KOUTSANTONIS: What are the cost estimates for the construction of the interconnector?

The Hon. D.C. VAN HOLST PELLEKAAN: The total cost estimate (and one of my advisers will correct me if I am wrong) I think is $1.52 billion. Of course, that is funded privately. That $1.5 billion, let's say, comes from private markets. As a shadow minister, former minister and former treasurer, you would understand very well the importance of the AER's process and the work towards granting it regulated infrastructure status. It is a very positive sign with regard to ElectraNet and TransGrid seeking finance to support the project they want to develop, own and operate. It is not the only way that a project like this can get up, of course. If everything were to progress as it appears it will, that $1.5 billion will not be a burden on the taxpayer in any way. It will be completely privately financed.

The investors, through TransGrid and ElectraNet, based on the RIT-T report, would be entitled to an average $9 per year return per household in South Australia. It is up to the AER to determine if it supports that proposal put to it by ElectraNet. It would have that regulated return. That would be good for all people involved because, while it would be the residential households and, of course, other electricity consumers who would make that payment, the RIT-T report estimates that the savings to households on average would be $75.

A $75 saving on average to all South Australian households, netting off a $9 cost on average to all South Australian households, leaves a $66 per year per average South Australian household net benefit. That is the information that has gone from ElectraNet to the AER. That is the very best indication that I have of what this project would deliver. Of course, it is up to the AER to assess that proposal.

The Hon. A. KOUTSANTONIS: What is the cost of capital that ElectraNet has submitted to the AER?

The Hon. D.C. VAN HOLST PELLEKAAN: The cost of capital in the ElectraNet report?

The Hon. A. KOUTSANTONIS: Yes.

The Hon. D.C. VAN HOLST PELLEKAAN: I do not have that number off the top of my head, but I am happy to take that on notice.

The Hon. A. KOUTSANTONIS: What is the cost of capital that TransGrid has submitted to the AER?

The Hon. D.C. VAN HOLST PELLEKAAN: Same answer as to your last question. By the way, the RIT-T report is a public document.

The Hon. A. KOUTSANTONIS: Have you made any objections to the AER through the RIT-T about their cost of capital?

The Hon. D.C. VAN HOLST PELLEKAAN: No.

The Hon. A. KOUTSANTONIS: You have made no submission?

The Hon. D.C. VAN HOLST PELLEKAAN: Let me check. I am advised that we have not.

The Hon. A. KOUTSANTONIS: Has the Treasurer?

The Hon. D.C. VAN HOLST PELLEKAAN: You would have to ask the Treasurer.

The Hon. A. KOUTSANTONIS: You did not ask the Treasurer to make a submission on behalf of South Australians, being the lessor of the electricity assets?

The Hon. D.C. VAN HOLST PELLEKAAN: If you want an answer to that question, you would have to ask the Treasurer.

The Hon. A. KOUTSANTONIS: So you have made no representations to the AER about ElectraNet's submission on their cost of gaining capital to build the interconnector?

The Hon. D.C. VAN HOLST PELLEKAAN: As the Minister for Energy and Mining, I have not. The Department for Energy and Mining, I am advised, has not. If you want to seek any further information about what any other department, particularly Treasury, might have done, you would need to go to them for that.

The Hon. A. KOUTSANTONIS: Do you know what the long-term bond rate is now?

The Hon. D.C. VAN HOLST PELLEKAAN: Not off the top of my head. If you do not know, I would be happy to take that on notice and provide it back to you.

The Hon. A. KOUTSANTONIS: The reason I ask you these questions is not to try to trick you, minister; it is the long-term bond rate, and the RBA is dropping rates at a very rapid rate. The Premier—just over there where the member for Hammond is sitting, starving to death—spoke about capital never being cheaper. If this becomes a regulated asset and the AER approves ElectraNet's submission of their cost of capital, South Australians will be required to pay that back for the life of the determination of the AER with no recourse.

The reason I am asking you these questions is that, as a minister, you are entitled to, and you have standing as a minister, make objections and make submissions to the AER about ElectraNet's costs. ElectraNet is privately owned. I am asking you: why have you not made any submissions to the AER about ElectraNet's cost of capital ask in their RIT-T?

The Hon. D.C. VAN HOLST PELLEKAAN: Well, there are a few reasons for that. One is that it is actually up to the AER to determine what it considers is the fair cost of capital. TransGrid and ElectraNet can put their proposals forward, as presumably they have done, but it is actually the AER that determines what it considers to be the fair cost of capital. The AER has actually not put out its discussion paper yet either.

The Hon. A. KOUTSANTONIS: You just told me it was public.

The Hon. D.C. VAN HOLST PELLEKAAN: No, I told you that the RIT-T was public.

The Hon. A. KOUTSANTONIS: I asked you about the cost of capital and you said that it was public.

The Hon. D.C. VAN HOLST PELLEKAAN: I told you the RIT-T that ElectraNet put forward on behalf of ElectraNet and TransGrid was public and you agreed with me. What I have just said is that the AER has not put out its discussion paper in response to the RIT-T proposal yet. The AER will offer what it suggests is the appropriate weighted cost of capital.

The Hon. A. KOUTSANTONIS: Have you heard the term 'gold plating'?

The Hon. D.C. VAN HOLST PELLEKAAN: Yes.

The Hon. A. KOUTSANTONIS: Do you understand what that means?

The Hon. D.C. VAN HOLST PELLEKAAN: Which budget line and which paper are you referring to?

The Hon. A. KOUTSANTONIS: The same one you spoke about with the interconnector when you were making your opening statement.

The Hon. D.C. VAN HOLST PELLEKAAN: It does not work that way, Tom.

The Hon. A. KOUTSANTONIS: Yes, it does, and—

The Hon. D.C. VAN HOLST PELLEKAAN: Shadow minister.

The Hon. A. KOUTSANTONIS: —it is member for West Torrens in here.

The Hon. D.C. VAN HOLST PELLEKAAN: Yes, shadow minister.

The Hon. A. KOUTSANTONIS: You have heard the term 'gold plating' before?

The Hon. D.C. VAN HOLST PELLEKAAN: Which budget line?

The Hon. A. KOUTSANTONIS: I am not trying to be difficult; I am just asking you a question.

The Hon. D.C. VAN HOLST PELLEKAAN: Just tell me which budget line then.

The Hon. A. KOUTSANTONIS: Okay. Your stated objectives of building an interconnector to New South Wales. Have you heard the term 'gold plating'?

The Hon. D.C. VAN HOLST PELLEKAAN: Yes.

The Hon. A. KOUTSANTONIS: Do you believe that, at the current rate of return that ElectraNet are asking from the AER, they are asking for above the odds of what they should be receiving as a return?

The Hon. D.C. VAN HOLST PELLEKAAN: You know from my previous answer that I am not able to answer that question. Even if I could, I probably would not right now because this is an issue for the AER to determine at the moment. Others will get their chance to respond to the AER's discussion paper if they want to, so that is where it is. If you are making the statement that you think it is too high, then you are welcome to do that.

The Hon. A. KOUTSANTONIS: Have you sought any advice from the South Australian Government Financing Authority about what the rate of return should be on a long-term bond?

The Hon. D.C. VAN HOLST PELLEKAAN: No, not yet.

The Hon. A. KOUTSANTONIS: Not yet? So you may?

The Hon. D.C. VAN HOLST PELLEKAAN: I may.

The Hon. A. KOUTSANTONIS: I now turn you to your workforce summary. In the 2018 budget papers, you show a budget of 332.9 FTEs for the 2018-19 period. The current budget papers show the estimated result for that period to be 304.6. The budget for 2019-20 shows it would be 298.6 FTEs, a reduction in total of 34.3 FTEs. Can you explain the reduction?

The Hon. D.C. VAN HOLST PELLEKAAN: Yes, I certainly can. In fact, we have a prepared answer for you on exactly that. As at 30 June 2019, the department's actual full-time equivalent FTE was 300.1, slightly under the approved cap of 303.6. This compares with the 2017 actual of 304.5. The headcount as at 30 June 2019 was 314, comprising 268 full-time employees and 46 part-time employees.

The 2018-19 FTE cap has reduced by 29.3 FTEs compared with the cap presented in the 2018-19 budget papers of 332.9 FTEs, mainly due to a change in the resourcing requirements for the Clean Energy Transition division. Twelve FTEs transferred to the Department for Industry and Skills, which is delivering several corporate service functions to DEM in 2018-19 under service level agreements—17.3 FTEs.

The Hon. A. KOUTSANTONIS: In your Agency Statement, Budget Paper 4, Volume 2, which table are you referring to?

The Hon. D.C. VAN HOLST PELLEKAAN: The table at the top of page 99.

The Hon. A. KOUTSANTONIS: The workforce summary. You told us that your FTE cap was 303.6 last financial year and this financial year your cap is 297.6; is that right?

The Hon. D.C. VAN HOLST PELLEKAAN: Correct.

The Hon. A. KOUTSANTONIS: If I take you on another journey, minister, your Budget Paper 3 from last year shows your savings tasks. This was in table 2.6 of the 2018-19 budget papers, which shows savings tasks in the 2018-19 year as a budget of $6.4 million; in 2019-20, it was $3.7 million; in 2020-21, it was $4.1 million; and in 2021-22, it was $4.2 million. That was what you were asked to do last year. Did you achieve those savings of $6.7 million?

The Hon. D.C. VAN HOLST PELLEKAAN: Yes, I am advised that we did achieve those savings.

The Hon. A. KOUTSANTONIS: You did achieve those savings? So when I look to your actual results this year, under operating statements by agency, your savings target has dramatically changed. You have gone from having $3.7 million savings targets in 2019-20 to $1.5 million, and you do not publish an estimated result for 2018-19. I have two questions; one is: why have you not published an estimated result?

The Hon. D.C. VAN HOLST PELLEKAAN: And the other question?

The Hon. A. KOUTSANTONIS: Why has your savings target reduced from $3.7 million to $1.5 million?

The CHAIR: Minister, before you answer that question—and I am sounding like a cracked record today—I need you both please to speak more directly into your microphones. Perhaps, minister, if you pull yours a little closer. I am hearing from upstairs that you are both quite faint, which makes it difficult.

The Hon. A. KOUTSANTONIS: I have never had that said of me before in my life.

The CHAIR: I know you have not, member for West Torrens, and my congratulations to you. I understand that you are having a question and answer session between yourselves, but in an ideal world you would direct it through the Chair and we would all be able to hear.

The Hon. D.C. VAN HOLST PELLEKAAN: Thanks, Chair. I will do my best to remember that. Shadow minister, the simple answer, I have just been advised, is that all last year's savings targets were met and that the new numbers are additional, more recent savings targets.

The Hon. A. KOUTSANTONIS: So they were all met? $6.7 million?

The Hon. D.C. VAN HOLST PELLEKAAN: I am advised that is correct.

The Hon. A. KOUTSANTONIS: Were they met with any higher fees?

The Hon. D.C. VAN HOLST PELLEKAAN: Yes, I am advised that of the total savings target approximately $4,400,000 was met in increased fees.

The Hon. A. KOUTSANTONIS: That was for the previous financial year. In this current financial year—in last year's budget—you were asked to make savings of nearly $4 million ($3.7 million) and this year's target is $1.5 million. Has that reduced because of increased fees and charges?

The Hon. D.C. VAN HOLST PELLEKAAN: I am advised that this is an additional obligation placed on DEM by the Treasurer, rather than a replacement.

The Hon. A. KOUTSANTONIS: So your target now is $3.7 million plus the $1.5 million? That is your total savings?

The Hon. D.C. VAN HOLST PELLEKAAN: Correct.

The Hon. A. KOUTSANTONIS: How do you intend to meet those savings?

The Hon. D.C. VAN HOLST PELLEKAAN: The $1.5 million for this year is still being determined, but the obligation for savings from the previous year has all been met already.

The Hon. A. KOUTSANTONIS: You have already dealt with the $3.7 million worth of savings before the year started, and now you have to find the further $1.5 million; is that correct?

The Hon. D.C. VAN HOLST PELLEKAAN: Correct.

The Hon. A. KOUTSANTONIS: Do you anticipate a reduction in workforce or an increase in fees?

The Hon. D.C. VAN HOLST PELLEKAAN: It will be a combination of both, most likely.

The Hon. A. KOUTSANTONIS: How many FTEs?

The Hon. D.C. VAN HOLST PELLEKAAN: As I said before, the details of how the saving will be achieved have not yet been fully resolved, so it is not possible to answer that question yet.

The Hon. A. KOUTSANTONIS: How many FTEs are assigned to the agency in total?

The Hon. D.C. VAN HOLST PELLEKAAN: I was going to say 298, but I have been advised that it is actually 297.6.

The Hon. A. KOUTSANTONIS: The workforce summary on page 99 says 298.6, not that it matters. We will move on.

The Hon. D.C. VAN HOLST PELLEKAAN: I have just been advised that the additional 1.0 is me, the minister. They have decided to separate me.

The CHAIR: It is nice to know that you are on the workforce, minister.

The Hon. A. KOUTSANTONIS: Is the agency authorised to breach its FTE cap?

The Hon. D.C. VAN HOLST PELLEKAAN: Is the agency authorised to breach—

The Hon. A. KOUTSANTONIS: Breach its FTE cap.

The Hon. D.C. VAN HOLST PELLEKAAN: Shadow, I do not know the specific answer to your question, neither do my advisers to my immediate right and left. What I would say is that we take fulfilling our obligations in this way very seriously. We have come to an agreement with Treasury about the savings that we must deliver. Most of how we will do that has been resolved; some of it has not yet been resolved.

We achieved what we were required to achieve last year, and we intend to achieve what we are required to achieve this year. The reason that none of the three of us are aware of whether we are entitled to breach the cap is that it is not a question we have considered.

The Hon. A. KOUTSANTONIS: I want to turn to your performance indicators, if I can, on page 104 of the Agency Statements, Budget Paper 4, Volume 2, where there is a whole series of indicators. In last year's budget, in the same table you projected the value of mineral production in the last financial year to be $4.8 billion and exploration expenditure to be $70 million, but the estimated result is half a billion less than you forecast and $20 million less than you claimed in exploration. What is concerning me even more is that you claim in the 2019-20 budget papers that last year you projected $4.6 billion, when in fact you projected more. Can you please explain to me why that number was changed?

The Hon. D.C. VAN HOLST PELLEKAAN: We will have to take that question on notice and get an answer back to you.

The Hon. A. KOUTSANTONIS: Can you please explain to me why you did not reach the targets last year?

The Hon. D.C. VAN HOLST PELLEKAAN: I am advised that there is no answer to this that you probably would not already be aware of. Commodity prices have come down and activity has reduced in all other states as well. Sometimes you get a win out of changes in commodity prices; sometimes you do not. My CE has certainly advised me that there is nothing untoward. While of course it is disappointing to deliver less than you intended in partnership with industry, the reasons are very straightforward and exactly the reasons that you would be aware of. My CE has just reminded me that it is one of the reasons we have put forward the accelerated discovery initiative.

The Hon. A. KOUTSANTONIS: In 2018-19, you projected $4.8 billion but in these budget papers you claim it is $4.6 billion, and next year's projection is $4.8 billion. From my reckoning of last year's budget papers and this year's budget papers you claim no growth in mineral production. Why?

The Hon. D.C. VAN HOLST PELLEKAAN: I have just been advised that another contributing factor to the reduction was BHP's outage and their reduction in production because of the unforeseen outage there. I am also advised that the best estimates that we have for this current financial year are the ones that are in the budget papers.

The Hon. A. KOUTSANTONIS: So you projected $80 million worth of exploration and you were off target by $30 million. You are now projecting not a bounce back to that 2018-19 projection or the 2017-18 actual of $48 million. If you look at the actual results, the 2017-18 actual was $48 million worth of activity. You projected $80 million, even though you cut PACE, and it dropped to $50 million, but it was still an increase of two. This year, you are forecasting a growth of $20 million a year in exploration activity on the basis of a $3 million grant; is that right?

The Hon. D.C. VAN HOLST PELLEKAAN: Not just on that basis—certainly not just on that basis. Just to correct something that you said, we did not cut PACE.

The Hon. A. KOUTSANTONIS: Oh, it came to an end.

The Hon. D.C. VAN HOLST PELLEKAAN: The previous Labor government, as you full well know, had nothing in the budget for PACE after the year before last. We did readjust, based on very good advice, some of the mineral PACE. I should just say that the PACE that came to the end that I was talking about before was petroleum PACE. We did readjust some of the mineral PACE to make it more productive, and we have been able to convince the Treasurer to give us some more money so that we can develop the Accelerated Discovery Initiative to support greater exploration.

I have some additional information that I can provide for you. Mineral exploration expenditure: the 2018-19 estimated result of $50 million has already been surpassed based on the first three quarters of mineral exploration spending reported by the ABS. According to ABS figures for the first three quarters of 2018-19, mineral exploration has totalled $58.6 million to date. Quarterly mineral exploration expenditure for 2018-19 includes September 2018 of $20.4 million, December 2018 of $21.9 million, and March 2019 of $16.3 million.

The 2018-19 projection of $80 million will be achieved if the June 19 quarterly expenditure reaches or exceeds $21.4 million. June quarter results will be reported by the ABS on 2 September 2019. Based on anticipated company exploration work programs, it is expected that mineral exploration expenditure can achieve similar levels to the previous three quarters in 2018-19 and will be close to the 2018-19 projection of $80 million—so I am advised.

The Hon. A. KOUTSANTONIS: Is that why you increased taxes on exploration?

The Hon. D.C. VAN HOLST PELLEKAAN: Well, Chair, a provocative question but the nuts and bolts of it is a very fair thing to ask. We increased it—

The Hon. A. Koutsantonis interjecting:

The Hon. D.C. VAN HOLST PELLEKAAN: It is just the way you choose to put it, shadow minister, but we are used to that. The key issue that I think the shadow minister is getting at here is about the additional fees placed on the holding of mineral exploration licences. We have already been through the very significant savings tasks that our agency has had put to us in light of the government as a whole losing a little bit more than $500 million per year of forecast GST income. That is something that came upon us. Unfortunately, not to—

The Hon. A. KOUTSANTONIS: Did you say half a billion per year?

The Hon. D.C. VAN HOLST PELLEKAAN: Yes, shadow, that is what I said, and I have just been advised that my CE thinks that is correct, but we will check it for you. This came very shortly before; in fact, while the budget was being developed, we had to respond. We made a commitment to the electorate that we would run balanced budgets—'balanced' being a little bit surplus or a little bit deficit, but very close to balanced budgets—and we were determined to keep that commitment.

We have found ways to reduce costs, fees, taxes and charges throughout the economy in many ways, like the emergency services levy and many others. We were faced, though, with an unexpected requirement for additional savings. My CE and I together determined that we would meet our savings targets in part through internal savings and in part through increased revenue. That is not a decision that we wanted to take, of course, but it was a decision we needed to take.

So we increased fees for the mineral exploration licences in line with fees and charges across the state for most organisations, for most areas of work, with the exception of exploration licences in the Gawler Craton. For those within the Gawler Craton, there was an additional charge—and I can certainly provide the detailed information if you want—and an even greater charge for exploration licences with a 200-kilometre radius around Olympic Dam.

Does anybody want to charge industry more? No, of course not. When you are in a situation where must increase fees and charges, you do so in as an intelligent and responsible way as you possibly can. We took the decision that the more valuable tenements—i.e. those in the Gawler Craton, and then again those closer to Olympic Dam—were the ones that we would, although we did not want to, charge even higher fees for the retention of those exploration licences.

It is also worth pointing out, shadow, that along with that was a belief that one of the advantages is that we would not only be charging higher fees for the more highly prospective parts of the state but that we would also, we hope, encourage the bringing forward of exploration activity. The reason we did it, but perhaps an indirect benefit we hope, is that those more prospective areas of the state will have more exploration activity done sooner because the holding cost is higher.

Do we want the holding cost to be higher? No, of course we do not, but if as an unintended consequence it brings forward exploration work or potentially leads to the turning over of some of that property from one existing tenement holder to another potential tenement holder, those two things would actually be good for the industry and for the state. I say again that they are not the reasons we did it, but they are probably indirect benefits. We did not want to charge extra money, but we have gone about it in the most responsible way that we could.

The Hon. A. KOUTSANTONIS: I find that a breathtaking explanation. I would have preferred you say simply that you wanted to meet the savings task, but pretending that, somehow, this will incentivise more activity, or is good for the mining industry, I think shows a real lack of understanding of sovereign risk.

The Hon. D.C. VAN HOLST PELLEKAAN: Well, what I did say was—

The Hon. A. KOUTSANTONIS: I have not finished.

The Hon. D.C. VAN HOLST PELLEKAAN: —that we are doing it because we need to meet the savings task.

The Hon. A. KOUTSANTONIS: I have not finished. Are you going to step in, or is it just for the opposition MPs you step in?

The CHAIR: Were you asking a question, member for West Torrens?

The Hon. A. KOUTSANTONIS: Yes, I was asking a question. I am also entitled to make a 15-minute statement if I like at any time.

The CHAIR: Yes, I know. Stay with me on this, member for West Torrens.

The Hon. A. KOUTSANTONIS: Good, do your job! Come on! I have sat here quietly—

The CHAIR: Member for West Torrens, please do not point at me.

The Hon. A. KOUTSANTONIS: Well, you just sat back while I was interrupted and you did not flinch. If I interrupt the minister, you immediately interject. You immediately call us to order.

The CHAIR: Member for West Torrens, please do not point at me. I am chairing this committee and I am going to ask you again to please speak into your microphone.

The Hon. A. Koutsantonis interjecting:

The CHAIR: No, seriously. Your comments re a question to the minister I could not actually hear and I need to hear them, so please talk into the microphone and ask your question.

The Hon. A. KOUTSANTONIS: The minister claims that by increasing fees and charges in and around selected deposits, rather than certain activity, is good mining policy. I reject that completely. I think that is appalling mining policy and it is all about meeting a savings task rather than growing the mining industry. So I will ask you: given that you think this is so good to the mining industry, who did you consult with before you implemented these new increased fees and charges? Did you speak to BHP or OZ Minerals before you implemented these changes?

The Hon. D.C. VAN HOLST PELLEKAAN: Given the multifaceted part of the question—and I was trying to address the beginning of the member's question before when he took a long breath, but I will now do so—I certainly did not claim that we went about increasing the fees because we thought it was good for the industry. In fact, I made it abundantly clear that it was one of the measures we felt we needed to undertake to meet the savings task that we had been given.

I made it very clear that we needed to increase fees as part of meeting the savings task, just as we are decreasing expenditure as part of meeting the savings task. I went on to explain that—and I think I have probably said it four times—we/I did not want to increase fees.

The Hon. A. KOUTSANTONIS: But you did.

The Hon. D.C. VAN HOLST PELLEKAAN: It is not something that anybody wants to do, but we did do it in the way that we did. It was not the reason that we did it, but it might well be an unintended consequence that could be of benefit to the industry if by—

The Hon. A. KOUTSANTONIS: Point of order, sir: this is repeating his last answer. My question was: did he consult with BHP and OZ Minerals on the changes?

The CHAIR: I understand that, member for West Torrens. The minister has provided fulsome answers right through this session. He is again, and I am sure he will get to the question at hand—

The Hon. A. KOUTSANTONIS: Did you?

The CHAIR: —at some point during this answer. Minister.

The Hon. D.C. VAN HOLST PELLEKAAN: And so the shadow minister's assertion that I have said that this is good mining policy is entirely false on his behalf.

The Hon. A. KOUTSANTONIS: So it is bad mining policy?

The Hon. D.C. VAN HOLST PELLEKAAN: I did not say that. I made it very clear that this was a process that we needed to go through to meet the Treasurer's savings task, which we have committed to meet. There might well be a positive unintended consequence that could come out of the fact that we have needed to do this. I did not once say that it was anything to do with mining policy.

With regard to the last part of what the shadow minister said, the consultation was undertaken by the Department for Energy and Mining, but I can advise the shadow minister that I actually contacted BHP and OZ Minerals directly myself to advise them personally of the decision we had taken and where we were going to go with this. I contacted a few key people directly myself. I ensured that key staff in my ministerial office contacted another group of people directly themselves, and I know that representatives from the Department for Energy and Mining contacted people as well.

Just to round that answer out and try to make it as detailed as I can, when I phoned both Andrew Cole from OZ Minerals and Laura Tyler from BHP, I managed to speak immediately with Andrew Cole and work it through with him. I was not able to speak with Laura Tyler, but I did leave a message for her. We swapped some text messages. It was clear that we were not going to be able to speak with each other directly over the phone until much later in the day, perhaps in the evening, so I ensured that one of my ministerial staff transferred that information directly to BHP. So we have done everything we possibly can to be as open, forthright and direct with the industry on this matter.

The Hon. A. KOUTSANTONIS: So you think being open, forthright and direct is telling them after you have made a decision that you are increasing their fees and charges, because you did not say in your answer when you spoke to them. I imagine that you spoke to them days or hours before it became public, and you were not consulting them on the size, the cost or whether or not they should be implemented; you were simply giving them the courtesy of telling them that you were doing this to them?

The Hon. D.C. VAN HOLST PELLEKAAN: What I have just told the committee is that the Department for Energy and Mining consulted through the decision-making process. I made that very clear. The department consulted and, in an ever helpful way, I wanted to share with the shadow minister and the committee that, as well as the consultation the Department for Energy and Mining undertook, I undertook to directly advise some of the companies most affected by this decision myself.

The Hon. A. KOUTSANTONIS: Has the minister met with the Woomera Prohibited Area task force?

The Hon. D.C. VAN HOLST PELLEKAAN: No, I have not met directly with them myself. My CE has been very deeply involved in that process and, no doubt, other members of the Department for Energy and Mining. I have met with a representative from the Department of Defence and a representative from ASIO on the potential for access to the Woomera Prohibited Area for the resources industry.

I am a strong advocate of that potential opportunity, but I am also very respectful of, primarily, the Department of Defence's right to determine who can and who cannot access the WPA and what they can and cannot do there if they are given access. I can assure the committee and the shadow minister that this is an important and ongoing priority for me and our department.

The Hon. A. KOUTSANTONIS: You are so committed that you have not met with them. Have any exploration activities occurred in the WPA over the last 12 months?

The Hon. D.C. VAN HOLST PELLEKAAN: To address the first part of the minister's statement, where he said that I was so committed that I have not met with them, my chief executive is deeply engaged with the committee and I have met directly with the representative of the Department of Defence, and it is the Department of Defence that has the final say on who can or cannot access the Woomera Prohibited Area.

With regard to the second part of the member's question, after taking some advice on what exploration has happened in the WPA recently, I can advise there is certainly exploration going on in the WPA but, with regard to the specifics of it, I will be happy to bring back more detailed information at a later date if you would like.

The Hon. A. KOUTSANTONIS: In the budget papers, you state that the agency has contributed to the continued growth of the state's mining industry through granting a mining lease to Renascor Resources, Ausmin Development, for the Siviour Graphite Project on Eyre Peninsula, which you claim is one of the world's largest undeveloped graphite deposits, as well as through granting a mining lease to Havilah Resources at the Kalkaroo copper subsidiary to develop the Kalkaroo copper project in the Braemar region. You say that is Australia's largest undeveloped open-cut copper deposit. When will production begin on any of those?

The Hon. D.C. VAN HOLST PELLEKAAN: I will get some advice on the specifics but, just to help you with the questioning, Renascor and Siviour are not different projects. Renascor is the company and Siviour is the name of the project.

The Hon. A. KOUTSANTONIS: When will that go into production?

The Hon. D.C. VAN HOLST PELLEKAAN: I am advised—and I am sure the shadow minister knows this—that it is not possible to give a specific date for any of those projects because even if every single thing that the South Australian government controls with regard to permissions and operations were in place, the company would still need to get all its finances, would need to tee up agreements with customers, and many other things.

From my perspective, it is as soon as is responsibly possible, but it is not even possible for me to come back with an answer to that question if I took it on notice because the information does not actually exist.

The Hon. A. KOUTSANTONIS: I take you to your statement of comprehensive income on page 123 of your Agency Statement. The budget papers state:

…an increase in income in [the] 2018-19 [period] associated with the use of the emergency temporary generators during the January heatwave ($2.0 million).'

I assume that was the profit, not the revenue generated from the state-owned generators?

The Hon. D.C. VAN HOLST PELLEKAAN: I actually think it was the revenue, and I think the cost of operating was about $1 million, but I will check that for you. I will get some advice on that.

The specific answer that I have been given to your question is that, under the National Electricity Rules the Australian Energy Market Operator's Reliability and Emergency Reserve Trader scheme (RERT, as you would know), costs are apportioned to market customers of the affected region. South Australia received payment through this scheme for the dispatch of the generators on 24 January 2019. Remuneration is calculated under the terms of the confidential reserve contract with the Australian Energy Market Operator. The state received approximately $2 million. I will have to take on notice confirmation of whether that was the profit or the revenue.

The Hon. A. KOUTSANTONIS: How long did the generators dispatch for?

The Hon. D.C. VAN HOLST PELLEKAAN: I am advised four hours.

The Hon. A. KOUTSANTONIS: How many megawatts were dispatched into the grid?

The Hon. D.C. VAN HOLST PELLEKAAN: I am happy to take that on notice for you. These were certainly numbers I was very familiar with on 25 January, but they are not all in my head right now. I am happy to take the question on notice.

The Hon. A. KOUTSANTONIS: Were both locations dispatching?

The Hon. D.C. VAN HOLST PELLEKAAN: As in both north and south? Yes, they were. They did not both start at the same time, from memory. Again, I can get you more detail on this if you want, but they both were used.

The Hon. A. KOUTSANTONIS: I would appreciate whatever detail you can give me on notice. Is the total revenue $2 million from both sites that the agency has received in the last financial year?

The Hon. D.C. VAN HOLST PELLEKAAN: Let me be cautious. I am being as open as I can with you. From memory, it was $2 million revenue, and from memory it was about $1 million of cost, which would leave about $1 million of profit. But, as I said before, I will check that. To the very best of my knowledge those figures, once checked, including the estimates that I am giving you, apply to both locations, both north and south: Lonsdale and Elizabeth.

The Hon. A. KOUTSANTONIS: If I can refer you now to your Agency Statement, Volume 2, page 112, you set a target in last year's budget to install 5,000 batteries in your program. You achieved 1,300, with 800 awaiting installations. Why didn't you meet your target?

The Hon. D.C. VAN HOLST PELLEKAAN: I will provide you with some specific numbers to be as helpful as possible, but before I do that I will give you some broad information. We know that the Home Battery Scheme, which is what you are referring to, will support the households that invest in partnership with the taxpayer to get the home batteries and potentially new solar as well; they will benefit, but all other South Australians will benefit as well.

What we intend to do with this scheme is help a significant number of households—40,000 over four years—to store the solar energy that they can generate during the day, at a time when they do not need to consume too much, through until the evening, after the sun has gone down, when they want to consume more electricity in their home, but very importantly—

The Hon. A. KOUTSANTONIS: Are you serious?

The Hon. D.C. VAN HOLST PELLEKAAN: —when everybody else wants to consume electricity as well. So the independent modelling that we got from ACIL Allen made it very clear that when 40,000 homes across the state participate in this way, the reduction in total demand on the grid in the evening—because those households are using the electricity that they generated during the day rather than drawing extra electricity from the grid—that chunk of demand removed from the grid will take an important amount of total demand from the grid itself and have a very positive downward impact on electricity prices.

That was the advice we received at the time. What we have done between developing a policy in opposition, based on ACIL Allen's independent advice and implementing that policy in government based on department advice and other external advice, is flesh out the details. Fortunately, in addition to the $100 million of South Australian taxpayers' money that we are allocating to this program, we were able to coordinate with the Clean Energy Finance Corporation so that they are contributing an additional $100 million so that not only can taxpayers access up to a six—

The Hon. A. KOUTSANTONIS: Point of order: I understand all of this. I asked you why you did not meet your target. I am not asking you to describe the project. I can look that up online. Why have you not meet your target? Why are you trying to avoid these questions?

The CHAIR: Thank you, member for West Torrens. The minister is continuing his answer and, as he has done right the way through the session, will get to the answer.

The Hon. A. KOUTSANTONIS: Well, what is the answer?

The CHAIR: Minister.

The Hon. D.C. VAN HOLST PELLEKAAN: In addition to the maximum of $6,000 subsidy per household, which is very deliberately a more generous offer for lower income households—

The Hon. A. KOUTSANTONIS: Well, it has not worked, has it?

The Hon. D.C. VAN HOLST PELLEKAAN: —in partnership with CEFC, we now have $100 million for low interest loans so that households can borrow money for the balance of the purchase price of the battery and, in fact, the installation of brand-new solar panels as well if they want to access that. In many cases, the repayment of that loan can be paid for out of the electricity cost savings to those households.

With regard to the specific numbers, this is a scheme that I think started in November 2018 for three battery providers: Sonnen, Alpha-ESS and Eguana. They got a priority period in participation in the scheme in return for the fact that all three of those organisations committed to and have started assembling and manufacturing batteries here in South Australia. In addition to the benefits of the scheme, we will bring nearly a thousand jobs into—

The Hon. A. KOUTSANTONIS: Point of order, sir: it is a simple question—why have you not met your targets? Why? I am not asking you to describe the program. What is it about this question that you do not understand?

The CHAIR: Thanks for that point of order, member for West Torrens. I will bring the minister to the close of his response.

The Hon. A. KOUTSANTONIS: Thank you.

The Hon. D.C. VAN HOLST PELLEKAAN: The reason for sharing that information is so that the shadow minister and the committee are fully informed about the fact that three of the battery supply companies started in November 2018. The scheme was not fully open to all battery suppliers and all installers until three months after that, so we are looking at about January that the scheme started in earnest, which means that we are looking at five or six months of this financial year, not the whole financial year.

Understanding that this was going to be the case, or it was going to be something along these lines, when we did our budget last year we put what we thought was a fair estimate for the number of batteries that would be delivered through the scheme into the budget, but it was always a good estimate. The shadow minister is quite within his rights to ask why the delivery is not—

The Hon. A. KOUTSANTONIS: This has taken 10 minutes. What are you afraid of?

The CHAIR: Member for West Torrens, I sense that the minister is right on the cusp—

The Hon. A. KOUTSANTONIS: You said that five minutes ago.

The CHAIR: —of answering your question. Minister.

The Hon. D.C. VAN HOLST PELLEKAAN: The shadow minister is quite within his rights to ask why the delivery has not been what the estimate was. For him to fully understand the answer, it is important that he understands how the estimate was formed. The estimate was probably a bit overly ambitious. I do not see that there is automatically anything wrong with the delivery, but because of the way the scheme was worked out we are talking about five or six months of this financial year. It will be a pleasure to provide the very specific numbers of what we have achieved under this scheme to date.

With effect as at 19 July 2019, which is, of course, very close to the end of the financial year but a little bit more up to date, we have had 5,700 quotes requested, 1,513 installations complete and another 800 installations confirmed, signed up, committed and pending installation, so we are looking at about or just over 2,300 commitments to the scheme at that stage. We have had 68,000 website visits for people inquiring about the scheme. We are doing everything that we possibly can to raise awareness and to increase the take-up of this program because we know it is good for those who do take it up and good for other electricity consumers as well.

The Hon. A. KOUTSANTONIS: In last year's budget papers, you announced a demand response, aggregation and integration of distribution generation program worth $30 million. This year, there is almost no mention of it in the budget papers. Did you put out a press release advising the public that you had repurposed this $30 million?

The Hon. D.C. VAN HOLST PELLEKAAN: No, I didn't because we haven't.

The Hon. A. KOUTSANTONIS: Really? Because your budget papers now—and let's make this very important point: the minister just said, no, he has not repurposed it. If I refer the minister to the Agency Statement in this year's budget, the agency talks about repurposing this money for other measures. Could you explain the discrepancy between your answer and the Agency Statement?

The Hon. D.C. VAN HOLST PELLEKAAN: I can certainly explain for the shadow minister that the $30 million is still available for its originally intended purpose, which is to run demand management and supply integration trials. We are developing that. What we decided to do was to break it up into two parts of approximately fifty-fifty, but not exactly.

The first part has actually been out for expressions of interests for several months now. The department is very close to making final recommendations to me about how we should spend that approximately $15 million with partners to run these demand management and demand response trials. That work continues.

If the shadow minister is interested in terms of why did we decide to split the money up, that is because there are still some rule changes being contemplated and/or being delivered, which would then have an impact on how we could run some of the trials that we want to run. That was a reason to wait. We still fully intend to use the $30 million for the purpose that it was intended in the broad term. There is no change in that whatsoever, but we are trying to make sure that we use taxpayers' money as effectively and as efficiently as possible by just holding off on spending approximately half of it.

The Hon. A. KOUTSANTONIS: So why do you say on page 111 of your Agency Statement—

…in addition to the transfer of funding for demand response, aggregation and integration trials ($6.0 million) and early works on the interconnector project ($4 million) to sub-program 1.4 Energy Policy and Programs—

if that entire $30 million is still available for demand response? Do you want to correct the record?

The Hon. D.C. VAN HOLST PELLEKAAN: No, I do not want to correct the record. The budget for the program over the forward estimates is $6 million for 2018-19, $15 million for 2019-20 and $9 million for 2020-21.

The Hon. A. KOUTSANTONIS: So you have not repurposed any of that money?

The Hon. D.C. VAN HOLST PELLEKAAN: As I said before, no. The answer is still no.

The Hon. A. KOUTSANTONIS: In what line item in the Agency Statements is the $30 million? Is it in Budget Measures, is it in Agency Statement, Volume 2, or is it in the Budget Statement? Where is it?

The Hon. D.C. VAN HOLST PELLEKAAN: I am advised that it is in Agency Statement, Volume 2.

The Hon. A. KOUTSANTONIS: Where? Which page?

The Hon. D.C. VAN HOLST PELLEKAAN: If the shadow goes to page 107, he will see Sub-program 1.4: Energy Policy and Programs. If he turns to the table on the next page, page 108, he will see the headings Expenses and 2019-20 Budget, and he will see $45.948 million. I think the $15 million for that year is part of that $46 million, and so on through that table.

The Hon. A. KOUTSANTONIS: Just to be clear, none of the $30 million has been repurposed for any other use other than demand management response? None of that money has been used on early works on the interconnector?

The Hon. D.C. VAN HOLST PELLEKAAN: I have been advised no.

The Hon. A. KOUTSANTONIS: Okay. How long have we got? Fifteen minutes?

The Hon. D.C. VAN HOLST PELLEKAAN: Until 5 o' clock.

The CHAIR: Yes, 15 minutes.

The Hon. A. KOUTSANTONIS: How long do the omnibus questions take?

Mr HUGHES: Five minutes.

The CHAIR: You have a good 10 minutes yet, member for West Torrens.

The Hon. A. KOUTSANTONIS: I refer you to your opening statement about AGL. Did you or your office contact AGL, asking them to defer their mothballing of their units that they now wish to keep open?

The Hon. D.C. VAN HOLST PELLEKAAN: I am advised that we did not. I certainly did not and my CE advises me that he did not, and I am not aware of anyone from DEM or my office doing that.

The Hon. A. KOUTSANTONIS: What is the process that you will now go through to consider whether or not you should grant the application to stop the mothballing?

The Hon. D.C. VAN HOLST PELLEKAAN: I do not think that it is actually my right to grant it. I think it is a planning permission. I think that would be minister Knoll. I am happy to take advice on that. While I get that advice, shadow minister, of course we have an interest in what happens. All government agencies have an interest in things that impact them. We think it would be a good thing; I think it would be a good thing. As I said in my opening statement, this will be assessed at arms length. However, our government is very aware of the need to support Victoria through summer, as shortages there can also affect us.

To provide you with the advice that I said I would check on: yes, I was correct. AGL has actually written to minister Knoll, seeking that variation.

The Hon. A. KOUTSANTONIS: I do not have the page reference, but in the Budget Statement you outline royalties that will be received this financial year and next financial year. Can you explain the change?

The Hon. D.C. VAN HOLST PELLEKAAN: Yes, I can. I will take some advice on them. From memory, the forecast royalties have actually gone up a bit over the forecast estimate. I think it was $300.1 million, but I will check that and get the information for you. Mineral and petroleum royalties are forecast to reach $300.1 million in the 2019-20 financial year. Of this amount, $111.9 million relates to petroleum royalties and $188.2 million to mining royalties.

The 2019-20 royalties forecast represents a $24.4 million improvement from the $275.7 million Mid-Year Budget Review estimate and $11 million more than the $289.1 million royalty receipts for the 2018-19 financial year. I have some more information, but if you want to squeeze more questions in, I am happy.

The Hon. A. KOUTSANTONIS: I do. Do you count in your revenue forecast for royalties fees and charges and regulation as well?

The Hon. D.C. VAN HOLST PELLEKAAN: Separate.

The Hon. A. KOUTSANTONIS: Separate?

The Hon. D.C. VAN HOLST PELLEKAAN: Totally separate.

The Hon. A. KOUTSANTONIS: Okay. I refer to the Budget Statement, Chapter 3: Revenue, page 37, Department for Energy and Mining, extractive mineral industry—increase fees. You increase fees by $1 million this financial year and then $2 million across the forward estimates. Did you consult with the industry before you increased those extractive fees? These are the same ones. These are not the aggregates industry. These are the same ones. Did you increase the fees on the aggregates industry as well?

The Hon. D.C. VAN HOLST PELLEKAAN: Shadow, with regard to fees for the extractives, we did increase their fees for their licences.

The Hon. A. KOUTSANTONIS: Yes.

The Hon. D.C. VAN HOLST PELLEKAAN: We would not expect any of it to be in the Gawler Creighton, so they would have had the standard government increase across the board. We increased fees for PEPRs from a cost recovery perspective.

The Hon. A. KOUTSANTONIS: Did you consult with them before you did that?

The Hon. D.C. VAN HOLST PELLEKAAN: The department consulted with the industry.

The Hon. A. KOUTSANTONIS: Do tenement holders pay land tax?

The Hon. D.C. VAN HOLST PELLEKAAN: Yes.

The Hon. A. KOUTSANTONIS: Did you consult with them about the aggregation principles involved that the government is putting forward?

The Hon. D.C. VAN HOLST PELLEKAAN: Did the Minister for Energy and Mining consult with—

The Hon. A. KOUTSANTONIS: Consult with the industry. You issued the tenements. Did you consult with them?

The Hon. D.C. VAN HOLST PELLEKAAN: Did the Minister for Energy and Mining consult with landholders with a connection—

The Hon. A. KOUTSANTONIS: Tenement holders.

The Hon. D.C. VAN HOLST PELLEKAAN: —to the energy and mining industry?

The Hon. A. KOUTSANTONIS: Do tenement holders pay land tax?

The Hon. D.C. VAN HOLST PELLEKAAN: Yes, they do.

The Hon. A. KOUTSANTONIS: Have you consulted with the tenement holders regarding the government's policy of aggregation?

The Hon. D.C. VAN HOLST PELLEKAAN: I did not consult with anybody regarding the land tax aggregation, which the Treasurer has announced, before the Treasurer announced it.

The Hon. A. KOUTSANTONIS: Do you have an impact on the mining industry for that aggregation policy in terms of extra fees and charges that they will pay?

The Hon. D.C. VAN HOLST PELLEKAAN: No, I do not. In fact, the Treasurer does not have that and the landholders do not have that yet. As you would know, there is an estimate in the budget for an increasing land tax charge of $40 million due to the aggregation. There is also, importantly, a decrease of $49 million due to reducing the rates as well, but these are just estimates and the Treasurer has made it very clear that there will be public consultation with all landholders before the definitive formulas are determined. So, of course, I cannot have an estimate of the impact it would have on those landholders.

The Hon. A. KOUTSANTONIS: The omnibus questions are:

1. For each department and agency reporting to the minister:

What is the actual FTE count at 30 June 2019 and the projected actual FTE count for each year of the forward estimates?

What is the total employment cost for each year of the forward estimates?

What is the notional FTE job reduction target that has been agreed with Treasury for each year of the forward estimates?

Does the agency or department expect to meet the target in each year of the forward estimates?

How many TVSPs are estimated to be required to meet FTE reductions over the forward estimates?

2. Between 1 July 2018 and 30 June 2019, will the minister list the job title and total employment cost of each position with a total estimated cost of $100,000 or more which has either (1) been abolished and (2) which has been created.

3. Will the minister provide a detailed breakdown of expenditure on consultants and contractors above $10,000 between 1 July 2018 and 30 June 2019 for all departments and agencies reporting to the minister, listing:

the name of the consultant, contractor or service supplier;

cost;

work undertaken;

reason for engaging the contractor, and

method of appointment?

4. For each department and agency for which the minister has responsibility:

How many FTEs were employed to provide communication and promotion activities in 2018-19 and what was their employment expense?

How many FTEs are budgeted to provide communication and promotion activities in 2019-20, 2020-21, 2021-22 and 2022-23 and what is their estimated employment expense?

The total cost of government-paid advertising, including campaigns, across all mediums in 2018-19 and budgeted cost for 2019-20.

5. For each department and agency reporting to the minister, please provide a full itemised breakdown of attraction and retention allowances as well as non-salary benefits paid to public servants and contracts between 1 July 2018 and 30 June 2019.

6. What is the title and total employment cost of each individual staff member in the minister's office as at 30 June 2019, including all departmental employees seconded to ministerial offices?

7. For each department and agency reporting to the minister, could you detail:

(a) How much was spent on targeted voluntary separation packages in 2018-19?

(b) What department funded these TVSPs? (except for DTF Estimates)

(c) What number of TVSPs were funded?

(d) What is the budget for targeted voluntary separation packages for financial years included in the forward estimates (by year), and how are these packages funded?

(e) What is the breakdown per agency/branch of targeted voluntary separation packages for financial years included in the forward estimates (by year) by FTEs?

8. For each department and agency reporting to the minister, how many executive terminations have occurred since 1 July 2018 and what is the value of executive termination payments made?

9. For each department and agency reporting to the minister, what new executive appointments have been made since 1 July 2018, and what is the annual salary, and total employment cost for each position?

10. For each department and agency reporting to the minister, how many employees have been declared excess, how long has each employee been declared excess, and what is the salary of each excess employee?

11. In the 2018-19 financial year, for all departments and agencies reporting to the minister, what underspending on operating programs (1) was and (2) was not approved by cabinet for carryover expenditure in 2019-20?

12. In the 2018-19 financial year, for all departments and agencies reporting to the minister, what underspending on investing or capital projects or programs (1) was and (2) was not approved by cabinet for carryover expenditure in 2019-20? How was much sought and how much was approved?

13. For each grant program or fund the minister is responsible for please provide the following information for 2018-19, 2019-20, 2020-21 and 2021-22 financial years:

(a) Name of the program or fund;

(b) The purpose of the program or fund;

(c) Balance of the grant program or fund;

(d) Budgeted (or actual) expenditure from the program or fund;

(e) Budgeted (or actual) payments into the program or fund;

(f) Carryovers into or from the program or fund; and

(g) Details, including the value and beneficiary, of any commitments already made to be funded from the program or fund.

14. For the period of 1 July 2018 to 30 June 2019, provide a breakdown of all grants paid by the department/agency that report to the minister, including when the payment was made to the recipient, and when the grant agreement was signed by both parties.

15. For each year of the forward estimates, please provide the name and budgeted expenditure across the 2019-20, 2020-21, 2021-22 and 2022-23 financial years for each individual investing expenditure project administered by or on behalf of all departments and agencies reporting to the minister.

16. 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.

17. For each department and agency reporting to the minister, what is the total cost of machinery of government changes since 1 July 2018 and please provide a breakdown of those costs?

18. For each department and agency reporting to the minister, what new sections of your department or agency have been established since 1 July 2018 and what is their purpose?

19. For each department and agency reporting to the minister:

What savings targets have been set for each year of the forward estimates?

What measures are you implementing to meet your savings target?

What is the estimated FTE impact of these measures?

I have one final question I would like to ask.

The Hon. D.C. VAN HOLST PELLEKAAN: Chair, I also want to make a correction, if that is okay.

The CHAIR: Yes, minister, you can do that, and then we will allow one further question from the member from West Torrens.

The Hon. D.C. VAN HOLST PELLEKAAN: While the shadow minister was reading out his omnibus questions, I was advised by my CE that, with regard to the increase in fees for exploration licences, the department did not consult with industry in a way that would have been considered general consultation. Advice was sought; the department wanted to consult but was unable to do so in the way that we would all consider consultation to actually take place due to confidentiality with regard to the budget and the Department of Treasury and Finance. I just wanted to be sure that I had the record as accurate as I possibly could, having just received that information.

The Hon. A. KOUTSANTONIS: Thank you. This is my final question, and you can take it on notice, I do not mind. For your Grid Scale Storage Fund, $50 million over four years, could you please provide a list to me of what you can make publicly available about how many applications you have had, who has been successful, what the rollout period is for those grants and how much of the grant has been expended.

The Hon. D.C. VAN HOLST PELLEKAAN: If you are happy to take that on notice, I will take some advice as well about through the tender process what is fair, and let me say that I am hoping that we can make an announcement on that relatively shortly.

The CHAIR: Thank you, minister. Thank you, shadow minister. Thank you, committee members and also advisers. There being no further questions, I declare the examination of the proposed payments for the Department for Energy and Mining to be adjourned and referred to committee B.

At 17:00 the committee adjourned to Friday 26 July 2019 at 9:00.