Department for Energy and Mining, $103,713,000

Membership:

Mr Tarzia substituted for Hon. J.A.W. Gardner.

Minister:

Hon. A. Koutsantonis, Minister for Infrastructure and Transport, Minister for Energy and Mining and Minister

Departmental Advisers:

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

Mr B. Adams, Chief Financial Officer, Department for Energy and Mining.

Mr S. Crafter, Chief Executive Officer, Hydrogen, Department for Energy and Mining.

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

Mr N. Smith, Executive Director, Growth and Low Carbon, Department for Energy and Mining.

Mr B. Zammit, Acting Assistant Executive Director, Mineral Resources, Department for Energy and Mining.

Mr N. Panagopoulos, Acting Executive Director, Energy Resources, Department for Energy and Mining.

The CHAIR: This is Estimates Committee A. Proposed payments are for the portfolio of the Department for Energy and Mining, and the minister appearing is the Minister for Energy and Mining. I declare the proposed payments open for examination. Does the minister wish to make any opening statements?

The Hon. A. KOUTSANTONIS: I will just introduce my advisers. To my left is the chief executive, Paul Heithersay. To my far left, which is ironic, is executive director Vince Duffy. To my right, which is inappropriate, is Ben Adams, the chief financial officer. Behind me to my left is Mr Sam Crafter, the Chief Executive of Hydrogen SA. Alongside him is Mr Nick Smith, the Executive Director of Growth and Low Carbon. Behind them are Mr Nick Panagopoulos, who is the Acting Executive Director of Energy Resources, and Mr Ben Zammit is alongside him, who is the Acting Executive Director of Mineral Resources.

The CHAIR: Does the lead member for the opposition wish to make any statement?

Mr PATTERSON: No, thank you, Chair. I have a question to double-check about the omnibus questions. I believe the member for Hammond asked them in the previous session to the minister.

The CHAIR: That is correct.

Mr PATTERSON: Does that apply also to the minister in his role as the Minister for Energy and Mining?

The CHAIR: Yes.

Mr PATTERSON: Thank you.

The CHAIR: Unless, of course, you want to ask them again?

Mr PATTERSON: No, I am just being efficient with time. I refer to Budget Paper 4, Volume 2, page 115, objectives. AEMO had to step in on Wednesday and suspend the National Electricity Market. From the minister's discussions with AEMO, what is AEMO's view of the state and stability of the South Australian electricity market compared with the other states?

The Hon. A. KOUTSANTONIS: I do not want to speak for AEMO, other than to say that my conversations with them were prior to their direction. I was given advance notice of their market-sensitive announcement on Wednesday, and from my discussions with them on Tuesday night their view was that the market was deteriorating at a rapid rate. The most striking aspect is that South Australia has been subject to directions for most of the proceeding four years for system stability. So, despite the rhetoric of the former government, it was AEMO who were stabilising the system with regular directions, which cost the South Australian economy millions and millions of dollars in extra costs to consumers and business.

Regarding the current crisis and stability of our system, it is not that there is a shortfall in supply in the traditional sense; that is, it is not like we have everything on, we are producing 3,000 or 3,200 megawatts of energy, the interconnectors are at capacity, it is getting hotter and more and more demand is coming into the system and we cannot meet it.

This is a shortfall where every player in the market is acting rationally in their interest, but combined it is an irrational outcome; that is, the price caps put in place that have been triggered by a certain level of bidding in the market have meant that generators have decided to withdraw from the market through a misunderstanding or intentionally to be directed on to obtain a different level of compensation for their services. Under any examination, South Australia has supply to meet demand, but when AEMO are having to compel market participants to participate in the market that is a disgrace, an absolute disgrace. It is a national shame.

As Prime Minister Albanese said today, this is not a problem of the making of the last 10 days; it is a problem of the making of the last 10 years. The inaction by conservative governments across the country on climate change shows how reliant and dependent we are on fossil fuels, and that has exposed Australia. We have not had any forced load shedding in South Australia because directions have been issued to turn supply on. That does not mean to say that there will not be further directions, as there have been continuously over the last four years for system stability.

Mr PATTERSON: On the same budget line—Budget Paper 4, Volume 2, page 115—I was looking for some understanding around how South Australia compares with the Eastern States. As a result of this market suspension, that will be reviewed daily, as said by the AEMO CEO. He has indicated publicly that this suspension may be in place for a few weeks. As you have said, you have not had discussions since that has been put in place, but is it your understanding that South Australia is better placed to have that suspension lifted earlier than other states?

The Hon. A. KOUTSANTONIS: I am not in a position to make comparisons, but I will say this: this is a point of political difference. I do not mean to cause a quarrel, and I mean that sincerely. We are completely reliant on the directions of AEMO to private providers. The state has no sovereign capability to produce electricity. We have some ability with SA Water and we have some ability to turn demand off, but in terms of producing electrons and supplying ourselves we are reliant on others. We are reliant on others because we do not own our assets.

If you compare us with Queensland, who own their generators, I suppose they would argue they are in a better position than us. If you spoke to Victoria, they may have a different point of view. My view is that every state is vulnerable. Are we better positioned? Without our sovereign capability and backup reserve, we are vulnerable. Those generators should not have been privatised; that was a poor, poor policy decision.

Mr PATTERSON: Moving on to Budget Paper 4, Volume 2, page 115 and delivery of the Hydrogen Jobs Plan, that is made up of a number of components, one of which is liquefied hydrogen storage. I have asked this previously in the house, but I am just seeing if it is still the case. Can the minister commit to constructing the 3,600 tonnes of liquefied hydrogen storage?

The Hon. A. KOUTSANTONIS: I have answered this question in the house previously and gave the minister an answer. I stand by that answer.

Mr PATTERSON: Have you been advised that liquefied hydrogen gas is the best storage medium for this hydrogen that is being produced?

The Hon. A. KOUTSANTONIS: As I told you in that answer in the house, we are currently out to the market. I will be very interested to see what the market comes back with, and I am very interested to see how that market sounding goes.

The former government made a lot of pronouncements about liquefied hydrogen and its storage costs. They made a lot of pronouncements about the government's Hydrogen Jobs Plan. Their first point of attack was liquefied storage, making all sorts of assertions about its cost and operation, basing it on a generator that would be operating 24/7 in the market when our generator would be operating on a 20 per cent co-efficiency as part of a jobs plan that was always proposed.

They also claimed, and the former Premier made these pronouncements, that there would be no private sector hydrogen investment whatsoever in South Australia. We were putting it all at risk if we built our Hydrogen Jobs Plan. Well, I say to the member that those fears were just that—fears. They were not based on any fact or reality.

AGL has announced today it is pressing ahead. The EOI that the former government started, funded through the commonwealth government and the state government, had been secured in the budget—$100 million from the commonwealth government, backed up by the Albanese government. That was a bipartisan grant. The $30 million that the former government had put in place is being put in place by us. The previous government had an aspiration to get $40 million out of the private sector for investment in Port Bonython, taking the total to $140 million on hydrogen—$70 million from the commonwealth government, $30 million from us and $40 million from the private sector. All that is continuing.

I see all these objections to the Hydrogen Jobs Plan as politics. Where the shadow minister is sitting now is no different to what I was being asked about the Tesla big battery, that it would not work, that it would only last half an hour and that it was no more than a big banana. Well, as soon as we lost office members opposite realised its value and it was expanded. They misunderstood the government's investment in the Tesla big battery.

The government's investment in the Tesla big battery was not just to try to smash the ancillary markets that were alongside it, like the FCAS market. It was also there to prove up the technology, to prove that grid-scale storage is possible and can be done at scale. It worked, and now it is standard across jurisdictions in Australia and around the world. Everyone is talking about grid-scale storage—everybody. It is now normal, and the same will be for hydrogen.

We are out there wanting to build a system that has generation, storage and electrolysers. We are going to be using an oversupply of energy that has been put on South Australian householders' roofs and throughout the system of renewable energy when there are times of oversupply. The former government's policy to deal with that oversupply was to turn it off, earth it or stop it being produced.

Our plan, like Tom Playford's plan for hot-water systems, is to utilise that extra demand and offer demand into the system at low prices to create storage—which is the hydrogen. It is no different from pumping water uphill, except the difference is it is a complicated process that is crucially inefficient, but it can be made efficient and it can be made cheap through an oversupply of energy. That oversupply of energy is the key to this policy.

I take all these questions back to the same meaning: it is all about hoping we fail. It is just like the big battery: hoping it would fail. I take all this stuff with a grain of salt. It is not a personal reflection on the member, it is just the history of this portfolio. Every time we try something new to try to decarbonise there is a cohort in this parliament who want that new attempt to fail, and we want it to succeed.

Mr PATTERSON: It is a significant sum of money, and it must be scrutinised, and that is where we are going with that in estimates. I do object to that term where you say we are wanting it to fail. We do not want the spending of taxpayer money to fail in any course. We want it to be spent wisely and to produce the result that is intended. On that, further to the hydrogen, has the minister received any advice about potential hydrogen loss due to leakage in storage tanks?

The Hon. A. KOUTSANTONIS: No.

Mr PATTERSON: On the same budget line on the budget paper, following up on this, have you received advice from the department that these storage tanks to store 3,600 tonnes of liquefied hydrogen can be done so at $31 million?

The Hon. A. KOUTSANTONIS: Let's put this in some context. When the previous government announced their interconnector policy, they claimed it would cost either $1.2 billion or $1.4 billion. Its final cost is a billion dollars more, so a substantial increase. There was no market testing by the previous government when they announced that and forced that cost on the people of South Australia and New South Wales.

We are going out to the market now. I have not received any advice that I know of, but I will check, that it is not feasible at the price. However, I again point out that these are not questions seeking answers; these are questions trying to make a point. I am not having a go at you, you are entitled to do it; we are in the business of politics.

We are attempting to create a new industry in this state, and we are attempting with that new industry to try to revitalise a number of things—our export industry and our manufacturing capability—and create a sovereign supply of energy for generation to firm up renewable resources. So we will go out to the market and we will see what the market says, and that is the appropriate way to conduct this.

I will tell you what is not appropriate: to run a whole series of television ads about something like GlobeLink and then abandon it, or promise you can build an interconnector for a certain price and it goes up by a billion dollars and then find criticism in us because we are daring to go out to the market. I think we are going about this appropriately. If there are any cost deviations or cost increases, they will be made public. There is nowhere for anyone to hide on this. We will make them public, but we are going to proceed and we are going to build generation, electrolyser and storage.

Mr PATTERSON: I refer to Budget Paper 4, Volume 2, page 115, the electrolysers. You have put out a request for information, committing to construct a 250-megawatt equivalent electrolyser; is that the case?

The Hon. A. KOUTSANTONIS: Yes.

Mr PATTERSON: Comparing that with what we have at Tonsley at the moment, I think we have an electrolyser of 1.25 megawatts. Have you had any advice around how many electrolyser units will be banked up to make up this 250-megawatt equivalent electrolyser?

The Hon. A. KOUTSANTONIS: That is why we are going out to the market. This industry is developing at pace. Let's go for an example. As you drive around regional South Australia and you see some of our legacy wind farms, the first generators were 200 kilowatts in the early nineties. Now you are getting wind farms that are up to six megawatts per unit, especially some of the offshore ones. The advances in technology here are moving at pace.

For example, in 2017 I visited Kawasaki Heavy Industries in Japan, where I saw a turbine generator, a very small generator, that had been operating on hydrogen for 20 years as a trial. This is not necessarily a new industry, but the advancements are moving fast. They are modular improvements and the technology is moving so quickly you can scale these developments up.

The member is a former trade and investment minister, so he would know about the investment funds that are looking at investing in gigawatts of renewable energy behind the meter in South Australia. For what purpose? Gigawatts of electrolysers. You cannot have it both ways. The private sector investment into gigawatts of electrolysers cannot be real and at threat because of our 250 megawatts, but our 250 megawatts is unachievable. The private investment the former government was talking about was entirely achievable, even though it was much larger than the private sector.

Let's take this to its logical end. If my 250-megawatt electrolyser is too big to build in Australia, what does it say about what the Marshall government was saying about Port Bonython? What does it say about those developments? What does it say about Nyrstar's development, the development of a 400-megawatt electrolyser into which the former government put $15 million of taxpayers' money?

You cannot have it both ways. You cannot say that our electrolyser is unachievable and too big, while at the same time be out there talking about private sector investments into much larger forms of electrolysers. At least be intellectually honest about it. If ours is unachievable, so are the ones that you were talking about.

Mr PATTERSON: I think you put a lot of words in people's mouths.

The Hon. A. KOUTSANTONIS: Well, get used to it.

Mr PATTERSON: That was not anything near what was said. It was a question and nothing more.

The Hon. A. KOUTSANTONIS: Yes, sure.

The Hon. D.R. CREGAN: Can I take the committee to Budget Paper 4, Volume 2, page 111. There is a sub-program reference there to mineral resources. Can the minister update the committee on the nature and scope of water modelling in relation to Terramin's application for a mining lease at Bird in Hand at Woodside?

The Hon. A. KOUTSANTONIS: Yes. I have arranged briefings for the member. This is a long and interesting question about mining in the Adelaide Hills. I know the member has very strong views on it, which are focused in my mind.

For the benefit of the committee, Bird in Hand want to mine a goldmine encapsulated in sandstone underground. Bird in Hand, the winery, is alongside this. It took its name from the traditional old goldmine that was there, so we all acknowledge there has been a history of mining in the Adelaide Hills—Kanmantoo Copper Mine and the like. The issue here is the watertable and the damage any underground mining could cause to the watertable. An exceptional amount of work is being done to assess Terramin's work on dealing with the water aquifer underground as it does its mining.

The assessments that are underway are being peer reviewed by CSIRO, I understand. The documents Terramin have submitted to us and to the CSIRO are in the thousands of pages. There will be a rigorous assessment of what they claim they can do with underground water. I do accept the point that the member makes, which is very, very powerful. This is a long, old and traditional area producing wine, fruits and vegetables, and it is a difficult question. It is a wicked problem.

The problem facing me as mining minister is that I want to see more jobs. Gold prices are high, it is a very good resource underground and the state should exploit that for the benefit of taxpayers. However, there is also at stake a lot of traditional agriculture and wineries that feel threatened and have real concerns about the risk to the aquifer, which they rely on for their livelihood. These are the things we have to balance, but I do take very seriously the local representations by the member. He is not one who is prone to over-egg it. He is very keen to fight for his local community.

If anything did go wrong at Bird in Hand mine, if it were to be approved, that would be a devastating blow to social licence for mining in agricultural areas across South Australia—a devastating blow—and there are other proposed mines. I have to weigh all this up, but I commit throughout the entire process to consult closely with the local community and their local representatives about what to do next. When that modelling and peer review work are completed, I will come back to the house.

The Hon. D.R. CREGAN: Thank you, minister, I appreciate that. You are right to summarise my concerns in the way you have. This is not a forum where I can put an argument to you but, as you rightly say, I have put very strong arguments to you and to the former minister and former government in relation to this project. I record that here.

I turn to the department's assessment so far of the reasonable expectations of residents and local businesses. Chair, it may be that, in view of the fact I am about to touch on a number of things, I will read in these questions or matters by way of omnibus and the minister may come back to me. Has the department, in its assessment process so far, considered the effects of noise pollution from blasting and trucks on vineyards, homes, farming and tourist operations, particularly given the proximity of the mine to those businesses and dwellings and to the township of Woodside?

The Hon. A. KOUTSANTONIS: Yes, they have. This is the question, isn't it? It all boils down to what expectation people have of an experience at Bird in Hand. Bird in Hand is a family success story. It is a great winery, and it is investing at scale to improve its offering. The question is: what do the operations of its neighbours do to the amenity of their offering? The offering at a winery is not controlled explosions down the road. I completely understand. This is what we have to balance, and it is a wicked problem.

The Hon. D.R. CREGAN: Of course, it is not just Bird in Hand.

The Hon. A. KOUTSANTONIS: I agree. There are other wineries, other residents. People should not be forced to be miserable in their own homes or their own businesses because of the activities of others. It is a very, very difficult problem.

The Hon. D.R. CREGAN: It is the amenity of the district that I have in mind. That is the attraction of a viticultural experience and a tourism experience. Much of industry and business in the Hills depends on the beauty of the natural environment, as it does in other iconic wine regions around the world. I emphasise that other wine regions have different ways of managing land use.

The Hon. A. KOUTSANTONIS: That is right. In Bordeaux, for example, they have put up nuclear power stations.

The CHAIR: I remind the member for Kavel that this is about questions and answers. Perhaps a reduction in the commentary might be helpful.

The Hon. D.R. CREGAN: Thank you, Mr Chair. This is something very important to my community and close to my heart.

The CHAIR: I understand that.

The Hon. D.R. CREGAN: Has the department, in its assessment process so far, considered the potential not only to damage the fractured rock aquifer but also to impact Adelaide's water supply through the watershed?

The Hon. A. KOUTSANTONIS: Yes, all those matters are being considered in the assessment.

The Hon. D.R. CREGAN: Will the assessment balance potential negative impacts or assess potential negative impacts on existing business and agricultural and viticultural operations against the possible future, and possibly limited, benefits of the mine?

The Hon. A. KOUTSANTONIS: In short, yes. The long form answer to this question is important. Mine life is very difficult to determine. It is a strange science. As production of a commodity underground begins, generally Mother Nature has more to offer, the ground has more to offer, and a nine-year mine life can become a 30-year mine life very quickly—look at Prominent Hill, for example. Different scales, different types of mines, different regions I understand. Look at Kanmantoo, for example. Kanmantoo is now looking at underground technologies to mine and extending that mine life.

There may be a limited lifespan now, but it could be larger. That still equates to the question of vineyards that are decades old and have decades in them and orchards that are producing and being replanted and the impact of basic amenity and water not only to Adelaide but also to the Adelaide Hills. These are the questions we have to balance, and it is a very, very difficult problem. If it were easy, I suspect the former government would have made a decision, but they did not.

The Hon. D.R. CREGAN: With your indulgence, Mr Chair, I have a question on this line. Has the department contemplated obtaining substantial undertakings or environmental bonds from Terramin if the mine were to be approved?

The Hon. A. KOUTSANTONIS: We are looking at all sorts of measures to protect the social licence of the industry as a whole. This is a very difficult question. We have had a select committee on this, which I was a member of. It is a very difficult problem—a very, very difficult problem. There are lots of questions about how best to regulate and do this. I think the department do it well.

The big safeguard for us all here is that the department knows that if you push aside local concerns—local amenity concerns, local water concerns, even local industry concerns—to use the power we have under the act to allow mining to proceed in an area, that power will quickly dissipate because the public will react and there will be changes to the legislation. This is what we have to balance. In the end, the public will get what they want.

If we want to increase our royalties from what we have been blessed with in terms of commodities—and gold is one of those critical minerals, do not forget; gold is part of the decarbonisation story and it is an excellent conductor of electricity—we have to make sure that we continue a pipeline of these projects. I take your point that maybe there are some regions we should not be mining. We are looking at that very closely without wanting to prejudice any decision.

The Hon. D.R. CREGAN: Thank you, minister. I maintain my grave concerns in relation to this project. As I say, this is not the forum for me to put an argument, but I record that I maintain my grave concerns.

The Hon. A. KOUTSANTONIS: You have made it known to me in no uncertain terms.

Mr PEDERICK: I have a question on that budget line, minister, the same line on mineral resources. I know full well that it has been a long time of appraisal, probably at least eight or nine years. It is good to hear that peer review is on board. Once the peer review is done, and more work is done by the department and a recommendation comes to you either to approve or not approve, are you beholden to that recommendation as a minister, or can you override it?

The Hon. A. KOUTSANTONIS: Yes, the act gives me the power to make a decision. Any good administrative lawyer—like the member for Kavel—will tell you that my decision has to be based on reason and fact. I would have to consider and weigh up all the recommendations, but ultimately the act gives the power to the minister. I can delegate that decision, of course, to the chief executive. There are many considerations. It is not likely that I would delegate this decision, but I am not sure yet.

Mr PEDERICK: But you are saying that you do have the ability as the minister to overturn a recommendation from the department?

The Hon. A. KOUTSANTONIS: Yes.

Mr PATTERSON: Returning to Budget Paper 4, Volume 2, page 115, and getting back to questions relating to the electrolyser, have you received advice from the department that it can be done for $220 million, as outlined in your policy?

The Hon. A. KOUTSANTONIS: That is why we are going out to the market.

Mr PATTERSON: I refer to the same page. I have previously asked about the turbine itself with respect to its being a combined-cycle turbine. When you went out to the market with a request for information, was the request asking that the turbine be a combined-cycle turbine?

The Hon. A. KOUTSANTONIS: I think I answered this question in the house when you asked me this exact same question. I said that we would go out to the market. If the market comes back with an open-cycle turbine as the preferred option, fine. It might come back with fuel cell as the preferred option. As I said to you, what we are attempting to do here is to prove up a new industry to take advantage of an oversupply of renewable energy.

Tom Playford was no fool. He knew what he was doing when he nationalised our electricity system and when he established the Electricity Trust. His aim was not to run an efficient electricity system to have last-minute supply to meet the needs of industry: he created an oversupply and attempted to have cheaper power prices. That did not always work, but it was a relatively stable, safe, secure supply at a relatively low cost, and manufacturing flourished.

We have an oversupply of renewable energy. The opposition's policy was to turn that oversupply off to stabilise the grid. Our policy is to incentivise demand to come on. We want that demand to be government owned to operate in the interests of South Australians. So, instead of potentially building a pipeline to pump water uphill and store it, which would be the simplest and cheapest form of storage (Snowy Hydro), what we are doing is saying, 'If we can use oversupply of electricity to manufacture hydrogen as a form of storage, which will be used later to produce electricity, what else can we do with that hydrogen?'

Well, we can export it, which was the plan the previous government had through its hydrogen hub at Port Bonython. Also, there are industrial applications, which everyone thinks is a good idea, green steel in furnaces. Electrolux, which is one of the last manufacturers of scale of whitegoods in South Australia, have a process that bakes enamel onto their ovens in ovens using natural gas. That is a very expensive process for them. They want to decarbonise. Electrolux, being an international company, want to offset their emissions. They want to convert those furnaces to hydrogen. They need a secure supply of hydrogen.

Think of all the industries that we lost because (1) they were expensive and (2) they were dirty because they were using fossil fuels and created carcinogens that were able to be emitted into the atmosphere. Now we have hydrogen, which could potentially replace it. Then the last option, of course, is mass transit—motor vehicles, buses, mining fleets, freight, even reticulation in household pipes. There are plenty of applications for this form.

Mr PATTERSON: You are absolutely right. On that, you are taking advice from the market. Prior to that, you were talking around the generator being a base load generator. Subsequent to the election, you started commentary about its becoming a peaking generator. Which type of generator do you expect it to be?

The Hon. A. KOUTSANTONIS: First and foremost, as I said, the key operations of whatever generation we choose are not to offer peaking services into the grid. We want to firm renewable energy, so wind farms—and this will take a bit of time to explain.

What we wanted to do with the solar thermal plant that we developed when we were in office, which failed under your government, was create a contract for difference where they could bid into the market above their marginal costs. If they bid in at market prices that were exceptionally high, whatever extra money they were getting at that time above their marginal costs would be returned to the taxpayer, so they were not incentivised to bid at high levels.

What we will be doing with our generation is that at times when wind farms cannot operate because of a lack of a resource or solar energy cannot produce because of lack of a resource, they can rely on our generator for those services—with one difference: we will be creating contracts for difference. Whatever the name of our government business is, we will be providing hydrogen-derived electricity at a price into the market to try to lower power prices and firm that renewable energy.

If those wind farms or solar arrays or renewable resources attempt to bid into the market at a higher price and take advantage of higher prices, that differential above their marginal cost runs will return to the taxpayer, so they will bid in lower. If you are bidding in lower, you are dragging the whole market down. That is what we are attempting to do, as well as prove up a technology. Contract for difference is what Matt Kean is looking at in New South Wales with his renewable resources, although he is leaving the consumer as the taker of all the risk.

What we are doing here is saying that there will be a government business that will contract into the market with renewable resources to firm that form of energy with contracts for difference to maintain lower power prices. That is the plan.

Mr PATTERSON: At the same line item, has the minister received advice from the department that the closed-cycle turbine for 200 megawatts can be done for the price of $342 million?

The Hon. A. KOUTSANTONIS: As I said earlier, we are out to the market now whether it is open cycle, closed cycle, combined cycle fuel cell or whatever. We want 200 megawatts of generation, 250 megawatts of electrolyser. We have a budget of nearly $600 million, so we want to see what we can get into that framework.

Mr PATTERSON: Talking of putting it out to market, have you put out to the market that this turbine has to be run on 100 per cent hydrogen?

The Hon. A. KOUTSANTONIS: That is the ambition, yes.

Mr PATTERSON: Turning to Budget Paper 5, page 38, there is a breakdown of this $593 million spend. In the first year, $50 million is budgeted for the 2022-23 year. Can the minister provide a breakdown of what will make up this amount?

The Hon. A. KOUTSANTONIS: Obviously there is some preparatory work: there are feasibility studies and we may need to place some orders to lock electrolysers in line in production schedules. There is environmental work to be done and there is consultation to be done. There are potential transmission connections that need to be done. A whole raft of works are required that are being fleshed out through the EOI that was announced by the Premier during the hydrogen conference. There is a lot of detailed design work to be done as well, so a lot of that money will be spent, and if it is not we will carry it over obviously.

Mr PATTERSON: You have other figures there for the following out years: $225 million and $225 million. Can you provide some more commentary around the breakdown and how you arrived at those numbers?

The Hon. A. KOUTSANTONIS: You do not put all the money at the end, so $50 million is in for the first year and then the number grows until you reach the 593. We want this operational by the end of 2025, so the money has to be spent. A lot of that will be informed by the expression of interest and the market soundings, and that may change from budget to budget because of the way that the market responds, but the deadlines remain in place and the budget remains in place.

Mr PATTERSON: Regarding this big capital spend, your government went to the election with an election promise around industry participation in jobs. Can the minister confirm that this Hydrogen Jobs Plan will use only local project managers, architects, designers, engineers, surveyors, planners and other professional service providers on this project?

The Hon. A. KOUTSANTONIS: That is our aspiration, but there are obviously deficiencies in some skills that might not be here, which may require us to get technology offshore. We certainly want to try to maximise it, and our policy did foresee potential issues where there are projects where there may not be the skill set available here in South Australia, but we do not want to not do projects because we do not have the skill set. We still would like to train it up and get it here.

Mr PATTERSON: Referring to page 115 of Budget Paper 4, Volume 2, again on the Hydrogen Jobs Plan, it has been outlined that Whyalla has been chosen as the location. Can you outline what considerations have been taken into account as to where exactly in Whyalla because there has also been commentary about that being Port Bonython as well?

The Hon. A. KOUTSANTONIS: Port Bonython is in the city of Whyalla. What we said was within the city of Whyalla. Obviously, Port Bonython is constrained because of Cultana, and the EOI process that the former government did around Port Bonython allocated most of that land, so we are looking at locations. You might remember that, as part of our election commitment, we set up an expert panel to research within the first 100 days where the placement of it should be. They are currently conducting that work and, as that work is completed, I will have more to say to the house.

But the truth is that we have the last structural steelmaker in Australia in Whyalla. They are using coking coal to manufacture steel and producing carbon emissions. Green steel, as a technology, is moving at pace. It makes intuitive sense that you would put your hydrogen assets closest to your largest manufacturer you have left in structural steel to try to get that benefit.

I imagine that coal is increasing in price dramatically, especially coking coal. Coal, for GFG, unless they were hedged, has gone from $150 to $200 a tonne on the spot market to $400 a tonne. So, all of a sudden, the cost of Australian steel just got more expensive, and the steelworks is precious to our state. It is precious to our country. It is a significant piece of infrastructure, so, yes, we chose Whyalla for a reason: it is close to Port Bonython and in the same council area for exports. There is the location of a substation, the location of water, the proximity to Whyalla and GFG and it has very strong local support for industrial applications in Whyalla. It is an industrial town and I think it is a good place to put it.

Mr PATTERSON: Going back to the discussion around the turbines and the modelling that has come out that says it will reduce wholesale costs by 8 per cent, do you still believe that if there are different generators there is the potential to be a difference in terms of the reduction in wholesale cost of electricity to industry?

The Hon. A. KOUTSANTONIS: I do not think it matters how it is generated, whether you would decrease the power. What I think the decrease in the wholesale price is influenced by is the fact that we have generators who are bidding in the market, owned by the taxpayer, whose objective is not to maximise profit for their shareholders but to lower power prices for their citizens. It is a different bidding strategy.

For example, what I suspect is occurring right now in the National Electricity Market is there are gas-fired turbines that are shadowing the market and are dispatching into the grid as if they had bought their gas off the spot market for, say—pick a number—$40 a gigajoule and are selling it to the market for $400 a megawatt hour or $440 a megawatt hour. For all we know, they have a contract for the next year to buy their gas at $8, $9, $10 a gigajoule and they are shadowing the market. Prices go up.

Our generator will not be operating in that way. Our generator will say, 'This is our cost of production. This is the cost of maintaining our infrastructure and our profit. We bid in here.' If the market goes crazy, we will not respond. We keep on bidding at above our cost of production to maintain our profits and our capital infrastructure and our maintenance, to firm that energy. That is the difference. Our generator will be acting in the public interest, not the shareholders' interest, and that is the difference.

Mr PATTERSON: On the same budget line, around the policy area and jobs, in your jobs plan it was claimed it will unlock 10,000 jobs through a $20 billion pipeline of renewable energy projects in South Australia. Is that taking into account already the existing pipeline of renewable energy jobs, or is that an extra $20 billion over the existing $16 billion of projects that are either approved or in the planning process?

The Hon. A. KOUTSANTONIS: Let's be clear about this. Those renewable projects will not get off the ground just because of an interconnector. An interconnector is connected into a market. We are a three-gigawatt market and New South Wales is a 10-gigawatt market. One proponent alone that I met with yesterday is planning to build 14 gigawatts of electricity. The interconnector power connector's capacity is 800 megawatts. Unless you are exporting hydrogen, the interconnector does nothing to incentivise renewable energy at scale, especially when the New South Wales government is using taxpayers' money to incentivise 14 gigawatts of electricity on their side of the border. This mirage that the former government were talking about is not real.

If you want real investment, you need to prove up hydrogen technology and you need to export it. The markets we want to export our sun and wind to are not in Australia because they are not big enough. The markets we want to export them to are Japan, South Korea and Europe through the Port of Rotterdam—a very good MOU signed up by the previous government, an excellent idea. That port is attempting to hedge, because their major source of revenue is importing LNG. They need to shift that.

When I was Minister for Energy in a previous life and Treasurer, I moved heaven and earth to try to get meetings with Krupp Steel in Germany and to meet their leading metallurgists about new technologies in green steel. They were not meeting with any Australian state leaders on any level. They were busy off doing their thing. Now, with the most recent hydrogen conference, they send their lead people out here, trying to meet us about our hydrogen developments, so there is a fundamental shift going on.

If I could summarise it this way: Japan and South Korea are looking for hydrogen as alternative sources of energy; Europe is looking at hydrogen for industrial applications; we are region neutral. We want to get as much of it as we can out of the ground.

For us, the big game here is if we can prove up our 250-megawatt generator, and we can produce it in a way that can be exported, then that unlocks billions of dollars of private investment, and thousands and thousands of jobs. That is the plan—the same plan that you had when you were in government. The only difference here is you put all the risk onto the private sector and said, 'Off you go. You do it. We will watch.' What we are saying is, 'We want to lead this. We want South Australia to be the home of this.' We are putting our money up-front, and we are going to prove this technology works to make them all come here.

Mr PATTERSON: That hydrogen hub at Port Bonython—that fantastic federal announcement in April—certainly is a fantastic way to export that hydrogen to Asia and also the Port of Rotterdam, as you mentioned. We are aligned in trying to unlock that potential for hydrogen absolutely. You have confirmed that those 10,000 jobs were in the pipeline and it relies on aspects, such as the Port Bonython hydrogen hub to unlock it, because it is very much export-focused to try to drive that up. In terms of a time frame for those jobs, how many of those 10,000 jobs do you expect will have been realised by 2030?

The Hon. A. KOUTSANTONIS: As many as possible.

Mr PATTERSON: In terms of the payback period for the hydrogen power station, before the election you were talking around it being five to 10 years. Quite soon after the election, you made the statement on radio that it was changing from 10 to 15 years. Is that now your understanding, that the payback period is 10 to 15 years?

The Hon. A. KOUTSANTONIS: I misspoke. I said that on radio—it was 10 to 15 years.

Mr PATTERSON: So that is not to do with the fact that things have changed in terms of advice you have received from the department?

The Hon. A. KOUTSANTONIS: No, I misspoke.

Mr PATTERSON: That is fair enough, because it is quite significant. Have you been able to fine-tune it to reduce that range down to less than five years?

The Hon. A. KOUTSANTONIS: That will depend on the price we can export our hydrogen for. If we are producing it at $2 a kilo—happy days.

Mr PATTERSON: Has the department done any modelling on this hydrogen plan?

The Hon. A. KOUTSANTONIS: We are out to the market now as we speak to do the modelling; it is underway. We also have the hydrogen pricing tool that the former government developed, which is a tool that we can use for the price of exporting hydrogen. We will be taking advantage of the work done there as well.

Mr PATTERSON: Did you provide the department with the Frontier Economics modelling report to help inform this?

The Hon. A. KOUTSANTONIS: Yes.

Mr PATTERSON: Will this hydrogen power plant be referred to the South Australian Productivity Commission for analysis?

The Hon. A. KOUTSANTONIS: No.

Mr PATTERSON: Are you prepared to release the modelling from Frontier Economics and make it fully public?

The Hon. A. KOUTSANTONIS: We did.

Mr PATTERSON: If I could move on to Budget paper 1, page 11—

The Hon. A. KOUTSANTONIS: Budget Paper 1, the glossy guide?

Mr PATTERSON: Yes. The Port Bonython hydrogen hub.

The Hon. A. KOUTSANTONIS: I did not bring that one.

Mr PATTERSON: Fair enough; it is an easy read. We have talked before about the money allocated there, around $140 million, including $30 million from the state government and $70 million from the feds. That money is to be allocated towards common-use infrastructure at Port Bonython. Can you provide an update on the status of that? Have you done investigation as to what types of common-use infrastructure might be applicable?

The Hon. A. KOUTSANTONIS: As you would be aware, that expression of interest is being conducted by the Department of Treasury and Finance, who are currently being investigated in committee B, so I would refer your questions to them. I do not know why Treasury and Finance were allocated this by the previous government. I am sure there was some reason for it, but I just cannot think of one.

Mr PATTERSON: I still have questioning around this. I take that answer, and I think this would still be in your ministry. This hydrogen hub looked at having both green and clean blue hydrogen, which is natural gas that has had the carbon split off and carbon captured. Are you still working towards having both types of hydrogen?

The Hon. A. KOUTSANTONIS: I am agnostic about the hydrogen. If proponents can prove they are not producing carbon and they are storing it safely, fine; I have no issue with that. My aim here is to decarbonise. I am not going to split hairs about how it is produced. These colours we assign to hydrogen are getting very interesting. I understand white hydrogen is naturally occurring hydrogen in the ground, and there are prospects of underground hydrogen reserves. Blue hydrogen is produced by gas, brown hydrogen from coal, green hydrogen from renewable. Are there any colours I have missed? I cannot remember what they are.

Mr PATTERSON: In terms of the actual Port Bonython hydrogen hub itself, part of the criteria is that the hydrogen is there for export, so you can confirm that this hydrogen hub is intended to export hydrogen?

The Hon. A. KOUTSANTONIS: I would have thought that is why you put it at Port Bonython.

Mr PATTERSON: I am glad to hear that. Can you also confirm that the $30 million commitment to that hydrogen hub will be used solely for the hydrogen hub and not for the hydrogen power station?

The Hon. A. KOUTSANTONIS: Yes.

Mr PATTERSON: In terms of the proposed 250-megawatt electrolysers in the Hydrogen Jobs Plan, you have talked about them. Will they be separate from any other electrolysers that are part of the Port Bonython hydrogen hub?

The Hon. A. KOUTSANTONIS: We are building 250 megawatts of hydrogen electrolysers. That is what we are going out to the market for. If these things are modular and they want to add on 50 megawatts at the end and they operate their 50 megawatts, so it then becomes a 300-megawatt electrolyser or a 350-megawatt electrolyser and we are able to modulise this, why would we not work with proponents to do that? That would make sense. Then it is one bigger procurement. But I will leave that to my experts behind me as we go out to expressions of interests. If we can partner with people who are prepared to make their own investments and we can all benefit from economies of scale, why wouldn't we? That would be ideologically silly, I think.

Mr PATTERSON: Equally, with the 3,600-tonne storage tanks, would they be standalone and separate from any storage tanks associated with the Port Bonython hydrogen hub?

The Hon. A. KOUTSANTONIS: If someone wants to build a larger storage facility and we can secure 3,600 or more or less, whatever is required as part of the project, we will look at that, but I will leave that to the procurement experts. As long as it is under the care and control of the South Australian government and we own the sovereign capability, I am relaxed.

Mr PATTERSON: With the hydrogen that is going to be produced out at the Port Bonython hydrogen hub, obviously that is additional hydrogen over and above your electrolysers. Would you look at also sourcing hydrogen from these, not just from your 250-megawatt electrolysers?

The Hon. A. KOUTSANTONIS: I am not going to be silly. I am not going to pay for hydrogen if I can get it for free, so let's be clear about this. For example, if we are decarbonising our bus fleet and running hydrogen fuel cell buses, it would be crazy to buy hydrogen off the market if we are producing it ourselves. We should be clever about this and make sure that we serve our needs first. But if people want to make power purchase agreements off us for our hydrogen, we will certainly look at that as well. It will be market driven.

Remember, this will be a government business, so the government business will have to provide for the generation to firm renewables, to keep power prices down. If there is surplus hydrogen at the end of that, that can be traded, depending on the price we produce it at and store it at and what we can sell it for, these are market considerations.

Mr PATTERSON: Moving on to Budget Paper 5, page 38, the Office of Hydrogen Power SA, it has there operating expenses of $2 million in the 2022-23 year. Can you provide a breakdown of that amount?

The Hon. A. KOUTSANTONIS: Yes, it is $2 million.

Mr PATTERSON: When I say 'breakdown', what is that $2 million budget? What will be the make-up of the spend? Is it all for staff?

The Hon. A. KOUTSANTONIS: Yes, staff. What the cabinet did not want to happen was too much of the $593 million being capitalised into running FTEs. I will give you an example. Your government ran something called the Jobs and Growth Fund, which had no public ability really to—well, that is not probably fair. It was a grant scheme administered by Treasury that was predominantly run by government departments. Those government departments would be awarded grants and they would capitalise FTEs within them. Rather than those grants going out into the economy to create jobs and invest in the private sector, they were being used by departments to pay for their FTEs.

To minimise that here, we have allocated an extra $2 million per annum to the Office of Hydrogen Power SA to run their operations so we can actually spend $593 million on capital as we intended. I know it is a unique thought for Liberal members, but I do not think it is wrong to allocate an operating budget alongside a capital budget. It makes sense, rather than using the capital budget for operating costs.

Mr PATTERSON: We have had these discussions at the Public Works Committee, I do remember. On the same line item, how many staff will the office have once it is fully up and running?

The Hon. A. KOUTSANTONIS: The initial thoughts are, before it becomes a trading government business enterprise, in its initial stages about 10 FTEs. Obviously the office will have at its disposal the Department for Energy and Mining as well and the expertise that is already there through growth and low carbon. Credit to the former government for keeping a lot of those capacities in place and putting them all in one agency. That was a very good move and something that we maintained.

I think that $2 million budget might change after they become a GBE and they are trading and they need different expertise. Things can change. They will have a board, obviously. They will be operating much like SA Water did and much the way ETSA used to.

Mr PATTERSON: You have made a statement here in parliament around the appointment of the Chief Executive for Hydrogen Power SA, Mr Sam Crafter. Who made the decision to appoint Mr Crafter?

The Hon. A. KOUTSANTONIS: The cabinet I think.

Mr PATTERSON: Was there a selection committee for appointing Mr Crafter?

The Hon. A. KOUTSANTONIS: We went through the same cabinet processes the former government did to appoint chief executives.

Mr PATTERSON: Were any other candidates considered for the position?

The Hon. A. KOUTSANTONIS: We went through the same cabinet processes the former government did.

Mr PATTERSON: Obviously it is a very important appointment for the state. Why did you not initiate a national or international recruitment for this position, a public one?

The Hon. A. KOUTSANTONIS: Because we had the best person for the job. The former government and the former Labor government—when Rod Hook was terminated from the Department of Planning, Transport and Infrastructure, we went through a recruitment process. We lost six months before we appointed Mr Deegan. On coming into office, the Marshall government sacked Mr Deegan and went through a six-month recruitment process to appoint Mr Tony Braxton-Smith. That is a combined 12 months lost, a combined year out of an eight-year cycle, because we did not have replacements ready to go.

We have done a mixture of that. The Premier decided for the process to be that, where we wanted to make changes, we had some people ready to go, and at other stages we went out to the market. It is entirely appropriate behaviour by a government. Time is of the essence. Not because he is sitting behind me, but Mr Crafter is a person who served the former government loyally and diligently as an executive director. He is someone who delivered the energy plan, the Tesla big battery and, along with other public officers sitting behind me, the temporary generators in record time.

These are people who are dedicated to the public sector in South Australia, and I have full confidence in them. In the same way, I have full confidence in Mr Andrew Ockenden, who was a former political adviser put into an executive director's role by the former government without a competitive process. He remains, and I have full confidence in him. I think we should leave the public servants out of it. If you want a crack at someone, you can have a crack at the chief executive because he is appointed by the Premier, or me. The rest are off limits.

Mr PATTERSON: I refer to Budget Paper 4, Volume 2, page 111, the highlights. You may have mentioned before that you are renaming the Accelerated Discovery Initiative; that is my understanding, but are you still retaining it?

The Hon. A. KOUTSANTONIS: Still retaining it. I am not as petty as the former government to go and change a well-known, well-established grant line from PACE to Accelerated Discovery Initiative because we could not possibly have the success of the former government lasting. I am not going to change the name. It would be silly. It was just silly. It was silly to change it from PACE, and it would be just as silly for me to change it back to PACE, so I am leaving it as it is.

Mr PATTERSON: Can I confirm, then, that this program will not be amended? Will it still deliver the necessary boost to vital greenfield mineral exploration in South Australia?

The Hon. A. KOUTSANTONIS: I certainly hope so, but I think there is a lot of work to do in the way we issue tenements and the way we do a lot of exploration work. A lot of it is taxpayer funded and made available to everyone. I have asked the department to have a look at this, if it is the best bang for buck for the taxpayer. That is not to say that the grants are at risk; it is just the way we conduct them.

Mr PATTERSON: On the same page in the budget papers, page 111, referring to mineral resources, the 2022-23 FTEs as at 30 June are 143.3. I think that is the estimate. This has been reduced from the 2021-22 estimate of 146.4. Why was that reduced? Where are these FTEs going to come from given the increasing complexity and delays in obtaining approvals?

The Hon. A. KOUTSANTONIS: Are you talking about three FTEs?

Mr PATTERSON: Yes.

The Hon. A. KOUTSANTONIS: Are you serious? Alright, I will take that on notice and get back to you.

Mr PATTERSON: On the same line item, referring to the Mining Compliance and Regulation Program, the target for the number of site inspections is greater than 70 per cent for 2022-23. How achievable is this considering it is going to be undertaken with fewer resources than for the 2021-22 year?

The Hon. A. KOUTSANTONIS: I am assured it is not a problem.

Mr PATTERSON: I refer to Budget Paper 4, Volume 2, page 107. Will the government continue with the review into the regulatory regime impacting electricity generators licences pursuant to the Electricity Act 1996?

The Hon. A. KOUTSANTONIS: Are you talking about the inertia of past requisite response requirements from the ATR?

Mr PATTERSON: Not so much. I will read the next question for you because it is around a local government line of questioning. One part of this licensing regime contained in the Electricity Corporations (Restructuring Disposal) Act 1999 prevents local councils from levying for council rates on electricity generators. If legislation were amended and this 20-year rates holiday ended, would this have any negative impact on state government revenue?

The Hon. A. KOUTSANTONIS: No, I do not think it would, but I will check.

Mr PATTERSON: I am happy for you to take those questions on notice.

The Hon. A. KOUTSANTONIS: As background for the committee, when Rob Lucas flogged off our assets, because we used to own our electricity assets, there was not a national agreement for competitive neutrality, which meant that we did not have to pay council rates on our electricity assets—our substations, our poles and wires, our generators—although Port Augusta Northern had a voluntary agreement in place or an indenture agreement in place. This cap came in after they were sold. Again, to increase the price of the sale, not only did he remove all our powers to direct generation like no other state did but he also put a cap in on council rates. It is in the act.

A lot of councils, especially regional councils, see hundreds of millions of dollars of renewable assets being built in their communities that are not rateable, but in New South Wales they are and in Victoria they are. In Queensland, they are not because it is government-owned, I think; I am not quite sure. They are looking across the border. For example, if you are on Eyre Peninsula there is a potential there for billions of dollars worth of investment that would be unrateable that would be on land. You could argue that those rates could be vital for local infrastructure for local communities. We are looking at it, but I do not want to do anything that would jeopardise government revenue or anything that would jeopardise the attractiveness of South Australia as a jurisdiction.

Mr PATTERSON: I refer to Budget Paper 4, Volume 2, page 106, the objectives. It states that the department's objective is to deliver lower electricity prices for business and industry in South Australia. Why is there no mention of residential electricity prices?

The Hon. A. KOUTSANTONIS: Because you privatised our assets and you removed South Australia from the ability to generate energy. It has now become no longer the central role of the Department for Energy and Mining to provide electricity, so we offer welfare now. The AER put out a draft default market offer in November. That was four months before the election. As a result of that default market offer draft, we went to the election campaign offering a doubling of pensioner concessions and self-funded retiree concessions for electricity. The then government offered none.

What we have done is put cash into people's pockets. If we still owned our electricity assets and we operated them—and I imagine if we did ETSA would be in my department, the Department for Energy and Mining—that would be a key objective. I suppose you might want to ask those who were here in 1999, when they privatised the assets, why they decided to do that.

Mr PATTERSON: Budget Paper 4, Volume 2, page 114 talks about trying to assist households reduce prices by switching to solar, which is mentioned in highlights. That program has now been cut. Can you advise whether you have contacted those applicants that were wanting to register their interests? Are they still able to participate in this scheme, or have you contacted them to say that it is no longer running?

The Hon. A. KOUTSANTONIS: I am pretty passionate about this, so I do not want you to feel that I am talking about you. I hate this scheme. I do not like it one bit. Telling pensioner concession cardholders to give up their concession payments in exchange for assets I think is immoral, and I do not like it.

There are 860,000 households connected to the National Electricity Market in South Australia, and taking 1,000 pensioners off their concessions does not lower cost-of-living burdens for the majority of South Australians. It is a very, very poor precedent to set, and I am glad that this program is being cancelled. However, because phase 1 involved 1,000 households, that program is still open to 31 August for the people who are registered, so we will continue it, but I have to say that this type of weaning off concessions is a mistake.

If a former government wanted to give people who are on concessions, on welfare, access to solar panels and batteries, then just give them to them. Why do you have to take their concessions off them? What was the benefit of that other than to the taxpayer? I assume that if this program had been as successful as members had hoped it would be—and I do not know what the uptake was, but it was relatively small—it would have been run across South Australia. I am not sure that this is an appropriate way to deal with people who are on these types of concessions, so I am glad that we are ending this program, and I hope that we never see a program of its like again.

However, virtual power plants, where we can use the rooftops of people who cannot afford to put up their own solar panels and create collective community batteries and community programs that we can then retail to them at a lower rate, are a fantastic, great idea. There is a community benefit. The idea that we can pick people out in cohorts of areas and say, 'You're coming off your concessions and you can get access to these little baubles,' I think is wrong. I think it is morally wrong, and I do not support the program and that is why we cut it.

Mr PATTERSON: I refer to page 37, Budget Paper 5, and the subsidies for electric vehicle smart chargers. Did the minister consult with any stakeholders before ending this program?

The Hon. A. KOUTSANTONIS: No, and I will explain why. What is occurring is that there is a shortfall in electric vehicles in the market. When electric vehicles are being sold, other than I think Tesla, most car retailers, car sales, do not give you the smart-charging equipment as a package with the vehicle.

What the former government did, for a cohort of people who could afford to purchase an electric vehicle, was to subsidise the cost of people putting on the appropriate charging at home, because when the car was being sold you were basically being given as a charging option an emergency backup charger—basically like a little extension cord—rather than the actual infrastructure in place.

This should have been a regulatory change. If you are serious about integrating electric vehicles into households, and households then put in the infrastructure where there is a proper smart charging system in place, either it is the retailer of the vehicle's responsibility to make sure that is a condition of sale or it is the responsibility of SA Power Networks or the people who bought the vehicle. Instead, the former government made this the responsibility of the taxpayer.

Why is it the taxpayers' responsibility to give people who can afford electric vehicles in today's market—which is generally over $100,000—the free infrastructure at home for smart charging when we should have made it a regulatory requirement? It is the equivalent of building someone a petrol station. It does not make sense.

Mr PATTERSON: Have you received advice from the department about the impact of having electric vehicle charging that is not connected via a smart charger—

The Hon. A. KOUTSANTONIS: Yes, I have.

Mr PATTERSON: —about the effects on grid stability and demand? We have talked about solar panels on rooftop and where that is. We are getting to the start of electric vehicles and having an unmanaged charging—

The Hon. A. KOUTSANTONIS: This is where the shadow minister and I agree. This is like we have already passed Mohammed on the mountain.

Mr PATTERSON: Well, it is the end, so we have got somewhere.

The Hon. A. KOUTSANTONIS: My view is that this is not the responsibility of the taxpayer. This is a government regulatory and planning issue. Electric cars are being rolled out. If we are able to manage hot-water systems being heated at a certain time, why can we not manage cars being charged at a certain time? The idea that we would actively subsidise people who have bought cars over $100,000 to put in smart charging systems does not mean that they should not have smart charging systems. The argument here is who should pay for it.

I am not into subsidising people who can afford $100,000 vehicles. Members opposite might be, but I am not. I am into subsidising people who cannot afford things, people on low incomes. My view is that if we do not start, as a nation, making it a requirement that when you sell an electric vehicle you have to either ensure that the equipment for charging that vehicle was part of a package or make it an option as part of a package; instead, you buy an electric vehicle these days and you issue them with basically emergency chargers.

The advice I have is that the OTR will begin to issue guidelines to try to meet demand response for requirements from 2024. The idea of a government subsidy in place for that I think is perverse because it will become entrenched and then everyone who buys an electric vehicle will require a government subsidy to put in a smart charger. That is unsustainable and unaffordable.

Mr PATTERSON: Have there been any applicants to this scheme as yet and, if so, have they been advised that the scheme is no longer going ahead?

The Hon. A. KOUTSANTONIS: No, the former government failed to open the scheme, so no-one applied, I am advised. Such was your eagerness for it, so committed to it, that you did not start it.

Mr PATTERSON: On the same Budget Paper 5, at page 37 you have $13 million of operational efficiencies. What will be the impact on programs and activities within the department?

The Hon. A. KOUTSANTONIS: It is not good for the Switch for Solar scheme and it is not good for the Home Battery Scheme and it is not good for the smart charging scheme, but I will get you a more detailed answer on notice.

Mr PATTERSON: Again, going to these operating efficiencies, could you outline in that response whether you will be continuing with the Port Pirie hydrogen and mineral processing hub initiative, which allocated $1 million to support Trafigura to accelerate their front end engineering design of the proposed 440-megawatt green hydrogen and ammonia plant at Port Pirie.

The Hon. A. KOUTSANTONIS: Yes.

The CHAIR: There being no further questions, I declare the examination of the Department for Energy and Mining complete and the further examination of the proposed payments adjourned until Thursday 23 June. I would like to thank the members of the committee, and I would like to thank the ministers and also their advisers for their participation today.

At 14:46 the committee adjourned to Monday 20 June 2022 at 09:00.