DEPARTMENT OF WATER, LAND AND BIODIVERSITY CONSERVATION, $88,000,000

ADMINISTERED ITEMS FOR THE DEPARTMENT OF WATER, LAND AND BIODIVERSITY CONSERVATION, $10,865,000

Membership:

Mr Williams substituted for Dr McFetridge.

Mr Pederick substituted for Mr Goldsworthy.

Witness:

Hon. K.A. Maywald, Minister for the River Murray, Minister for Water Security.

Departmental Advisers:

Ms A. Howe, Chief Executive Officer, SA Water.

Mr P. Mendo, Chief Financial Officer, SA Water.

Mr J. Ringham, Chief Operating Officer, SA Water.

Mr G. Henstock, Corporation Secretary, SA Water.

Mr P. Prodanovski, Financial Controller, SA Water.

The ACTING CHAIR: I declare the proposed payments reopened for examination and refer members to the Portfolio Statement, Volume 3, Part 11. Minister, this is your first appearance here but I will not read out all the opening remarks. However, I will remind you that if the minister undertakes to supply information it must be submitted to the committee secretary by no later than Friday 17 July 2009. This year the Hansard supplement, which contains all estimates committee responses, will be published on 2 October 2009. There is no formal facility for the tabling of documents; however, documents can be supplied to the chair for distribution to the committee. The incorporation of material in Hansard is permitted on the same basis as applies in the House of Assembly, that is, purely statistical and limited to one page in length.

I remind opposition and government members that all questions are to be directed to the minister and not the minister's advisers. I understand a timetable has been agreed, which is 5.15pm to 6.15pm for SA Water and 6.15pm to 7.15pm for the Department of Water, Land and Biodiversity Conservation, but I understand this may be shortened. Have you agreed on that timetable?

The Hon. K.A. MAYWALD: Yes.

Mr PEDERICK: Yes.

The ACTING CHAIR: Minister, do you have an opening statement?

The Hon. K.A. MAYWALD: I do. This state government's number one priority is ensuring that South Australia has sufficient water supplies for future economic and population growth, and this week we outlined a comprehensive plan to guarantee South Australia's future water security to 2050 and beyond. Through the more than 90 actions outlined in 'Water for Good', we will ensure that there is enough water available to the state to fully capture emerging economic opportunities while reducing our reliance on the River Murray and other rain-dependent water sources.

The Adelaide desalination plant, at a cost of $1.83 billion, will deliver up to half of Adelaide's drinking water needs, even in times of drought. Bulk earthworks are under way and about $833 million in capital will be spent in 2009-10. The first water will flow from the plant in December 2010. By 2014 the state will have independent economic regulation of our water and waste water services, while maintaining state ownership of our water infrastructure. We will have opened it up to private third party access and new entrants. Of course, we intend to put out a discussion paper later this year with the intention that legislation will be introduced next year.

We will have a single overarching water industry and planning act to manage a more competitive and diverse water industry, and across regional South Australia demand and supply plans will be in place to ensure that long-term solutions for each region are based on local needs and local knowledge. Of course, we have completed the process on the Eyre Peninsula and it is under way on Yorke Peninsula and Kangaroo Island. As a result of that work on Eyre Peninsula, additional water resources, including desalinated seawater, will supplement supplies on Eyre Peninsula, subject to site and environmental investigations, by 2014.

By 2013 our stormwater reuse will have more than doubled, by 2025 we aim to be harvesting 35 billion litres, and by 2050 we expect this to have increased to 75 billion litres in urban areas across the state. The targets for Greater Adelaide are informed by the Urban Stormwater Harvesting Options Study, which was also released this week. This study was commissioned by the Stormwater Management Authority, and is the most detailed investigation of urban stormwater harvesting opportunities on a metropolitan scale in any Australian capital city. The study identifies a significant number of potential sites across Adelaide where stormwater capture and storage schemes could be developed, with a total stormwater harvest potential of about 60 billion litres per year.

The Urban Stormwater Harvesting Options Study has also informed the state government submission for commonwealth funding to contribute to important stormwater initiatives worth $145 million across Adelaide, from the airport to new developments in Adelaide's south and to our northern suburbs. In 2009-10 the state government, through SA Water, will continue to deliver key projects to provide new sources of water through desalination and recycling, and to better manage the resources we have through efficient water use and catchment care.

This state continues to lead the nation in waste water recycling. In 2007-08 we reused about 31 per cent of our metropolitan waste water compared to a national average of about 13 per cent. Around $165 million will be spent on major waste water recycling projects in 2009-10, and $414 million will be spent between 2009-10 and 2012-13. Most of this will be spent on expanding waste water treatment plants and water recycling infrastructure.

The $272 million Christies Beach waste water treatment plant upgrade works are under way, with $80 million to be invested in the coming year. In 2009-10 the sludge dewatering facility will be fully operational and the outfall pipe completed. The plant upgrade is scheduled for completion in early 2012. The $75 million Glenelg to Parklands project, bringing recycled water into Adelaide's CBD, is also more than 50 per cent complete, with first water scheduled for irrigation of the Parklands by the end of 2009.

In the five years to 2007-08, SA Water's total capital expenditure has increased to nearly $841 million, a 60 per cent increase on the previous five years. Looking to the future, we see this massive investment continuing, with an increase of about 332 per cent forecast to 2012-13. From 2009-10 to 2012-13 there will be a $2.95 billion capital investment. Water prices will increase by an average of 17.9 per cent in real terms this year, starting today, in recognition of the substantial investments required for desalination and other projects needed to ensure future water security.

From 1 July, quarterly billing of water use charges will apply to all customers, so that bills more closely reflect water use, better informing customers and encouraging more responsible water use. I think it is important to note that in 2008 the South Australian community reduced its water use by 28 per cent compared to the previous comparable drought year of 2002, a significant achievement. Well done to the South Australian community. This year we are also on track to keep our consumption well below our target levels. The investments I have outlined today will ensure that South Australia remains a world leader in water management to support our economy, lifestyle and environment, and to protect and supplement our water supplies both now and for the longer term.

Mr PEDERICK: I refer to Budget Paper 1, page 12. Will the minister provide a breakdown of the $52.3 million for stormwater harvesting and, for each project detailed, what is the estimated total cost and what proportion of that total cost is to be funded by the commonwealth government, the state government, local government and other parties; and is the state government's $52.3 million the full extent of its commitment to achieving the stormwater targets set out in the Water for Good plan?

The Hon. K.A. MAYWALD: Specifically, the $145 million which we have earmarked for the seven projects and for which we put in an application to the federal government is a breakdown of $65 million from the federal government and $26 million (or very close to that) from the South Australian government. The $52 million that is outlined in the budget line, the total amount of those projects and the breakdown of who is contributing is detail that I will provide to the honourable member. I will take the question on notice and provide the honourable member with all the details of those projects.

Mr PEDERICK: You will provide that later?

The Hon. K.A. MAYWALD: Yes, I can.

Mr PEDERICK: I refer to Budget Paper 1, page 12. Does the $52.3 million include the $45 million state contribution announced in the minister's press release on Monday this week, and will the state government contribution to the $45 million stormwater harvesting projects be in the name of SA Water and managed by SA Water?

The Hon. K.A. MAYWALD: With respect to the projects to which we referred on Monday this week, $145 million is the total project cost. The projects will be in partnership with the federal government funding support, but, certainly, they will be partnered with local government. The assets mostly will be retained by local government given that they will be projects that will be led by local government, as most stormwater harvesting projects are still the responsibility of local government.

We intend to support those projects through the Stormwater Management Authority, as well as state government contributions to those projects. The state government contribution to those projects, I understand, is over and above that $52 million, but I will get that checked for the honourable member.

Mr PEDERICK: Again, I refer to Budget Paper 1, page 12. Considering that the government has ruled out using stormwater for potable use, are any distribution network costs factored into the government's commitment of $52.3 million? Is the government proposing to have a single distribution network controlled by SA Water, or will water be supplied direct to the user by the operator of the project?

The Hon. K.A. MAYWALD: Generally speaking, the operator of the project will supply the water directly to the consumer unless they are using SA Water assets. Each project will be unique and will be developed in partnership with the proponents of the project. Generally speaking, the proponents of the stormwater reuse projects are responsible for the supply and charging of that water to the users.

Mr PEDERICK: In reference to the same budget line, will there be access to the current SA Water network?

The Hon. K.A. MAYWALD: Not into the potable network system for stormwater, no. What the state government does intend to do, however, is to open up the SA Water network for fit-for-purpose water for third party access. The third party access will be for drinking water supply into SA Water's potable system. We will not be putting stormwater into SA Water's potable network. Stormwater is about fit for purpose: gardens, parks, flushing toilets, third pipe systems, and the like.

Mr PEDERICK: Referring to the same budget line, will SA Water be engaging in urban stormwater harvesting and, if so, how many of the identified projects proposed will be undertaken by SA Water, and what is the estimated revenue impact for SA Water?

The Hon. K.A. MAYWALD: Certainly, some of the projects will have SA Water involvement, but, as I said, stormwater management is in the realm of local government. The assets will generally be owned by local government and the capture assets will be owned by local government. SA Water, of course, will play a role in that; and SA Water will, of course, be a significant stakeholder in ensuring that that water can be delivered effectively through the project proponents.

SA Water will have a role but, in most instances, it will not have ownership of the projects. For example, work on a number of projects that will possibly be going into a subsequent round may have more involvement with SA Water, but that is yet to be determined.

Mr PEDERICK: I refer to the same budget line. The sale of stormwater is currently not regulated other than for environmental and health needs. Is the government's licensing proposal a form of market development regulation or will it be limited to environment and health?

The Hon. K.A. MAYWALD: Through the release of the Water for Good strategy earlier this week, the government announced that we would be looking to introduce new legislation for a new water act and a new water planning act. The intention there is not only for third party access but also to set the regulation for new innovative suppliers of water to have third party access. We will also be putting in place legislation that deals with the regulation of the sale and distribution of other water products other than potable supplies, which the existing legislation does not account for. The legislation that we intend to introduce next year will deal with that.

Mr PEDERICK: Referring to the same budget line, will the captured stormwater be injected into aquifers used for extracting ground water for potable uses?

The Hon. K.A. MAYWALD: It is not our intention to use stormwater for potable uses.

Mr PEDERICK: So it will not be injected into aquifers?

The Hon. K.A. MAYWALD: We do not extract from the aquifers for drinking water supply in Adelaide.

Mr PEDERICK: In reference to the same budget line, what work has the government undertaken on assessing the market opportunities for stormwater, and on grounds does the government consider there is insufficient market for stormwater, considering Salisbury council has been able to find a market for all its stormwater?

The Hon. K.A. MAYWALD: Each individual project has a component of investigation to determine likely customers for that water. Currently the Salisbury council is able to harvest and re-use up to six gigalitres of water, and with the projects we have announced we intend to more than double that amount of water. The projects that have been forwarded to the commonwealth government for support for funding have local government involved in them. Local government has identified where it believes the customer base will be for those projects. For the full 60 gigalitres, as we work up the projects for those 60 gigalitres, customers will be identified as part of the ongoing process of developing those projects over time.

Mr PEDERICK: In reference to that answer, and on the same budget line, does that mean that local governments will be operating this at the sharp end with state and federal government support? Is that the short version of it?

The Hon. K.A. MAYWALD: Yes; that is what happens now. Stormwater management is in the realm of local government. The federal and state governments have a role to play in supporting it in those projects and that is what we intend to do.

Mr PEDERICK: In light of that answer, the government has no intention to take over the sharp end of the equation in stormwater capture and re-use: take full control instead of running through the local councils?

The Hon. K.A. MAYWALD: No; we do not intend to take over full control, as we believe local government is the appropriate level of government to manage stormwater for two reasons: for flood mitigation and, where appropriate, for recycling and re-use. Our major role will be supporting it in the recycling and re-use components of its projects. We have also established, as the honourable member is aware, the Stormwater Management Authority to assist it with its planning for flood mitigation, which is part of this process. Also, the assets of stormwater management belong with local government and are owned by local government, and we will work with it in a very proactive way to ensure we can maximise the recycling content of those projects.

Going forward we intend to revisit and review the governance of the Stormwater Management Authority, and we have been talking to local government in that regard. That will be part of the process we will go through over the next few months, and it will be part of the information about the Stormwater Management Authority. The consultation on what we might need to do in future will be part of the discussion paper we put out later this year.

Mr PEDERICK: On the same budget line, is the government taking any action to reserve suitable open spaces for wetlands to store diverted stormwater?

The Hon. K.A. MAYWALD: When you develop a project such as Cheltenham you make provision for open space to deal with stormwater: 4.5 hectares has been set aside for stormwater management. With the projects in Waterproofing the South and projects we are working on with the Salisbury council in the north, the state government has been very much involved in the provision of land for open space. The LMC provided a substantial amount of land to enable the Salisbury project to go ahead. Without that land the Salisbury council would not have been able to harvest what it is harvesting right now. The answer is that we have been and will continue to do so.

Mr PEDERICK: I refer to Budget Paper 5, page 54 and the works in progress on the Adelaide desalination plant. When is the commonwealth scheduled to provide its grant for the second 50 gigalitres of the plant, and what conditions must be fulfilled before that grant is transferred, such as reductions in our take from the River Murray?

The Hon. K.A. MAYWALD: We have agreed with the federal government that the increase in the desalination plant capacity is conditional upon us meeting one condition, namely, to ensure that we reduce our reliance on the River Murray. That does not mean we will reduce our licence, but that we will manage it differently to ensure that our draw on the River Murray during drought years is significantly reduced, particularly when the River Murray is in drought. We have also negotiated access to storages of Hume and Dartmouth Dams, which enables us to manage our metropolitan licence more effectively to deal with the variability we have seen most recently in this extreme drought and also to deal with variability that climate change may bring in future.

As to when the commonwealth is due to deliver, the Adelaide desalination plant is expected to provide 50 gigalitres. We are getting $50 million in 2009-10 and a second $50 million in 2010-11 from the first $100 million committed. For the expansion, $114 million is forecast to be provided to South Australia in 2009-10 and $114 million is to be provided in 2010-11.

Mr PEDERICK: I refer to Budget Paper 5, page 54 and the works in progress for the Adelaide desalination plant. When will construction commence on the additional modules to increase the capacity of the Adelaide desalination plant to 100 gigalitres, and what triggers will the government use for switching off all or part of the Adelaide desalination plant?

The Hon. K.A. MAYWALD: The initial 50 gigalitre plant included building the offtake and transfer pipeline to a capacity of 100 gigalitres; that work has already commenced. The actual desalination component, which is the reverse osmosis infrastructure, is developed in modules, so you add bit by bit. The first part of the plant will provide first water by the end of December, and the full 50 gigalitres will be up and running by the middle of the following year. We expect the full 100 gigalitres to be online by 2012. There will be a progressive 'bringing on' of the new modules as they are added to the system; but, upfront, the initial investment in the offtake and the access pipeline into the distribution network has already commenced.

Mr PEDERICK: I appreciate that, yes, the major pipework intake and outlet will suit the 100 gigalitres, but can you give me a definite start date for the additional actual module on the plant for the—

The Hon. K.A. MAYWALD: It is an ongoing process. Once we finish one module, we will move to the next one. Given that water coming on line for the 50 gigalitres plant in full will be in the middle of 2011, I suggest that work towards the establishment of the other modules will have well and truly commenced prior to that as well; it will be in the rollout. There will be some fundamental bits that they will do at the same time, given that they now have the go-ahead to build the 100 gigalitre plant within the initial contract. They will commence construction in relation to the site works for the full 50 gigalitre reverse osmosis modules now, and then they will bolt in the bits as they complete each section.

Mr PEDERICK: I refer to Budget Paper 5, page 54. Will the Adelaide desalination plant be fully powered by wind generated power?

The Hon. K.A. MAYWALD: It will be fully powered by renewable energy. That is the commitment that the government has given. We have released a tender for the private sector to provide us with ideas and options on how that might be achieved. That tender closes at the end of July. We will assess the submissions from that, and that question will be better answered once we fully review those submissions.

Mr PEDERICK: I refer to the same budget line. In light of that answer, in the current tender for power, what are the details of the sorts of power that can be offered by potential suppliers and being sought by SA Water? I include black energy, green energy, black energy with renewable energy certificates, and so on.

The Hon. K.A. MAYWALD: For the 50 gigalitre per annum plant, we are procuring up to 255 gigawatt hours per annum of accredited renewable energy. For the 100 gigalitres per annum plant, we are procuring up to 514 gigawatt hours per annum of accredited renewable energy. In that tender, however, we are also including our major pumping electricity requirements, which, of course, will be standard grid electricity; that is, pumping from the River Murray and the like. The tender includes more than just the Adelaide desalination plant's electricity requirements. However, the part that is specific to the desalination plant will be achieved through accredited renewable energy sources.

Mr PEDERICK: I refer to Budget Paper 4, Volume 3, page 11.57: Performance Commentary. What alternative water supply options is the government considering for Eyre Peninsula and adjoining areas now that the government has pulled out of the Upper Spencer Gulf desalination plant? Will the previously committed $160 million be diverted to providing alternative sources of water for mining, industries and the community?

The Hon. K.A. MAYWALD: First, the $160 million was a commitment from the federal government out of its rural and remote water supply program; and $160 million was committed to the BHP project if the state government committed to extending that project to include the supply of potable water. None of the $160 million was to be directed towards supply for BHP or any other mining opportunity; it was specifically for the state government's potable supplies.

In terms of not going ahead with the BHP desalination extension, the South Australian government made that decision for a number of reasons. The extension to the desalination plant in Adelaide has the capacity to reduce the draw on the River Murray by an extra 50 gigalitres, whereas the Spencer Gulf project was looking at between 20 and 30 gigalitres. The capacity that we now have for storing our metropolitan and other licences in the Hume and Dartmouth dams gives us greater flexibility in the management of our water, particular during drought years. The other reason is that the cost per unit of water produced in the desalination plant in conjunction with BHP would have been higher than the cost associated with production at the Port Stanvac site.

The South Australian government is committed to ensuring that Eyre Peninsula has appropriate and sufficient water supplies to meet future growth, future demand and future prosperity. We have been working with the community over some time and have developed our long-term management plan. It was initiated on 7 March from a water summit that we held, and the plan was launched in December last year.

As part of the launch of that plan, we also committed to $500,000 through the course of 2009 to put in place the initiatives outlined in the long-term plan, including the full investigation of options for desalination to supply local demands on Eyre Peninsula. That work is currently being undertaken. It also looks at the capacity within the Iron Knob to Kimba pipeline, which, of course, is running at about 800 megalitres at the moment and has the capacity to go up to 2.3 gigalitres in the future, if required.

We are able to say that those two sources are actively on the books. We certainly will have information regarding a suitable site and options for desalination towards the end of this year for Eyre Peninsula.

Mr PEDERICK: Again, I refer to Budget Paper 5, page 54, and the works in progress, Adelaide Desalination Plant. I do not think you picked up on this part of the question. What triggers will the government use for switching off all or part of the Adelaide Desalination Plant?

The Hon. K.A. MAYWALD: Climatic conditions will be the triggers that will determine where we will source our water from on an ongoing basis. We have far more flexibility in the system now which will enable us to have a lot more choices, particularly in dry years. Of course, we will continue to ensure that we can minimise the costs associated with the provision of water to consumers in South Australia through SA Water by using that mix of sources of water, reflecting climatic conditions.

If it is a dry year we would use more desalination. If it is a wetter year and there is less impact on the environment then, of course, one of our cheapest sources of water is from the River Murray, so we will call on that. If we have greater flows into the Mount Lofty Ranges that is by far the cheapest source of water for Adelaide, so that would be the first call on water; the second would be River Murray, if it is available; and the third would be desal. The triggers will be worked out on an annual basis or a seasonal basis, depending on the amount of water that is available. Not only will we minimise the cost but we will also maintain security by having that diversity of products available to us.

Mr PEDERICK: In light of that answer, and with reference to the same budget line, what is the shutdown time of the plant and what cost does it create? What is the start-up time for the plant? I guess what I am asking is: what is the cost to shut down the plant and what is the cost to reinvigorate the plant to bring it back online?

The Hon. K.A. MAYWALD: The way in which we have contracted the management and operation of the plant in the longer term, I understand, and as I have been advised by SA Water, is that we have a flat rate that is the fixed cost associated with the management of the plant and then there is the ongoing cost associated with how much water they produce. When the plant is shut down and is not using water, it will still be a cost to the consumer as far as the flat charge goes. The actual costs I do not have the details of here today. The contractor has a provision to be able to either fire it up very quickly or close it down as required by the operating plan that will be established according to the seasonal conditions.

Mr PEDERICK: I refer to the same budget line regarding the Adelaide Desalination Plant. What is the current capacity of the water network to receive desalinated water from the Adelaide Desalination Plant, without it being stored in reservoirs, etc? What storage elements will there be either at the plant itself, in the Happy Valley Reservoir or elsewhere?

The Hon. K.A. MAYWALD: The water will not be stored in the Happy Valley Reservoir. There will be limited storage capacity at the Port Stanvac site and that it will be pumped through to the storage facilities that are just downstream of the Happy Valley Treatment Plant. It will be fed into the network from there, so it will be blended with the treated reservoir water in the storages downstream from the Happy Valley Treatment Plant. There will be limited storage on site.

We will be enhancing the capacity with the integration of the pipeline network from the north to the south of the city so that we can get more water through the system. Just to add to that, we can currently utilise the full 50 gigalitres at this stage. To bring the full 100 gigalitres online we will need to do the augmentation of the pipeline system between the north and the south of the city.

Mr PEDERICK: I refer to the same budget line. Have any funds been allocated for the north-south interconnector, and what is the estimated cost of this interconnector?

The Hon. K.A. MAYWALD: We have $403 million in our forward estimates out to 2013 for the augmentation of the pipeline system between the north and the south. The details of that project have not been developed in full at this stage. We are in a very preliminary stage of working out the best options for augmentation of that system.

Mr PEDERICK: Do you believe that the cost of that project is built into the $1.8 billion for the desalination project?

The Hon. K.A. MAYWALD: No, it is in addition to the $1.8 billion.

Mr PEDERICK: How soon do you believe costings for that project will be available?

The Hon. K.A. MAYWALD: Probably in the middle of next year, that work will be concluded.

Mr PEDERICK: I refer to Budget Paper 1, page 12. Considering it is a requirement of the commonwealth grants program that projects be carbon neutral, how is the government proposing to provide power for its stormwater sites and the distribution networks? Does the government expect that there will be sufficient renewable energy, considering the likelihood that the desalination plant may consume most of the renewable energy market in South Australia?

The Hon. K.A. MAYWALD: Certainly we will meet all requirements for the federal government funding for all projects: there is no doubt about that. The need for renewable energies will increase as the emissions trading schemes and the other requirements of the federal government come on line. I believe it will develop further innovation in those markets in the future. As we have said, we are committed to renewable energy to supply the desalination plant, and we are committed to meeting any requirement of the federal government in regard to carbon neutrality of any future projects.

Mr PEDERICK: I refer to Budget Paper 5, page 55: Works in Progress, Maintain Business Program. What arrangements are being considered for the provision of operations and maintenance in the Adelaide region post the conclusion of the current contract with United Water?

The Hon. K.A. MAYWALD: There have been no decisions made in that regard at this stage, and we are working through those matters currently.

Mr PEDERICK: In light of that answer, does the budget include any resources allocated towards the future arrangements for the operations and maintenance function in the Adelaide region post the conclusion of the current contract with United Water?

The Hon. K.A. MAYWALD: Yes.

Mr PEDERICK: What are the contingencies allowed in the budget for that operation?

The Hon. K.A. MAYWALD: We certainly do not make available to the public the contingencies, particularly when we are negotiating going forward. It is a major project and we will be providing information to the public about the future of that contract once we have concluded the work we are undertaking reviewing the current situation and making decisions on the next step for government in that regard.

Mr PEDERICK: I refer to the same budget item. What was the total cost of relocating and building the new SA Water premises at Streaky Bay? Can the minister advise whether there was a cost overrun for the relocation to the new depot?

The Hon. K.A. MAYWALD: I do not have that detail with me, but we will take that question on notice.

Mr PEDERICK: I refer to Budget Paper 4, Volume 3, page 11.46: 2008-09 Highlights. The fifth dot point refers to 201 gigalitres of water for critical human needs. What is the allowance in the budget for the purchase of this water in 2009-10, and when will that be paid?

The Hon. K.A. MAYWALD: During the course of 2009-10, we are required to accumulate 201 gigalitres for 2010-11. That water will be accumulated through two sources, one of which is through the allocation of improvements in the system that South Australia determines to hold in reserve, and also water purchases. Our water purchase profile will depend largely on rain that is yet to fall in the catchment, and the funds we would need to call upon will come from Treasury contingencies. As you would be aware, Treasury holds a range of contingency moneys for wages outcomes, drought and unforeseen expenses, and we will call on that contingency, as required. We will not know how much we will need until we know how much rain falls in the catchment. So, we will have to wait and see.

Mr PEDERICK: In light of that answer, I assume that any money for purchasing water will have to come out of the Treasurer's slush fund account, so to speak, which I think is around $473 million.

The Hon. K.A. MAYWALD: We do not have any slush funds. Like any responsible government, we make provision for unforeseen expenses, which includes responding to drought. We will certainly make application for funds, as required, from Treasury, should we need to secure critical human needs water. I do not think anyone would suggest that investing money in critical human needs water would be a slush fund exercise.

Mr PEDERICK: I refer to the previous budget line. How much water was purchased for critical human needs in 2008-09, and how much did this water cost?

The Hon. K.A. MAYWALD: During 2008-09, the government purchased temporary water for various drought and water security initiatives. We purchased a total of 217 gigalitres in 2008-09, and 61 gigalitres of that was for critical water allocations; 50 gigalitres for the Lower Lakes environment; and 106 gigalitres for critical human needs. The critical human needs water is not necessarily all for the 2009-10 water year: 39 of that is the beginning of the reserve for the following year, 2010-11. The cost associated with the purchase was just over $77½ million.

Mr PEDERICK: Do I take it that is for the total 217 gigalitres?

The Hon. K.A. MAYWALD: Yes. For 217 gigalitres, the total cost was $77,573,000, plus the statutory and admin fees on top of that; but that is the actual water purchase price.

Mr PEDERICK: I refer to the same budget line. From where was the water purchased and in what amounts?

The Hon. K.A. MAYWALD: It was purchased in 600 transactions, including Murrumbidgee water; Coleambally water; Victorian water, from the Goulburn Valley, I believe; and some water purchased locally from South Australia.

Mr PEDERICK: Will you be able to produce those amounts later on?

The Hon. K.A. MAYWALD: The individual amounts for the 600 transactions, or do you just want us to advise what it is per district?

Mr PEDERICK: Let us bulk it out and make it in respect of the areas.

The Hon. K.A. MAYWALD: That is probably better. I would rather not go to 600 transactions.

Mr PEDERICK: No; I do not want to go to that level. I refer to Budget Paper 5, page 53: New Works: Adelaide Plains Water Supply Study. What progress has been made on the Adelaide Plains water supply study?

The Hon. K.A. MAYWALD: The study has not quite been concluded as yet, but we have had some preliminary findings on it that have indicated that there is potential for what I think is around about 10 gigalitres per annum that could be called on from the bores if required. I will get the details for the member, however, and provide him with a response. I will take that one on notice.

Mr PEDERICK: On the same budget line, other than the Adelaide Plains water supply study, what contingency measures is the government considering in the event of there being insufficient water for critical human needs in the 2009-10 summer?

The Hon. K.A. MAYWALD: There will not be a shortage of water in the 2009-10 summer, because we already have our 201 gigalitres in the dams in Hume and Dartmouth in the system.

Mr PEDERICK: On the same budget line, and I may be stretching it a bit, I acknowledge that you have said that we have the 201 gigalitres secured. Is the conveyance water secured?

The Hon. K.A. MAYWALD: The conveyance water is secured, yes. There has been agreement with the states on the water sharing arrangements. The first ministers are currently reviewing that and will sign off shortly, I understand. The water sharing arrangements provide for contingencies to cover off on any shortfall in the conveyance water in the 2009-10 year to deliver the critical human needs and at least 80 per cent of carryover water at this stage.

The contingencies include things like the lowering of the weir pools, Snowy advances, tributary waters from New South Wales and Victoria and also holding some private irrigator carryover in contingency, which is the first contingency that is repaid as inflows improve. To date, we initially thought we would need to hold back 40 per cent of irrigator carryover. It has now been announced today that that has been decreased to 20 per cent and, as inflows occur, we use those new inflows into the system to counter those contingencies: first and foremost private irrigator carryover, then the weir pools, then Snowy, and then South Australia is required to contribute our third share towards the tributary waters from inflows that will be allocated to South Australia from future improvements.

That means that we will have a deficit starting at the beginning of this water year that will require us to pay it back at the rate of 50 per cent of our improvements, as we did this year. However, at the beginning of this water year, the numbers have been better defined as a consequence of the independent report undertaken by Peter Noonan, and the accounting processes of the commission have now been changed to ensure that there is a fairer and more equitable process and a more transparent process in relation to any account imbalances arising from new water sharing arrangements. South Australia was successful in getting a positive outcome from that investigation earlier this year.

Mr PEDERICK: I refer to the Budget Statement, page 2.12 and the second last paragraph referring to the construction of a $105.5 million pipeline from Jervois to Langhorne and Currency creeks. Minister, given that this program is described as costing $120 million, and given that the provision of potable water to Point Sturt and Hindmarsh Island has been noted as conditional upon the final cost of the creeks pipeline, can the residents at Point Sturt and Hindmarsh Island anticipate the installation of pipes to their communities which will cost $7.3 million combined?

The Hon. K.A. MAYWALD: Well, we certainly hope there will be enough in the contingencies. The $120 million for the pipelines included the pipeline around to Narrung as well as the irrigation pipeline. The project, as you are aware, does have contingencies built into it. We are hopeful that sufficient funding will be available at the conclusion of the project to enable us to be able to subsidise pipelines to those two communities. Of course, those decisions will be determined as the project progresses.

Mr PEDERICK: When is there likely to be any light at the end of the tunnel for that decision, minister?

The Hon. K.A. MAYWALD: As I have advised publicly, and those communities in written correspondence, probably September, but earlier if we can.

Mr PEDERICK: My second question is in direct relation to that budget line. Why have those communities been denied assistance with water supplies for critical human needs while state funds have been committed to other much more expensive projects to supply irrigators in the region?

The Hon. K.A. MAYWALD: The communities that you refer to were not part of the original Murray Futures program to supply water to communities around the Lower Lakes. We made application to the federal government for funding. They supported it with $120 million. Many communities around South Australia do not have access to SA Water's water supply system.

Any community that wants to connect into SA Water's supply system can do so through the normal process of applying to SA Water for an extension to the potable supply network; developers do that all the time. Communities need to get support from their neighbours. A certain percentage of the population in a region must sign up to a pipeline extension, and then a cost is associated with that delivery.

Hindmarsh Island and Point Sturt could do that right now; however, they are seeking subsidised connection into the SA Water network and, as we have said to them, we are prepared to work with them to determine whether any funds are available out of the federal government's Murray Futures program to support their project and subsidise their connection.

Right across South Australia people pay the normal connection costs associated with SA Water's policy on extension of main supply, and they are no different in those communities. They have been advised of that, and we have also advised them that we have been more than happy to seek further funding from the federal government to support their project as well. However, the federal government has said that it will only be possible if it fits within the $120 million. So, we are endeavouring to do that by making sure as best we can that the contingency moneys are not needed in the project.

Mr PEDERICK: In reference to the same budget line and in reference to that answer, I was very pleased that Meningie and Narrung had access to potable pipelines even though they have lost their right to irrigate. That was funded under the Murray Futures program, so they did not have to pay the same costs as developers, etc. I wonder whether it was a gross oversight by the department not to regard these communities in the projects. I note your comments to the effect of 'if they want potable pipelines' but until now, with the drying out of the lake, they have not needed to have potable pipelines, minister.

The Hon. K.A. MAYWALD: A whole range of communities across South Australia are in the same position when their dams dry up and they have to make alternative arrangements to supply water. There is nothing new in a drought causing problems with people's water supply drying up. We have that in the Adelaide Hills. We have people right throughout the Adelaide Hills who need to cart water during a dry period. So, first and foremost, that is nothing new.

Secondly, the people around Narrung and Meningie areas did not get it for free: they had to pay connection fees as well. They made a contribution to the pipeline, and the pipeline was subsidised by the federal government. The federal government had agreed to subsidise pipelines to the value of $120 million. They are not prepared to extend that any further.

If the Point Sturt and the Hindmarsh Island communities choose to go down the path of connecting into the SA Water supply system, they will still be required to pay connection fees. However, it will be subsidised by any funding that may be remaining in that $120 million funding bucket that came from the federal government to support connections around the Lower Lakes.

Mr PEDERICK: I refer to the same budget line. Traditionally, in times of low River Murray flows, such as now (which is obvious), fresh water supply to parts of Hindmarsh Island immediately east of where the Clayton embankment is being constructed are provided and maintained by the Finniss River and neighbouring tributaries. That will now be disrupted by the new regulators, thereby denying them their riparian right to water. Is the government aware of these facts?

The Hon. K.A. MAYWALD: Have we moved into the River Murray area or are we still on SA Water? If you want to move to the River Murray, we can do that, but I will need to change advisers.

The ACTING CHAIR: Member for Hammond, 6.15 is the time to move on to the River Murray. Do you want to continue or move to the River Murray now?

Mr PEDERICK: I will continue with SA Water for now; I have just a few more questions to ask. I can go back to that question, if that is okay, minister.

The Hon. K.A. MAYWALD: Sure.

Mr PEDERICK: I refer to Budget Paper 4, Volume 1, page 3.31: Administered Items for the Department of Treasury and Finance, SA Water Corporation. What is the expected impact on demand for recycled water supplied by SA Water as a result of the increase in the price of recycled water due to the projected rise in the potable water price to fund the Adelaide desalination plant?

The Hon. K.A. MAYWALD: As part of the legislative review that we will be undertaking, we will be including investigations into how we will price wastewater and reusable stormwater.

Mr PEDERICK: I refer to Budget Paper 3, page 3.6. How much does the government estimate the price of water may need to increase as a result of an emissions trading scheme?

The Hon. K.A. MAYWALD: When we know what the scheme is, we will be able to answer that question.

Mr PEDERICK: On the same budget line, I understand that the government is looking at transitioning non-residential customers to a single water price. As these increases will be on top of the post desalination price, will these prices be business competitive?

The Hon. K.A. MAYWALD: Yes is the answer to that question, quite simply. For large commercials it will actually result in a reduction in their prices.

Mr PEDERICK: I refer to Budget Paper 4, Volume 3, page 11.57: Water security, performance commentary. What has been the total cost of developing the Water for Good plan, and how much has been, and will be, spent on advertising the plan?

The Hon. K.A. MAYWALD: The plan has been developed over about a nine-month period. It has been developed out of the Office of Water Security, which has a budget line that you can see in the paper. So, much of the work has been undertaken by the staff in the Office for Water Security. A number of consultancies have also been let to support the Water for Good document. Some of those consultancies include: WorleyParsons, which looked at the life-cycle costing of nine augmentation options for Greater Adelaide; Frontier Economics were involved in a report on the economic regulation framework; KPMG; Clemengers were involved in the preparation of media advertisements; MartinsIntegrated.com did some design work and printing of the plan; and Starcom was involved in the running of media advertisements. Some of those companies were involved with the development of the plan and others are involved in the ongoing costs of the communication and education program.

Funding of $2.4 million has been allocated for information provision, communications and education for the Water for Good plan, and that information was made available on Monday also. Those activities are very important in ensuring that the public is aware of what is happening with security and how they can participate in ensuring that we have water for the future, and to educate the public about their role in being waterwise and more informed about broader water issues in this state. The funding for budget purposes now is $2.4 million, and the other costs associated with the development of the plan have been incorporated in the Office of Water Security costs.

The ACTING CHAIR: Member for Hammond, are you ready to move on to the River Murray?

Mr PEDERICK: We can do that.

Departmental Advisers:

Mr S. Ashby, Chief Executive, Department of Water, Land and Biodiversity Conservation.

Mr P. O'Neill, Executive Director, Water Resources, Department of Water, Land and Biodiversity Conservation.

Mr T. Goodes, Executive Director, Corporate Science and Information, Department of Water, Land and Biodiversity Conservation.

Mr D. De Cesare, Director, Finance and Organisational Improvement, Department of Water, Land and Biodiversity Conservation.

Ms L. Carruthers, Manager, Policy and Strategy, Office for Water Security, Department of Water, Land and Biodiversity Conservation.

Ms C. Kiesewetter, Executive Director, Major Projects, Office for Water Security, Department of Water, Land and Biodiversity Conservation.

The Hon. K.A. MAYWALD: I have a short opening statement in lieu of questions from the government. Drought conditions have persisted over the southern connected Murray-Darling Basin, with inflows into the River Murray system for 2008-09 being the third driest in 118 years on record. Irrigator allocations have remained at 18 per cent in the last water year, and water storage across the basin is currently at 15 per cent capacity, well below the long-term average and below what we had at the same time last year.

The severe conditions are also having a detrimental impact upon the environment. South Australia has risen to the challenge and the government is playing its part in progressing key short-term drought response measures and putting in place long-term sustainable water solutions that will reduce our reliance on the River Murray and ensure the future economic prosperity of the state.

The South Australian government has secured the 201 gigalitres of water for critical human needs in 2009-10, and we have also secured 39 gigalitres towards our critical human water needs in 2010-11. In addition, 50 gigalitres of temporary water has been purchased for the Lower Lakes and approximately 90 gigalitres has been reserved to meet anticipated total private irrigator carryover commitments in 2009-10.

Irrigators will commence the 2009-10 water year with a 2 per cent opening allocation and access to 80 per cent of their approved carryover water. The government has progressed a number of short-term drought measures to ease the pressure on irrigators and regional communities to protect the environment over the last 12 months. The Critical Water Allocations Scheme secured over 60 gigalitres of water to ensure the survival of critical plantings. We waived fees to transfer water purchased by licensed water users and provided relief from NRM water levies.

We continued to provide affected communities with updated information on a regular basis, with many public meetings and community group meetings. We have installed 130 emergency moorings for commercial houseboats, commenced implementation of the Goolwa Channel water level management project and provided additional compliance and enforcement effort along the River Murray. We have also put in place a very significant risk management profile for riverbank slumping in the river system below Lock 1. Many of these initiatives and other measures outlined in the budget documents will continue in 2009-10.

As the committee is aware, South Australia has been instrumental in negotiations to facilitate the federal government's Water for the Future strategy for the management of the Murray-Darling Basin. The new independent Murray-Darling Basin Authority that was established in the past 12 months is charged with the responsibility to prepare a basin plan that will set enforceable, sustainable diversion limits for groundwater and surface water in all the water resources in the Murray-Darling Basin.

Water sharing arrangements, which are currently under consideration by first ministers and which have been agreed to by state water ministers but which need to be signed off by the first ministers, include water for critical human needs for each state. We will also have an extra 25 gigalitres of water upfront to each state, following the provision of conveyance water, critical human needs and other water carried over by the states.

South Australia will need to repay water received in advance at a rate of 50 per cent of its shared improvement in the shared resource. That is our third share of those tributary waters that have been provided by New South Wales and Victoria. Governments may enter the market to purchase water for environmental or critical human needs in 2010-11 but may not enter the market to purchase water for irrigators. These arrangements have ensured that we are able to get the conveyance water necessary for management planning in 2009-10.

In other matters, the South Australian government was the first jurisdiction to secure its target volume of 35 gigalitres of permanent water under the Living Murray initiative. This initiative involves recovering 500 gigalitres of permanent water for environmental purposes by 2009.

The Murray Futures is another South Australian priority project under the intergovernmental agreement on Murray-Darling Basin reform. It is an integrated package of works and measures, valued at $610 million over 10 years and includes: $120 million for the integrated pipeline network around the Lower Lakes, $110 million for industry renewal, $200 million for Lower Lakes/Coorong long-term recovery and long-term planning, $100 million for riverine recovery, and $80 million for water purchases. With these significant investments, a real and material benefit will be realised for communities that rely on the River Murray in the long term and also for all South Australians who rely on the River Murray.

As I said earlier, the Water for Good plan, publicly released on 29 June 2009, is the blueprint for securing South Australia's water supply to 2050 and beyond. The implementation of the plan's 90 actions will ensure security of water supply in meeting current and future demand, while reducing the reliance on the River Murray as a source of water. With all these initiatives in train, together with the Murray-Darling Basin reform program, the government and I are confident that our state is well positioned to manage our water needs during these unprecedented circumstances and into the future for the benefit of South Australians.

Mr PEDERICK: I refer again to page 2.12 of the Budget Statement, where the second last paragraph refers to the construction of a $105.5 million pipeline from Jervois to Langhorne Creek and Currency Creek. Traditionally, in times of low River Murray flows (such as now), fresh water that supplied parts of Hindmarsh Island, immediately east of where the Clayton embankment is being constructed, was provided and maintained by the Finniss River and neighbouring tributaries. That will now be disrupted by the new regulators, thereby denying them their riparian right to water. Is the government aware of these facts?

The Hon. K.A. MAYWALD: We have advised landowners recently of the situation in relation to the Goolwa Channel water level management project, and there will need to be a notice of restriction on taking water from those areas. The water quality for the next two years will not be of a quality fit for potable use or for irrigation. There is not a usable water supply there presently, as a consequence of the acidification that has occurred and the mobilisation of the acid and other nasties in the soils. Without this project the water would become acidic naturally and, therefore, there would be no water supply out of those areas. We are working closely with those communities and keeping them informed of these matters.

Mr PEDERICK: I refer to the same budget line. With respect to that answer, how do you propose to provide these people with an alternative supply of water, and will you compensate them for loss of that riparian right?

The Hon. K.A. MAYWALD: The loss of the riparian right is not as a consequence of the actions that have been taken by the government. What we are trying do to is preserve those environments from complete and utter ecological collapse, which would mean that they would have no access to water, anyway. We are working with those communities in relation to some other possible options, one of which is groundwater. That will all be determined by the science available, and we are working with those communities to see what options are available to them.

Mr PEDERICK: I refer to Budget Paper 4, Volume 3, page 11.46, the first dot point of the 2008-09 highlights: 'Provided critical water allocations to River Murray licensed irrigators for permanent plantings'. I think you have mentioned this before, but we may as well get it in Hansard again: how much water was purchased for critical water allocations for the Riverland in 2008-09, how much did this water cost, from where was it purchased and in what amounts?

The Hon. K.A. MAYWALD: The critical water allocation policy also provided water for other than Riverland irrigators. The temporary water allocations that were purchased were 61 gigalitres at a cost of $23.008 million, and $377 per gigalitre was the average price paid over the course of the purchase term. What was the other part of the question?

Mr PEDERICK: Where was the water purchased and in what amounts?

The Hon. K.A. MAYWALD: That is part of the 600; we took that on notice earlier.

Mr PEDERICK: With respect to that answer, was that average purchase price $377 a megalitre?

The Hon. K.A. MAYWALD: Yes, per megalitre.

Mr PEDERICK: Was that price above the average current market value over the purchasing period?

The Hon. K.A. MAYWALD: We understand that the price for temporary water allocation trades across the whole year averaged about $350 per megalitre. The government entry into the market did not appear to distort the price. We purchased at different times.

Our purchase profile is based on what sales have been achieved in the previous week to the purchase, and we purchase at that price. We do not inflate the price at all. So, the temporary allocation price for purchase is slightly elevated above the entire year purchase, because we concluded that purchase profile early in the year and later in the year the price dropped and then it went back up again. So, it is determined by when the purchase profile occurred. We did not buy at the lowest rate all year. We bought at market rate at the time that purchase was available to us.

If you look at the critical human needs purchase that we undertook, you will see that the average of that over the full course of the year was $347 per megalitre, because our purchase profile was over a longer period of time.

Did we distort the market? The answer to that question is: the government does not believe so and, because of the way in which we operate within the market and only base the price we are prepared to offer on the historic data of purchases within the last week or so, we are not inflating the price.

Mr PEDERICK: In reference to the same budget line and in light of the fact that you had to pay, I think it is $27 a megalitre over the average purchase price—

The Hon. K.A. MAYWALD: No, we did not. I will have to get for you the average purchase price for the period in which we purchased the critical allocations. The average price of the purchase period when the South Australian government was in the marketplace will not be the same as the average price over the full course of the year. I will need to get that detail for you.

Mr PEDERICK: In light of that answer as well, minister, did the government have to aim a bit higher to ensure that it secured that water?

The Hon. K.A. MAYWALD: No, as I said, we made our decisions on how much we paid on transactions that had occurred in the marketplace immediately preceding the purchase that we made. There is an exception to that where we actually entered into an arrangement with Coleambally. I am not certain whether that was for critical human needs or for critical water allocations for permanent plantings, but we did buy 10 gigalitres from the Coleambally district because they agreed to bulk up a number of licences into one purchase for us, which was economic to do so in relation to fees associated with water transfers, and we did pay a slight premium above the market rate for that particular purchase because it was a 10 gigalitre purchase, I believe.

Mr PEDERICK: In light of that answer, minister, would it be right to assume that the market price for that 10 gigalitres bought from Coleambally was about 10 per cent above the market value of water at the time?

The Hon. K.A. MAYWALD: The actual price per megalitre for the 10 gigalitres that we purchased from Coleambally was $370 a megalitre, so that was less than the average we paid over the year for the critical water allocations for that period that we were in the market purchasing for critical water allocations.

Mr PEDERICK: I appreciate that, minister, but at that current point in time did you have to strike a figure about 10 per cent above the market value?

The Hon. K.A. MAYWALD: I do not recall that it was 10 per cent, but we will check that for you. At that time, the government determined that $370 a megalitre was a fair and reasonable price to pay for such a substantial package of water and the associated reduction in administrative costs and the like.

Mr PEDERICK: Referring to the same budget line, with regard to the critical water allocation, how many irrigators were provided with this water and what terms of assessment were used to determine who received this water; and over what stage of the water year was this water delivered to irrigators?

The Hon. K.A. MAYWALD: The water was delivered to irrigators as they required it. There were no criteria that determined when it was delivered. Irrigators used their water according to their needs over the 12 month period. We announced the program, I think it was in September last year, and people who applied and were successful then had a minimum amount of water that they knew they could use over the period of the year, and they would set their irrigation profile according to what their permanent plantings needed.

The number of irrigators who applied for it did so through Primary Industries. It is actually a Department of Primary Industries and Resources SA program, not a River Murray program or a water security program. However, I can inform the member that the criteria used to assess viability were based on a portion of the criteria required to meet the federal government's EC for interest rate subsidies. The information I have just been given is that water was allocated under the scheme to over 1,350 irrigators. I have already provided the cost of the water previously.

Mr PEDERICK: I refer to the same budget line. I understood that 64 gigalitres were purchased for critical water allocations. Why was the full amount of water secured not used? What happened with the excess water that was not provided to irrigators?

The Hon. K.A. MAYWALD: In relation to the amount of water we purchased for all critical human needs, the critical water allocation, we set a notional amount that we would need to purchase for the critical water allocations, depending on the finalisation of all the applications. We were out in the market as the program was rolling out, so not all the applications had been concluded at that time we were in the market purchasing water.

We set ourselves a target of 64 gigalitres to ensure that we could cover off on the absolute top end of what the applicants would be eligible to receive. Once they were concluded, the applications determined that 61 gigalitres was the required amount to meet the program, and the other three gigalitres were transferred over to our reserve for critical human needs. It is now currently sitting as part of the 39 gigalitres we already have in the bank for the 2010-11 year for critical human needs.

Mr PEDERICK: I refer to the same budget line in relation to critical water allocations for the River Murray licensed irrigators for permanent plantings. Why is there no allowance in the current budget to continue to support irrigators in 2009-10?

The Hon. K.A. MAYWALD: Once again, it is the drought contingency program. We will be sourcing the funding for a continuation of that project from drought contingencies. The program, of course, cannot be delivered this year in the format it was last water year, given that the water sharing agreements reached with New South Wales and Victoria preclude state governments from purchasing temporary water for their irrigators.

On the basis that the situation this year is tighter than it was at the same time last year, there is less water available, and the pressure on New South Wales and Victoria to introduce a program similar to the South Australian critical water program would have necessitated three governments going into the market to purchase temporary water. It was decided by New South Wales and Victoria that they thought that would unduly impact on the market; therefore, they insisted that there be no governments in the marketplace purchasing water as one of the conditions of the new water sharing arrangements.

This state government is currently considering what we will be able to provide for the next year, and more information will be made available about that as the government considers the options presented to cabinet.

Mr PEDERICK: Can you confirm that, when the critical water allocation was announced, $67 million was allocated for that program?

The Hon. K.A. MAYWALD: No; there was no funding allocated for the program. What was determined through the cabinet decision was that there would be a critical water allocation supplied. If the critical water allocation was to be based on the 11 per cent rate of allocation that was available to irrigators, and if all irrigators were able to take it up—and that meant that all irrigators passed the test—and if we had to pay $1,000 a megalitre for it, it could cost up to $67 million.

It was not an allocation of a certain amount of money; it was a notional indication to cabinet that this would be the outer bound if we had to pay up to $1,000 a megalitre, if every irrigator who had permanent plantings was eligible and if irrigation allocations stayed at 11 per cent. A number of those things changed. Of course, we got water for $377 per megalitre on average, and we were able to provide an increased allocation of up to 18 per cent; therefore, that reduced the amount of water that was required for critical water allocations.

Once we went to 18 per cent, a number of irrigators no longer qualified for the critical water allocation because there 18 per cent covered off on the amount of water they needed to keep their plantings alive.

Mr PEDERICK: Let's hope they get through this year. I refer to Budget Paper 4, Volume 3, page 11.46, 2008-09 Highlights, dot point 9: the sustainable water level in Lake Albert to avoid acidification through pumping from Lake Alexandrina. My question is: what has been spent in total on this project, including bund construction and maintenance, pump installation and operation, and dredging of adjacent lake beds and ferry channel?

The Hon. K.A. MAYWALD: For stage 1 of the project, which ran from May 2008 to mid November 2008, the budget was $5.22 million, with $5.18 million actually being spent. For stage 2 of the project, which ran from mid November 2008 to the end of June 2009 (yesterday), the budget was $8.1 million, with $5.1 million being spent to date. The project was funded by the Murray-Darling Basin Commission, and then Authority, up to 13 June, so any funds that have not been expended on that project belong to the Murray-Darling Basin Authority. It is a Murray-Darling Basin Authority-funded project.

Mr PEDERICK: My understanding is that the authority was in charge of the project, and I believe South Australia, Victoria and New South Wales put funding into it. I am interested in what was spent by each individual body or state that contributed.

The Hon. K.A. MAYWALD: The way the Murray-Darling Basin Commission and Authority works is that we all make an annual contribution to the capital works and operating costs of the authority. The authority and commission then determine how that funding is distributed to operational and capital works through their corporate plan, which is endorsed by the Murray Darling Basin Commission Ministerial Council—and now it is the Murray-Darling Authority. All that money goes to run everything: it runs the system, the dams, everything. Some contingency money is made available out of that overall budget for emergency projects. This was one of those, and it came out of the emergency funding.

You ask how much we contributed overall to the budget of the Murray-Darling Basin Commission in the past 12 months: it was about $23.3 million last year, and in this 2009-10 budget we will contribute $24.388 million. The breakdown of who paid what is not really relevant, because it is all paid into one authority, which then distributes the money according to projects approved—and this is one of those projects. It is a big bucket of money that is distributed amongst all the projects around the state; it runs the locks, the weirs, the dams, the whole lot.

Mr PEDERICK: On the same budget line, what proposals or initiatives is the government taking to combat acidification in Lake Albert now that pumping from Lake Alexandrina has ceased?

The Hon. K.A. MAYWALD: A major program of bioremediation has commenced roll-out, and that includes cropping. We will also be looking at liming, as we have with the Finniss and Currency Creeks. The scale of the acid sulphate soil occurrence appears to be unprecedented anywhere in the world. We have a range of leading scientists and industry experts working with us, and they are involved in determining the best way to manage the exposed soils. Currently, up to an estimated 20,000 hectares is affected.

Revegetation has the purpose of adding organic carbon to the soils and reducing the amount of wind erosion, while bioremediation provides the conditions that encourage naturally occurring bacteria to counter the effects of acid formation in the soils. As we are working with the Australian government, the Minister for Climate Change and Water has advised that the $10 million in funding has been committed for a program of bioremediation and revegetation at the Lower Lakes and their tributaries with a focus on community involvement. That funding is not reflected in our budget papers at this stage but that has been committed by the federal government. We will be working with the federal government and local communities on further development of the revegetation programs.

DH and Rural Solutions have developed the revegetation plan, and the trials have been undertaken around the Lower Lakes. Aerial seeding of some 4,500 hectares of exposed lake beds and sediments was carried out in May. Local landholders have been contracted to seed areas of Lake Albert and the northern shoreline of Lake Alexandrina. As I said, we are progressing other ways for local communities to be involved in this project. Seeding has also been undertaken in parallel with limestone addition trials, which we are doing in the Goolwa channel and Currency Creek at the moment so that we can determine the success rate of those trials.

That trial of the limestone, the slurry mix and the aerial dosing to prevent mobilisation of acidic water will feed into the investigations on what will be most suitable for Lake Albert. Of course, with the rainfall that we are achieving at the moment, we are maintaining levels above the acidification trigger, so we are still within the time frame where we can work these up properly and to make sure that we do it as best we can.

Mr PEDERICK: Moving forward, do you believe that Lake Albert has a fresh water future, or is one of your proposals to prevent acidification of Lake Albert to introduce sea water into that lake?

The Hon. K.A. MAYWALD: Do I believe that it has a fresh water future? Yes. Do we have to consider all options about what might occur and what actions we might take? I believe that any responsible government would be doing that. If that means that we have to investigate whether or not, under a worse case scenario, a small amount of sea water may be needed to be introduced to prevent acidification, then that is what we would have to do. We believe there is a fresh water future. That fresh water future is, of course, dependent upon rainfall and seasonal conditions over which we have no control.

As a responsible government, we are taking what action we need to be ready for any scenario that may come forward, and that may include the need to introduce a small amount of sea water if the bioremediation does not work effectively.

Mr PEDERICK: I refer to Budget Paper 4, Volume 3, page 11.46, and dot point 10 of the 2008-09 Highlights: Acquired 50 gigalitres of water for the Lower Lakes. When was the 50 gigalitres for Lake Alexandrina purchased? How much was the purchase price of that water, when will that water be delivered to Lake Alexandrina and why was this option not pursued sooner to assist the Lower Lakes?

The Hon. K.A. MAYWALD: The purchase of the 50 gigalitres commenced, I think, around February this year—so, in the second half of the financial year. The average price has been about $347 per megalitre. The decision to purchase the water was made, I guess, concurrently with the work that we are undertaking to look at whether or not we would continue pumping into Lake Albert. The pumping project into Lake Albert required 170 gigalitres to be pumped from Lake Alexandrina into Lake Albert to maintain it above the acidification triggers that would have caused a complete and utter ecological collapse of the lake, which was a consequence or an outcome that I believe everyone would be hoping to avoid.

The decision to cease pumping into Lake Albert means that we have an extra available amount of water for Lake Alexandrina, which does provide for a greater buffer for Lake Alexandrina in relation to meeting its critical acidification triggers. Just purchasing 50 gigalitres alone and sending it down to the Lower Lakes would not have made any measureable difference in relation to the acidification triggers had other decisions not been made to supplement that.

The combination of 50 gigalitres, plus the 170 gigalitres that we no longer pump, has the potential to extend the time frame within which triggers could be realised down in Lake Alexandrina for acidification. The 50 gigalitres will be delivered over the course of the 12 months and the 170 gigalitres will stay in Lake Alexandrina rather than being pumped, so that pushes out when Lake Alexandrina may reach that trigger level.

Mr PEDERICK: In light of that answer, obviously the 170 gigalitres of water does not just turn up unannounced.

The Hon. K.A. MAYWALD: It does. It is part of the 350 going into the lakes now. It is not an additional 170 into the lakes but 170 that is already going into the lakes, but it will no longer need to be pumped into Lake Albert because of the decision made not to continue that project. Therefore, it stays in Lake Alexandrina where it maintains the height of that lake for a longer period. Adding in the 50 gigalitres purchased gives a combination of the 220 gigalitres, which will stay in Lake Alexandrina. So, we will have the 350 going in there, plus an additional 50, and 170 will not need to be pumped over, so that will stay in Lake Alexandrina, which will keep it at a higher level than it would otherwise have been had the pumping project continued.

Mr PEDERICK: So in light of that answer, the magical 220 number will get the decision for the Pomanda Island weir and give us the winter of 2010. The trigger level, worst case scenario, for the weir is probably about March next year.

The Hon. K.A. MAYWALD: Worst case scenario—that is around the mark. We do a monthly assessment of the situation, but the next date we are working towards to make a decision on whether we need to construct is August. The reason for that is that we need nine months to build the weir, so we do all the modelling, throw it out forward—when could the triggers occur under a worst case scenario with what we have now; what we know; what decisions have been made to date—and do the modelling. If the triggers are looking like being reached within a nine-month period, we will need to commence construction of the weir.

There is another complicating factor, however: the issue of salinity increases in the Lower Lakes, in Lake Alexandrina, where the salinity levels are increasing as a consequence of no dilution flows getting out to sea. It is accumulating salt from the system in Lake Alexandrina and we are monitoring it very carefully. Under certain wind conditions we can see water from the lakes move up into the river channel, and in recent times we have seen a phenomenon where that water has gone up and, because of the low flows, it is taking longer to dilute the salinity.

The weir may be necessary to protect us next winter against the storm events that push water upstream to prevent them from pushing more salty water up to the Tailem Bend offtake. We are considering that as well in the mix of things we have to consider in maintaining potable water supplies to our communities.

Mr PEDERICK: In light of that answer, I take it that free flow of water as it is now in the system adds a third complication to the modelling. I believed that under the modelling the minus1.5 trigger for the weir was roughly equivalent to the salinity trigger.

The Hon. K.A. MAYWALD: Roughly, yes. This is an issue that may resolve itself with further work being undertaken at the moment. We are looking at a whole range of options to manage that also. We received information recently, and normally in that event we would see the flow of the salty water back up into the river and then it would disperse rapidly, but we saw one event back in April where it did not disperse as quickly. We are now undertaking a significant amount of work through the Murray-Darling Basin Authority, which is currently upgrading its modelling, and that will give us more certainty about what we may expect. All of that will be fed into the mix of things we have to consider when making decisions on how we secure fit for purpose water.

Mr PEDERICK: On the same budget line, will you be purchasing more water for the environmental health of Lakes Alexandrina and Albert, and when will it be delivered?

The Hon. K.A. MAYWALD: Once again, that depends on rain.

Mr PEDERICK: I appreciate that, minister, but, obviously, there would be temporary water on the market, but do you rule out purchasing environmental flows for Lake Alexandrina?

The Hon. K.A. MAYWALD: No; we do not rule that out. As I said, it all depends on rain and whether there is a market. The issue that we have at the moment is that New South Wales has suspended temporary trade out of the Murrumbidgee, which is where we purchase most of our water, because it does not have sufficient water in its system for the inter-valley transfers necessary at this stage of the season.

We need to determine whether there will be a market and whether the rain that falls in the catchment will enable a robust market to cover our critical human needs as well as other needs of the system, such as critical human needs for the following year; and we will be working that into the mix. The environment is at the forefront of our minds, but our first and most important task is to deliver water for critical human needs. I am sure that you would agree that that would be the case and, if you were in government, you would be doing the same.

Mr PEDERICK: I refer to Budget Paper 4, Volume 3, page 11.53: Performance Commentary. Did Murray-Darling Basin jurisdictions achieve their collective target of 500 gigalitres for environmental water recovery by yesterday, 30 June 2009?

The Hon. K.A. MAYWALD: South Australia has certainly recovered its 35 gigalitres. We were very successful in achieving that through the purchase of water and the transfer of water that was held in government ownership. Much of that water was from our rehabilitation of irrigation systems in past decades. We are very pleased to say that South Australia has been able to achieve its target.

Other projects in New South Wales and Victoria will achieve water targets, but not all of them will be fully completed to deliver water, as a consequence of the time frames necessary to construct the infrastructure to deliver water savings. I understand that all states have met their targets in identifying and registering the projects that will deliver the water, but not all of those projects are up and running at this stage. We expect that the projects will be up and running by the end of this calendar year, rather than 1 July. We are disappointed, of course, that they have been unable to deliver by the targeted date; however, we are very pleased that we have achieved the projects necessary to deliver the water and that the work is ongoing and will be concluded hopefully by the end of this calendar year.

South Australia took a very strong position on the Living Murray initially in that it was incredibly important that the Living Murray included the purchase of water from willing sellers. I must say that was not largely supported by other jurisdictions, and, in particular, it was not very well supported by local members in Murray-Darling Basin jurisdictions upstream. I recall that the federal government at the time was also not supportive of the purchase of water, but it was supportive of infrastructure projects being the first call on funds for the Living Murray to deliver water savings. It was only in the past two years that the federal government embraced the notion of the purchase of water in the marketplace, and that was when Malcolm Turnbull released his national plan.

Water purchase out of the marketplace, which is the most effective way of delivering water for projects such as the Living Murray, was enabled only three years into the project in a number of jurisdictions. Certainly, the former commonwealth government was not supportive of projects that were not infrastructure-driven. New South Wales did follow our lead, and it went into the market and started purchasing water. It, too, has secured much of its water savings through the purchase of water, which is a good thing.

However, I reiterate: it was not until only very recently that the federal government embraced water purchase for any of these projects to get water back into the marketplace. I recall that the federal member for Barker, who is the federal member for most of the River Murray in South Australia, was part of a rural standing committee of the federal government that put out a report at the time that the Living Murray was being established. He said that we did not need more water but that we needed more science; and that was not so long ago.

The purchase of water has been critical to getting these projects up and running and critical to getting water back into the marketplace. With the Living Murray, 35 gigalitres from South Australia has been achieved mostly through the purchase of water.

Mr PEDERICK: I refer to Budget Paper 4, Volume 3, page 11.54, and to the performance commentary, paragraph 5, which states:

Due to low water levels in the river, there were a number of riverbank slumping incidents. Responses have focused on minimising risk to public safety, including navigational hazards.

Will the government reimburse or compensate local councils, irrigation trusts and private individuals who have had to spend substantial sums of money on slumping prevention and repair?

The Hon. K.A. MAYWALD: The answer to that question is no. The state government is not responsible for the low flows coming into South Australia; it is not responsible for the lack of rainfall in the system; and it is also not responsible for the drought. However, it is doing its best to manage the consequences of those circumstances.

The Department of Water, Land and Biodiversity Conservation has received approximately 35 reports in relation to riverbank slumping, some of which involve extensive cracking and with a high likelihood of future slumping. Approximately 1,000 metres of riverbank has slumped into the river, some of that being in the care and control of councils, some of it being state government infrastructure, some of it being private infrastructure, some of it being marinas, some of it being banks where irrigation structures have been in place.

We are working with communities to manage the risk on properties associated with the prospect of riverbank slumping in their areas. We are working very closely with councils on matters of public safety. High risk locations have been identified, and local communities and key stakeholders have been consulted. We have established a 24-hour telephone hotline for public reporting. Fallen trees in the river have been secured or removed and all navigation hazards have been marked appropriately. Geotechnical and river experts have been engaged to assess the incidents and to establish appropriate methodology to manage them.

We have placed public notices in relevant newspapers, and property owners have been contacted individually to advise them of incidents and risks. Legal advice has been received from the Crown Solicitor's Office in relation to the legal obligations of the Crown. Of course, we are responsible to ensure that we minimise the risks where we have a responsibility for crown land. An amount of $500,000 has been allocated from the Save the Murray Fund to undertake activities to support the works that we are undertaking in partnership with the community.

Next year we will continue the close monitoring of high risk areas and will liaise with key stakeholders, including local councils and ETSA. A focused geotechnical assessment of the riverbank by a panel of experts will be available early in the new financial year. An establishment of methodology to mitigate the risk to public safety and property damage, in the case of an increase in riverbank slumping incidents, is also being established. This government will meet all of our legal obligations in relation to riverbank slumping.

Mr PEDERICK: In light of that answer, does the state government propose to approach the federal government for assistance for people along the River Murray who are suffering from slumping to assist them with these costs?

The Hon. K.A. MAYWALD: I understand that some councils have written to the Murray-Darling Basin Authority to seek support for the work that they need to undertake. The Murray-Darling Basin Authority has responded and said that it has a small contingency for emergencies. There is only about $5 million in its budget for emergency contingencies, so it does not have a lot of leeway there. However, it has agreed to assist with technical support where it is practical to do so.

Mr PEDERICK: I refer to Budget Paper 4, Volume 3, page 11.29, the performance commentary and paragraph 1 referring to the Murray Futures program. How much has so far been spent of the Murray Futures funds allocated by the commonwealth government to secure the future of the River Murray?

The Hon. K.A. MAYWALD: There is $610 million, of which we have responsibility for $530 million. The federal government is managing the $80 million that is allocated to water purchase. We have spent $675,000 on the Riverine Recovery Project; $57.29 million on the irrigation pipeline project; $27.8 million on the Lower Lakes potable pipeline; $3 million, to date, on the Lower Lakes and Coorong recovery; and $370,000, to date, on industry renewal.

Mr PEDERICK: What other projects are proposed along the river channel in South Australia, on top of those you have just listed?

The Hon. K.A. MAYWALD: They are the Murray Futures project and, within each of those projects, such as the Riverine Recovery, there is a number of different projects that will be supported. The Riverine project aims to relocate infrastructure on the flood plain that inhibits our capacity to manage the river system in an environmentally friendly way—that is, pumps on back waters mean we must maintain river levels at certain heights, which means that we have permanently inundated water bodies on the flood plain, which means that we have high evaporation and unhealthy flood plains. What we are looking to do with the Riverine project is prioritise the actions necessary to remove pumps where we can improve the environment on the flood plain by introducing wetting and drying cycles. So there will be a number of Riverine Recovery projects that will be invested in as part of that project.

It is an extremely good project given that, already, in recent years we have had about 27 of these flood plain management projects developed and implemented, and they involve a management plan on the flood plains and structures to introduce wetting and drying, and the results are absolutely fantastic.

In regard to the irrigation pipeline, of course, the member will be aware that that may include subsidies for the pipelines to the Hindmarsh Island community and Point Sturt. However, that depends on contingencies not having to be expended in the irrigation pipeline. Work on the Lower Lakes potable pipeline, of course, is completed.

In regard to the Lower Lakes and Coorong recovery project, $3 million has been allocated towards a number of investigations that are being undertaken into the long-term planning for recovery and long-term management of the Lower Lakes and the Coorong; and, as you are aware, a consultation process is under way at the moment with a draft plan to be released in July or August, and that will go out for further consultation. That involves $200 million over 10 years to be invested in different projects to manage the Lower Lakes.

Of course, the Goolwa level management project is a combination of funding from the Murray-Darling authority, which is 50 per cent, and we have sought funding from the federal government out of the $200 million for the Lower Lakes and Coorong recovery project. It has supported in principle the remaining component of that project—up to 90 per cent of the remaining funds—and we are looking forward to working out the finer detail on that with them. The Lower Lakes and Coorong recovery project will have a whole range of different components to it.

We are still working through the detail of industry renewal with the federal government as to what it will allow us to spend that money on and, as we negotiate through to a conclusion on that, we will make that information available to the irrigation community.

Mr PEDERICK: I refer to Budget Paper 4, Volume 3, page 11.29: Performance Commentary. In paragraph 2, it refers to the Directions for a Healthy Future, and the minister has just mentioned the work being carried out at Goolwa and Clayton. I am concerned about community input being recognised by the government and also about whether the information flow is coming from the government as it should. Given that similar community consultation meetings were held to discuss the installation of regulators in the Goolwa-Clayton part of the river and given that the Taylor report commissioned by the government, which was highly relevant to the subject, was completed in December 2008 but was not made available to the community until after those meetings in January, what assurance can the minister give me that all available studies and information will be fully canvassed and presented to the public for consideration and comment before the presentation of the final report?

The Hon. K.A. MAYWALD: We will certainly give an undertaking to conduct a thorough, open and transparent consultation with the community on all projects, as we have endeavoured to do in the past. This government certainly has no intention of doing anything by stealth. I guess there are a number of people out there who would like to be conspiracy theorists but, in all the things we are doing around the Lower Lakes, we are doing our best to do our best for the communities around the Lower Lakes, and this government has no intention of doing otherwise.

Mr PEDERICK: In light of your answer regarding community consultation, why was a well prepared and presented, scientifically-based submission by community members Mike South and Neil Shillabeer on the subject of the management of acidification risk in Finniss River and Currency Creek, which was presented to the department in February 2009, not even acknowledged by the department?

The Hon. K.A. MAYWALD: I understand that the submission you are talking about is a public circulation document. I do not believe it warranted a response. It was a newsletter that was sent out to the community, basically, expressing a number of opinions from different people who have been involved in the process. I certainly received a copy of it. I thought the community people who had input into that newsletter were genuine in their views and in their representation of how they saw things around the Lower Lakes. It was a community information document.

Mr PEDERICK: The following are my omnibus questions:

1. Will the minister provide a detailed breakdown of the baseline data that was provided to the Shared Services Reform Office by each department or agency reporting to the minister, including the current total cost of the provision of payroll, finance, human resources, procurement, records management and information technology services in each department or agency reporting to the minister, as well as the full-time equivalent staffing numbers involved?

2. Will the minister provide a detailed breakdown of expenditure on consultants and contractors in 2008-09 for all departments and agencies reporting to the minister, listing the name of the consultant, the contractor or service supplier, the cost, the work undertaken and the method of appointment?

3. For each department or agency reporting to the minister, how many surplus employees will there be at 30 June 2009, and for each surplus employee what is the title or classification of the employee and the total employment cost (TEC) of the employee?

4. In financial year 2008-09 for all departments and agencies reporting to the minister what underspending on projects and programs was not approved by cabinet for carryover expenditure in 2009-10; and how much was approved by cabinet?

5. (i) What was the total number of employees with a total employment cost of $100,000 or more per employee, and also as a sub-category the total number of employees with a total employment cost of $200,000 or more per employee, for all departments and agencies reporting to the minister as at 30 June 2009; and

(ii) Between 30 June 2008 and 30 June 2009, will the minister list the job title and total employment cost of each position (with a total estimated cost of $100,000 or more):

(a) which has been abolished; and

(b) which has been created?

6. For the year 2008-09, will the minister provide a breakdown of expenditure on all grants in excess of $10,000 administered by all departments and agencies reporting to the minister, listing the name of the grant recipient, the amount of the grant and the purpose of the grant, and whether the grant was subject to a grant agreement as required by Treasurer's Instruction No. 15?

7. For all capital works projects listed in Budget Paper 5 that are the responsibility of the minister, will the minister list the total amounts spent to date on each project?

The Hon. K.A. MAYWALD: I have a point of clarification on the question of consultants.

Mr PEDERICK: In question 2, 'a detailed breakdown of expenditure on consultants and contractors in 2008-09' relates only to sums over $10,000.

The ACTING CHAIR: There being no further questions for the minister, I declare the examination of the proposed payments completed. I lay before the committee a draft report.

The Hon. S.W. KEY: I move:

That the draft report be the report of the committee.

Motion carried.

Mr PEDERICK: I would just like to make a closing comment. I would like to thank all the departmental people and the staffers here today for all the work they have done on these portfolios: thank you.

The ACTING CHAIR: Thank you to everyone.

At 19:16 the committee concluded.