Department of State Development, $644,298,000

Administered Items for the Department of State Development, $7,665,000

Membership:

Mr van Holst Pellekaan substituted for Mr Marshall.

Mr Speirs substituted for Mr Griffiths.

Mr Knoll substituted for Mr Wingard.

Minister:

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

Departmental Advisers:

Mr R. Garrand, Chief Executive, Department of State Development.

Mr. M. Pegoli, Director, Invest in SA, Department of State Development.

Mr. R. Janssan, Group Executive Director, Strategic Services, Department of State Development.

Ms P. Chau, Director, Finance, Department of State Development.

Ms C. Jamieson, Acting Director, Office of the Economic Development Board.

The CHAIR: I declare the proposed payments open for examination and call on the minister to make a statement.

The Hon. A. KOUTSANTONIS: The government is committed to attracting the investment necessary to ensure we have the economic environment to provide ongoing business and employment opportunities in our safe and flourishing communities. However, as a state we are entering a pivotal stage of our economic history, with a transformational change across a range of sectors, the outcomes of significant global forces.

As a state we have seen the development of new sectors, but we must continue to refine our focus, opening up new pathways for investment and growing existing ones. We need to make smart choices to maintain a truly outward looking economy and to continue the work across government and industry to modernise and diversify.

Our place within a global economy is providing international partners with potential for investment in sectors such as minerals and energy, agribusiness, health business and, of course, defence. To benefit from these new opportunities we must have access to partners and productive capital. This government recognises that as a state we must attract a higher proportion of foreign direct investment if we are to maximise our opportunities for local business, local jobs and local wealth. That is why we have a renewed focus on developing investment pathways into South Australia. Job and investment creation are the key to a prosperous South Australia.

While we have done a lot to open up markets and grow opportunities, we can, we should and we must do more. That is why our efforts to boost trade, investment, industry engagement and job creation are now the responsibility of one department, one new agency, the Department of State Development. It will drive and leverage growth in our economy, administer our jobs plan and coordinate the government's engagement with small to medium-size businesses.

The merger of departments and the refocusing of their work will harness a full range of government levers to drive the transformation of our South Australian economy, bringing together the portfolios of employment, business and other economic indicators to provide stewardship of the next stage of the state's economic transformation. It will act as the government's front door to business, and is given the important task of delivering Our Jobs Plan. It is about creating strong links between government and the private sector so that barriers to job creation can be identified and removed.

It will also be given the key role of case management: case management of private sector major projects to ensure they are given the best opportunity to succeed in the model of the Olympic Dam Task Force. We will look to remove red tape, remove barriers to bureaucracy and assist in any way we can to help access finance. If it is red tape that is in the way, we will remove it. If it is bureaucratic delays, we will speed it up. If it is finance that is required, we will help access it.

Programs such as Invest in South Australia will continue to engage the capital markets to ensure participants are aware of the opportunities and skills available in South Australia. Invest in South Australia has worked to identify priorities to pursue these opportunities best aligned to our natural economic assets. This unit is providing evidence-based documentation to promote the state's projects to capital market participants, who in turn gain a better understanding of South Australia and can link suitable investors with projects in this state.

It also has ongoing engagement with the capital market investment community to promote South Australia as an investment destination and promotes the state and its opportunities to targeted financial institutions and intermediaries. Additionally, a new special cabinet committee, chaired by the Premier and consisting of key economic ministers, will be formed to prioritise the work of the EDB.

Across government, we need to ensure that we continue to foster investment, open markets and drive job growth. Cross-government coordination is essential in shaping a business environment that bodies such as Invest in South Australia and the EDB can confidently pitch to global investors as possessing the attributes that they need to operate productively. We support these investment attraction measures with the activity to foster this attractive environment. We are committed to minimising energy costs and promoting low carbon energy generation efforts.

We recognise the need to reduce the regulatory burden on business. We must boost the capabilities of our skilled workforce by attracting businesses and skilled migration. As a government, we are committed to working with industry and research institutions to provide the best available scientific and other information to boost investor confidence. We will plan for and invest in infrastructure—infrastructure to support investors and ensure that industry and community engagement is integral to the development of strategies to facilitate investment attraction.

We are committed to continuing the development of Adelaide and other centres in our regions as attractive focal points for investors, workers and families. The progress of these efforts, the growth of our economy, is now the responsibility for government within the new Department of State Development. The creation of this department heralds a new era for economic development in this state and I will be pleased to oversee its achievements. I look forward to the committee asking me and our office holders as many questions as they like.

The CHAIR: Does the member for Stuart, as lead speaker, have an opening statement?

Mr VAN HOLST PELLEKAAN: No, thank you, sir, other than just to say they are all exceptionally worthy goals.

The CHAIR: Proceed with questions.

Mr VAN HOLST PELLEKAAN: Budget Paper 6, Budget Measures Statement, page 104. How will the department achieve the savings over the forward estimates, starting at $4.8 million in 2014-15, as a result of the merged departments?

The Hon. A. KOUTSANTONIS: Point 1 is an FTE reduction. The initial savings made by the department thus far have been 32 FTEs, or $3.3 million, arising from the merger, and further savings will be achieved in addition to any budget savings required from the former agencies.

In the context of state development, the department is expected to be largely on budget and on track to meet its savings target of $34 million in 2013-14. The final position for 2013-14 will be available once the financial statements are signed off in September 2014. As a whole, the department will be required to deliver savings of $77 million. To save the committee's time, I am more than happy to give you a detailed answer on notice, or I can read this out if you like.

Mr VAN HOLST PELLEKAAN: On notice. Has anybody from within government—any of the departments that have been merged, or the new CEO, Dr Russell—raised any concerns with you with regard to the new proposed structure?

The Hon. A. KOUTSANTONIS: Dr Russell has not raised any concerns that I am aware of. Obviously, whenever you merge a department, there are always going to be HR issues with staff who are made redundant or are being asked to look elsewhere.

At a leadership level, I think there are some staff that probably do not like change—no-one likes change—but I think, overwhelmingly, the public sector in this state is so professional that they are more than willing to accept change and will all put their shoulders to the wheel to get the best outcome for the people of this state.

Mr VAN HOLST PELLEKAAN: How will Dr Russell report to six different ministers?

The Hon. A. KOUTSANTONIS: The way any chief executive reports to different ministers. It is an easy structure. For example, I suspect that most of his reporting to me will be done as needed. I will have my minerals and energy group reporting to me as required. I meet with them quite regularly. That will be something for Mr Russell to articulate in his management strategy, but I do not see that as being a major inhibitor to our ability to run the department. I have just been informed by Mr Garrand that he reported to five ministers in Canberra.

Mr VAN HOLST PELLEKAAN: So it will be his management style that determines the interaction between those ministers, will it?

The Hon. A. KOUTSANTONIS: No. The ministers will decide how he interacts with us. I do not see it as being an issue. It is just a management strategy. It will be easily worked out. I do not see it as being any major contributor to any inefficiencies.

Mr VAN HOLST PELLEKAAN: When there are competing priorities among those ministers, as there are, to be working hard for the people in the areas of responsibility they represent, who will actually be charged with determining the final direction? Will that be your call?

The Hon. A. KOUTSANTONIS: Hopefully Treasury in the final analysis. If not Treasury, we are a very collegiate government and we have the cabinet process to sort all those differences out. The Westminster system is designed to be an adversarial system, an adversarial system in the parliament and a system of fearless combat within the cabinet; that is the whole idea.

Mr VAN HOLST PELLEKAAN: Is the Minister for Defence Industries and Investment and Trade fully supportive of this move now?

The Hon. A. KOUTSANTONIS: You would have to ask him, but it is a cabinet decision and he supports all cabinet decisions.

Mr VAN HOLST PELLEKAAN: He previously called this move towards a state development department 'chaos and confusion and has all the hallmarks of a bureaucratic mess'. Those are his public statements, not private statements.

The Hon. A. KOUTSANTONIS: Yes; and your leader's public statements before the election included telling everybody to go out and vote Labor—so what?

Mr VAN HOLST PELLEKAAN: Has he changed his mind or—

The Hon. A. KOUTSANTONIS: Has your leader changed his mind about everyone going out and voting Labor?

Mr VAN HOLST PELLEKAAN: Has he changed his mind, or is that something you have worked through together? I deserve to know how this interaction works between the ministers.

The CHAIR: Member for Stuart, the Treasurer is not responsible for the Minister for Trade, nor can he comment on cabinet matters, so I think we move on.

The Hon. A. KOUTSANTONIS: I think everyone has moved on but you.

Mr VAN HOLST PELLEKAAN: This is not a cabinet issue.

The CHAIR: Which budget line are you referring to?

The Hon. A. KOUTSANTONIS: It is his estimates. If you want to ask about what Marty thinks, go ahead. It is symbolic of the malaise you are in as an opposition that you are focused on your former leader who has left your ranks and joined the government. If that is what you want to focus on rather than the future, go ahead.

Mr VAN HOLST PELLEKAAN: I am just asking how the new department will work.

The Hon. A. KOUTSANTONIS: No, you are asking me about what Mr Hamilton-Smith thinks.

Mr VAN HOLST PELLEKAAN: There is an example of at least one minister who has expressed concern. You told me there was no concern, so that is why I am asking.

The Hon. A. KOUTSANTONIS: You would have to ask Mr Hamilton-Smith. The thing about cabinet deliberations is that, if you are ever lucky enough to form government and you are seated n the cabinet, you will realise very quickly that the utterings you have made in opposition do not necessarily fit in smoothly with the utterings you will be making in government. Governments and oppositions are littered with ministers and shadow ministers who have said things while shadow ministers which they have regretted while being ministers. So what?

Mr VAN HOLST PELLEKAAN: So he regrets it?

The Hon. A. KOUTSANTONIS: I do not know; you will have to ask him.

Mr VAN HOLST PELLEKAAN: Okay. Referring to the same page and same item, how is this rearrangement going to improve upon the machinery of government changes that Premier Weatherill put in place shortly after becoming Premier?

The Hon. A. KOUTSANTONIS: From 2012 or from 2014?

Mr VAN HOLST PELLEKAAN: From 2012.

The Hon. A. KOUTSANTONIS: Government always refines itself. The thing about progress is that you are constantly moving. There is always constant forward motion. What we do not want to do is be stuck in a time warp where this is how we did it in 2002 or this is how we did it in 2010. We always want to look back, create some creative destruction, move around trying to make sure that the government and the departments are as efficient as possible. I think it is fair to say that the cabinet and the government think the machinery of government changes made after the election and subsequently, with the creation of the Department of State Development, are in the best interests of the people of this state. We stand by them and we will be judged accordingly.

Mr VAN HOLST PELLEKAAN: Has the government filled all the executive positions within the new department?

The Hon. A. KOUTSANTONIS: I understand that we have filled the majority of the positions but we are advertising some other positions and there are still some more to be filled when the new chief executive comes online on 4 August.

Mr VAN HOLST PELLEKAAN: Am I right in assuming that there will be a reduction in the total number of senior executives in this transition?

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

Mr VAN HOLST PELLEKAAN: What are the terms of the contract for Dr Russell including salary and length of contract?

The Hon. A. KOUTSANTONIS: I am advised he is on a five-year contract and a package of $450,000 per year.

Mr VAN HOLST PELLEKAAN: What was the total expenditure for consultants for the Department of State Development in 2013-14?

The Hon. A. KOUTSANTONIS: In 2013-14?

Mr VAN HOLST PELLEKAAN: Yes, and while you have it there, the budget for 2014-15.

The Hon. A. KOUTSANTONIS: And the budget?

Mr VAN HOLST PELLEKAAN: Yes.

The Hon. A. KOUTSANTONIS: DSD's budget for consultancies expenditure for 2014-15 is $2.9 million.

Mr VAN HOLST PELLEKAAN: And actual spent in 2013-14?

The Hon. A. KOUTSANTONIS: We will have the final figures in September but the prelim consultancy expenditure is $5.9 million.

Mr VAN HOLST PELLEKAAN: Budget Paper 4, Agency Statement 4, page 90. Can the minister confirm the amount the Department of State Development paid to Innovation Performance Australia Pty Ltd for a specialist adviser contracted from 1 April 2014 to 30 June 2014?

The Hon. A. KOUTSANTONIS: What is the name of the consultant?

Mr VAN HOLST PELLEKAAN: It is Innovation Performance Australia Pty Ltd.

The Hon. A. KOUTSANTONIS: The advice I have is that Innovation Performance Australia received a consultancy of $206,000.

Mr VAN HOLST PELLEKAAN: Is that for 1 April to end of June period?

The Hon. A. KOUTSANTONIS: As of 2013-14, I am advised.

Mr VAN HOLST PELLEKAAN: So it is the total for 2013-14?

The Hon. A. KOUTSANTONIS: That is what I am advised but if it is not correct I will get you the appropriate answer.

Mr VAN HOLST PELLEKAAN: Thank you. What was the primary service that that company provided?

The Hon. A. KOUTSANTONIS: It is for services provided by Göran Roos, and it was advice in relation to Holden and the automotive industry, but I will get you some more detail on it if you like.

Mr VAN HOLST PELLEKAAN: You might like to take this on notice too if it suits. Please explain how this specialist adviser, this company, was sourced and how it was determined to use this contractor?

The Hon. A. KOUTSANTONIS: Are you asking if it went out to tender or not?

Mr VAN HOLST PELLEKAAN: Yes.

The Hon. A. KOUTSANTONIS: I do not know whether it went out to tender or not but given the size of it, it may not have. I will get back and check for you but I would not be surprised if it did not go out to tender.

Mr VAN HOLST PELLEKAAN: And take the question on notice?

The Hon. A. KOUTSANTONIS: I will take the question on notice and check.

Mr VAN HOLST PELLEKAAN: Same book, page 90, was a business case prepared for the $5.5 million investment for the Innovation and Collaboration Centre and, if so, what was the outcome?

The Hon. A. KOUTSANTONIS: There is no business case made, because it is not a profit-making centre. It operates as a not-for-profit.

Mr VAN HOLST PELLEKAAN: What outcomes did the government expect to receive from this investment?

The Hon. A. KOUTSANTONIS: It is proposed, on advice, that the state government will provide a $5.5 million grant to the University of South Australia to establish the Innovation and Collaboration Centre, which will give students and small businesses access to HP's global capabilities. HP also announced that they are expanding their presence in Adelaide by creating 430 high-end technology jobs over the next four years. In conjunction with HP, the University of South Australia will deliver an ICT honours program including work placements with HP to further support workforce development and expansion.

Under the partnership, the state government will commit $150,000 a year for a student entrepreneur initiative that will support innovative students to pursue commercialisation of new ideas in the ICT sector in partnership with HP and other companies. The state government will support training to help workers move into the ICT sector, including workers displaced from declining industries who are looking to reskill. It is a good deal overall.

Mr VAN HOLST PELLEKAAN: Will the Economic Development Board stay in place or be abolished as part of the Premier's announcement with regard to boards and committees going?

The Hon. A. KOUTSANTONIS: All boards and committees must make their case whether they will stay or go. I am not going to predetermine any outcome. I do not think the EDB would be one of those boards, but it depends on the EDB. They may resolve that they think they need to be dissolved. I do not think they would, though.

Mr VAN HOLST PELLEKAAN: But they are being treated the same as all of the others, and they have to make their case?

The Hon. A. KOUTSANTONIS: That is my understanding, yes; of course, all boards. We are serious about this. I notice with interest that the opposition announced a repeal day in the parliament. People will say, 'What good does a repeal day do if legislation is redundant?' The same can be said about boards and committees: why have them if they are redundant? Why not, every now and then, do a piece of work to have a look at whether or not these boards and committees actually do serve a purpose and actually ask the committees? I think a majority of them will actually have a very good introspective look at themselves and say, 'Do we need to be operating? Are we creating unnecessary red tape?' Or are they providing an essential service that would cost us more money if we remove them? I actually think it is a very good exercise to put on government every now and then. I am fully supportive of it and we want to treat all committees the same.

Mr VAN HOLST PELLEKAAN: And will it be your decision, minister, whether that board stays?

The Hon. A. KOUTSANTONIS: It will be the cabinet's decision, was my advice.

Mr VAN HOLST PELLEKAAN: I was under the impression that each minister had the authority to determine the future of the boards.

The Hon. A. KOUTSANTONIS: You make recommendations to the cabinet and the cabinet decides collegiately whether we keep them or they go. For example, it is not unusual for a minister to have their cabinet recommendation overruled by the cabinet. A minister may recommend X and the cabinet says, 'No, no—please do Y.' Ministerial recommendations do not always win the day, unfortunately—or fortunately, depending on your perspective.

Mr VAN HOLST PELLEKAAN: Given that value for money is one of the key criteria for whether or not a board stays, is decreasing the cost of the board one of the considerations? Rather than saying should the board stay or go exactly as it is, is changing the board or changing its cost base something that could be considered as well in this process?

The Hon. A. KOUTSANTONIS: I think it is fair to say that the Economic Development Board is a very prestigious government board and it has been designed so deliberately. It has been designed to give board members access to all members of the executive, to all aspects of government, and we pay them a fee that is not really commensurate with the work they do for us. Let's face it: the people who are on this board are high-worth individuals or they are leading experts in their field and I think we are lucky to have them, personally. They do very good work for our state.

When it comes to cost, the EDB is not one of the boards that screams out and says 'We can do this more efficiently' because, if we were paying them what they were worth, I think people like Mr Raymond Spencer would be on a lot more than what we are paying him, as with Mr Chapman and other members of the board as well, so I am pretty convinced they do a very good job for us, but you may have a different view.

Mr VAN HOLST PELLEKAAN: No, I did not express that view, I was just asking how the system works. On the same page, how much funding has been provided to Brand South Australia in 2013-14?

The Hon. A. KOUTSANTONIS: So, $1.4 million in 2013-14 and $1.457 million in 2014-15. The combined DSD contribution to the 2014-15 payment is $390,000, which is comprised of $340,000 from the former DMITRE and $50,000 from the former DFEEST. This payment is a separate budget line from the OEDB budget.

Mr VAN HOLST PELLEKAAN: How many businesses signed up to Brand South Australia in 2013-14?

The Hon. A. KOUTSANTONIS: I will take that on notice and get back to you.

Mr VAN HOLST PELLEKAAN: Do you know how many the government expected to sign up?

The Hon. A. KOUTSANTONIS: I will take it on notice and get back to you and make it part of the answer.

Mr VAN HOLST PELLEKAAN: On the same page: what was the cost to government for the KPMG 'Competitive Alternatives' report in 2014?

The Hon. A. KOUTSANTONIS: We will take that on notice and get back to you, hopefully while the committee is still sitting.

Mr VAN HOLST PELLEKAAN: Thanks, minister, that would be good. Is it still the government's objective to be the least costly place to set up and do business in Australia?

The Hon. A. KOUTSANTONIS: Absolutely. We want to keep costs for business set-up low as much as we possibly can. We want to see our home-grown family businesses grow and thrive and prosper. We want to see small businesses do well, so we do all we can.

Mr VAN HOLST PELLEKAAN: Sure, because that report in 2012 had South Australia first and in 2014 it had South Australia second, so that remains a target to get back to first. What measures have been taken by the government to achieve this?

The Hon. A. KOUTSANTONIS: Obviously, as I announced earlier in my opening statement, we are doing all we can to remove regulatory burdens on small to medium-sized enterprises, our jobs plan has evolved to try to help people get access to capital, Invest in South Australia are doing their bit to go out and sell the story of South Australia and make sure that we can, and the deregulation unit within government is doing what it can to try to cut red tape. Government since year dot has been trying to cut red tape and will always be cutting red tape and the job will always be ahead of us because it is very easy to overregulate an industry so we will do all we can to try and remove those burdens.

Mr VAN HOLST PELLEKAAN: In the last dot point, advice to government, on that page, please detail what advice was provided to government about maximising the value of significant economic development opportunities for South Australia?

The Hon. A. KOUTSANTONIS: You want to know what the advice was from the KPMG report?

Mr VAN HOLST PELLEKAAN: No, the last dot point on that page says, 'Provided advice to government about maximising the value of significant economic development...' That is a highlight for last year.

The Hon. A. KOUTSANTONIS: This is from Brand South Australia?

Mr VAN HOLST PELLEKAAN: No, under economic development.

The Hon. A. KOUTSANTONIS: There is a whole series of dot points, so I am not sure—

Mr VAN HOLST PELLEKAAN: The last one.

The Hon. A. KOUTSANTONIS: What are you asking for?

Mr VAN HOLST PELLEKAAN: The highlight was 'provided advice', well, what was the advice?

The Hon. A. KOUTSANTONIS: If that is what you want. I was going to waive all the Dorothy Dixer questions, but basically it is about investment attraction advice, how to get access to markets, and Invest in South Australia.

Mr VAN HOLST PELLEKAAN: So it is nothing; it was the same stuff that you had in your opening statement—

The Hon. A. KOUTSANTONIS: No; it is important stuff. There are things like developing the new brand to promote South Australia, assisting the establishment of the Riverbank Precinct Authority, promoting population growth to support prosperity, promoting infrastructure investment, protecting housing affordability, championing the public sector renewal program, championing the establishment of SA Health and the medical research institute Wellbeing and Resilience Centre.

Professor Roos has led a number of key industry development projects in the last 12 months, including the cellulose fibre project in the South-East, the identification of opportunities available to South Australian manufacturers through the federal government's proposed LAND 400 project for the provision of combat vehicles in partnership with Defence SA, the establishment of the Manufacturing Leaders Network, a network forum for chief executives of South Australian manufacturers to engage with leading specialists from around the world on a range of issues related to manufacturing, industry development, industry policy and research, and a value chain mapping exercise for four local industry sectors in his capacity as a member of the EDB. There is a whole series of things that advice was on; we just tried to keep it short in the budget papers.

The CHAIR: Member for Stuart, we do need to move on to minerals and energy now.

Mr VAN HOLST PELLEKAAN: Can I just ask one last question?

The CHAIR: One last quick question.

Mr VAN HOLST PELLEKAAN: Minister, the response to the closure of Holden was not on that list, population growth was not, land tax and other tax reform was not on that list—

The Hon. A. KOUTSANTONIS: Yes, it was. I just set out the operation of it—

Mr VAN HOLST PELLEKAAN: Are they dealt with, and you just did not have time to read them out or—

The Hon. A. KOUTSANTONIS: Well in terms of Holden, we are dealing with a very, very difficult time. The components industry in this state spent about a billion dollars in South Australia on components, and when the commonwealth made its decision not to invest in the automotive industry in South Australia and Victoria it basically deindustrialised those industries. So we have had to come up with our own jobs plan. We would like the commonwealth to partner with us to a much larger extent rather than just make their withdrawal of funding to Holden, Toyota and Ford budget savings, but they have taken those budget savings, and what we have done is step up as much as we can to try to keep people working in South Australia.

We have redirected our $50 million of funding previously committed to the Holden next generation vehicle program, as part of its $60 million commitment under our jobs plan. It contains six key actions aimed at securing the future of the state's economy: it assists displaced automotive workers to secure new jobs in emerging sectors, supporting communities most affected to generate local activities and jobs; helping the transition of automotive supply businesses move into new markets and industry sectors; accelerating the transition of our manufacturing sector into advanced manufacturing through support for our clusters, such as funding for collaboration and innovation; bringing forward significant infrastructure projects to create jobs and lift productivity; the establishment of the Automotive Transformation Taskforce, chaired by Mr Greg Combet; and the Automotive Workers in Transition program.

There is a whole series of things I could provide you, without notice, but I tried to spare the committee needless reading out of government initiatives already announced. I thought you would much rather be asking other questions.

The CHAIR: On that note, minister, would you like to change advisers for minerals and energy?

Departmental Advisers:

Mr R. Garrand, Chief Executive, Department of State Development.

Mr P. Heithersay, Deputy Chief Executive, Resources and Energy, Department of State Development.

Mr. R. Janssan, Group Executive Director, Strategic Services, Department of State Development.

Dr T. Tyne, Executive Director, Mineral Resources, Department of State Development.

Mr V. Duffy, Executive Director, Energy Markets and Programs, Department of State Development.

Ms P. Chau, Director, Finance, Department of State Development.

The Hon. A. KOUTSANTONIS: Can I introduce Dr Paul Heithersay, PSM, Deputy Chief Executive of Resources and Energy. Behind me, to my right, is Dr Ted Tyne, Executive Director of Mineral Resources and Energy. Next to him is Mr Vince Duffy. We are in the presence of two great minds, Michael Malavazos and Nick Panagopoulos, who are in the department and do good work for us on petroleum and mineral royalties. I am happy to take your questions. I could go in-depth about our commitment to the fastest growing sectors of our economy and about the opposition’s punitive policy responses to oil and gas, but I will not do that. I will not bore the committee with their approach and I will just head straight into questions. We may have one question.

Membership:

Hon. I.F. Evans substituted for Mr Knoll.

Mr VAN HOLST PELLEKAAN: Thanks. You would not want to mislead the committee either, minister.

The Hon. A. KOUTSANTONIS: No, I would not. I would just speak the truth and it would shame you.

Mr VAN HOLST PELLEKAAN: That is actually not the case. I refer to Budget Paper 6, Budget Measures Statement, page 112. What proportion of the $32.2 million for a new state drill core library will come from the sale of current facilities?

The Hon. A. KOUTSANTONIS: First and foremost, I do not want to compromise any current tender processes, so I am reluctant to make it public. However, I am happy to speak to the member privately and inform the opposition of what we think the estimates are. It will be public ultimately, but we are in the middle of a process here and I do not want to prejudice that. However, if you push me on it I will have to tell you but, if we get exactly that, I will blame you.

Mr VAN HOLST PELLEKAAN: You might have got less without me, minister. How many properties are involved, please?

The Hon. A. KOUTSANTONIS: I am advised it is three properties.

Mr VAN HOLST PELLEKAAN: Three in total?

The Hon. A. KOUTSANTONIS: Unless there is something I have missed. I will go back and check, but I think it is just three.

Mr VAN HOLST PELLEKAAN: Just to make sure it is on the record, I will take you up on that offer to get those figures from you privately and to keep them private. When does the government expect to have all three properties sold?

The Hon. A. KOUTSANTONIS: Again, it depends on the market. Hopefully the market will move swiftly. I know that Thebarton is a great place to live, so I am sure that will go very well. Moonta is a beautiful place and so is Glenside.

Mr VAN HOLST PELLEKAAN: Given that you need to sell the properties to create the drill core reference library—

The Hon. A. KOUTSANTONIS: It has been to Public Works. It is funded. We will spend taxpayers' money on it and recover some of the moneys from the sale. So, it will not inhibit in any way the construction of the drill core library.

Mr VAN HOLST PELLEKAAN: So if selling the properties proves to be difficult for some reason, that will not inhibit the spending of the $32.2 million?

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

Mr VAN HOLST PELLEKAAN: So you do not actually need the money from the sale of the properties?

The Hon. A. KOUTSANTONIS: Yes. We have budgeted to get money back from them. No-one is going to build a drill core library and not try to get some money back from the assets we are consolidating. It is the prudent thing to do.

Mr VAN HOLST PELLEKAAN: You will do the drill core library on a separate timetable independent of the sale of the properties?

The Hon. A. KOUTSANTONIS: Yes. It has been to public works. It is a public process.

Mr VAN HOLST PELLEKAAN: So it does not matter how long or what difficulty comes up?

The Hon. A. KOUTSANTONIS: I cannot underestimate the importance of a drill core library to this state’s future prosperity. The Cooper Basin, the South-East, gas exploration, the opening up of Woomera today. The drill core library is critical and key to further exploration, finding and identifying targets for exploration. I consider one of the most important economic endeavours that we will undertake in the next four years is building this drill core library. We have the best one in Australia. I want to have the best one in the southern hemisphere.

Mr VAN HOLST PELLEKAAN: That would be good. If the properties are not sold, it will just be a hit to the budget, not to the project?

The Hon. A. KOUTSANTONIS: I am advised that we have been very conservative in our estimates for the proceeds of the sales of the properties. I agree with the Leader of the Opposition, the property market is bouncing back very nicely and I think we will probably get a good return.

Mr VAN HOLST PELLEKAAN: Okay, but I just want to be clear: whether you do—

The Hon. A. KOUTSANTONIS: I cannot be clearer than I have been with you: we are going to build a drill core library.

Mr VAN HOLST PELLEKAAN: And if you do not sell the properties?

The Hon. A. KOUTSANTONIS: The properties are for sale.

Mr VAN HOLST PELLEKAAN: And that will be an impact on the budget, not on the project?

The Hon. A. KOUTSANTONIS: We have budgeted conservatively—

Mr VAN HOLST PELLEKAAN: Just say yes.

The Hon. A. KOUTSANTONIS: Yes, okay, or how about I actually give you the facts rather than you just hoping it is what you say it is. What we are doing is we are building a drill core library. We have budgeted our costs, we have been to Public Works, the opposition has been briefed on it, they have seen the plans, works begin, tenders have gone out. What we have done now is we have properties on the market for sale. We have budgeted very conservatively what we think the return for that project will be to offset some of those costs and it does not inhibit the drill core library going ahead.

The Hon. I.F. EVANS: Following on the same line of questioning, is the government going to rezone the three sites that are up for sale so that the government reaps the full reward of the value, or is the government going to sell them at their current zoning so that the developer reaps the value?

The Hon. A. KOUTSANTONIS: I am advised that the estimates of the proceeds of the sales are based on the current zoning. So, we—

The Hon. I.F. EVANS: So, has the government sought advice? Has the government rezoned them to residential? You said Thebarton was a nice place to live. If they rezoned them to residential or to a higher value, has the government actually sought advice on that, and why wouldn't the government seek advice on that?

The Hon. A. KOUTSANTONIS: For a couple of reasons. When we sell the drill core library, the current one at Glenside, we want to maintain its use for mines and energy purposes. We think it is key that we maintain that precinct. Even though we may get a larger return to government by rezoning it residential, in terms of economic activity we would probably lose out in the long run.

The Hon. I.F. EVANS: The other two sites?

The Hon. A. KOUTSANTONIS: I am not sure about Moonta, but I can get back to you on that. In Thebarton it is currently an industrial zone, I think, and the idea of removing industrial land so close to the city and so close to the airport is counterintuitive to good practice to encourage business.

The Hon. I.F. EVANS: As long as you have taken advice on what will give the taxpayer the highest value, I guess.

The Hon. A. KOUTSANTONIS: Sometimes the highest value is not what we are after. What we are after is the highest return and that could be economic activity.

Mr VAN HOLST PELLEKAAN: Budget Overview, page 5—you do not need to turn to it, it is just about unconventional gas royalties—was there any analysis taken on what royalties were expected to be received from unconventional gas projects, and, if so, what was the expected income for each financial year of the forward estimates that you have forgone?

The Hon. A. KOUTSANTONIS: Two things: the government announced royalty deferrals for all unconventional gas wells, but we are being very conservative. The reason we are being conservative is because the rocks are not necessarily behaving the way they have behaved in other jurisdictions around the world for unconventional commercial flows, so we have not been budgeting for windfall royalties, we have been very, very conservative and that is the prudent thing to do. The last thing you want to do is start budgeting for massive returns on a type of practice that may not work.

So, what we have to do is create an investment climate, a regulatory climate and an environmental climate that is as conducive as possible to investment in those types of resources to give them the confidence they need to crack the code. What I am very concerned about is that any discussion of the question of the science around unconventional gas risks the ability of these companies to spend the vast resources they have to unlock the code. Policies like the one you took to the last state election, calling for an inquiry into unconventional gas practices, which is anti-investment and anti-mining, and given that you did not even announce a mining policy during the election campaign, I think the industry is relieved that it has four years of a welcoming government that is prepared to protect its investments and not create any sovereign risk the way the opposition will if they are ever elected, the way Premier Mike Baird is creating sovereign risk in New South Wales and the way Premier Napthine is creating sovereign risk in Victoria.

We will support unconventional gas. Our gas round table and our road map to unconventional gas, the work we have done there, is world's best practice to drive down costs and give regulatory certainty. I ask the opposition to abandon its election policies on unconventional gas and to join with the government to do all it can to encourage this industry.

Mr VAN HOLST PELLEKAAN: So the forgone royalties is not money that was budgeted anywhere in the budget? Can you tell me how these forgone royalties would fit with the future fund?

The Hon. A. KOUTSANTONIS: What forgone royalties?

Mr VAN HOLST PELLEKAAN: The five-year moratorium on charging?

The Hon. A. KOUTSANTONIS: Well, it is not forgone then, is it?

Mr VAN HOLST PELLEKAAN: Can you tell me, minister, how they would fit into the future fund which, if there is a surplus of course would start, and two years of royalties would go into that, and then 7 per cent after that. How does that fit with the future fund? In five years' time, assuming there is a surplus, what happens? Do they then pay the next two years into the future fund or do they start at 7 per cent?

The Hon. A. KOUTSANTONIS: I will tell you what my thinking is so you understand. You did so much damage during the election campaign to the confidence of the oil and gas sector with your pronouncements in the South-East that I had to restore confidence as quickly as possible in that industry. The act of vandalism by the Liberal Party in openly questioning the environmental—

Mr VAN HOLST PELLEKAAN: Minister, just answer the question.

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

Mr VAN HOLST PELLEKAAN: Well is it 7 per cent?

The Hon. A. KOUTSANTONIS: I know it hurts you because you are embarrassed by it, but the open vandalism by attacking companies like Beach Energy, great South Australian corporate citizens who employ local South Australians, and encouraging extreme fringe movements to come in, like Lock the Gate, and members of the Liberal Party actively campaigning and calling for action—I had to move very quickly to restore confidence in this industry. The way I did that was by instituting a royalty deferral for these companies to say to them, 'You are welcome in this state, despite what the most loyal opposition is saying about this industry.'

They are very relieved to see what we have done. Indeed, this Labor government has probably the best working relationship of the oil and gas sector of any government in the country, and we are an example to other governments and are praised regularly by other governments. So, if you are trying to make a political point about the future fund, I would first look to what damage you did during the election campaign when you threatened the one industry in this state that could dramatically change the way we recognise economic development in this state.

Mr VAN HOLST PELLEKAAN: Treasurer, I think you are displaying a great oversensitivity.

The Hon. A. KOUTSANTONIS: Do not believe me, believe APPEA, believe Beach Energy, believe Santos.

Mr VAN HOLST PELLEKAAN: I would just like to know how it works with the future fund.

The Hon. A. KOUTSANTONIS: I just explained to you.

Mr VAN HOLST PELLEKAAN: No, no, you did not. So, at the end of the five years do they then pay the next two years worth of royalties—does it start that way, or do they go straight to the 7 per cent? That was the question.

The Hon. A. KOUTSANTONIS: First and foremost, the legislation for the future fund will be decided as soon as we are into surplus. Also, this sector needs all the encouragement it can, so I am very keen to see through this five-year deferral, to see exactly how it operates. We may make decisions in subsequent budgets to increase it. We may make decisions that it is not probably the most appropriate way to work, but we have announced it now for it to be in place, and we will honour that. I would like to see how it is going to play out before I make any concrete decisions here. The first principle is: get behind and support the industry.

Mr VAN HOLST PELLEKAAN: Page 129, Budget Paper 4, Volume 4.

The Hon. A. KOUTSANTONIS: Yes, I would change the subject too, if I were you.

Mr VAN HOLST PELLEKAAN: Minister, clearly you are not going to answer the question.

The Hon. A. KOUTSANTONIS: I just did.

Mr VAN HOLST PELLEKAAN: I just want to know how it is going to work. You said that you are going to think about it and figure it out later. I am not sure I will get any more out of it than that. Mining royalties: does the government have any plans to repeal the 2011 increase in royalty rate if the mineral resource rent tax is repealed by the federal government?

The Hon. A. KOUTSANTONIS: Sorry, explain your question.

Mr VAN HOLST PELLEKAAN: It is quite likely that the mineral resource rent tax will be repealed. If that is the case, does your government have any intention to repeal the 2011 increase in royalties?

The Hon. A. KOUTSANTONIS: No, they are unrelated. No-one in South Australia pays the MRRT.

Mr VAN HOLST PELLEKAAN: Has the government investigated the potential benefits to the industry if those royalties were to be reduced?

The Hon. A. KOUTSANTONIS: We have the lowest competitive rates, I think, in the country, I am advised. Our new mine rate is world's best practice, 2 per cent. If you look at the rates that Western Australia and Queensland are charging for iron ore and coal, they are almost extortionate. This Labor government has the most competitive royalty regime in place in Australia, and the benefits to the industry of a royalty deferral for oil and gas, I think, are obvious, as witnessed by comments by Senex Energy, Beach Energy and Santos.

In terms of minerals, I think every independent observer points to South Australia as being in the top five jurisdictions in the world for the way we conduct ourselves with our tax regime on royalties. I am very proud of it. I do not think there is much more we can do.

Mr VAN HOLST PELLEKAAN: Budget Paper 6, page 109. This is about the revised royalty arrangements for extractives and private mines. What are the total estimated royalty payments for extractive minerals in 2013-14, and the expected payments for 2014-15?

The Hon. A. KOUTSANTONIS: In 2013-14 we received approximately $2 million in extractive royalties, I am advised. We factored in with the increase an additional $2.8 million on the basis of royalty increases for extractives.

Mr VAN HOLST PELLEKAAN: For 2014-15?

The Hon. A. KOUTSANTONIS: Yes.

Mr VAN HOLST PELLEKAAN: Given that the royalty rate for extractives and private mines has increased from 35¢ to 55¢ as of 1 July, do you believe that the 11 days is sufficient time for the affected producers to plan for that increase?

The Hon. A. KOUTSANTONIS: Yes.

Mr VAN HOLST PELLEKAAN: When consideration was given to increasing these royalties, were any concerns raised with the government about the short notice of the increase or the message this increase would send to investors in South Australia?

The Hon. A. KOUTSANTONIS: Increasing taxes is not sovereign risk. Sovereign risk is saying during an election campaign that you may ban or bring in a moratorium on an industry like oil and gas, which is what you did. What we have is now the third cheapest rate for extractives in the country. That is not sovereign risk. Sovereign risk is threatening an industry completely by launching inquiries or standing committees into their operations—operations that are longstanding practice.

Mr VAN HOLST PELLEKAAN: Minister, the question was not about sovereign risk. It was about whether any concerns were raised with you about that or whether you had any concerns about what message you were sending.

The Hon. A. KOUTSANTONIS: If you are asking me whether industries like paying more taxes, I think the answer would be no, they do not like paying more taxes.

Mr VAN HOLST PELLEKAAN: How about internally—from within government, not from industry?

The Hon. A. KOUTSANTONIS: The department's advice is they act in a fearless and honest manner. They give me advice whether they like something or do not. I did not get an overwhelming feeling that they were opposed to this, but they may have their own personal views—and they are entitled to them. It is a free country.

Mr VAN HOLST PELLEKAAN: How did you determine the 20¢, as opposed to 15¢ or 25¢?

The Hon. A. KOUTSANTONIS: I think we asked Treasury or the department to work together on what was an appropriate increase.

Mr VAN HOLST PELLEKAAN: It was their recommendation?

The Hon. A. KOUTSANTONIS: Ultimately, it is a government decision but, yes.

Mr VAN HOLST PELLEKAAN: Did the government undertake any analysis of the potential impact of royalty increase for extractive minerals on the cost to government contracts, given that the government is the largest contractor for this resource in South Australia?

The Hon. A. KOUTSANTONIS: I understand we have, and I am advised that the cost is minimal. I understand it is less than 0.1 per cent of our spend.

Mr VAN HOLST PELLEKAAN: Do you have the figures handy—or take it on notice, please—for the increase in costs to the RAH, the Torrens to Torrens and the Darlington projects?

The Hon. A. KOUTSANTONIS: RAH is a fixed price build so they will absorb it. Torrens to Torrens is out to tender now so I do not know what the cost would be and I do not know what the discount rates would be, so I am not sure I could give you an accurate answer.

Mr VAN HOLST PELLEKAAN: Would you undertake to try?

The Hon. A. KOUTSANTONIS: I am not sure I can. You are asking me to try to guess what a private provider would have bid for a project on the basis of a new royalty regime. I cannot do it.

Mr VAN HOLST PELLEKAAN: Did you consider the impact on local government?

The Hon. A. KOUTSANTONIS: No; I considered the impact on the state government. The state government had not increased these royalties since 2005. It is now 2014; it was due.

Mr VAN HOLST PELLEKAAN: Have you done any modelling on whether there will be any job losses associated with this increase in royalties?

The Hon. A. KOUTSANTONIS: No, I do not think we have done any modelling of its impact on employment levels within the extractive industry and I do not think it will have any impact on the extractive industry. What will have an impact on the extractive industry is if we implement Liberal Party policy and start believing that all infrastructure spending is a false economy. That would have a dramatic impact on the extractive industry, because the government would stop building roads and bridges and productive parts of the economy that you say are a false economy.

Mr VAN HOLST PELLEKAAN: It is estimated—and I am quite open; this is a very rough estimate that has been given to me—that 25 per cent of the business done by the extractive industry is actually with the state government as the customer, so the state government essentially purchases 25 per cent. Was that factored into the calculations, given that the royalty increase will be passed on from supplier to customer and then you get more but you pay more so at the net South Australians would be getting 15 cents?

The Hon. A. KOUTSANTONIS: Whenever we increase a royalty, or we increase costs, and government is involved in the same business, we also increase our costs. When water prices go up, we also use water. Any cost that government is involved in may be levied, but we do not take that into account as a reason not to do it, because we are increasing our own costs. What we need to have is efficient taxation that allows the government to spend on its priorities. This industry had not had an increase in its royalty base since 2005.

Mr VAN HOLST PELLEKAAN: So that was factored in, that essentially—

The Hon. A. KOUTSANTONIS: Yes, it would cost us more, but ultimately, as I said to you, it is less then 0.1 per cent.

Mr VAN HOLST PELLEKAAN: I refer to Budget Paper 6, page 109 again: definition of a private mine.

The Hon. A. KOUTSANTONIS: It is in the act, but I will get the act for you.

Mr VAN HOLST PELLEKAAN: That is alright. If it is in the act, I can get it.

The Hon. A. KOUTSANTONIS: I am pretty sure it is. They are not necessarily defined; they have basically evolved. Remember that we are trying to regulate a system without changing some existing practices, not to disadvantage mainly primary producers and other people who have their own extractants. The Mining Act came in in 1971. It came into effect on 3 July 1972 and all the rights of the minerals became invested in the Crown.

Prior to the commencement of the act, some freehold landowners held the rights to minerals on their property. Those were the days. For a three-year period after the commencement of the act, a person who was divested of ownership of the minerals on their property could apply under part 3, section 19 of the act for declaration of areas of private mine. Each private mine was proclaimed by the Governor. It had no expiry date. The Governor may also by proclamation vary or revoke a private mine in accordance with section 73N of the act. Some 316 private mines were proclaimed by the Governor. Of the proclaimed private mines, 74 have been revoked. A total of 243 private mines are currently listed as active in TMS.

The combined area of these private mines is over 19,000 hectares. Approximately 77 of the private mines are currently operating, that is, they are producing. Conversely, approximately 166 private mines are currently not being operated. Many private mines have never been operated according to DSD records. Private mines do not form part of the mining register and the proprietor of a private mine has few obligations under the act.

Part 11B of the act specifically deals with private mines. Private mines do not have an expiry date and they continue to exist until an application for revocation or variants under the Warden's Court. That would have changed now I imagine—rather than going to the Warden's Court they would go to the ERD court. Crown rent is not collected for private mines therefore landowners do not receive rent refunds where private mines are situated on their property. Private mines are exempt from all other parts of the act unless a part explicitly states that it applies to private mines. In accordance with the act, the proprietor of a private mine is required to submit six-monthly mining returns, pay royalties on extracted minerals and to conduct mining operations in accordance with an approved mine operation or MOP.

Private mine proprieties have no obligation under the act to advise PIRSA, DMITRE or State Development of change of address or change of ownership. In comparison to other mining tenements granted under the act, private mine files have very few records and the records that are available are usually very old. The general advice received is that private mines and land titles are separate and the sale of the land does not automatically include the sale of a private mine. Then there is a whole series of advice, and all these other actions that go with it, but I suppose that that pretty much defines what a private mine is. It is basically an evolution of us trying to impose a system that took away the mineral royalties from the landowner and invested them in the Crown.

Mr VAN HOLST PELLEKAAN: Minister, of the 243 that you said were active, how many of them will be affected by this increase in royalties?

The Hon. A. KOUTSANTONIS: There are 77 active mines, most of them produce extractives and are already subject to royalties, I am advised. There are a few, about five, that produce other things other than extractives which do not draw royalties. The intent of the change in the budget is to ensure that we can levy royalties on the Penrice mine if it is sold to an international or multinational company. They are the ones that would be most affected by the change because I find it inconceivable that we would allow a multinational to buy that mine, put it into production and have it royalty free unless predetermined by the government as an economic stimulus rather than some sort of ownership right transferred to a new company.

In 2013, Penrice requested an extension from me at the time to pay outstanding royalties in June 2012 and June 2013. The amount outstanding for these three periods is $385,000 and we have done what we can to try to stimulate them but, if they are sold, I expect to levy royalties on the new owner.

Mr VAN HOLST PELLEKAAN: Minister, is that $385,000 outstanding forgone or is that something that they will pay once they sell the mine?

The Hon. A. KOUTSANTONIS: No, I am advised that waiving unpaid royalties is not appropriate as a normal principle and nor should it be. My department has further advised that it would be appropriate to practise to provide an endorsed proposal to implement a repayment plan allowing Penrice or the administrators to repay the outstanding amounts commencing in July this year over a 24-month period.

As part of the proposed arrangement, Penrice committed to meet all future royalty obligations as and when they fell due. Since agreeing to the extension and repayment plan, Penrice has failed to make the December 2013 royalty payment of $110,000 and a monthly royalty payment of $23,500 for the month of January and February, including the moneys owed as part of the repayment plan and the royalties owed since December 2013. The current outstanding royalty liability for the state stands at over half a million dollars, at $541,842. The details of the unpaid royalties have been provided to the administrators.

Mr VAN HOLST PELLEKAAN: In terms of moving forward, if the mine changes hands, what are the annual expected royalties from the mine?

The Hon. A. KOUTSANTONIS: Whatever the new rate is.

Mr VAN HOLST PELLEKAAN: But do you have a total dollar figure that you expect to get out of that Penrice mine?

The Hon. A. KOUTSANTONIS: It depends what their production is.

Mr VAN HOLST PELLEKAAN: So, you do not have an estimate?

The Hon. A. KOUTSANTONIS: On the parts that are currently exempt from royalties, we estimate about $400,000 per annum.

Mr VAN HOLST PELLEKAAN: Representing the 20 per cent increase?

The Hon. A. KOUTSANTONIS: Yes. No? Hang on, I do not want to mislead you. To be clear, the distinction is that we receive an additional $400,000 on the parts of the mine that have not been rated for royalties thus far on the sale of the private mine. So, if they sell it, we will be able to levy royalties on parts of their production that thus far have been exempt from royalties, and that will deliver to the budget $400,000 per annum.

Mr VAN HOLST PELLEKAAN: Per year?

The Hon. A. KOUTSANTONIS: Yes.

Mr VAN HOLST PELLEKAAN: Is that likely to be an impediment to the sale?

The Hon. A. KOUTSANTONIS: No, I do not think that is the impediment to the sale.

Mr VAN HOLST PELLEKAAN: What would be the impediment to the sale?

The Hon. A. KOUTSANTONIS: You would have to speak to the people who want to buy it.

Mr VAN HOLST PELLEKAAN: You do not think an increase of $400,000 per year in the cost of operation would be an impediment?

The Hon. A. KOUTSANTONIS: I think every mining company that buys a mine knows that the cost of doing business is to pay royalties. You would be surprised how big and how small companies are that try to avoid their requirements to pay royalties.

Mr VAN HOLST PELLEKAAN: You do not think it will make the difference—

The Hon. A. KOUTSANTONIS: No.

Mr VAN HOLST PELLEKAAN: —on whether or not they can sell?

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

Mr VAN HOLST PELLEKAAN: In regard to Budget Paper 6, page 109, I refer to a document received on 7 March this year under FOI from DMITRE regarding state royalties, which states:

The SA government has no plans to further adjust royalty rates. The decision to increase royalties in 2011 was taken in the context of the high level of mineral commodity prices, the need to ensure that SA was receiving an adequate return from the commercial exploitation of their mineral resources, alignment with effective royalty rates in comparable jurisdictions and the need to ensure SA retains a competitive and stable environment for resource investment.

That is what came back to me under FOI. Is there currently a high commodity price for extractive minerals?

The Hon. A. KOUTSANTONIS: I think you are talking about mineral resources there, rather than extractives. Can you provide me a copy of the FOI so I can have a look at it?

Mr VAN HOLST PELLEKAAN: I would be happy to.

The Hon. A. KOUTSANTONIS: That was obviously 7 March. That was before the outcome of the election and before we started our budget deliberations.

Mr VAN HOLST PELLEKAAN: It was just shortly before the election.

The Hon. A. KOUTSANTONIS: I imagine we are talking about mineral resources, rather than extractives, I am advised.

Mr VAN HOLST PELLEKAAN: I will get that for you. Can you tell me please how does the increase in extractives compare with other states?

The Hon. A. KOUTSANTONIS: We are the third cheapest, I am advised.

Mr VAN HOLST PELLEKAAN: Third out of seven?

The Hon. A. KOUTSANTONIS: Third out of eight.

Mr VAN HOLST PELLEKAAN: Middle of the pack.

The Hon. A. KOUTSANTONIS: Yes. The published royalty rate in South Australia pre budget was 35¢. The new rate is now 55¢; in Western Australia, it is 62¢; in Victoria, it is 87¢; in New South Wales, it is variable up to 70¢; Queensland is 50¢; Tasmania is 66¢. We are in a good place. In all other states, on top of the royalties, rehabilitation bonds, sureties and bank guarantees are required, and that is a cost, so in terms of a competitive place for extractives, we are very well placed.

Mr VAN HOLST PELLEKAAN: Page 100, this time of Budget Paper 4, Agency Statement 4, and I am just turning to RAES, the remote areas electricity scheme.

The Hon. A. KOUTSANTONIS: Which one?

Mr VAN HOLST PELLEKAAN: To RAES, remote areas electricity scheme, and specifically that last dot point on page 100 that talks about indexation and tariff increases between financial years relating to the sale of electricity for the use of RAES: half a million dollars. Can you tell me what that tariff is? What tariff is increasing there?

The Hon. A. KOUTSANTONIS: I am going to take that on notice so we do not give you a confused answer, but it is fair to say that you are comparing an estimate with an actual result. I will get you a detailed written answer which explains it much more concisely than the way I possibly could.

Mr VAN HOLST PELLEKAAN: So, likely to be an estimate versus actual, not a new tariff or an increase?

The Hon. A. KOUTSANTONIS: I do not want to mislead you in any way, so let me just get you the written answer.

Mr VAN HOLST PELLEKAAN: Given that the government promised $1.5 million in each financial year over the forward estimates—wherever this is coming from, this extra half a million dollars per year—does that mean that the RAES contribution essentially, the money to help electricity prices go down in the outback, is only going to be $1 million per year instead of $1.5 million?

The Hon. A. KOUTSANTONIS: No, it is $1.5 million, I am advised. We are going to look after our regional communities, otherwise the member for Giles will be on my doorstep.

Mr VAN HOLST PELLEKAAN: And Stuart.

The Hon. A. KOUTSANTONIS: I am not really worried about that one. You do not have a vote in my caucus. Not yet though, but you are more than welcome to join.

Mr VAN HOLST PELLEKAAN: I will tell the people of Stuart that you care about Giles but not them.

The Hon. A. KOUTSANTONIS: No, they matter to me.

Mr VAN HOLST PELLEKAAN: Budget Paper 4, Agency Statement 4, page 95, exploration expenditure, performance indicators. Given the explanation for not meeting our Strategic Plan target for exploration expenditure in 2013-14 was due to ongoing challenging global financial conditions impacting on exploration companies, how does the downturn in South Australia compare with other Australian jurisdictions and the national average?

The Hon. A. KOUTSANTONIS: I am advised that the decline in South Australian mineral exploration expenditure follows global and national trends of decreasing expenditure. Across Australia, mineral exploration expenditure fell from $547.4 million or 25 per cent to $408 million in the March quarter. The most significant decline was from Western Australia, which decreased expenditure by just over $100 million. All other states, except New South Wales, contributed to an additional $40 million national quarterly decline in exploration expenditure. Commentators point to ongoing challenges for mineral explorers, particularly in regard to lack of access to global risk capital for exploration on a broad scale, and, of course, falling commodity prices.

A key lead indicator for mineral exploration activities is the number of work programs, including matters approved by DSD or the old DMITRE. These have declined to date 2014, and this activity reduction reflects the intention of companies to better manage cash reserves by delaying some exploration programs until the global economic environment for resource investment improves.

However, when you combine minerals and petroleum exploration figures for the 12 months to March it was $472.9 million for South Australia, $131.9 million from minerals and $341.0 million for petroleum—down from $646.1 million for the 12 months. The positive note for us is that petroleum expenditure for the 12 months to March 2014 continued at a high level of $341 million. That reflects a positive global outlook provided by our unconventional gas discoveries.

While yes, mineral exploration is down, it is down across the country. If you want to compare jurisdiction with jurisdiction, Western Australia had the biggest fall. We are doing what we can to try to open that up, and I congratulate the commonwealth government today on finally passing legislation first announced by minister Ferguson, premier Rann and prime minister Rudd on opening up Woomera. That would be mainly mineral exploration.

PACE goes from strength to strength, and I think we are doing a fair bit to try to encourage the core library, although I would like to see it turn up as well. However, we are lucky because we have the petroleum sector propping up exploration, which is why am very keen for you to change your policy.

Mr VAN HOLST PELLEKAAN: Minister, I am pleased that petroleum exploration is going well, too. Just focusing on mineral exploration, though, in the three most recent quarters—September 2013, December 2013 and March 2014; of course, I have not got June yet—from the figures that you mentioned last year, mineral exploration has gone down nearly 61 per cent compared to last year. It has certainly dropped significantly more than any of the other states. You mentioned Western Australia before; in that same period Western Australia saw a 48 per cent decrease. Do you have any idea why it would be declining more in South Australia in the last nine months than in any of those other states?

The Hon. A. KOUTSANTONIS: I am advised that the figure is actually $24.8 million in decline; compare that with Western Australia, which was down $100 million for one quarter, I think (without misleading you). While percentages may look worse for us, the key for drilling is actual holes and dollars spent. It is not so much about the percentages: it is about the dollars and the ground and the holes that you are digging. Yes, it is not as good as we would like it to be—and I am not trying to hide it—but what we can do, as the government, is offer the most attractive regulatory environment possible to encourage people in a scarce capital market to take risks here rather than in other jurisdictions.

What reduces risk profile dramatically, in terms of where you are going to invest, is, first and foremost, what you spend on your own program for trying to find out where the minerals are, what your drill core library is like, what your regulations are like, what access to government is like, what sovereign risk is like, what the royalty rates are, what the government's future plans are for mining. On all those measures we do very well. I have to say that for a party that supports the right to farm legislation and 'lock the gate', it is a bit rich you lecturing us on mineral exploration.

Mr VAN HOLST PELLEKAAN: Minister, I am not lecturing you on anything; I am just trying to understand these numbers here.

The Hon. A. KOUTSANTONIS: Perhaps they are frightened of you winning an election.

Mr VAN HOLST PELLEKAAN: You talked about the fact that it is not percentages that count, it is dollars that count. In the last nine months, $919 million has been spent on mineral exploration in WA and $90 million in South Australia. However, I do come back to the percentages because that is a 60 percent drop and I am trying to understand what is happening differently here. They have all dropped, by the way.

The Hon. A. KOUTSANTONIS: They have all dropped, I know.

Mr VAN HOLST PELLEKAAN: Why has it dropped so much more here than in other states and what do you expect to change if that trend is to be reversed?

The Hon. A. KOUTSANTONIS: Our investment in PACE, our investment in the resources sector, our investment in policies that encourage investment, our precompetitive data that de-risks projects. I think—without embarrassing Paul and his team and Barry Goldstein and Ted Tyne—that they are the best regulators in the country, if not the southern hemisphere. They are held in the highest regard. Unfortunately, their minister is not held in the same regard as they are, but I think they are, without a doubt, the leading lights in the nation for mineral resources. I have to say that the people who tell me this are not necessarily from the hotbeds of socialism and leftist activity: they are generally people from the Minerals Council of Australia, from APPEA, from the SCR, where I have Liberal mining ministers and National Party mining ministers saying, ‘We’ve cracked a code to good regulation in this country for this type of industry and I am very proud of it.’ That does not mean that I can change global markets.

Remembering that our explorers are mainly juniors, what we do is try to de-risk them with precompetitive data. I suppose the best thing we can do is multiple land-use strategies, allowing access to land for exploration. The big struggle over the next decade is not going to be just access to finance and native title or even the EPA and environmental approvals: it is going to be land access. That is the next frontier. A lot of our mineral resource wealth is held in areas that are currently cropping land—Yorke Peninsula, Eyre Peninsula, on the Braemar and, of course, the upper Mid North in and around Giles and Stuart.

We have to work very hard to try to help unlock that access by trying to educate people that exploration and mining is beneficial for everyone, but it can be difficult. The truth is that it is going to be a very tough slog for us until economic conditions around the world improve and commodity prices go up. If you see a dramatic improvement in the uranium price, exploration figures will go up. If you see a dramatic improvement in the copper price, then you will see exploration figures go up. It is that correspondent. It is that simple.

Iron ore prices are down, therefore exploration in Western Australia is down. Most of the exploration you are talking about is brownfield sites, people looking for new deposits on mines that have already been mined, not greenfields development. Most of our exploration generally has been greenfields sites, people out looking for new mines. That is good; that is what you want. When you have a downturn people stop looking in new sites and start looking on brownfield sites, and that is what you are getting in Western Australia because iron ore prices are dropping. We need global confidence to resume.

Mr VAN HOLST PELLEKAAN: Minister, I have no concern at all in joining you in congratulating the departmental people who work really hard. What I am really trying to understand is how essentially the same world prices, the same economic conditions, etc., seem to be affecting our state so much more negatively than others. That is what I am trying to get at.

The Hon. A. KOUTSANTONIS: We are blessed with vast deposits, but they are at depth.

Mr VAN HOLST PELLEKAAN: I refer to page 100 in the same book, minister. I think I have the wrong page here, to be honest, but it is about the RAES scheme anyway. Can the minister explain the exclusion of annual fuel cost adjustment from 2014-15? What does that refer to, please? Actually, it is the right page, it is the first dot point right at the top.

The Hon. A. KOUTSANTONIS: I am advised that the Treasurer, as opposed to the energy minister—they were a bit too keen to rush for the advice. We are the ones who manage the cost risk on the diesel, I am advised, so if the prices go up we manage that for them and we replenish them in the Mid-Year Budget Review rather than giving them the ability to manage their own risk. So, we do it ourselves. The Treasurer does not trust the energy minister to administer this so what he does, quite cruelly, is not allow his bureaucrats to manage their own risk.

Mr HEITHERSAY: I think that is pretty accurate.

The Hon. A. KOUTSANTONIS: Now, I understand the energy minister is very upset about this set of events and there has been some very detailed discussion in the bathroom in the morning about whether or not the Treasurer should trust the energy minister to let the energy department manage its own risk, but it has worked well so far and we will continue to work this way, I am advised.

Mr VAN HOLST PELLEKAAN: I thank the ministers, but can you just tell me what this adjustment is? That is actually what I want to know.

The Hon. A. KOUTSANTONIS: The adjustment is that the fuel costs go up.

Mr VAN HOLST PELLEKAAN: With the exclusion of the annual fuel costs adjustment, so it is just—

The Hon. A. KOUTSANTONIS: I am advised that they do not manage their own risk, so we exclude that money from them. What we basically do is we wait and see what we are actually spending on fuel before we supplement it, rather than giving them the ability to manage it. So, we say, 'Here's your base, go off and spend it.' If they need more they get it and we supplement it in the Mid-Year Budget Review. It is just a timing issue.

Mr VAN HOLST PELLEKAAN: Page 99 of the same book, I refer to the Regional Mining Infrastructure Plan which specifies that it will take up to five years to develop a high capacity port yet ports are needed to serve the Eyre and western region by 2018 and the Yorke, Mid North and Braemar region by 2019. What options are available for the Regional Infrastructure Task Force to achieve these targets?

The Hon. A. KOUTSANTONIS: It is a matter for the private sector to come to us with a proposal which we can approve in record time for them.

Mr VAN HOLST PELLEKAAN: Is underwriting an option that you would consider?

The Hon. A. KOUTSANTONIS: What you are really asking me is will I build a port? Well, who do I offer the underwriting to? Will the underwriting stimulate the development of a port? What came first, the chicken or the egg? I am not in the business of picking winners; perhaps we should, if we do that would be a policy change. My very strong view is that if we did invest in productive infrastructure, like a port, it should only be for a short period of time and we should divest ourselves of it immediately; that is, we build it (hypothetically), get some iron off the ground and then we sell it immediately.

The problem I have is if I build one port, which one do I choose? Do I choose Braemar, because I can tell you what Braemar will say if I build the one on the Eyre Peninsula, they will say, 'We were ready first and you've dramatically stymied our ability to build a port.' Do I upgrade Port Bonython? We can do all the bodies of work that we like on it, the reality is that it is no good until the mines find a market for their ores and when they find a market for their ore I suspect they will not need us. So, it is a difficult question, but I have not ruled it out.

Mr VAN HOLST PELLEKAAN: You have not ruled underwriting it out?

The Hon. A. KOUTSANTONIS: I have not ruled anything out. Again, I caution the opposition: the government attempting to run a private venture, we usually do not do it very well. That is why the private sector is better at delivering these services than we are. I think you are seeing the Victorian government (both political parties) privatising their ports to invest in other infrastructure.

You are basically saying we should step into the port building business, whether it is underwriting or building it ourselves. It is always a difficult step for a government to make, and in the end knowing which one to build, how much to charge, who runs it, is it an indenture, who do we lock in or out, is it multiple use? It gets very complicated and very messy. We will have a round table to ensure all balance sheets are represented. May the best solution win.

Mr VAN HOLST PELLEKAAN: On the same page, page 99, given that one of the targets for the current year is progress recommendations of the Regional Mining Infrastructure Plan, what actions are the government taking to do that?

The Hon. A. KOUTSANTONIS: We formed a task force. We did an infrastructure and demand study, highlighting the sector's future project development plan and specific infrastructure needs. Five recommendations emerged from the IDS, which is the demand study, that were endorsed by the government in a direction statement in 2012, with a focus on the planning for infrastructure corridors and utility hubs through a master planning process. They focus on infrastructure corridors and hubs, deep sea ports, electricity, water, mapping and investment. The aim of the recommendations is to stimulate actions which will generate confidence in the market to facilitate investments and provide a basis for future government and industry planning.

Cross-government collaboration has ensured that each recommendation has an identifiable action or series of actions that will support identified infrastructure development and planning. In 2013, supported by the demand study, South Australia successfully obtained commonwealth funding for $1.5 million to undertake three regional mining infrastructure plans. As the advisory body to the government, RESIC was consulted during the project's progress and RMIP were developed for the Far North, Eyre, Western and Yorke and Mid North/Braemar problems.

As you said, community industry consultation was undertaken in 2013. The region was seen as representing a majority of the mining projects in the state, and the focus of potential infrastructure corridor hubs essential to ongoing development in the minerals and energy sectors. In response to the RMIP we have committed to establishing a regional resources infrastructure task force. There is a potential role for RESIC in the proposed task force. The task force will be the state's single point of reference for the facilitation of planning, development and delivery of regional resources and infrastructure, driven by the growing resource sector demands, providing flow-on benefits to surrounding communities, industries and businesses.

Mr VAN HOLST PELLEKAAN: Has the Minister for Regional Development put forward any suggestions, proposals or recommendations in this regard?

The Hon. A. KOUTSANTONIS: He runs a whole series of committees within cabinet and is a trusted adviser to the government on all matters in regional South Australia, and of course we take his ideas and plans and feed them in.

Mr VAN HOLST PELLEKAAN: Has he made any suggestions?

The Hon. A. KOUTSANTONIS: He makes them to me all the time.

Mr VAN HOLST PELLEKAAN: Specifically about this area of work?

The Hon. A. KOUTSANTONIS: Absolutely. He makes them to me all the time.

Mr VAN HOLST PELLEKAAN: Page 98: please advise whether the Olympic Dam task force will be responsible for progressing the proposal to upgrade the Strzelecki Track.

The Hon. A. KOUTSANTONIS: The ODEX Task Force?

Mr VAN HOLST PELLEKAAN: Yes, minister.

The Hon. A. KOUTSANTONIS: No. They can if they like—I would like them to. It is a DPTI issue and a government issue. Again, it is the sort of thing the Minister for Regional Development will talk to me about. He talks to me about a whole series of issues, not necessarily formal papers that he presents to a committee or a process—that is what the cabinet process is. We have general discussions about what is going on. He is a fierce advocate.

Mr VAN HOLST PELLEKAAN: I was not asking about the future development.

The Hon. A. KOUTSANTONIS: No, but I am bringing it back to who runs these things. DPTI should be running the upgrade and bitumising of the Strzelecki Track. I am a personal supporter of it—I think it is a very good piece of infrastructure, and I would like to see the commonwealth come on board.

Mr VAN HOLST PELLEKAAN: The reason I ask is, as you probably know, the OD Task Force is involved, obviously, in Olympic Dam, but with Nyrstar, with Arrium, facilitated declaration of major development status for the Braemar proposal, continued involvement in the Upper Spencer Gulf ecosystem development initiative, and given how important is the oil and gas sector, and given what a critical piece of infrastructure it is, at least in my mind (and I am trying to find out if it is the same for the government), it is much more than just a DPTI transport piece of infrastructure.

It has the capacity to add enormous vigour to the north-east Cooper Basin, and it also has the capacity to instantly bring back business from Queensland. Many pieces of infrastructure you put in place, you put the infrastructure in, as you said, chicken and egg, and hope then that the business follows. The business is already there, so that is why I am asking whether ODT, because they do these other things, is focused on that; and, if not, who else in government, apart from people who focus on transport, are looking at this infrastructure?

The Hon. A. KOUTSANTONIS: First and foremost, OD Task Force works at a level to unlock private investment. The Strzelecki Track will not be a toll road unless the commonwealth government insist on it or they make it a toll road, which they probably cannot because it is our road. I know that the unconventional road map talks about sealing the Strzelecki Track, the ITLUP. Mr Malavazos advises me that working group four within the road map is progressing that issue. It is not going to be done by private investment: it is going to be done by government. This is a Nation Building piece of infrastructure.

I am glad you have got on board with the government's suggestion about sealing the Strzelecki Track. I was very disappointed, before the last federal election, that both major political parties almost completely ignored South Australia's regions in terms of infrastructure projects. I note that the current commonwealth government and the previous commonwealth government, while doing some minor works in and around regional areas, did not put this up.

I have certainly spoken about it for many years. I have put it on the map for Infrastructure Australia to look at. I understand it has been submitted to them for their consideration. The problem we have got with the Strzelecki Track is the cost-benefit analysis would be very, very poor, probably worse than Darlington. The reason it is so poor is the traffic that goes up there now would not justify sealing it—but we know intuitively, if you did seal it, it would dramatically be a game changer for where mining services would be located—in places like Gillman, Tonsley, and others.

I am a big supporter of it and I would be more than happy to work with the commonwealth government on a funding split of 80-20, as is the norm in regional infrastructure spends, to invest in the Strzelecki Track. Thus far, they have not come to us with that proposal. I have gone to them. I must say, I think minister Briggs is slightly interested but, like the Leader of the Opposition said, of their $50 billion spend, I think he quoted today, the majority of that is being spent on the eastern seaboard.

Mr VAN HOLST PELLEKAAN: Is this something that sits and waits, or is there a deadline to get a response from Infrastructure Australia?

The Hon. A. KOUTSANTONIS: The way it works is it goes to Infrastructure Australia and they keep on pushing it up, like they did with Torrens to Torrens and like they do with other infrastructure projects—South Road superway. They push these things up. But, again, these are all matters for the Minister for Transport. I am really stepping on his toes here a little bit. The reality is sealing the Strzelecki Track links Brisbane to Adelaide, fundamentally, with the Cooper Basin at its heart.

It really is a Nation Building project, a lot like the crossing in Port Augusta. That is a Nation Building project and the commonwealth government should be investing in that heavily, because we do not want to cut off Western Australia from the rest of the country, and vice versa. Yorkeys Crossing, the Strzelecki Track and upgrading highways heading to the eastern seaboard are all Nation Building projects, and I would like to see the commonwealth take a greater interest in them, and we are certainly pushing them up.

Mr VAN HOLST PELLEKAAN: Pages 98 and 99, the same book, are very close. Is the OD Task Force a completely separate entity from the regional infrastructure task force? Are there common members or do they work independently? How does that work?

The Hon. A. KOUTSANTONIS: The task force, as a model, can second in and out pretty much who it pleases, and a task force model, I submit to the committee, is probably the best model we have in government for cutting red tape and getting things done. It is chaired by Mr Heithersay, with Mr Elford on it. It is a stand alone creature, as it were, in terms of the way it is recognised within government, but it can have many purposes. For example, we asked them to do Nyrstar. We asked them to do Braemar. We asked them to do Olympic Dam, obviously. That is why they were established. We have asked them to do a whole series of pieces of work to unlock private investment in South Australia. Every now and then we may ask them to help with government, but generally they are a task force targeted to try to cut through government bureaucracy for the private sector.

Mr VAN HOLST PELLEKAAN: Thanks. Under the OD Task Force, there is $1.8 million of expenditure and $400,000 of income. Can you explain those two numbers, please?

The Hon. A. KOUTSANTONIS: Yes; good question. I am advised it is a one-off increase in income due to a one-off reimbursement for legal fees associated with the Nyrstar project.

Mr VAN HOLST PELLEKAAN: So it is a reimbursement of $400,000 of legal fees that were incurred?

The Hon. A. KOUTSANTONIS: I am advised that Nyrstar paid all the government's legal costs and they were reimbursed through to the OD Task Force, which I will probably step in and take soon.

Mr VAN HOLST PELLEKAAN: Moving to page 93, the Mining and Petroleum Services Centre of Excellence. What was the total funding allocated to the Mining and Petroleum Services Centre of Excellence in 2013-14?

The Hon. A. KOUTSANTONIS: I am advised that the 2013-14 budget allocated $6 million over four years to support the Mining and Petroleum Services Centre of Excellence. The $2 million provided for 2013-14 has been fully expended.

Mr VAN HOLST PELLEKAAN: What additional incomes does the government expect for the additional $1 million put towards the centre? What I am getting at there is that the 2013-14 budget had $2 million per year in it. There was also an election commitment of an additional $1 million per year. What does the government actually expect to get by putting that 50 per cent extra in?

The Hon. A. KOUTSANTONIS: We believe we can leverage, I am advised, further funding and in-kind support from the private sector and the commonwealth. Often we are asked to match funding, so that gives us the ability to match some funding.

Mr VAN HOLST PELLEKAAN: So if it is one for one, one for two or whatever, you believe that will—

The Hon. A. KOUTSANTONIS: Someone might come to us and say, 'We'll spend half a million dollars on X if you match us two to one, or conversely you put in half of it,' so we need to have the ability to do that, I am advised.

Mr VAN HOLST PELLEKAAN: Can I just confirm that the current budget for 2014-15 is $3 million, 2015-16 is $2 million, 2016-17 is $2 million and 2017-18 is $1 million?

The Hon. A. KOUTSANTONIS: I am advised that the budget allocation over four years is $6 million. I will check the breakdown that you read out and get back to you on that. I am advised that it is probably accurate, but I will double-check. I have just been advised that to date the value of the committed and expected contributions of cash and in kind from industry research institutions exceeds $4 million. We are talking about a 2:1 minimum ratio on what we are leveraging from the private sector.

Mr VAN HOLST PELLEKAAN: Just to be clear, the numbers I read out added up to eight so I look forward to getting the confirmation back. On page 92, Minerals Resources and Energy: Fees, fines and penalties, the budget for 2014-15 shows a $1.8 million increase in fees, fines and penalties over the 2013-14 estimate. Can the minister detail how the government will raise these funds?

The Hon. A. KOUTSANTONIS: I am advised, but I will check, it is from petroleum retention licences fees.

Mr VAN HOLST PELLEKAAN: Sorry, petroleum?

The Hon. A. KOUTSANTONIS: Retention licences but I will double-check for you.

Mr VAN HOLST PELLEKAAN: Not a general upturn in activity or anything like that? It is specifically—

The Hon. A. KOUTSANTONIS: Retention licences are activity.

Mr VAN HOLST PELLEKAAN: Fees and fines are typically linked to activity, but there has actually been an activity decrease. How does that fit together?

The Hon. A. KOUTSANTONIS: I am advised not in oil and gas. We are getting into unchartered waters here. I am answering you too quickly on the basis of what I am overhearing so I do not want to mislead you in any way. Let's start again. I will get you a detailed answer so we do not mislead you in any way because there seems to be a bit of confusion about whether we are talking about petroleum or minerals or both, but certainly I am advised there has not been a downturn in petroleum activity.

Mr VAN HOLST PELLEKAAN: Budget Paper 4, Volume 4, page 92, under Expenses: Fees, fines and penalties.

The Hon. A. KOUTSANTONIS: Yes.

Mr VAN HOLST PELLEKAAN: Still on page 92, will the minister explain the $12.4 million decrease in expenditure from the estimated result in 2013-14 to the budgeted figure in 2014-15 for the mineral resources and energy budget?

The Hon. A. KOUTSANTONIS: Which line are you talking about?

Mr VAN HOLST PELLEKAAN: On page 92, Total expenses, under Mineral Resources and Energy.

The Hon. A. KOUTSANTONIS: So, essentially for last year the budget was 82, the estimated result was 89—

The Hon. A. KOUTSANTONIS: I am advised that the movement in the total expenses between the 2014-15 budget and the 2013-14 estimated result is a $12.4 million decrease. Decreases of the $16.3 million include the following—

Mr VAN HOLST PELLEKAAN: What does the decrease of $16.3 million relate to?

The Hon. A. KOUTSANTONIS: There is a decrease and an increase. I will read it through and explain it to you. A decrease of $6.7 million is due to variations in Remote Areas Energy Supplies (RAES) scheme between financial years which includes input to the major upgrades for the central powerhouse on Aboriginal lands during 2013-14 and the annual fuel cost adjustment of $5.6 million not incorporated in 2014-15. A decrease of $5.5 million is due to the implementation of savings initiatives and changes in overhead allocations between financial years which are allocated across programs based on FTEs which are spread across all subprograms.

A decrease of $1.9 million is due to funding for the State Drill Core Reference Library design phase, $0.3 million; Woomera geoscience survey, $0.2 million; National Partnership Agreement on Coal Seam Gas and Large Coal Mining, $0.5 million; once-off funding for Nyrstar in 2013-14 for reimbursement of costs of specialist advice in relation to the Port Pirie Smelter transformation proposal, $0.4 million; and commonwealth government funding for the National Energy Efficient Building Project of $0.5 million ending in 2013-14.

A decrease of $1.5 million is due to expansion on the Brukunga mine site remediation project varying between financial years in line with the approved project plan. A decrease of $0.7 million is due to the minor decreases across a number of other projects between financial years. Increases of $3.9 million include the following: an increase of $2 million for additional funding for the Mining and Petroleum Services Centre of Excellence; $1 million for the Plan for Accelerated Exploration; $1 million for programs in 2014-15 as per the election commitment; and an increase of $1.9 million due to higher regulation and compliance costs across government associated with an increase in petroleum retention licences.

Mr VAN HOLST PELLEKAAN: Regarding the 23 FTEs that go with that change, what are the likely impacts that the industry will feel with regard to their involvement with the department?

The Hon. A. KOUTSANTONIS: I would imagine, none, but I will double-check. The advice I have received is none.

Mr VAN HOLST PELLEKAAN: How does that work? What were the 23 people doing?

The Hon. A. KOUTSANTONIS: How can I explain this? You do more with less. We will make efficiencies like all agencies do, whether they are private or public. Whether it is a supermarket or a retail outlet, you make efficiencies and you still provide the same service. Some of them are corporate overheads; some of them are not front-line service delivery.

Mr VAN HOLST PELLEKAAN: Again on pages 98 and 99, going back to the OD Task Force, I refer to 'Continue to facilitate the expansion of and business sustainability of Arrium's steelmaking and mining operations in SA.' What will this target involve for the task force? What is really the meat of that?

The Hon. A. KOUTSANTONIS: Arrium has a permanent workforce of about 10,000 people operating across 15 countries, and 85 per cent of their workforce is in Australia. Arrium is one of Australia's largest exporters of iron ore outside of the three majors, producing around 12 million tonnes per annum from operations in the Middleback Ranges and the Far North—a great asset to the people of Whyalla.

Arrium has invested an additional $200 million in expanding the Whyalla port facilities. The recently expanded capacity of 13 million tons per annum makes Whyalla the state's largest tonnage capacity port. The steelworks, part of Arrium Steel, continue to operate in a challenging economic condition with an EBIT loss of $43 million in the financial year 2013. The steelworks supports the majority of those employees in SA. New royalty arrangements, which come into operation in May 2013, are ensuring that the South Australian community receives a fair share of the benefits of the expanded mining operations, but in a way that does not jeopardise the financial viability of the steelworks.

The task force worked with Arrium through a high-level working group to streamline interaction between the government and business, and I think we have done a very good job in its interactions. Basically, what we do, to give you a snapshot, is to allow what goes into the mill to be royalty-free and we charge royalties on what they export. That is the basic arrangement. I believe passionately that this country needs to make steel. I believe passionately that South Australia should be making steel and we will do what we can using our balance sheet to preserve our ability to manufacture steel.

Mr VAN HOLST PELLEKAAN: Is Arrium subject to the mineral resources rent tax?

The Hon. A. KOUTSANTONIS: No, I do not think they pay it. I will have to check with them, but I do not think they do. I will check with them.

Mr VAN HOLST PELLEKAAN: Can you give me some information, minister, regarding the highlights for 2013-14 on that same page. I am specifically interested in the BHP Billiton section where it talks about new technologies, on-site works and expansion of Aboriginal opportunities. Can you flesh that out?

The Hon. A. KOUTSANTONIS: BHP is a very good corporate citizen in this state. They are one of the largest employers and, as you are aware—no doubt you have been briefed by BHP—they are investing very heavily in a less capital-intensive design for the open pit expansion that uses technologies that would substantially improve the economics of the project.

As indenture minister, I granted an extension for the end of date notification of the expansion and an amended Olympic Dam and Stuart Shelf Indenture to take effect—I think that was me in 2012; yes, it was—such that notification can occur up until October 2016. The task force is facilitating BHP's commitment to the expenditure of some $650 million over the next four years to 2016. It is committed to spending more than half a billion on rescoping of the project itself, including the new technology studies and on-site works.

It is committed to initiatives regarding the expansion for Aboriginal opportunities and investment in mining services industry. They do great work with PREOP at a Port Augusta prison, something that I started with BHP when I was corrections minister. Was it me or was it Carmel? It might have been Carmel, I cannot remember, but it was a program that is still going very strong. They were recently awarded at the most recent SACOME dinner and they, of course, are contributing to their environmental initiatives. They do great work and I am a big fan of BHP.

Mr VAN HOLST PELLEKAAN: Page 104, Renewable Energy Fund, right under estimated result. How much funding was provided to the Renewable Energy Fund in 2012-13 and 2013-14?

The Hon. A. KOUTSANTONIS: I will take that on notice and get it to you.

Mr VAN HOLST PELLEKAAN: How many applications for funding were received in 2012-13 and 2013-14 and how many of those applications received funding?

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

The CHAIR: Member for Stuart, before you go on, do you have omnibus questions that you would like to tack on the end of this?

Mr VAN HOLST PELLEKAAN: No, they were all read in by the leader about every department, rather than any of us doing specific ones.

The CHAIR: Excellent, no worries. Carry on then.

Mr VAN HOLST PELLEKAAN: Thank you, I appreciate that. Minister, the Renewable Energy Fund, what is the reason for this fund being closed?

The Hon. A. KOUTSANTONIS: I suppose it has served its purpose, but I will get you a more fulsome answer on notice.

Mr VAN HOLST PELLEKAAN: Page 103 again, please explain what measures have been taken or will be taken by the department to achieve a reduction in funding for RenewablesSA from $1.4 million in 2012-13 to a budget of $679,000 in 2014-15?

The Hon. A. KOUTSANTONIS: Sorry, repeat the question.

Mr VAN HOLST PELLEKAAN: Please explain what measures have been taken or will be taken by the department to achieve a reduction in funding for RenewablesSA from $1.4 million in 2012-13 to a budget of $679,000 in 2014-15?

The Hon. A. KOUTSANTONIS: I will take that on notice. I will give you a brief answer. I am advised that the movement in that expense between the 2013-14 estimated result and the 2012-13 actual result is a $0.6 million decrease. The decrease is due to lower grants payments resulting in the winding up of the Renewable Energy Fund in line with a savings initiative.

Mr VAN HOLST PELLEKAAN: Will you take what their savings initiative was on notice?

The Hon. A. KOUTSANTONIS: I think winding up the Renewable Energy Fund was the savings initiative.

Mr VAN HOLST PELLEKAAN: So it was as simple as that. Page 101, please outline what changes will be made to the Residential Energy Efficiency Scheme as a result of the recent review?

The Hon. A. KOUTSANTONIS: Which scheme was it?

Mr VAN HOLST PELLEKAAN: Residential Energy Efficiency Scheme (REES).

The Hon. A. KOUTSANTONIS: I note that the opposition took to the election a commitment to scrap this scheme. We think it does good work. We know what the requirements of the retailers are, but we took a review of the scheme to assess whether the scheme had met its objectives and whether they had been cost effective or they should continue post 2014. An independent valuation commissioned as part of the review found that in its first three years the scheme delivered a benefit of over $100 million.

The independent survey of households that took part in the scheme found that more than 90 per cent were either happy or very happy with the quality of activities and audits. On 29 November last year I announced that the government would extend the scheme to 2020 and expand it to include small business. The DSD is working on regulatory and administrative changes associated with that decision and I look forward to announcing to the parliament soon the full range of implications for extending that to small businesses.

The CHAIR: This will be your last question, member for Stuart, just to let you know.

Mr VAN HOLST PELLEKAAN: The full range of implications including the impact on electricity prices?

The Hon. A. KOUTSANTONIS: Yes.

Mr VAN HOLST PELLEKAAN: Thank you.

Sitting suspended from 15:45 to 16:00.

The CHAIR: Welcome back, Treasurer, to your last session. In your role as Minister for Small Business I invite you to make a statement and introduce any new advisers you have assisting you.

Departmental Advisers:

Mr R. Garrand, Chief Executive, Department of State Development.

Mr T. Newton, Manager, Case/Investigations, Office of the Small Business Commissioner.

Mr I. Nightingale, Industry Participation Advocate, Department of the Premier and Cabinet.

Mr L. Piro, Executive Director, Industry and Innovation, Department of State Development.

Ms P. Chau, Director, Finance, Department of State Development.

Mr. R. Janssan, Group Executive Director, Strategic Services, Department of State Development.

Ms L. Blazujevic, Principal Adviser, Department of State Development.

Ms A. Pangallo, Office Manager, Office of the Small Business Commissioner.

The Hon. A. KOUTSANTONIS: I will not be making an opening statement, and am prepared to take questions immediately.

Mr VAN HOLST PELLEKAAN: Budget Paper 4, Agency Statement 4, page 105. I am asking about the Office of the Small Business Commissioner. Is funding for the Office of the Small Business Commissioner contained within this Program 8: Opportunities for Small Business?

The Hon. A. KOUTSANTONIS: I am advised that the Small Business Commissioner, the incoming expenditure of the office, is not reflected within the Agency Statements, except to the extent that the net cost of services are reflected in the Administered Items.

Mr VAN HOLST PELLEKAAN: Where is the funding for the Small Business Commissioner held then?

The Hon. A. KOUTSANTONIS: If you look at the Administered Items on page 129 of Agency Statements, Volume 4, there is a table (and I apologise that I don't have the number of it). It says 'Small Business Commissioner $1.49 million' in 2014-15.

Mr VAN HOLST PELLEKAAN: Is there any reason that the Small Business Commissioner funding is not included in the Opportunities for Small Business?

The Hon. A. KOUTSANTONIS: It is an independent office. It is government-funded but, like the DPP and like the training advocate, they are independent.

Mr VAN HOLST PELLEKAAN: Just to be sure that I understand it, the $1.424 million for Opportunities for Small Business and the $1.491 million on the page you just referred to, they essentially add together to support small business. They are not the same money; it is additional money.

The Hon. A. KOUTSANTONIS: Yes, you are correct, they are two separate allocations.

Membership:

Mr Tarzia substituted for Hon. I.F. Evans.

Mr VAN HOLST PELLEKAAN: Is the Small Business Commissioner receiving the additional $263,000 that was promised in the 2012-13 budget?

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

Mr VAN HOLST PELLEKAAN: Just to help you then, the government announced in the 2013-14 budget an additional $267,000 indexed over the forward estimates for the Small Business Commissioner, so I would just like to be sure that the budget reflects that.

The Hon. A. KOUTSANTONIS: I am glad you are so supportive of an office you voted against establishing.

Mr VAN HOLST PELLEKAAN: With regard to the Small Business Commissioner’s Office again, which of these two budgets would any internal charges (government department to government department) come out of? Would they come out of the budget line you referred me to on page 129 or out of opportunities for small business?

The Hon. A. KOUTSANTONIS: They are separate. Anything he expends comes out of his budget and anything we expend comes out of my budget. If that is not accurate I will get you a detailed answer. I do not think we charge for HR services and we do not charge for any other administrative fees other than what is budgeted for. So the cost, for example, of HR is within the agency statement.

Mr VAN HOLST PELLEKAAN: The reason I ask is that you specifically talked about HR or whatever internal government charges. I have an invoice here from the Crown Solicitor’s Office to DMITRE for legal fees associated with the Small Business Commissioner’s alleged improper conduct. Which budget would that come out of?

The Hon. A. KOUTSANTONIS: The Crown Solicitor’s Office has sent a bill to DMITRE, did you say?

Mr VAN HOLST PELLEKAAN: Yes.

The Hon. A. KOUTSANTONIS: That would come out of DMITRE’s budget, I imagine, but I will have to check for you.

Mr VAN HOLST PELLEKAAN: So neither of these two budgets; is that what you are saying?

The Hon. A. KOUTSANTONIS: I do not know. I will have to go back and check. Is it an FOI you have?

Mr VAN HOLST PELLEKAAN: No, it is a copy of an invoice.

The Hon. A. KOUTSANTONIS: I will chase that up for you.

Mr VAN HOLST PELLEKAAN: Alleged improper conduct of the Small Business Commissioner, it says here. Do you know anything about that, minister?

The Hon. A. KOUTSANTONIS: I cannot add to anything, I am sorry.

Mr VAN HOLST PELLEKAAN: Do any of your advisers?

The Hon. A. KOUTSANTONIS: We cannot make any comments.

Mr VAN HOLST PELLEKAAN: Why is that, minister?

The Hon. A. KOUTSANTONIS: It is not within my purview to make a comment to the committee about that.

Mr VAN HOLST PELLEKAAN: But it is a costed item. It is a $12,000 expense.

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

Mr VAN HOLST PELLEKAAN: Why is that? I do not understand.

The Hon. A. KOUTSANTONIS: There are other requirements that the government must take into account.

Mr VAN HOLST PELLEKAAN: Other than explaining an expense that you have incurred.

The Hon. A. KOUTSANTONIS: Yes.

Mr VAN HOLST PELLEKAAN: Such as?

The Hon. A. KOUTSANTONIS: I cannot go any further into it. I suppose the best way to deal with this is to say that the government obviously operates within all legislative frameworks and is always responsible for maintaining due process. There are legislative requirements and punitive measures in place for anyone who acts outside of those legislative frameworks, and I am not about to step out of those frameworks in this committee.

Mr VAN HOLST PELLEKAAN: I respect that. Are you suggesting in that answer then that this invoice has resulted in something in that category that you just mentioned?

The Hon. A. KOUTSANTONIS: I am not suggesting anything. I said to you that I would like to give you a fulsome explanation, but I cannot.

The CHAIR: I think the minister's position is clear.

Mr VAN HOLST PELLEKAAN: Would you be prepared, as you did on a different question in a different committee, to give me a private briefing on that?

The Hon. A. KOUTSANTONIS: No; I am not disclosing anything. People have legal rights and legal opinions have always been confidential. I will just get some advice. I have nothing I can add to my initial answer.

Mr VAN HOLST PELLEKAAN: Does that mean that any public information or any parliamentary committee information that has to do with legal expenses cannot be dealt with? I mean, I am not aware of what the result of it was, I am not aware of the details that you might feel you need to keep private, I am just asking about an $11,900 expense and how that is being dealt with.

The Hon. A. KOUTSANTONIS: Sure. I am going to ensure that everyone is afforded procedural fairness, so I am not going to make any further comments on this matter.

Mr VAN HOLST PELLEKAAN: Page 105 (the same page), you stated in your budget speech (page 9 of the budget speech) that:

The Premier has called on all Ministers to reconnect with business to ensure South Australia's business environment is as competitive and attractive as possible.

Please explain why the total expenditure for the opportunities for small business program is a total of $1.442 million in 2014-15, a 20 per cent decrease from 2013-14?

The Hon. A. KOUTSANTONIS: We in the Labor Party get accused quite often that if there is a problem then we throw money at it. The Prime Minister is very good at saying to the Labor Party, 'You can't solve every problem in the country by throwing money at it.' So, I have to say I am always surprised when the opposition says to me, 'You don't care about this industry because you are not spending money at the problem.' You do not necessarily have to spend money at a problem to show an interest in small business. What I said in the speech is what the Premier has asked us to do, which is to reconnect with business.

I think it is fair to say that South Australia is well served by its small business community. They are good hardworking people. I grew up in a family that ran a small business and I know what it is to have the family home mortgaged to run a small business, as I am sure many members of the house (on both sides of politics) know what it is like. I do not think the solution to a problem is necessarily money. What small business is looking for from the government is to grow economic opportunities, to make the economy more efficient, to cut red tape, to give them the access to go out and compete. What they are not interested in is handouts.

Every time we have made cutbacks on government handouts or on handouts to business or on corporate welfare, we get accused by MPs of not caring about that industry while being quietly applauded by the industry that often sees that as unnecessary. So, I do not accept what it is you are saying. I do think we are attempting to reconnect with business and I do not think money is the answer.

Mr VAN HOLST PELLEKAAN: Minister, I did not accuse you of anything, I just asked the question: can you explain why there is a stated desire to engage more and help more, but there is a financial reduction?

The Hon. A. KOUTSANTONIS: I do not think you can equate there being a conflict with the two statements, simply because money is not the solution.

Mr VAN HOLST PELLEKAAN: Can you explain what the difference is then with regard to regional development? There is the same desire to engage and support regional development—

The Hon. A. KOUTSANTONIS: There is a greater deal of disadvantage amongst regional communities than there is amongst metropolitan communities. You should know that as a regional MP. The tyranny of distance, the extra costs involved in regional communities of being competitive, labour costs, transport costs, infrastructure costs, the costs of doing business are more expensive.

The Regional Development Fund is about building the productive infrastructure we need when the normal weight of population does not justify in normal circumstances the infrastructure being built. Minister Brock is attempting to level the balance sheet for regional communities. You would know, as a regional MP speaking to your regional businesses, how much harder it is for them to compete internationally and interstate with metropolitan-based businesses because they have cost advantages because they are so close to ports, to infrastructure and to sources of their supplies. We are attempting to increase funding to try to level the playing field, but the idea that generically anyone can assert, say or show a lack of interest in small business simply by a budget line I do not think is accurate.

Mr VAN HOLST PELLEKAAN: In your dual role as Treasurer and Minister for Small Business you have increased the emergency services levy, you have introduced a transport development levy and you will remove the payroll tax concessions in a year or so. Can you tell me what you believe will be the impact of that on small business?

The Hon. A. KOUTSANTONIS: I will, because the transport development levy is a good one. The key for growing retail in the city is to make sure that there are many car park spaces available to get consumers who are spending money in the city in out as quickly and efficiently as possible. The problem we have in South Australia is that, overwhelmingly, the number of people who work in the city drive to the city, congesting our roads in and out in peak hour, taking up all the car parks and adding a cost burden on business people who employ people in the city because they generally pay for their car parking or it is reflected in their wages. If we are able to levy those car parks, we will be able to spend that money on productive infrastructure like, for example, park-and-ride facilities.

I notice in your recent newsletter that you took credit for a Park'n'Ride, yet you have stated that you are going to vote against the transport development levy. That type of hypocrisy really exposes the Liberal Party at its core. They are out there celebrating infrastructure that is being built as a result of the tax to build that infrastructure. They take credit for the infrastructure being built but then vote against the measures that pay for it. What we are attempting to do by decongesting the city is make more spaces available for people who are coming to shop, do commerce or do business, and make it easier for them to get in and out of the city, while people who work in the city from nine to five or are shift workers can use public transport to get in and out of the city. It is more efficient and there are better outcomes for those workers and their families because there is a lesser cost than bringing transport in and out of the city. That is one aspect.

The good thing about that is that it is not necessarily a levy on business but a levy on people who use car parks and on car park operators. For example, if I was a retail worker in Rundle Mall or I owned a small business or boutique in the city, I would want to encourage, as far as possible, my consumers being able to come in and get affordable and available car parking that is not taken up by city workers who are filling up car parking spaces and creating more and more demand, pushing up the price of car parking. It is an argument we have that we disagree on. We believe the best way to have a functioning metropolitan city is to have public transport solutions. Your solution is that everybody drives into the city and parks in a car park—it is just a different outlook.

Mr VAN HOLST PELLEKAAN: How will the removal of the payroll concession help small business?

The Hon. A. KOUTSANTONIS: The important thing about the payroll tax concession that we have brought in, which will be an implementation over two years, has very good benefits. The government may make a decision in the budget to extend that, may make it permanent—it may do all sorts of things, but I am not going to announce them here in the estimates committee. What you are seeing on display is that we had a very difficult time trying to fill the hole made by the commonwealth Liberal government in its health and education cuts, so rather than imposing an extra impost on business we have spread the burden across all South Australians on a progressive tax scale, which is the emergency services levy, so the more valuable your home the more you pay.

Of course there are entrenched and enshrined discounts for regional communities. As you would be aware, in certain regional communities you get a certain percentage discount, and the further you move away from those communities the discount gets larger. It is the most progressive tax form we have, and it was a tax implemented by the former Liberal government. They are the ones who invented it and the ones who designed it. We have removed the remissions we offer people on the emergency services levy and have taken that remission money and put it straight into health, which has made a lot easier the savings targets health has to make, as in corresponding cuts that the commonwealth has made.

What is the benefit to business? I did not jack up payroll tax. I did not jack up land tax. I did not increase those taxes directly on business. I spread it all on the emergency services levy. In fact, there have been a number of businesses that have asked me to increase business taxes to benefit other businesses. My view is business taxes are as high as they should be in this state—they should probably go no higher—and, if anything, we should do all we can to try to reduce them.

I have to try to build capacity within the budget because of the commonwealth budget, and one of those measures is the emergency services levy and, if you vote against the transport development levy, you are going to make our job $100 million harder and we will have to find other ways of implementing them, so you may, inadvertently, be increasing business taxes.

Mr VAN HOLST PELLEKAAN: When you said in your budget speech in another place that you will increase payroll tax in a year's time, it is actually possible you might change your mind on that?

The Hon. A. KOUTSANTONIS: We may.

Mr VAN HOLST PELLEKAAN: You said you did not want to touch land tax, but what is the difference between increasing the emergency services levy and increasing land tax?

The Hon. A. KOUTSANTONIS: Because it is not a land tax. It is a fee for services.

Mr VAN HOLST PELLEKAAN: It is a property tax.

The Hon. A. KOUTSANTONIS: When the Liberal Party invented the emergency services levy, they were attempting to design a revenue base much like councils have. You work out the cost of delivering these volunteer services—SES and CFS—and paid services like the MFS and some aspects of police to respond to emergencies. What the tax is designed to do, I am advised, is to work out the total cost of delivering those services and then apply that tax on the basis of property value across South Australia with all the discounts that are in place for regional communities and regional centres. Then we applied a 50 per cent remission regardless of the ability to pay. Whether you had a $10 million home or a $250,000 home, you got a remission on your emergency services levy.

What we have done is remove that remission to fully fund our emergency services. We took it out of your taxes normally to offer that remission and we have moved that money into health and education. The reason we have done so is the commonwealth Liberal government has made once-in-a-generation draconian and dramatic cuts to health and education, and we are expressing our values by trying to maintain what we think are the two most important services we can offer our community. There are no silver bullets left in this world other than education, and the way civilisations are judged is by the way we treat people who are sick, old and infirm.

Quite frankly, this government will express its values, and the values we are expressing are that we want to make sure we can minimise the impacts of the cruellest cuts made by the Prime Minister on health and education. That is why we have increased those taxes—or removed the remissions.

Mr VAN HOLST PELLEKAAN: You did that with the full knowledge that that would be an immediate impact on every small business—

The Hon. A. KOUTSANTONIS: Less so than residences.

Mr VAN HOLST PELLEKAAN: —that owns or rents a property—essentially, that works from a property.

The Hon. A. KOUTSANTONIS: But it is applied equally. Businesses, I am advised, have a lower increase but I will check that for you. Generally, it is about cost recovery for emergency services. It is not a new levy imposed. That levy was always in place. It is a levy that the Liberal Party introduced. It is your tax. You designed it, you brought it in, you championed it and now we have removed the discounts to pay for cuts your party has made in Canberra.

Mr VAN HOLST PELLEKAAN: But you did consider the fact that it is going to be a direct—

The Hon. A. KOUTSANTONIS: I suppose it is like you complaining to me about the impact of the GST on some services. Well, GST is your tax. It is your tax: you implemented it and designed it—not you personally, but your brand.

Mr VAN HOLST PELLEKAAN: I suspect, as Treasurer, you are very glad to receive every dollar that you get from it. At page 105, the same page, the 2013-14 estimated result—and this is again opportunities for small business—included a $218,000 grants and subsidies line. This compared to a budget of $70,000. Can you explain how it blew out?

The Hon. A. KOUTSANTONIS: I am advised that $150,000 in 2013-14 was for the small business support discovery program and $68,000 was for the small business policy evaluation and research program. They were incorporated within the renamed small business support program and the industry engagement program. I will get you more details of those grant lines so you have a better understanding of what they were used for.

Mr VAN HOLST PELLEKAAN: Would you, when you come back with that answer, let me know how many applications were made to grants and subsidies too?

The Hon. A. KOUTSANTONIS: Sure.

Mr VAN HOLST PELLEKAAN: Why is that grant and subsidy being removed?

The Hon. A. KOUTSANTONIS: The Our Jobs Plan supersedes these subsidy lines. That is a much more effective way of assisting small business, so we will be making these plans redundant in favour of the Our Jobs Plan, which is a much larger fund.

Mr VAN HOLST PELLEKAAN: Within the Our Jobs Plan then, is there grant and subsidy money or an equivalent dedicated for small business?

The Hon. A. KOUTSANTONIS: There are things like the Innovation Voucher Program—something that I was quite pleased to be involved in when it was first developed, much to the chagrin of the then treasurer—business transformation vouchers of $4.5 million, the ANZ Innovyz Start program, which I was very happy to announce, the microfinance fund. We have also provided $2.5 million over three years for Hills Industries. We have extended the small business innovation research pilot program. Of course, the biggest thing we can do for small business is reform WorkCover, which I look forward to your fulsome support on when it enters the parliament.

Mr VAN HOLST PELLEKAAN: Apart from the microfinance example that you used, there is nothing really there that is particularly targeted to small business.

The Hon. A. KOUTSANTONIS: I disagree. I think the Innovation Voucher Program is absolutely for SMEs. The business transformation vouchers program assists businesses access services to specialist consultants, which a lot of small businesses find very difficult to get access to, to develop implementation plans to improve productivity and competitiveness or to diversify new product markets.

A lot of small businesses often look inwards because they are so busy and time poor they do not have the opportunity to go out and get the consultants, to get the accounting firms to do the work for them. What this voucher does is give them the access to actually lift their eyes a bit, have a look around them and see what other businesses that are slightly larger are doing. It is a very good program. The ANZ Innovyz Start program is all about small business.

The truth is, South Australia put the S into SME. We are a state of SMEs, and most of these programs and the microfinance fund are designed around small business. I have to say the one thing that I hear the most from small businesses, that they are most concerned about, is their WorkCover levy. The WorkCover levy is the one that frustrates them the most and the one that the government agrees needs remedying the most.

The truth about the WorkCover levy for small business is that small businesses are often incapable of dealing with workplace injuries. They are incapable of dealing with the red tape that comes with a workplace injury and the return-to-work programs that are pushed upon them, and the levy becomes so burdensome that they often just throw their hands in the air and give up. What we are attempting to do through our reforms is have some very difficult discussions with our friends in the union movement about the appropriateness or otherwise of actually having our own state-based welfare system.

Welfare should be delivered by the commonwealth and, to use the Prime Minister's own language, if he wants to have every state sovereign—no worries, I will give it to him in spades. He can have all the sovereignty he wants, because welfare is his provision. What we are attempting to do through WorkCover is to minimise costs. The tax cuts that we can give people through WorkCover far exceed anything I could possibly do within the budget, because the good thing about the WorkCover cuts is they will not impact on our budget, but they are a massive saving to business. If we get our levy down to about 2 per cent we are talking about a nearly $180 million a year tax cut.

I understand there is a lot of cynicism within the business community and within the opposition. After 12 years of government, there has not been much reform in WorkCover. I would ask you to have an honest look at our legislation—and that is not implying that you have not done that previously—and judge us on our intent and the merit of the bill. I would ask you, once you have seen the bill, to support the government's intent to try to lower the levy as low as we possibly can while maintaining dignity for injured workers, and try to give small business the biggest tax cut we could ever possibly give them.

Mr VAN HOLST PELLEKAAN: I will keep that in mind, minister.

The Hon. A. KOUTSANTONIS: I am glad because we need an advocate in your party.

Mr VAN HOLST PELLEKAAN: With these programs under the Our Jobs Plan, I accept that small business can attract those but certainly big business could too, and big business could gobble up an enormous amount of the money and take what 10 or 100 small businesses could have. Is there an allocation in those programs set aside specifically for small business, given that a program in the budget specifically for small business has been taken away?

The Hon. A. KOUTSANTONIS: A lot of these grant programs and Our Jobs Plan would not be attractive to very large business because often you will find that they do not require a subsidy or access to capital. They require removal of red tape and bureaucracy and are more interested in the approvals and planning side of their delay—whether it is Peregrine Corporation, BHP, Santos. They are not really that interested in accessing grants. They are more interested in regulatory burden. Small business is more interested in financial incentives to upgrade or access grant lines. So, intuitively, you are already cutting out most of the big business.

But do we have a hypothecation for small business? We have very good people like Len Piro and Göran Roos looking over these sorts of things, and people like Mario Pegoli from Investment in SA and, of course, the chief executive and the new chief executive who is coming in, looking over all of these things and saying, 'Look, is it really worth our while giving these large grants to these large companies that do not really need them or are we better off helping the small start-ups?'

We are better off helping out small businesses who typically could employ 15 people if given the right opportunities and access to markets. These grants are inherently designed to try and benefit those businesses, so I do not think you are going to see Santos, Peregrine Corporation, Beach Energy, BHP or AusMinerals turn up and say, 'We want a $15,000 grant to innovate.'

Mr VAN HOLST PELLEKAAN: Budget Paper 4, statement 4, page 106. I refer to the quote for 2014-15 'Deliver phase 2 of the South Australian Small Business Innovation Research Program'. How much funding was provided to the program in 2013-14 and budgeted for 2014-15? It is the third dot point from the bottom.

The Hon. A. KOUTSANTONIS: Phase 2 is a development phase which will cover more intensive research and development and detailed product development. It will fund up to two companies for a maximum of half a million dollars each, for up to 24 months, I am advised.

Mr VAN HOLST PELLEKAAN: And over the forward estimates?

The Hon. A. KOUTSANTONIS: Phase 3 is for commercialisation of the product. No funds will be provided as part of the SBIR for this; however, DSD and our partner agencies can provide basic assistance and advice to assist with the commercialisation process.

Mr VAN HOLST PELLEKAAN: Sorry, minister, does that mean phase 1 was for year 1, phase 2 is year 2 and then it stops? Is that what you are saying?

The Hon. A. KOUTSANTONIS: My apologies, that is for SA Water's phase. The 2013-14 budget provided an additional $2.96 million over three years to extend the initial challenge to phase 2 and run a second complete challenge. My apologies. I was talking about one discrete program. The budget offers additional money of nearly $3 million over three years to extend the challenge.

Mr VAN HOLST PELLEKAAN: Okay, thanks.

The Hon. A. KOUTSANTONIS: My apologies on inadvertently misleading you.

Mr VAN HOLST PELLEKAAN: I understand and accept that. What were the results of the pilot program?

The Hon. A. KOUTSANTONIS: I will let Len Piro answer this, like a proud father.

Mr PIRO: Thank you. The initial program was with SA Water and the challenge they put forward was to take particular materials out of their wastewater—phosphorus-based materials. Two companies were funded to develop technology that would have met that challenge and at this stage SA Water is just finalising their decision on which one of those two will go forward, if either of them meet their requirements.

Mr VAN HOLST PELLEKAAN: So two companies have applied and only one—

Mr PIRO: There were six who applied and two—

Mr VAN HOLST PELLEKAAN: Down to a shortlist of two, now.

Mr PIRO: Correct. Two got funded—

Mr VAN HOLST PELLEKAAN: And one will be chosen.

Mr PIRO: If they have the technical merit, of course.

Mr VAN HOLST PELLEKAAN: Just moving to the top of that same page, the very first bullet point under Highlights for last year: 'Implemented initiatives to support the small business sector to engage in supply chains and business opportunities created by the state's infrastructure resources, energy and defence projects.' Can you tell me why this is here rather than in manufacturing and innovation? Why is this a highlight here in terms of opportunities for small business rather than under manufacturing and innovation? Is this something that is specifically targeted to small business, just harking back to those other questions about other grants?

The Hon. A. KOUTSANTONIS: It is all about providing $25,000 in funding to the Defence Teaming Centre to deliver a major project ready skills accreditation program to small and medium-size enterprises in the defence advanced manufacturing sector. Basically, it is procurement pre tender, down a supply chain.

Mr VAN HOLST PELLEKAAN: Procurement from small businesses.

The Hon. A. KOUTSANTONIS: It is getting them procurement ready so they can tender. The biggest impediment that a lot of people have to accessing government work is the inability to know how to tender properly. You would be surprised how much time we have to spend and the problem with that is the high reporting requirements that we have as a government, and the rightful scrutiny that you put us under. It would be a lot easier if we were a private company going out to tender, rather than the government. When you have small businesses attempting to tender for projects, it is difficult because the requirements are much higher and often it is a lot of work for very little reward and it is much easier just to bypass it altogether.

The outcome of that is that we do not get very good competitive tenders because the small business base that we have here close to market cannot tender, because they think it is too difficult, so we get the same people—the same suspects—turning up over and over again who know how to tender for government work quite well, who charge appropriately. What we are trying to do is to encourage people who do not usually get access to this to be tender ready, so they can procure for down the supply chain. It is hard work; it is difficult work. You do get good rewards out of it, but you have to keep on doing it.

Mr VAN HOLST PELLEKAAN: Why is funding for that program not going past 2016-17?

The Hon. A. KOUTSANTONIS: We will assess it and then make a decision in that budget.

Mr VAN HOLST PELLEKAAN: Referring to page 105 and the Red Tape Reduction Steering Committee, what red tape reduction initiatives have been successfully implemented in 2013-14?

The Hon. A. KOUTSANTONIS: Hundreds of millions of dollars worth of red tape reductions. Do you want to know what we have done since coming to office?

Mr VAN HOLST PELLEKAAN: Just 2013-14, thanks, minister. Just the ones that worked.

The Hon. A. KOUTSANTONIS: Through the measuring standards the government has, we estimate that we have cut about $150 million. I am advised that Deloittes independently audited our red tape reduction programs, which cut nearly $150 million worth of red tape but, like roses, when you prune them, they grow back, so you always have to keep on cutting red tape. You cannot rest on your laurels. I notice that parliamentary secretary Frydenberg is undertaking a red tape reduction with very large targets.

If you go back historically, the commonwealth government and the state governments have all had these red tape reduction programs in place and you keep on cutting red tape. We think we have cut $150 million, but what we have identified is a series of specific red tape issues that are high priority. They are: transacting with government online and streamlining our processes, in particular for small business; increased accountability for approval of time frames within government, that is, we want people to be accountable for decisions they make about extending time lines; and rationalising and streamlining accreditation and audits for food and beverage in manufacturing business. These are some of them.

Some other ones are, for example, options to reduce the regulatory burden for food manufacturing businesses in reducing trade waste, and public stocktake of legislation to identify priority regulations that are overly burdensome. For example, do we have legislation that is out of date, pre internet, pre online shopping or pre online approvals that make it redundant or require it to be thrown out, or is irrelevant from a business perspective? Does government need it?

Often you will have crown law or an agency or parliamentary counsel say, 'This is essential,' and you will have business say, 'Look, that is just an impediment for me even getting involved. There has to be another way.' So, this is all about those red tape reduction programs we have in place.

We want to work collaboratively with industry, so Business SA is on the committee with us, as is the South Australian Chamber of Mines and Energy, as are a lot of other small representative businesses who reflect the demographics out in South Australia of SMEs and large manufacturers, giving us advice on what they are facing day to day.

For example, I had someone tell me anecdotally that they were in breach of food standards because they had an air dryer next to a tap but no towels in the dispenser. If the dispenser was taken down, the air dryer would have been sufficient, but they still got a fine. That is crazy. That is an overburdensome regulation and, no doubt, either a council or the government paid to have that regulator out there inflicting pain on a business simply because someone did not fill the paper towel rack when they did not need the paper towel rack at all. If the owner had gone out with a screwdriver and taken down the paper towel dispenser because he had the dryer there, all would have been okay. That sort of madness sends me crazy and I want to get rid of it, as I am sure all 69 state MPs would love to see that all gone, so this is not a party political issue, this is just about common sense.

Mr VAN HOLST PELLEKAAN: When was the Red Tape Reduction Steering Committee first established and how regularly does it meet?

The Hon. A. KOUTSANTONIS: It commenced in February 2014, but we have had them since 2002, I imagine. We have had a number of iterations of red tape reduction committees, but I sit on it and I attend.

Mr VAN HOLST PELLEKAAN: How regularly does it meet?

The Hon. A. KOUTSANTONIS: I think it meets every three months, but I could be wrong on that, I will check.

Mr VAN HOLST PELLEKAAN: What sort of KPIs do you have? I imagine with red tape there is low hanging fruit and it probably—

The Hon. A. KOUTSANTONIS: We have done all our hanging fruit.

Mr VAN HOLST PELLEKAAN: That is what I am getting at. How will you judge ongoing success?

The Hon. A. KOUTSANTONIS: By actual red tape we have reduced. We could set a value, which we have done in the past, that could be one way. I think industry is a bit sick and tired of the value aspect. I think time and payments of accounts are good KPIs. For example, DMITRE pay 96.5 per cent of their invoices within 30 calendar days, and that is good, TAFE 94 per cent, DFEEST 98.6 per cent, Arts 97.2 per cent, but we could improve these numbers. My view is: why do we not pay them all within 30 days and then if we have a dispute, we will be good model litigants and take them to court and do it the other way. Obviously Treasury have their own views about how we pay these things. That is one way we can set KPIs, but I think I will let industry set the KPIs for us because they are the ones who are most affected.

Mr VAN HOLST PELLEKAAN: What funding goes towards that committee?

The Hon. A. KOUTSANTONIS: Over two years, $300,000, I understand.

Mr VAN HOLST PELLEKAAN: So, $150,000 a year?

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

Mr VAN HOLST PELLEKAAN: Just help me understand where that money comes from. You have said that, essentially, you can identify $150 million worth of savings to small business through the removal of the committee—

The Hon. A. KOUTSANTONIS: No—

Mr VAN HOLST PELLEKAAN: Sorry, removal of the regulation because of the work of the committee. Where does this—

The Hon. A. KOUTSANTONIS: If there were a committee that cost me $150 million it would be gone.

Mr VAN HOLST PELLEKAAN: I understand that.

The Hon. A. KOUTSANTONIS: Mr Garrand has just made a very good point. Savings are basically the time it costs someone to do something. If it takes you three years to apply for a mining licence, that is excessive red tape; if it takes you three years to apply for a food licence with the appropriate regulations for planning. I think we should look to set world's best practice. I think time is the big issue for me; I want to speed up the process. I want the interface with government to be short, fast and satisfying. Sound familiar?

Mr VAN HOLST PELLEKAAN: I wasn't going to ask if it was your speciality, minister. I refer to Budget Paper 3, page 186, looking at the very top of that page. In your calculations, how many specific, individual small businesses will actually benefit from this payroll tax concession?

The Hon. A. KOUTSANTONIS: Lots. I signed their letters, and I have to say it was a nice letter that I sent them. I will find out the exact number and get it to you.

Mr VAN HOLST PELLEKAAN: Can you share with me how, in your dual role as Treasurer and Minister for Small Business, you weigh up that potential decision about not removing the concession for payroll tax? Obviously, there are competing forces there.

The Hon. A. KOUTSANTONIS: Well, it will not be a decision I make on my own; it will be part of any budget process. Obviously my cabinet colleagues will have to decide about the merits or otherwise of that foregone revenue, and whether we spend that revenue. It is largely dependent on what the commonwealth does, and what my capacity is to withstand any future cuts.

I think it is important that we put the budget into surplus, as planned, but I also believe that we will have to do some very quick, evidence-based research about whether or not the most efficient way of delivering payroll tax is to have tax-free thresholds. If you asked an economist they would say 'Remove the tax-free threshold.' I don't support that assertion, but that is what they would say. They would say, 'Make it efficient. Charge everyone payroll tax, not just people earning a certain amount.'

I know, for example, that there are many people in the industry who say to me that they are competing, across the road, with someone who is not paying payroll tax. Pubs, for example, are always complaining about restaurants. Pubs are regulated to within an inch of their life because of poker machines and alcohol service. They cannot really fudge what their payroll and FTE count is, whereas a restaurant across the road may have less stringent reporting mechanisms in place for payroll. Their view would certainly be to remove the tax-free threshold and make everyone pay it as a level playing field; just drop the rate dramatically to raise the same amount of money.

My view on that is very different. The biggest impediment to payroll tax is not those who are paying it now; it is those who are about to pay it, because all of a sudden it is a new cost on the business and it is very difficult to budget for it. It is very difficult to anticipate that it is coming, and obviously when it comes it hurts. We have to try to work out that gap between not paying it and paying it, and whether we are really impeding economic growth by having the threshold at that level. For people who are about to enter it, do businesses actually say 'Let's not expand, let's not make that decision because if we do my accountant tells me that our payroll tax liability will be X.'

I have to say that if that is occurring and it is occurring on a large scale then the tax is counter-productive, but you would have to offset that with the revenue you would get from the payroll tax and make a judgement about what you would do with those revenues. So, it is a difficult decision.

I note that the Victorian government modelled its—I cannot remember whether they lowered their threshold or increased the rate; they did one of the two. They are difficult decisions, but by the same point, because most states have transactional taxes, if the property market returns back to trend, it may not be a problem at all. We could implement the cuts and make them permanent. It depends entirely on what happens to our other transactional taxes as well.

Premier Baird was able to deliver a surplus this year on the basis of a windfall gain in conveyance duties—completely unbudgeted for, just a surge in the property market in New South Wales and he gets a surplus. That is the nature of our transactional taxes. When they come back, they come back hard. When they drop, they drop fast. They are not like the GST or income tax, which are quite regular and consistent.

Mr VAN HOLST PELLEKAAN: Thanks, minister. Given that the decision to remove the concession in a year’s time—if that is what you do—will no doubt hurt employment, what would you consider doing instead to support small businesses so that you can keep the government’s 100,000 new jobs by 2016 promise?

The Hon. A. KOUTSANTONIS: I do not accept the premise of what you said. I do not accept that it will hurt jobs. I said that it may. You have to remember that a lot of people who are now taking the benefit of the payroll tax concession may actually grow into the part of the threshold that does not give them the concession. So there may be a number of businesses that drop out simply because they have moved up the scale and do not become eligible for the concession anymore. There might be a whole new group that comes up into it that has never had the concession. I cannot say that the concession is going to affect the same people if you remove it. I do not think that you can make that assertion. However, we are doing what we can to try to create 100,000 jobs. We have created somewhere around 10,000 jobs already up to 2010. If you look at what we have done over the last few months—

Mr VAN HOLST PELLEKAAN: Sorry, did you say up to 2010?

The Hon. A. KOUTSANTONIS: Up to 2010, some—

Mr VAN HOLST PELLEKAAN: But this is—

The Hon. A. KOUTSANTONIS: I know. You are talking about the 2016 target, but I am saying that this is what we have done. In the past month what you saw was an increase in the unemployment rate but an increase in the participation rate as well. So you actually saw 1,100 jobs created in the economy last month. However, at the same time, you saw more people looking for work. So, conversely, that is a good thing because more people are looking to engage in the South Australian economy. People are not retreating from the economy but they are getting involved. So I was actually quite buoyed by the participation rate increase.

In seasonally adjusted terms, the growth in hours worked in June 2014, South Australia was stronger than the national average of any other state. South Australia was up 2.3 per cent, WA 2.2, NSW 1.4, VIC was up 0.7, Queensland went down, Tasmania went down 0.5 and Australia went up 0.9. So, in terms of hours worked, South Australians did better in seasonally adjusted terms. Full-time employment has increased for eight consecutive months in South Australia, an increase of 6,700 or more and 800 a month over the last six consecutive months, according to the ABS, I am advised. So, signs are good but, in the end, like I said in the first estimates hearing, the biggest threat we have is confidence.

I give credit to the Prime Minister and the Treasurer. When they were first elected they did a very good job of boosting the confidence of the nation. Business felt relieved that the drama of the previous six years was over. The states were relieved that the drama of the previous six years were over and people started spending again. They felt more secure. Regardless of their political persuasion, they felt that the commonwealth issues had been resolved by and large, and then along came the commonwealth budget, which has adversely affected nearly every single demographic in Australia.

What you are seeing, whether you are high income, low income, whether you have a job, is anxiety levels are up and consumer confidence is down and it is all pretty much pinpointed back to that commonwealth budget. They were doing quite well leading up to it. In my view, the mistake the Prime Minister and the Treasurer made is their budget repair program, their so-called budget emergency. They may have cut off their nose to spite their face because the dent that they have made to confidence is going to ripple around Australia. They have elections coming up in Queensland, New South Wales and Victoria and I think the Liberal Party is about to pay a very big price in probably two of those states on the basis of what the Prime Minister has done.

My biggest threat over the next 12 months is not us, it is not you, it is confidence, people feeling secure to go out and spend money. So, whatever impact and pull you have with your commonwealth friends I would say to them, 'Pretty please with a cherry on top, talk the economy up, stop talking it down.' Retail turnover is up, exports are up, the underlying metrics are good, new car sales are up. I mean, things are getting better but we constantly hear negative commentary on the economy and that hurts, that impacts and it has to stop.

Mr VAN HOLST PELLEKAAN: Budget Paper 4, Statement 4, page 105, looking at the second dot point there under Highlights 2013-14:

Provided self-help small business support services via multiple mediums to assist start-ups, early-stage businesses and those businesses wishing to grow.

How many businesses were engaged and assisted in this service in 2013-14?

The Hon. A. KOUTSANTONIS: I will also point out that the recent NAB Business Confidence Survey showed South Australia and Queensland as the most confident mainland states for business activity, suggesting that firms are participating in a turnaround of the tough conditions faced in these states' economies, whereas New South Wales follows at plus six, are the latest stats from the NAB business survey. Now to your question, approximately 370 regional small businesses have participated to date, I am advised, with nearly 94 per cent saying that the workshops have helped increase said knowledge and interest in developing a web presence for their businesses.

Mr VAN HOLST PELLEKAAN: Is there a key target performance indicator for a measure of this program's success?

The Hon. A. KOUTSANTONIS: I will find out and get back to you.

Mr VAN HOLST PELLEKAAN: What were the multiple mediums used? It says here 'via multiple mediums'.

The Hon. A. KOUTSANTONIS: I would imagine it is social media, online portals, Business SA, Defence Teaming Centre, Polaris.

Mr VAN HOLST PELLEKAAN: Sorry, I cannot hear you.

The Hon. A. KOUTSANTONIS: I will give them to you on notice. There are a whole series.

Mr VAN HOLST PELLEKAAN: Essentially, is that providers? Is that what you are saying? Rather than media, like social media, it is actually providing organisations that helped you deliver the programs.

The Hon. A. KOUTSANTONIS: We will send you a detailed answer on notice.

Mr VAN HOLST PELLEKAAN: Where was the most success achieved, in the start-up, the early stage businesses, or those wishing to grow?

The Hon. A. KOUTSANTONIS: Business SA ran a program. The regional ones had quite a good penetration. I suppose it is hard to say. What we will do is I will give you a list of all of them and you can go through and make your own assessment about what you think was successful and otherwise, rather than me preach to you from—

Mr VAN HOLST PELLEKAAN: But, minister, I will not know if a company necessarily was a start-up or an early stage or a business wishing to grow. I am just looking to know where was the most success found with regard to the hard outcomes of the program?

The CHAIR: I will just advise the committee that there is one minute left.

The Hon. A. KOUTSANTONIS: Giving an anecdotal example, I have just been advised that SAYES, which is a young entrepreneurs program, went from 15 start-ups to 50 because of the program we ran. That is an example of the take up and the success. I will try to give you a detailed answer on notice which spells out what we think have been the success stories.

Mr VAN HOLST PELLEKAAN: It identifies those—

The Hon. A. KOUTSANTONIS: Sure. That was a very impressive piece of information.

Mr VAN HOLST PELLEKAAN: On the same page, has the government done any modelling that indicates how many jobs are predicted to grow in small business specifically in 2014-15?

The Hon. A. KOUTSANTONIS: We do not break it down by small business employment forecasts.

Mr VAN HOLST PELLEKAAN: In terms of the jobs growth targets, it is not broken down into different sectors of employment?

The Hon. A. KOUTSANTONIS: No.

The CHAIR: On behalf of the committee, I thank the Treasurer and his officials and departmental people for coming today. There being no further questions, I declare the examination of the proposed payments of the Department of State Development completed.

At 17:01 the committee adjourned until Friday 18 July 2014 at 10:30.