Estimates Vote

Department of State Development, $644,298,000

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

Minister:

Hon. S.E. Close, Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for the Public Sector.

Departmental Advisers:

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

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

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

Mr D. Cussen, Acting Director, Manufacturing and Small Business, Department of State Development.

Mr P. Tyler, Director, Automotive Transformation Taskforce, Department of State Development.

Mr M. Ganley, Chief of Staff.

The CHAIR: I remind members that this is a fairly informal proceeding. The general rules are that we have three questions each side. Supplementaries are the exception, rather than the rule, but again, we will be flexible and, hopefully, civilised. All questions need to be addressed to the minister, not the advisers. All questions on notice need to be back by Friday 26September, and normal standing orders apply. Welcome to the Minister for Manufacturing and Innovation and the Minister for Automotive Transformation. I declare the proposed payments open for examination and I refer members to Agency Statements, Volume 4. I now call on the minister to make a statement if she wishes and also to introduce her advisers and officials.

The Hon. S.E. CLOSE: Thank you, Chair. With your permission, I would like to include some details about the automotive transformation in my opening statement as there is only half an hour set aside for that, and I do not want to intrude in that section with another opening statement. There are few industries undergoing more structural change and upheaval in South Australia, and indeed Australia, than the manufacturing sector. Australia's high-cost economy, the continued strength of the Australian dollar, aggressive international competition and more recently the announced closure of the entire Australian automotive new car build industry by 2017 are adversely affecting the sector and the capacity of our local manufacturing businesses to thrive.

South Australia's economy has traditionally relied heavily on manufacturing to provide jobs. Over recent decades, the reduction in tariff barriers and entry of low-cost competitors into the global market has put enormous pressure on traditional manufacturing jobs in this state. Faced with that pressure, a transition has been underway in this state, a transition away from high volume mass production towards more innovative low volume advanced manufacturing. With the federal government's decision to withdraw support for the car industry, the work required to support that transition to new job creating industries has been dramatically hastened.

We need a budget that is focused on creating new innovation driven employment opportunities, jobs in infrastructure projects to build roads and public transport that improve our economic efficiency and maintain Adelaide as a liveable city, support for component manufacturers so that they can retool and find new markets when Holden closes, assistance to our growth industries like mining and health for jobs in the future, and more training places to develop the skills needed to compete in high quality low volume production.

This is a budget designed to support new jobs and sustain the jobs growth that South Australia has experienced in the last 12 years. Manufacturing will undoubtedly continue to play a significant role in our economy, including in regional South Australia. Currently, more than 80,000 people are employed directly in manufacturing across the state. South Australia needs to be a place that makes things. Our economy will continue to rely on local manufacturing to value-add to our tradeable goods, to increase productivity, and generate flow-on jobs in the services and other sectors.

The state government is acutely aware of the importance of this sector and has repeatedly affirmed its commitment to support the growth of advanced manufacturing. Indeed, growing advanced manufacturing is one of this government's core economic priorities. To achieve this aim the government has had the foresight to implement a 10-year industry strategy called Manufacturing Works. Set in train well before the decision by Holden, Ford and Toyota to cease their automotive production in this country, Manufacturing Works underpins this government's sustained effort to guide the transformation of the automotive industry and the broader manufacturing sector towards high-value opportunities.

The strategy identifies five roles in which the state government can encourage innovative high value-adding by our manufacturers to better position themselves to seize new market opportunities. These roles being:

a civic leader in the broader interests of South Australia and its residents;

a sophisticated purchaser to provide local firms with an opportunity to partner with state government agencies to develop products and services;

a broker of knowledge and relationships, whether that is between local governments and industry or the research sector and manufacturers;

a responsive regulator to create a better regulatory environment in which manufacturers can operate; and

an infrastructure and information provider, such as the government's redevelopment of Tonsley Park as a high-value advanced manufacturing precinct.

In this budget the government aims to ensure that South Australia's manufacturers have the capability and flexibility to support other growing and established sectors. These include:

the mineral resources and energy sector, where opportunities are being created for minerals processing and technology and engineering related services;

agriculture, where another of our core priorities, promoting our premium food and wine from our clean environment, provides opportunities to value-add and capture new markets, especially in Asia; and

other opportunities that exist in forestry and forestry-related products, as well as clean technology and health, medical devices, and assistive technologies.

Many of these sector opportunities also open up areas for improved exports which are being supported elsewhere in the Department of State Development through our India and China focused engagement strategies. In time, the local manufacturing industry will look differently to how it does today with fewer production lines, smaller buildings, and more integration within communities. Those who work in the sector will be highly skilled and those skilled workers will be highly sought after.

This government does not subscribe to the hype that there is no future for manufacturing in South Australia. Yes, the future will be different, but there is a sweet spot for South Australian manufacturers and it is not in mass production. Rather, our future lies in the production of niche products and the provision of related services which involve high complexity, high variability, high value-add and high flexibility. These products and services are, by their nature, predominantly low volume.

Technology is also changing at a rapid rate. The uptake of new technologies such as 3D printing, robotics, photonics and sensors, individualised production control systems and advanced materials will enhance the competitiveness of smaller companies in a high-cost environmental. Combine this with the growing market opportunities I spoke about previously—in mining and energy, health and medical, food and beverage, manufacturing and renewables—and manufacturing in this state does have a future.

The government launched Manufacturing Works in October 2012 with an initial budget of $11.1 million. Since that launch, 190 manufacturing firms have participated in innovation capacity building programs. The Innovation Voucher Program has had 36 applicants approved for funding, which includes 10 firms that have never previously engaged with the research sector.

New programs have been implemented to stimulate the adoption of new technologies in the fields of medical technology, photonics and nanotechnology. Others are currently being explored in areas such as 3D printing and big data. A project to develop the capacity of firms to operate as high-performance workplaces is being developed with the University of Adelaide. Some of South Australia’s leading manufacturers, including Seeley International, Ellex and Bickfords, have agreed to participate as role models and best-practice case studies.

The Mining Industry Participation Office conducted an ICT Roadmap for Minerals and Energy Resources Project to identify and develop new local innovative information and communications technology (ICT) products and services that contribute to improved productivity, safety, environmental management and community engagement in the South Australian resources sector. We have also developed road maps for food manufacturers and forestry firms in the South-East, where major plantation growers are now collaborating to attract investment in large-scale processing in the region.

The GRANTassist website has been established as a one-stop shop directory to help firms locate government support programs that are most relevant to them. We are now in the process of accelerating and amplifying these efforts, largely due to the commonwealth government’s withdrawal of support for the automotive industry. The state government now has only a short window in which to prepare our manufacturing sector for a future without car building.

This government has made significant commitments to the workers who will be affected by the closure of GM Holden and the suppliers who will need help to diversify and find new markets in the next three years as the Australian automotive industry pulls down the shutters.

The government’s Our Jobs Plan provides $60.1 million to help South Australian manufacturing to prepare and take action to diversify. Within five years the Department of State Development will implement manufacturing industry programs with a budget of $39.48 million, including $11.65 million to support automotive diversification.

The government has set up the Automotive Transformation Taskforce to provide leadership as we face up to the challenges created by the closure of the new car build sector. The Automotive Transformation Taskforce is a new business unit that sits within the Department of State Development, with a board that is chaired by Mr Greg Combet AM. The task force brings together senior government staff with expertise in labour market and business structural adjustment. It will carry out its role until June 2018, by which time Holden will have closed its doors and our local suppliers will have diversified, consolidated to seek other buyers outside Australia or, in some cases, I am afraid to say, shut down.

The task force will deliver targeted programs to transition automotive industry companies and their workforce as well as liaise with the commonwealth and Victorian governments in the final design and implementation of elements of the $155 million Growth Fund. The task force will also take the lead in implementing the labour market adjustment and automotive supplier diversification components of Our Jobs Plan.

One important way government can facilitate growth and innovation in the private sector is to provide an environment for business, entrepreneurs and researchers to meet, talk and ultimately develop and commercialise their ideas.

As members would be aware, the former Mitsubishi automotive manufacturing site at Tonsley is being redeveloped as a unique hub for high-end manufacturing and job creation. Since February 2012, stakeholders signing up to the government’s vision for the site include:

Basetec Services, Signostics, ZEN Energy Systems and MAN Diesel & Turbo Australia;

Siemens is about to begin construction of its new $5 million turbo-machinery workshop;

Tier 5 is establishing an energy efficient, state-of-the-art data centre on the site, a $113 million investment;

Tonsley TAFE is open, and training 800 students a day at its state-of-the-art trade training facility;

Flinders University is building Flinders Tonsley, a $120 million investment that incorporates the School of Computer Science, Engineering and Mathematics and other Flinders business units such as the Medical Devices Research Institute, Flinders Partners and the New Ventures Institute;

Flinders is also building an $8 million pod with coinvestment of $4 million from the state government, which will house approximately 2,000 square metres of laboratories, engineering workshops and teaching facilities;

the Onshore Petroleum Centre of Excellence training facility is being established with funding from the Mining and Petroleum Services Centre of Excellence, a facility that is a collaboration between Santos, Beach Energy, Senex Energy, the state government and TAFE SA to ensure the provision of trained staff for an expanding onshore petroleum industry;

construction of the relocated State Drill Core Reference Library as a cornerstone of investment in a resources hub at Tonsley will begin later this year; and

negotiations are also underway with a preferred operator to establish accommodation at Tonsley for start-ups, entrepreneurs and professional services in an affordable, collaborative environment.

Tonsley is an outstanding role model for what can be done when the government and wider community collaborate to create an innovative precinct. The closure of the Mitsubishi manufacturing plant at Tonsley Park could have dealt a severe blow to the community but, instead, we are creating a showcase on that site for government and industry partnerships in research and development, training and skills development as well as innovation and commercialisation.

I mentioned earlier that manufacturing plays a vital role in regional South Australia. In addition to the government's significant undertaking to guarantee Nyrstar's $514 million redevelopment of Port Pirie, the government also supports manufacturing in regional South Australia through case management, the Industry Capability Network, and various programs for small business.

A Port Pirie-based engineering firm has recently been awarded funding through the Photonics Catalyst Program for its proposal to adapt and engineer high temperature sensors to be used at Nyrstar's Port Pirie smelter. On the Limestone Coast, the government has allocated $16.5 million towards five projects from the $27 million South East Forestry Partnerships Program to facilitate a new investment of $36 million in the forestry sector. On the Fleurieu Peninsula, the government is working with regional winemakers to support the development of high-value luxury wines and, of course, cabinet recently held meetings in the Riverland where many local residents and firms had the opportunity to share their vision for the region directly with members of cabinet.

There is a lot to be gained from being out in the regions to hear directly from business owners and community leaders about exactly how they feel government can best help them address the challenges they face. Similarly, the more than 100 meetings and site visits with businesses and stakeholders that I have attended since becoming minister have given me enormous understanding of the task at hand, but also confirmation that we are heading in the right direction.

I will now turn to the budget. For presentation purposes within the Agency Statements, and pending the finalisation of the new agency's overall 2014-15 budget strategy, notional savings of about $1.1 million have been attributed to the Manufacturing Innovation Program, based on pro rata FTE numbers. Given the importance of this program in terms of jobs growth, every effort will be made to minimise the impact of final budget savings where practicable.

The Manufacturing Works strategy has positioned us well to address the broader reforms that are needed within the manufacturing sector, while Our Jobs Plan provides a targeted approach to addressing the specific issues associated with the closure of the entire Australian automotive, new-build car industry. In an era of financial restraint, the government will seek to expand the reach of programs that are currently available to help firms build their innovative capabilities. We will continue to provide a supportive environment for manufacturers to collaborate with universities, to commercialise new technologies and leverage our world-class research.

We have every reason to be optimistic about the future of manufacturing in South Australia. Our challenge as a community and the government is not to confuse optimism with complacency. Urgency is required—in government, in industry and in research institutions—and this is a budget that reflects that urgency. I now welcome questions from the committee.

The CHAIR: Thank you, minister, for that comprehensive opening statement. Does the opposition have an opening statement at all, or would you like to go straight to questions?

Mr VAN HOLST PELLEKAAN: Just very briefly, Chair, thank you. I think it is important to put on the record that, with regard to outcomes and objectives in this area, the government and the opposition would be exceptionally close to each other. We do disagree on certain issues about how we achieve those objectives, but I would like to put very clearly on the record that the opposition is exceptionally supportive of the state government aiming for those objectives with regard to manufacturing innovation and automotive transformation sectors and we will certainly point out where we think that could be achieved in a better way.

Budget Paper 4, Volume 4, page 114. I refer to a statement made yesterday by the Minister for Defence Industries in estimates, where he said with regard to the future submarine building project:

…the lynch pin to the future of Australia's manufacturing sector. We have lost the Olympic Dam expansion; you might call that strike 1. We have lost the automotive sector; you might call that strike 2. If we do not get it right with future submarines and the frigates, I would call that strike 3, and I would have serious fears for the future of this state's manufacturing sector.

I would ask whether you agree with that statement or not.

The Hon. S.E. CLOSE: I would note that Olympic Dam will happen sometime. I think that was reflected in the Deloitte report, that we need to bear in mind that the resource remains there, it is a world-class resource and at some point it will happen. I certainly understand why the minister made reference to it being a challenge because we had expected it to come online earlier. The loss of the new car build sector is absolutely a serious blow, and you would be aware of how hard this government worked to keep that sector going.

As the member for Port Adelaide, I can say how important I regard the defence sector to be. There are people currently working at Techport, working in Mawson Lakes and, of course outside my electorate, working in Edinburgh Parks, who are dependent on procurement decisions that are going to be made by a different government—by the federal government. So, I think it is extremely important that they carefully consider the impact on the South Australian economy, and therefore on the Australian economy, when they make their procurement decisions.

Mr VAN HOLST PELLEKAAN: Same budget reference. Please advise how the government will be reducing the Program 12: Manufacturing and Innovation budget from $22.6 million in 2013-14 to $18.9 million in 2014-15?

The Hon. S.E. CLOSE: I will read this and see if it gets to the answer you are looking for. I am advised that the movement in the total expenses between the 2014-15 budget and the 2013-14 estimated result is a $3.6 million decrease. Decreases of $7.1 million are due to the following: a decrease of $2.8 million due to the once-off funding in 2013-14 relating to the sale of a Renewal SA property at Felixstow; a decrease of—

Mr VAN HOLST PELLEKAAN: Sorry, minister, there are three other conversations going on and I am struggling to hear you.

The Hon. S.E. CLOSE: —$1.2 million due to cessation of funding for the South East South Australia Innovation and Investment Fund in 2013-14; a decrease of $800,000 due to change in funding for the Manufacturing Works between the years; a decrease of $700,000 due to change in savings measures between years, including the impact of new savings from 2014-15; a decrease of $600,000 in overhead costs which are allocated to programs based on FTEs reduction, mainly due to once-off costs in 2013-14 relating to TVSPs for corporate staff and public sector renewal project; a decrease of $500,000 due to change in assistance to Hills Holdings Limited between years; a decrease of $500,000 due to change in the South Australian Small Business Innovation Research Pilot Program between years.

Increases of $3.2 million are due to the following: increase of $1.4 million in funding for future industries for South Australia between the years; increase of $1.2 million in funding for building a stronger South Australia, Our Jobs Plan between years; and increase of $600,000 due to changes in ministerial responsibilities during 2013-14, which have resulted in office costs being spread over a smaller number of programs.

Mr VAN HOLST PELLEKAAN: Thanks, minister, I appreciate that detail. Just in an overview summary, given that the budget for last year was $15 million, the actual estimated result for last year was $22.6 million, so approximately a 50 per cent overspend. Are you optimistic that this program will come in at the $18.9 million budgeted for this year?

The Hon. S.E. CLOSE: I am confident. I would not accept that it is an overspend in the sense that each item is explicable, as I have gone through in some detail, so I think the word 'overspend' is probably not quite right.

Mr VAN HOLST PELLEKAAN: Page 116 in the same book, with regard to the Tonsley redevelopment: is the government expenditure for Tonsley over 20 years still expected to be $253 million?

The Hon. S.E. CLOSE: Yes, it is but I am advised that a lot of that will be up-front, towards the front end.

Mr VAN HOLST PELLEKAAN: And the net cost (and this is information provided in estimates last year) is expected to be $77 million. Is that still on target, still the expectation?

The Hon. S.E. CLOSE: The Tonsley redevelopment project budget is actually held by Renewal SA. The total expenditure budget for the project is, as you say, $253 million, including land costs, planning, design, construction and operational costs. Project expenditure will be offset by $172 million of revenue through land sales of $145 million and rental income of $27 million. Independent economic analysis estimates that Tonsley will generate $492 million in net economic benefits and detract $1 billion in private sector investment over the project life.

Mr VAN HOLST PELLEKAAN: Is that $492 million the net benefit over the 20-year life of the project?

The Hon. S.E. CLOSE: That is correct.

Mr VAN HOLST PELLEKAAN: So, essentially, on a net outlay of $77 million, it will be a $492 million return predicted over the 20 years?

The Hon. S.E. CLOSE: That is what is anticipated.

Mr VAN HOLST PELLEKAAN: You gave in your opening statement a list of tenants at Tonsley. Are there any others that were not mentioned in your opening statement?

The Hon. S.E. CLOSE: There are a number we are in discussion with, but we are not able to yet talk about them.

Mr VAN HOLST PELLEKAAN: But there are no others who have actually taken up tenancy other than those mentioned?

The Hon. S.E. CLOSE: No.

Mr VAN HOLST PELLEKAAN: How many vacant sites remain?

The Hon. S.E. CLOSE: The challenge in answering that is, where land has not been used it has not been subdivided, so to give you a number is difficult because one tenant could take up a larger space or a smaller space. What we are concentrating on is the main assembly site, which is under the roof that has been refurbished, but has preserved the character of the original Tonsley site. That is where we are working at the moment. It is, of course, an extremely large site overall.

Mr VAN HOLST PELLEKAAN: How many potential tenants are you currently in negotiation with? I understand you do not want to disclose them, but can you tell us the number?

The Hon. S.E. CLOSE: Three or four are active at the moment, but there are many more that we would be interested in.

Mr VAN HOLST PELLEKAAN: But negotiations have not really commenced with them yet?

The Hon. S.E. CLOSE: That is right. Sorry; can I just add a little to that? In addition to that, TAFE is in negotiation with a number of parties about subletting some of their space.

Mr SPEIRS: This is a continuation of the questions on Tonsley from Budget Paper 4, page 116. How many prospective tenants have had their expressions of interest to locate their operations at Tonsley rejected?

The Hon. S.E. CLOSE: I will take that on notice in order to be accurate in the response.

Mr SPEIRS: I have a linked question, which you could also take on notice. Can you provide a list of those organisations which have been rejected and the reasons for this?

The Hon. S.E. CLOSE: I will take all of that on notice, yes.

Mr VAN HOLST PELLEKAAN: Same page: as the owner of the former Mitsubishi site, is the South Australian government liable for any clean-up costs associated with contamination on that site?

The Hon. S.E. CLOSE: I am advised that we have undertaken extensive testing and that an environmental management plan has been approved by the EPA over the site. There is only one area that we have some concerns around, which is around the Tenneco site. The contract with Mitsubishi specifically excludes our having responsibility for that clean-up, so if and when necessary we will engage in discussions with Mitsubishi.

Mr VAN HOLST PELLEKAAN: So Mitsubishi retains that responsibility?

The Hon. S.E. CLOSE: Over that part, yes.

Mr VAN HOLST PELLEKAAN: Is that for the whole site or just the one area of particular concern?

The Hon. S.E. CLOSE: Just that one area that we have identified.

Mr VAN HOLST PELLEKAAN: Was that contamination identified or was the government aware of it before taking over the site?

The Hon. S.E. CLOSE: The answer is yes.

Mr VAN HOLST PELLEKAAN: What is the expected cost to the taxpayer for the remediation of the parts that we are obliged to remediate?

The Hon. S.E. CLOSE: The environmental management plan that we have over the vast majority of the site does not require remediation per se. It is just how we do development, so it is guided by that environmental management plan. The area that we have some sensitivity about is specifically excluded from the contract that we will be responsible for paying for that.

Mr VAN HOLST PELLEKAAN: I understand it is environmental management, but is there or isn't there contamination that needs to be remediated in the government responsibility?

The Hon. S.E. CLOSE: The word 'remediation' is not the appropriate word. It is about how we do the development, so the kind of development process that is used that has been approved by the EPA under the environmental management plan.

Mr VAN HOLST PELLEKAAN: You mean in terms of what land uses can live with the contamination that exists?

The Hon. S.E. CLOSE: Within the state of the soil; that is right. Because we have already built TAFE there I am just getting advice on the way that was managed, and it was really about the way in which that building was built, and how the footings and slabs were managed.

Mr VAN HOLST PELLEKAAN: There must still be a cost that goes with that minister, even if the remediation is not going to be there, just in terms of the management plans or extra cost of the building to TAFE, for example.

The Hon. S.E. CLOSE: I do not know if that is necessarily the case at all but I will take that on notice, particularly as I am not the minister for TAFE.

Mr VAN HOLST PELLEKAAN: Same page minister. How many companies tendered to become the preferred developer for the Tonsley residential precinct?

The Hon. S.E. CLOSE: This whole process is being managed by Renewal SA so I am loath to get too far into talking about another minister and agency's processes.

Mr VAN HOLST PELLEKAAN: Can I ask you then: does the government still plan to develop a 1,200 person housing development there?

The Hon. S.E. CLOSE: It still remains in the plans, absolutely.

Mr VAN HOLST PELLEKAAN: That is still the target. Does government still plan to have retail space at the site?

The Hon. S.E. CLOSE: That is correct.

Mr VAN HOLST PELLEKAAN: When do you expect these developments to be available for sale?

The Hon. S.E. CLOSE: There is currently a very nice coffee shop in situ in the middle. Actually I would be very happy to take you on a tour of Tonsley if you have not yet had that experience. I think that would be useful.

Mr VAN HOLST PELLEKAAN: I have been there but happy to go again and see the more recent developments.

The Hon. S.E. CLOSE: Excellent; we will do that.

Mr VAN HOLST PELLEKAAN: Minister, back to the contamination issue, have any of these housing developers or retail or hospitality businesses such as coffee shops, or any potential tenants, businesses or people expressed concern about contamination there? Have they raised that issue with the government?

The Hon. S.E. CLOSE: No, not that I am advised.

Mr VAN HOLST PELLEKAAN: The management plan that talks about appropriate uses with the existing contamination, that is fully satisfied?

The Hon. S.E. CLOSE: And appropriate build—well as far as it has come up to us, absolutely.

Mr VAN HOLST PELLEKAAN: Tonsley redevelopment, same page: do you agree with recent comments by Santos managing director, David Knox, when he said, 'You need at least three hubs because you want diversity and you want SMEs to participate'?

The Hon. S.E. CLOSE: I had not heard those comments but it has been pointed out to me that not only do we already have Tonsley but there is a mining and engineering centre at Regency. Whether Mr Knox would like to help fund a third site, I guess, is open for discussion.

Mr VAN HOLST PELLEKAAN: But the government does not have plans in that way?

The Hon. S.E. CLOSE: There are no plans at this stage.

Mr VAN HOLST PELLEKAAN: No plans at all for any future hubs?

The Hon. S.E. CLOSE: Well that I am aware of; there is nothing that has been put into my budget that is in my forward estimates that relates to that. It does not mean that people do not have ideas for the future.

Mr VAN HOLST PELLEKAAN: Within cabinet, I mean. Minister, how many FTEs are allocated to the Tonsley redevelopment project?

The Hon. S.E. CLOSE: There are five FTEs within my area but I would have to consult with Renewal SA which is primarily running the development project to find out how many FTEs they have.

Mr VAN HOLST PELLEKAAN: Back to page 114, department objectives, assist the development and improve the efficiency and international competitiveness of SA manufacturers. Please outline the government's strategy in responding to the closure of manufacturing companies in SA, and I am thinking particularly of examples like Carr Components, Tectaloy and Custom Coaches.

The Hon. S.E. CLOSE: First of all, I would like to take issue with the question about whether Carr Components is closing. I was asked that question in question time some weeks ago by the Leader of the Opposition and I indicated that I was unaware it was closing. On subsequent investigation, it appears that another company is in the process of consolidating that rather than closing it. This is what we expect to see in the car components sector and, in fact, is what we would rather see than wholesale closure. We will see closure: that is inevitable with the closing down of Holden, Ford and Toyota. I think we need to be wary of being startled by developments but also over-reading them.

The substance of your question, I think, is: what is it that the government does when a manufacturing company closes? Of course, the first step we take is support for the workers. We have, as a big section of the Automotive Transformation Taskforce but also generally within the Department of State Development, an area that is very well skilled in the labour market adjustment process to assist workers both in assessing their existing skills and their transferability and in identifying their need for additional skills. The commonwealth offers employment support opportunities—finding new jobs. We make sure that those workers are well aware of what those services are.

Mr VAN HOLST PELLEKAAN: And the second and third steps? The first step is support workers.

The Hon. S.E. CLOSE: The larger question is, of course, how do we support companies so that they are not in a position of closing, particularly when they are associated with the automotive sector? The work that we are doing to help diversification in that supply chain is important but, more generally, we are working to assist manufacturing to move up the value chain and to become more sustainable. There is a number of projects that include the innovation vouchers, the business transformation, the automotive transformation vouchers, all of which are aimed at supporting companies to find other opportunities in how they conduct their work.

Mr VAN HOLST PELLEKAAN: Did Custom Coaches contact the government seeking advice for assistance prior to their announcement that they would close?

The Hon. S.E. CLOSE: I am advised that Custom Coaches did indicate before they went into administration that they were having some difficulties.

Mr VAN HOLST PELLEKAAN: What was the explanation given to the government as to why they were having those difficulties? What did they say was causing those difficulties?

The Hon. S.E. CLOSE: I will read the briefing that I have on Custom Coaches to give you the full picture. Established in 1955, Custom Coaches designs and manufacturers large bus bodies on imported chassis, including a significant portion of the Adelaide metropolitan public transport fleet. Alexander Dennis Limited, Britain's largest bus manufacturer, purchased Custom Coaches in June 2012 to expand its presence in the region. In February 2013, Custom Coaches was unsuccessful with a tender to provide school buses to the Department for Education and Child Development.

In November 2013, Custom Coaches advised the Department of State Development that, due to a downturn in government fleet orders, it would be reducing its casual labour hire workforce. The Department of Planning, Transport and Infrastructure is one year into a five-year contract with Scania ending in June 2018 who subcontract to Custom Coaches for the supply of 125 buses. Scania has advised that other interstate subcontractors could fill the contract.

The Department for Education and Child Development recently awarded a tender for the build of 16 mid-size and large buses to Custom Coaches for delivery in 2012-14. The Department for Education and Child Development awarded a further tender for 10 small buses to two overseas suppliers. Small buses are currently not manufactured in Australia. The Department of State Development and the Office of the Industry Advocate have been working with Custom Coaches on enterprise improvement, industry participation and diversification opportunities.

On 3 June 2014, Custom Coaches' administrator announced that 50 people, including 19 in Adelaide, would lose their jobs effective immediately. At an information session on 6 June 2014, the department provided information about the services available through the state government's retrenched worker program to workers who were retrenched on 3 June 2014. This information will also be made available to other workers who may have been retrenched. The department has been continually liaising with the company's local management.

Mr VAN HOLST PELLEKAAN: If I heard you correctly, you said that the government had 16 buses on order to be delivered in, I think you said, 2012-14?

The Hon. S.E. CLOSE: It is 2013-14; I may have misspoken. That is with the Department for Education and Child Development. There are also the other 125 buses for the fleet for the Department of Transport.

Mr VAN HOLST PELLEKAAN: Those 2013-14 deliveries have taken place? The government has them?

The Hon. S.E. CLOSE: That is my understanding, yes.

Mr VAN HOLST PELLEKAAN: Are there any outstanding orders for any buses?

The Hon. S.E. CLOSE: Yes, because we are one year into a five-year contract for 125 buses for the Department of Transport.

Mr VAN HOLST PELLEKAAN: How many of those have been delivered and how many remain outstanding?

The Hon. S.E. CLOSE: I will have to take that on notice for the other minister.

Mr VAN HOLST PELLEKAAN: In terms of future buses, presumably government has to buy them from interstate from now on?

The Hon. S.E. CLOSE: I imagine that they will be working through those options.

Mr VAN HOLST PELLEKAAN: This might be something for the other minister, but do you have any indication of what the extra cost of that might be?

The Hon. S.E. CLOSE: No.

Mr VAN HOLST PELLEKAAN: On the same page, looking at dot point 4, provide a first point of contact for South Australian manufacturing firms to access advice, can you advise how many job losses are expected at Tenneco automotive?

The Hon. S.E. CLOSE: We have had no advice as to job losses at Tenneco.

Mr VAN HOLST PELLEKAAN: So, there is no expectation?

The Hon. S.E. CLOSE: Being part of the automotive sector, of course there is, but we have not been advised of any levels—

Mr VAN HOLST PELLEKAAN: Just not the number.

The Hon. S.E. CLOSE: —and we are working as hard as we can.

Mr VAN HOLST PELLEKAAN: What reason did Tenneco give the government for their likely job losses, understanding that you do not actually have the specific number?

The Hon. S.E. CLOSE: Tenneco is involved in the automotive sector really in two ways, with new car build and also aftermarket. Naturally with new car build concluding, they will be affected by that and we are aware of that. However, they do have a strong aftermarket contribution as well.

Mr VAN HOLST PELLEKAAN: When did the government become aware of Tenneco's concerns?

The Hon. S.E. CLOSE: I am advised that a few weeks ago they did reduce their staff by 30, but they are now going through a review to work out what their plans are and we are not yet aware of what they will be.

Mr VAN HOLST PELLEKAAN: When did they first approach the government about their concerns and about those job losses?

The Hon. S.E. CLOSE: I will get the detail on notice. It was a few weeks ago, but that is not terribly precise, is it?

Mr VAN HOLST PELLEKAAN: I have similar questions, but about Tectaloy this time. What reasons did the company give the government for making their jobs redundant?

The Hon. S.E. CLOSE: I think one of the challenges we are having here is because I am not the Minister for Employment and the support of the workers is substantially coming out of what used to be DFEEST. I understand that Tectaloy is essentially an after-market supplier and we will find out some more details for you perhaps from the other minister.

Mr VAN HOLST PELLEKAAN: I certainly respect the different responsibilities of different ministers, but these concerns do all fall fairly and squarely within the description of work that you do that you gave in your opening statement.

The Hon. S.E. CLOSE: No, they are fair questions; I am just trying to explain our answers.

Mr VAN HOLST PELLEKAAN: Of all the recent companies to move their manufacturing operations out of South Australia, did the government propose any arrangements where they may be able to assist the companies to stay and, if so, what were they?

The Hon. S.E. CLOSE: The question is perhaps a little broad, but if I could give you an example as a response with Castalloy. Castalloy some time ago was seriously considering leaving the state and the government was able to sit down and negotiate a long-term approach that has kept them here.

Mr VAN HOLST PELLEKAAN: And what is the approach? What is the sort of thing that made the difference?

The Hon. S.E. CLOSE: In that case the government purchased the site and has given rent relief in order to keep the company able to afford to stay.

Mr VAN HOLST PELLEKAAN: What was the cost of that purchase?

The Hon. S.E. CLOSE: It was in 2005, so we will have to check the detail of that.

Mr VAN HOLST PELLEKAAN: Are you or the government in any similar negotiations with other companies at the moment that are seeking the same sort of support?

The Hon. S.E. CLOSE: There are no active ones that I am aware of.

Mr VAN HOLST PELLEKAAN: None?

The Hon. S.E. CLOSE: That is right.

Mr GEE: My question is regarding Volume 4, page 116. Can the minister inform the committee about what the government is doing to support South Australian manufacturers in accessing opportunities in the mining and resource sector?

The Hon. S.E. CLOSE: The Department of State Development works to maximise opportunities for South Australian companies to gain a greater share of local, national and international minerals and petroleum supply chains. This work is conducted through the industry participation branch within the Department of State Development, which was established as part of the state's Manufacturing Works strategy released in October 2012. The office has developed activities in conjunction with industry through the Mining Industry Participation Office Advisory Council. The council comprises senior executives from the resource sector, industry associations, suppliers and academia, and works with the government to ensure the office’s objectives align with those of industry.

Initiatives to date include an oil and gas supply tour to Houston, Texas, the establishment of the Mining and Petroleum Services Centre of Excellence and a capability gap analysis for the development of this state’s world-class unconventional gas resources.

The Industry Participation Office took 16 participants from 13 organisations (including government officers) to Houston, Texas, from 29 January to 7 February 2014, to learn more about the mature US petroleum sector. The tour introduced SA businesses to international suppliers and provided perspective on the scale, depth and life-cycle opportunities available to South Australian suppliers from a shale gas development. Feedback from study tour participants was very positive and a number of direct benefits have resulted from the trip:

An oil and gas well services business targeting well maintenance services is being established in South Australia.

A local material testing laboratory is now planning to invest in proppant testing equipment to position itself as a local supplier of this service.

As a result of introductions to project management and services firm Jacobs in Houston, a South Australian company is now looking to diversify from defence communication systems to the petroleum sector.

The Mining and Petroleum Services Centre of Excellence brings together resource companies, research institutions and service businesses to foster and coordinate innovation and applied research initiatives to benefit the resources sector, service providers and manufacturers. It supports new and innovative ways to drive mineral and energy sector growth. Its ultimate objective is to support the development of local supply chains that can provide high value-added products and services to the global resources sector.

The Industry Participation Office has both an advocacy and governance role in the Mining and Petroleum Services Centre of Excellence, fostering relationships between industry, academia and SMEs to develop targeted capabilities. Projects to date include:

Onshore Petroleum Centre of Excellence training facility at Tonsley: a collaboration between Santos, Beach Energy, Senex Energy, the South Australian government and TAFE SA to ensure the provision of trained staff for an expanding onshore petroleum industry. The state government has contributed $500,000 from the Mining and Petroleum Services Centre of Excellence; Santos, as operator of the SA Cooper Basin Joint Venture, has committed significant oil and gas production and mechanical equipment, engineering design, transportation and installation; and Senex Energy and Beach Energy have committed funding for fit-out and capital works. Training facility fit-out and curriculum development are underway, with pilot training planned for late 2014.

the development of the ICT Roadmap for Minerals and Energy Resources, a joint project between the Department of State Development and the Australian Information Industry Association, with input from the CSIRO Minerals Down Under Flagship and Deloitte. The road map identified 11 opportunities for South Australia to 2025 based on SA ICT and defence capabilities. Mining and Petroleum Services Centre of Excellence funding is $130,000.

Mr VAN HOLST PELLEKAAN: Back to the same page I have been asking questions about, this time I want to ask a bit about the Penrice soda ash plant at Osborne. What assistance is the government giving to the workers who will lose their jobs at that plant?

The Hon. S.E. CLOSE: I am advised that the nature of the support being offered involves professional career development counselling, employability skills identification, future of regional job growth assessment, career direction support, training opportunities, training provider identification, a technical skills audit and both accredited and non-accredited training options. I am advised that the department has spent quite a bit of time down at Penrice meeting with the workers to make sure that they are clear on what they are being offered.

Mr VAN HOLST PELLEKAAN: Minister, are you aware of the announcement that Brighton Cement has bought that facility and that 95 jobs will go, that 40 jobs will be kept and 95 jobs will go?

The Hon. S.E. CLOSE: Are you referring to the quarry rather than to Penrice at Osborne?

Mr VAN HOLST PELLEKAAN: Yes, minister; correct. So would those people get the same support?

The Hon. S.E. CLOSE: Absolutely.

Mr VAN HOLST PELLEKAAN: So the people from the quarry who are going to lose their jobs will get exactly the same support?

The Hon. S.E. CLOSE: Absolutely; that is right.

Mr VAN HOLST PELLEKAAN: Great, fantastic. Just going back to the soda ash plant, what is the extent of the contamination there?

The Hon. S.E. CLOSE: It is unclear at this stage what contamination might exist right underneath the plant itself, which is owned by the administrators. We will be undertaking an assessment with that company. There is also some land that is owned by Renewal SA that has some calsilt sitting on top of it. At the moment the administrators hold the obligation to remediate and remove the calsilt from the Port River and also the land leased to it by Renewal SA. Renewal SA is seeking some expert advice on the total cost of site remediation.

Mr VAN HOLST PELLEKAAN: When is that advice going to be available? When do you expect it?

The Hon. S.E. CLOSE: I am not the minister for Renewal SA so I am unclear, but I am very happy to pass that on to that minister.

Mr VAN HOLST PELLEKAAN: Thank you. What is the government doing to progress an alternative use of that site?

The Hon. S.E. CLOSE: That would be in the hands of Renewal SA.

Mr VAN HOLST PELLEKAAN: Okay. In terms of your role as Minister for Manufacturing and Innovation, what would you advocate for it?

The Hon. S.E. CLOSE: I would not be obsessed with that particular site. It has been used for a particular purpose, and there was an attempt to sell it for that purpose, which was unsuccessful. I am interested in developing manufacturing broadly; I am not particularly focussed on that particular site in that part of my portfolio responsibilities. Of course, as the local member I take an interest.

Mr VAN HOLST PELLEKAAN: I refer to page 116 again, dot point 1, Manufacturing Works. What is the expenditure for the Manufacturing Works program itself within the broader budget? What are the key performance indicators for that funding? How do you judge whether that money is well spent?

The Hon. S.E. CLOSE: I can give you the long answer or the short one. The funding for Manufacturing Works for 2012-13 is $4.1 million, for 2013-14 it is $3.4 million, for 2014-15 it is $2.7 million, and for 2015-16 it is $0.9 million. That totals $11.1 million. I can go through the pillars that exist within that, and therefore what we expect—

Mr VAN HOLST PELLEKAAN: Sorry?

The Hon. S.E. CLOSE: The pillars. The Manufacturing Works strategy is divided into four pillars of activity, so I can briefly talk to you about each of those.

Mr VAN HOLST PELLEKAAN: Yes, please; that would be good.

The Hon. S.E. CLOSE: Pillar one is to enhance the capacity of manufacturers to innovate, and what sits under there is the Innovation Voucher Program (IVP), which aims to stimulate innovation in manufacturing companies by facilitating collaboration with research and technology organisations. The IVP has a budget of $1 million in 2013-14 and, to date, 36 applicants have been approved. Of these projects 24 are currently in progress, 10 have been completed and two were cancelled.

Out of the 10 completed projects, all have completed design development, eight have completed prototypes, nine have completed testing and validation, and four have completed field trials or customer trials. Ten of the successful applicants have engaged with an applied research and development provider for the first time.

Also under that pillar there is the Small Business Innovation Research Pilot program, which is a pilot program to encourage innovation in South Australian small businesses by creating demand for new ideas that address specific problems for state government agencies. The first challenge is being run with SA Water to find new ways to recover and re-use phosphorus from wastewater at Bolivar Wastewater Treatment Plant. Phase 1 is reaching its conclusion and positive outcomes are being achieved in trials. Based on the outcome of phase 1, one or more companies may be funded under phase 2 of the program to further develop the product.

The Department of State Development is currently in discussions with several state government agencies to establish a second challenge, with additional funding of $1 million to be available in 2014-15.

The SME Innovation Capacity Program, which is another one under pillar 1, has provided 39 companies with access to targeted training from globally recognised experts in business transformation, new business models and manufacturing related services. As a result of participating in this program, one South Australian manufacturer has increased its revenue by 40 per cent while another has completely restructured its company to focus on customer innovation.

Another element under pillar 1 is the Medical Technologies Program, which is delivered in partnership with Flinders University and has delivered seven projects in 2013-14. These include: adding new features to a post-operative rehabilitation device prototype developed by orthopaedic surgeon Dr Matthew Liptak; improving the sensitivity of a handheld cancer probe technology developed at the University of South Australia; evaluating the technology behind a novel sleep apnoea device for Ellex Precise; developing a lightweight handheld dental X-ray device; developing a dental pain laser device; designing support and conducting a trial of a mobility assistive device in the hospital and aged care setting; and improving the software in SimTools, which comprises five medical simulation devices, that provides a training framework for healthcare educators. This program is funded through to 2015-16. The MTP has exceeded the awarded project KPIs for the 2013-14 financial year.

Another project under pillar 1 is the Photonics Catalyst Program. I am sure that you have gone around IPAS at the University of Adelaide and if not, you should. It is quite an extraordinary centre of innovation and research. That program is being delivered in partnership with the University of Adelaide's Institute for Photonics and Advanced Sensing (IPAS). Four projects have been awarded funding. They include: adapting and engineering high temperature sensors for the Port Pirie smelter, as I mentioned in my opening statement; enhancing the performance of mining industry laser scanners through the use of additive manufacturing; developing a device flown on weather balloons from airports to detect freezing conditions in the atmosphere and alert pilots to icing hazards; and developing in situ sensors to optimise energy use in sewage treatment.

The Photonics Catalyst Program is on track to achieving its KPI of five projects in the 2014 calendar year. An additional 30 projects are also in the pipeline. Finally under pillar 1 is the NanoConnect program, which runs in partnership with the Flinders University. It currently has seven manufacturers exploring new opportunities to experiment with nanotechnologies.

The second pillar of Manufacturing Works is leadership, knowledge and skills. The Manufacturing Leaders Network has been established as a forum for chief executives of South Australia's high performing manufacturers to engage with industry peers and the minister. The network incorporates the Premier's CEO Forum and the Advanced Manufacturing Council's Industry Reference Group. The network also facilitates knowledge transfer from international experts who are invited to address and engage with the group on a range of issues related to manufacturing, industry development, industry policy and research.

A high performance workplaces project is currently being developed in partnership with the University of Adelaide to provide information and advice to manufacturers seeking to develop their workplaces as high performance. Seeley International, Ellex and Bickford's have all agreed to participate as best practice case studies, from which others can learn.

The third pillar of Manufacturing Works is future markets and opportunities. The Mining Industry Participation Office is one of those, and I have already given an answer on that so I will not say anything further.

While under the management of DMITRE previously, the Competitive Foods Initiative developed a range of innovation-based collaboration opportunities to assist food and beverage manufacturers capture new market opportunities, including: identification of supply opportunities in the defence and minerals sector; arranging workshops for local companies on innovation and collaboration with Mondelez International (formerly Kraft Foods) and best practice in the purchase of new processing equipment; scoped and geographically mapped the food and drink manufacturing industry in South Australia to understand the key strengths and potential clusters in the state; and undertaken a study to identify the opportunities and challenges facing the food and drink industry in the state.

The Competitive Foods Initiative transferred to PIRSA from 1 July 2014 as part of the machinery of government changes. The department undertook a comprehensive Cellulose Fibre Study that involved the VTT Technical Research Centre of Finland, to identify a sustainable road map for the forestry sector.

The study was completed in September 2013, and there is momentum within the industry to collaborate on higher value-adding opportunities, albeit at a very early stage of development. The region's major plantation growers have now joined together, with the goal of attracting one or more large-scale processing investments into the region. Responsibility for the SEFPP transfer to PIRSA is part of machinery government changes.

The fourth and final pillar is infrastructure and policy gaps. The Advanced Manufacturing Council was created in 2013 to help drive the development and implementation of policies, strategies and programs to support the growth and international competitiveness of South Australia's manufacturing sector. The former Thinker in Residence, Professor Göran Roos, chairs the council, and key achievements in 2013-14 are:

the oversight of the cellulose fibre project in the South-East;

establishment of the manufacturing leader's network;

launch of Venture Catalyst, a grant program to assist undergraduates or postgraduates to establish start-up firms, based on commercial opportunities arising from applied research; and

identification, in partnership with Defence SA, of opportunities for South Australian manufacturers to participate in the federal government's proposed LAND 400 combat vehicle acquisition.

GRANTassist has been established as an online portal to help firms locate assistance to programs that are most relevant to them. The portal is currently being extended to include access to grant information for communities, clubs and individuals. The state government, as we have already discussed at reasonable length, is investing in the Tonsley project also.

The state government is committed to expanding Manufacturing Works programs to support capability development and investment in innovation in response to the closure of the car-making industry in Australia through Our Jobs Plan, with additional funding of $8.6 million. In addition, funding has been allocated to a range of automotive support initiatives to be administered under the Automotive Transformation Taskforce. Funding from Our Jobs Plan is $19.1 million. Our Jobs Plan also provides $7.6 million towards a range of cluster and entrepreneurial initiatives.

Mr VAN HOLST PELLEKAAN: Thanks, minister: that summary will be useful, so I appreciate that. How many FTEs are in the Manufacturing Works program?

The Hon. S.E. CLOSE: Because the activity is spread in different areas I would prefer to work through that carefully, so I will take it on notice and give you an accurate answer.

Mr VAN HOLST PELLEKAAN: You mentioned in that last answer the $6 million to the Our Jobs Plan. What existing government programs are being superseded by that Our Jobs Plan?

The Hon. S.E. CLOSE: Initially I will go through where the expenditure sits in the Our Jobs Plan as a background for you.

Mr VAN HOLST PELLEKAAN: That would be helpful, but what I would really like to know is: what was there before, what is going and what is being replaced by the Our Jobs Plan? You mentioned that there is $6 million there for that. I would also like to know what was the funding for the original existing programs, whether it was more or less or the same as the $6 million.

The Hon. S.E. CLOSE: To the best of my knowledge and advice, we are not stopping anything because we now have Our Jobs Plan. The Manufacturing Works funding ran to 2015-16, so in that sense the coming on stream of Our Jobs Plan supersedes it, but there is no program that I am aware of that we were funding that we are ceasing to fund because we are now funding the Our Jobs Plan.

Mr VAN HOLST PELLEKAAN: So to the best of your knowledge it is all completely additional new money for a new program?

The Hon. S.E. CLOSE: Exactly.

Mr VAN HOLST PELLEKAAN: Budget Paper 6, page 110. This is again about the Our Jobs Plan. What will the $15.9 million budgeted for 2014-15 in the Our Jobs Plan be spent on? Can you give details? There is $6 million in the first year and $16 million in the second year: what will ramp up or be different?

The Hon. S.E. CLOSE: If I could just clarify, your question is that the last financial year was at a certain level and next financial year is higher, and what does that constitute?

Mr VAN HOLST PELLEKAAN: That is right. The estimated result for 2013-14 is $6 million, so I would be curious to know how that money was spent and exactly what programs made up that money and then, of course, what the difference is for a $10 million additional, up to $16 million in the 2014-15 year.

The Hon. S.E. CLOSE: I am sorry; can you give us the reference again?

Mr VAN HOLST PELLEKAAN: Yes; Budget Paper 6, page 110, towards the middle of that page. You will see 'Building a Stronger South Australia: Our Jobs Plan' and then you will see those figures there in the short table.

Ms DIGANCE: You are rounding the figures—is that what you are doing, when you are talking about them?

Mr VAN HOLST PELLEKAAN: When I say $6 million, it is actually $6.095 million and when I say $16 million it is actually $15.975 million.

The Hon. S.E. CLOSE: I can give you the elements that relate to my portfolio. Our Jobs Plan is larger than I am exclusively responsible for. The department had a budget of $3.2 million in 2013-14 out of that $6.095 million to implement initiatives from Our Jobs Plan that relate to the manufacturing sector. The key initiatives included: a consultancy to map the defence industry supply chain; the establishment of an innovation for growth pilot program with KPMG, with five manufacturers participating in the pilot; the development of a program that will help manufacturers accelerate the adoption of new technologies, particularly those that are developed locally by the public research sector; and support for automotive supply diversification activities.

Mr VAN HOLST PELLEKAAN: And that was for last year?

The Hon. S.E. CLOSE: That is correct.

Mr VAN HOLST PELLEKAAN: And for this year?

The Hon. S.E. CLOSE: For the year that we have just commenced, my contribution, for which I am responsible, is around $5 million, and the activities include industry road maps, automotive supply diversification program, retooling for diversification, the automotive transformation coordinator and working on the Manufacturing Works, so expanding existing programs, and also the business transformation voucher program.

Mr VAN HOLST PELLEKAAN: Are any of those programs or any of those outcomes for this year contingent upon commonwealth funding?

The Hon. S.E. CLOSE: No. The commonwealth fund, the $155 million growth fund, is separately accounted for.

Mr VAN HOLST PELLEKAAN: Totally separate?

The Hon. S.E. CLOSE: That is right. Indeed, I would not expect any of that money to flow through us.

Mr VAN HOLST PELLEKAAN: Same page and again about the Our Jobs Plan. What funding has been allocated to initiatives beyond 2016-17?

The Hon. S.E. CLOSE: Reading this, it says $60 million in total.

Mr VAN HOLST PELLEKAAN: Beyond that.

The Hon. S.E. CLOSE: Beyond 2017-18?

Mr VAN HOLST PELLEKAAN: Yes. There is $6.3 million there. Is it something that the government intends to continue with, or is that really—

The Hon. S.E. CLOSE: We have no funding beyond forward estimates.

Mr VAN HOLST PELLEKAAN: Have you had any further discussions with the commonwealth about potential contributions to this program?

The Hon. S.E. CLOSE: I have had a good conversation with the federal minister quite recently. I think that he and I at this point disagree on the extent of funding required from the feds. We will continue to have those discussions. We did have productive discussions more specifically about some of the approaches to the guidelines, but he did indicate that he remains interested in South Australia and will watch how things work, but our judgement differs on the extent of commonwealth funding that we each believe is required to address the problems that will result from the closure of Holden and, indeed, Ford and Toyota. It should be remembered that our suppliers are also exposed to that.

Mr VAN HOLST PELLEKAAN: Very true. So when the Premier said that really it was the complete $393 million program, combined state and federal, that was necessary to achieve the right results–

The Hon. S.E. CLOSE: In my view that would have been a proportionate response when you look at our response when Mitsubishi closed with the funding from South Australia and from the feds. In my view the money coming from the feds is not adequate. I put that on notice with the minister and he is aware that we have a difference of view about that, and I imagine that that is something we will continue to discuss over the next couple of years. We are yet to really see the result of the closure. We are seeing some challenges within the suppliers but we are yet to really come to grips with it.

Mr VAN HOLST PELLEKAAN: Yes, minister. My question is that when the Premier said that the full $393 million was what was required to achieve the desired result, and the $333 million has not been achieved from the commonwealth government, with the $60,000 that the state is going to put in, will that still achieve—

The Hon. S.E. CLOSE: $60 million.

Mr VAN HOLST PELLEKAAN: —a commensurate outcome in terms of its share?

Mr GEE: Point of order: I think this is more in line with automotive transformation, which is in the next session, and not just manufacturing in general, because you are slowly chipping away one bit at a time. It is all automotive and I am sure you have—

The CHAIR: Member for Napier.

Mr GEE: —time to spend talking about general matters.

The CHAIR: Member for Napier can resume his seat. It is a fair enough point of order. The convention is that we have split it up by agreement into different sections and these are related to a separate group of advisers that the minister can call upon to assist her. If the minister is happy to range around and you are happy to wait for her to consult different advisers at different times than I am happy to let it go; it is within the same budget line. Are you happy with that?

The Hon. S.E. CLOSE: I am.

Mr VAN HOLST PELLEKAAN: I am happy either way because there is time there.

The CHAIR: In that case shall we stick with the initial timetable and go to automotive transformation later or is everyone really comfortable to range around?

The Hon. S.E. CLOSE: I am happy to proceed. I think the member for Stuart and I share a deep concern about what is going to happen with the South Australian economy—

The CHAIR: As do I.

The Hon. S.E. CLOSE: —as he has indicated and he may have some different views about how we do it but I think this is a productive discussion to be having.

The CHAIR: Absolutely; okay.

Mr VAN HOLST PELLEKAAN: Thanks, minister. This is a delicate issue and you are quite reasonable in your comments about the commonwealth government and I am not giving the state government a hard time in this issue. What I am saying is that if the expectation was that $393 million was what was needed as a total to do the job, and we have not got the total, can we still get the commensurate share of outcomes and values out of the commensurate share of the money that we have at the moment, which is the $60 million? That is really all I was trying to get at.

The Hon. S.E. CLOSE: I think a different minister might answer differently—

Mr VAN HOLST PELLEKAAN: I am sure you are right.

The Hon. S.E. CLOSE: I do think what the commonwealth is offering is inadequate—it is manifestly inadequate in fact. If you look at what the commonwealth has set aside with the $155 million, of which 12 comes from us, 12 from the Victorian government, 15 from GM, and 15 from Toyota (Ford is doing its own work), and then you look at the fact that it is having to be shared across different states—not just Victoria and South Australia—then all the extra commonwealth money that we are guaranteed (because there has been a recognition with some of the programs that it will come to South Australia) then all we have in addition is $33 million from them, and that is half of what we are putting in.

I am sure we will be successful in bidding for additional money out of that fund, I would absolutely have that expectation, but in terms of guarantee it is $33 million. So of course I cannot sit here and say, 'That is going to be fine. The people of northern Adelaide in particular shouldn't worry.' However, I am going to say that the program we have derived with the $60 million of our own money and the way in which we will approach the 33-plus that we will get from the commonwealth and the way in which the 15 will be spent by GM on its workers, we will make work as well as we possibly can.

As it becomes clear that that federal money is manifestly inadequate, I will not be slow in going to Canberra and reminding Ian Macfarlane of his interest in South Australia. I could remind everyone of how much was in the forward estimates of the commonwealth for the car industry that they are not spending, but we are well aware of those figures.

Mr VAN HOLST PELLEKAAN: Back to the first book, Budget Paper 4, Agency Statements, Volume 4, page 114 and talking about competitiveness. That is obviously a key issue and, no doubt, you are aware of the KPMG Competitive Alternatives report that the government contributes towards. In 2012 it found South Australia to be the most competitive state to do business but it slipped back in the 2014 report. Is the cost of doing business in our state something that is brought to you by manufacturing companies and concerns in that regard?

The Hon. S.E. CLOSE: It is interesting that, in the companies that I have visited (and I mentioned it is about 100 that I have either been to or had their leaders come and meet with me), that has not been a strong refrain. They have more immediate concerns. They have concerns about having access to the right skill level of workers. They are concerned about access to capital. They are aware that they need to do more research in order to remain competitive yet they find it hard as a small to medium business sector to expend their own resources on that. They are aware that trade is potentially an extremely lucrative avenue for them but it is difficult when you are a small to medium business to develop a strategy on how you are going to approach China.

What I have found in those discussions is that the kind of strategies that I have elaborated on previously are essentially in the right direction. That said, of course, the way in which business cost is experienced is a matter of concern to every government and we are actively considering ways in which we can bring costs down. One of the reforms that the government has talked about is the WorkCover reform that has the intention to bring down the cost, and that will make a significant difference to the cost of business.

We have the payroll tax concessions which provide some relief for small businesses. Also, the Premier recently announced the coordinator-general position to call in developments in order to facilitate these speeds. Of course, time does literally mean money for business so, if we are able to facilitate developments in a speedier fashion, that will not only be good for those businesses but also have the economic impact of those developments occurring.

We have also recognised that, for small to medium businesses, it is often difficult to compete for larger projects, so the Industry Participation Advocate provides an important role in state government procurement, and the industry capability network is one of the ways in which we are able to help companies to have access to private investment where they can compete for that business.

By no means am I complacent that we have the right business cost structure in South Australia, but nor do I see it as being a matter of serious alarm. It is a matter of constant attention. It is one of the questions that I ask when I go out to businesses: what is it that the government could do differently to help you grow? What we have with the closure of Holden is the need for other parts of the economy that may be growing anyway to grow much more quickly, and it is that acceleration that I am particularly concerned about and interested in.

Mr VAN HOLST PELLEKAAN: Has the government done modelling on the impact of the removal of the carbon tax on the manufacturing sector in South Australia?

The Hon. S.E. CLOSE: I have not. It may be that Treasury has, but I have not been involved in that.

Mr VAN HOLST PELLEKAAN: Is that something that the manufacturing sector has raised with you?

The Hon. S.E. CLOSE: No, I cannot recall a single person raising the carbon tax with me in manufacturing. Obviously, lots of people in my electorate are quite keen on the carbon tax and think it was a good idea to price carbon, but in terms of manufacturers saying that it was an issue, I have not had that occur.

Mr VAN HOLST PELLEKAAN: Budget Paper 6, page 41, just below halfway down, in relation to the specialist advanced manufacturing school, what advice will the manufacturing innovation program provide to the specialist advanced manufacturing school at Seaview Heights, and how many FTEs are allocated to that?

The Hon. S.E. CLOSE: That is a project that is being run out of the Department for Education. It is not my portfolio.

Mr VAN HOLST PELLEKAAN: It is nothing to do with your department, even though it is a manufacturing school?

The Hon. S.E. CLOSE: That is right. We are offering help to them to design the course, but it is not my budget line. It is being paid for exclusively by the Department for Education.

Mr VAN HOLST PELLEKAAN: What advice has been offered towards the development?

The Hon. S.E. CLOSE: We have made the offer that we would be very involved in helping in terms of curriculum and the connection to Tonsley, given its proximity, but I do not have very much to offer, given that it is not my budget line.

Mr VAN HOLST PELLEKAAN: It is just the curriculum, essentially?

The Hon. S.E. CLOSE: Given the proximity to Tonsley, I could speculate about how useful it would be to have the school kids come down and experience Tonsley in the future, but it is not my budget line to make comment on.

Mr VAN HOLST PELLEKAAN: Returning to the previous reference, Budget Paper 4, Volume 4, page 114: minister, you gave an example in your opening statement of essentially what you saw as areas of opportunity in advanced manufacturing. I am just curious to know: in terms of your perspective or the department's perspective, what really is the difference? Where do you draw the line between manufacturing as we would have all thought of it growing up as kids and advanced manufacturing as we talk about now? Or is it possible to draw the line?

The Hon. S.E. CLOSE: I do not think there is a hard edge, but essentially, what you see with advanced manufacturing is the higher-value adds. You are going up the value chain and you will often see a research or innovation component to the work that is done. It often refers to the kind of machinery and equipment that is being utilised. Increasingly, advanced manufacturing blurs into service provision. There is the inelegant term 'service-tisation'. I cannot even say it, it so awful. It is awful as a word, not as a concept: it is a great concept. The idea that a manufacturing company is also inextricably bound up in the service provision with acquiring that equipment, servicing that equipment, supporting it and using it is increasingly the direction for advanced manufacturing.

Mr VAN HOLST PELLEKAAN: The reason I ask about that is that, obviously, advanced manufacturing is one of the government's key drivers. I think it is one of the seven key drivers and I think you said it is one of the four key economic platforms. How do you measure jobs growth in that? I accept what you say, that there probably is not a hard edge in terms of being left or right of that line, but obviously the reason to pursue this sector is for the benefit of the economy and for the benefit of families and people via households. How do you know whether you are winning in that space, essentially, with regard to job creation?

The Hon. S.E. CLOSE: The way the data is collected by the ABS is on manufacturing generally, so you are not going to get a jobs figure that differentiates advanced manufacturing. The power of the idea of advanced manufacturing is that we know that that is what we are better at and we are more competitive at than the kind of manufacturing that does not have the flexibility or the customisation or require the higher skill levels. What we are aware of, if you look across the international economy, is that we find it extremely difficult to compete at the high volume low value-add level, so manufacturing must become more and more advanced for us to continue to have a manufacturing sector at all. That is the power of the terminology; it sets us in the right direction.

Occasionally, when I am interviewed on the radio, I have the 'manufacturing is disappearing in this state' argument put to me and part of my answer is, 'Look, it cannot.' We must not allow ourselves to have an economy that does not make things, but also it is an over read of what is occurring. What we are having is a change in manufacturing in this state.

In the last year, according to the ABS in the most recent quarterly figures, we have put on net 8,000 jobs in the manufacturing sector, so this is not a sector that is in terminal decline, this is a sector that is undergoing change. It is very clear that the change towards flexibility and customisation is where we will get that maximum benefit and it is also where we will be better able to engage in trade.

Mr VAN HOLST PELLEKAAN: In your opening statement you mentioned an estimate of 80,000 jobs in manufacturing, if I heard you correctly, at the moment?

The Hon. S.E. CLOSE: There is something like 80,000 jobs in the manufacturing sector, that is correct.

Mr VAN HOLST PELLEKAAN: Yes, that is right. Do you or the government have a target with regard to jobs growth for your sector as a component of the total target?

The Hon. S.E. CLOSE: No, we do not have an official target and I am not really particularly interested in precise targets. I am interested in the direction and the kind of programs that we need. We know that we need to expand our economy. We know that we are going to lose jobs in the manufacturing sector with the closure of Holden. There are different estimates as to how many that will be, but we will lose jobs, and so I am most concerned that we continue to increase jobs rather than decrease them.

Mr VAN HOLST PELLEKAAN: You are clearly saying increase not decrease, I get that, but how will you measure the success of all these programs? I would suggest that it should be more than just 'more jobs', that maybe there should be some more finite targets than that to know that the money, the effort and the time of all your staff and departmental people has been put to good use.

The Hon. S.E. CLOSE: There is an interesting measure which is the value-add per employee which therefore indicates for a particular company what direction they are going in terms of adding value per employment, so that will be a very interesting and useful heuristic device to know how well we are moving up the advanced manufacturing chain, but what we need to measure is the skill level that we have in our economy, the growth of our economy, the extent to which we are innovating and the success in our trade. These are all important measures in addition to the employment levels or the number of jobs added.

Mr VAN HOLST PELLEKAAN: Yes, I agree that they are all important and I understand the value-adding per employee is an important productivity measure at the micro level, but how will you really know if the millions of taxpayer dollars that go into this have been well spent? I understand that you want good stuff, not bad stuff and you want more and not less. I have never been in government, but I am sure you need to have some targets to test yourself against and to test your people against.

The Hon. S.E. CLOSE: In an estimates session I am not going to come up with some nice targets. The challenge is that we know exactly what needs to be measured and most of them are measurable but, as I said earlier, we have not had the support from the federal government that we believe we need.

So, when you look at the trajectory of the South Australian economy and what happens particularly to the workers who will stop working because of the closure of Holden, we know the kind of work that we are doing and we can measure the impact of those programs and their success in their own terms. All programs have KPIs and therefore can be reported on but, if you are asking about how the South Australian economy is going or how the employment figures look for the people who were in Holden, then I am going to say that it is just as much a measure of what the commonwealth government has or has not done to assist.

Mr VAN HOLST PELLEKAAN: I understand that, minister. I will not labour the point because we are probably not going to get there.

The Hon. S.E. CLOSE: We could go around in circles if you want.

Mr VAN HOLST PELLEKAAN: I find it unusual that there are not targets, where you say, ‘We’re going to spend this much money and we hope to achieve these fairly specific results.’ However, I am happy to leave it there.

The Hon. S.E. CLOSE: We have specific targets for each program in their efficacy, but I think you were talking at a higher level of economic indicators.

Mr VAN HOLST PELLEKAAN: The manufacturing sector. That is really what I was talking about, not the whole economy, because I know you are not responsible for that. The manufacturing sector.

The Hon. S.E. CLOSE: At the level of the programs that we are offering, we always have KPIs and we measure how they travel, so we can give you chapter and verse on that. How it adds up for employment and manufacturing will be partly a function of how much commonwealth support we receive.

Mr VAN HOLST PELLEKAAN: I realise that this is not your responsibility, but do you happen to know whether the government as a whole, when it asked for the $333 million from the federal government, took along a list of expected achievements or expected outcomes for that sought investment?

The Hon. S.E. CLOSE: You would be aware that with the Our Jobs Plan we broke down specifically what we wanted to use that money for, so it was not just $333 million: it comprised the various sections. However, I will ask for advice for you on exactly what we asked.

Mr VAN HOLST PELLEKAAN: You will take that on notice?

The Hon. S.E. CLOSE: That is right.

Mr VAN HOLST PELLEKAAN: Thanks, minister. Grants and subsidies, page 114 again, please explain how that $8.8 million in grants and subsidies for the 2014-15 budgeted year will be allocated?

The Hon. S.E. CLOSE: I will answer the question in two parts. I will give you the list of grants and subsidies for 2014-15, but first I will just explain the variance between the 2014-15 budget and the estimated result from 2013-14. The 2014-15 budget reflects an increase of approximately $0.5 million compared with the estimated result in 2013-14, which is predominantly made up of a decrease relating to the South East SA Innovation and Investment Fund, the Hills Holdings restructure between years and the change in the SA Small Business Innovation Research Pilot Program, and then an increase relating to future industries for South Australia, Our Jobs Plan and Manufacturing Works.

Specifically, the budget that I am responsible for is $8.8 million for 2014-15, and the highlights include $2 million in funding for the manufacturing strategy, $1.4 million to contribute to future industries, $1.6 million for the Building a Stronger South Australia, the Our Jobs Plan initiative, $1 million on the Small Business Innovation Research Pilot and a $1.8 million contribution to the strategic Industry Development Fund and the Castalloy initiative that we discussed earlier.

Mr VAN HOLST PELLEKAAN: Can you provide the recipients of grants in the 2013-14 year?

The Hon. S.E. CLOSE: I will take that on notice and provide that.

Mr VAN HOLST PELLEKAAN: Page 115, same book. What were the results of the SA Small Business Innovation Research Pilot programs? They are under Estimated Result, the first dot point towards the bottom there.

The Hon. S.E. CLOSE: You will recall that in answer to a previous question I mentioned the SA Water challenge for management of phosphorus at Bolivar—

Mr VAN HOLST PELLEKAAN: Yes.

The Hon. S.E. CLOSE: That challenge went out to six companies, and for phase 1 two companies were selected. They are now in the process of reporting back on what they achieved and SA Water will make a decision about which company will proceed to the next stage.

Mr VAN HOLST PELLEKAAN: So that decision has not been made yet?

The Hon. S.E. CLOSE: No.

Mr VAN HOLST PELLEKAAN: You have me stumped there just a little bit, because it is in the section about 2013-14 estimated results. I am just looking for what was achieved in the last year, or is this a program that runs over successive years?

The Hon. S.E. CLOSE: It looks like we have transferred our money to SA Water and they have achieved the phase 1 with the two companies. It is now in SA Water's hands to take it on to the next stage. So, our contribution has been done.

Mr VAN HOLST PELLEKAAN: And how much was that contribution, specifically?

The Hon. S.E. CLOSE: We think we know the answer but, rather than mislead you, we will take it on notice.

Mr VAN HOLST PELLEKAAN: I understand what you said about that water project particularly, but is there any money allocated for the Small Business Innovation Research Pilot program for this financial year?

The Hon. S.E. CLOSE: As I think I said in a previous answer, we are doing another round and we are in discussion with departments about which department would like to take it on board.

Mr VAN HOLST PELLEKAAN: And the funding that is attached?

The Hon. S.E. CLOSE: The funding will remain the same from us.

Mr VAN HOLST PELLEKAAN: So the funding—

The Hon. S.E. CLOSE: The funding has been allocated for us to contribute, and that is what we need to be precise about, how much that is.

Mr VAN HOLST PELLEKAAN: So you will come back on what was allocated, what was spent for the last year, and what is budgeted for this year?

The Hon. S.E. CLOSE: Yes.

Mr VAN HOLST PELLEKAAN: Same page, and the South East Innovation Investment Fund. What was the total budget allocation for the South East Innovation Investment Fund for each year of the life of the program?

The Hon. S.E. CLOSE: I will read the brief on this to give the full picture; it is not too long. The South East South Australia Innovation Investment Fund was established in response to the decision by Kimberly-Clark Australia to restructure its operations at Millicent and Tantanoola. The fund is now closed for new applications. It included a $12 million industry development program and a $5 million labour adjustment program.

There are currently 21 projects proceeding. These projects are entitled to claim $6.26 million in grants to generate $25.31 million in investment and create 187 new jobs. In addition to the grants provided to businesses in the region, additional grants approved out of the South East South Australia Innovation Investment Fund are as follows:

District Council of Grant $500,000 for the Mount Gambier and District Airport;

Regional Development Australia $540,000 to conduct a comprehensive cellulose fibre study; and

the VTT Technical Research Centre of Finland, in conjunction with the state government, worked with the South-East forestry industry to identify a sustainable road map and achievable market opportunities for higher value-added activity in the sector. The study was completed in September 2013. We do not have a breakdown across the years, but the state money that was put in was $2 million.

Mr VAN HOLST PELLEKAAN: Sorry; I did not quite hear?

The Hon. S.E. CLOSE: We do not have a breakdown across the years, we just have a total fund here: the state put in $2 million and the commonwealth put in $10 million.

Mr VAN HOLST PELLEKAAN: Turning now to regional South Australia, and I noted your comments in your opening statement, which I certainly appreciated, and I have seen information in your areas of responsibility with regard to the budget. Can you point to specific initiatives the government has established for growth and manufacturing in regional South Australia, please? So, outcomes.

The Hon. S.E. CLOSE: Here is something we prepared earlier on that subject.

Mr VAN HOLST PELLEKAAN: I am not surprised.

The Hon. S.E. CLOSE: The Department of State Development supports manufacturing in regional South Australia through: Manufacturing Works programs that aim to help firms become more competitive in a high cost environment; case management which provides guidance to streamline investment projects; the delivery of tailored small business programs; facilitating industry participation opportunities through the Industry Capability Network of South Australia; the delivery of an energy efficiency program; guaranteeing third-party investment in Nyrstar as part of the transformation of the Port Pirie lead smelter into a multi-metal recycling facility; and the $17 million South East South Australia Innovation and Investment Fund with the commonwealth government, which was established in response to the decision by Kimberly-Clark Australia to restructure its operations. I would like to update my answer previously where I said there was $2 million and $10 million for Kimberly-Clark.

Mr VAN HOLST PELLEKAAN: This is back to the last question, yes.

The Hon. S.E. CLOSE: When I read 17—12 and 17 are not the same. I understand there was an additional $5 million that was labour market adjustment that was paid into that.

Mr VAN HOLST PELLEKAAN: Thank you, minister.

The Hon. S.E. CLOSE: Specific activities and outcomes in the various regions include, for the Limestone Coast, the South East Forestry Partnerships Program. Twenty-seven million dollars was announced by the former treasurer on 15 November 2012 to facilitate investment in new and existing businesses in the forestry industry. To date, $16.5 million has been allocated to five projects to stimulate investment of $36 million. The government has committed an unspent balance of $10.46 million to support the implementation of projects consistent with the Cellulose Fibre Value Chain Study recommendations. From 1 July 2014, the Minister for Forests, through Primary Industries SA, has responsibility for this fund.

The Cellulose Fibre Value Chain Study: in December 2012, the department undertook a comprehensive cellulose fibre study, that involved the VTT Technical Research Centre of Finland, to identify a sustainable road map for the forestry sector. The study was completed in September 2013 and there is momentum within the industry to collaborate on higher value-adding opportunities, albeit at a very early stage of development. Investors are liaising with the government regarding opportunities consistent with the study's recommendations. The region's major plantation growers have now joined together with the goal of attracting one or more large-scale processing investments into the region.

Innovation capacity building: the RDA Limestone Coast has been provided with a grant of $50,000 to deliver a business model innovation program with Professor Göran Roos and a customer-led innovation program with Professor Sam Bucolo in 2013-14 and 2014-15. The BMI program was completed in April 2014. The CLI program is scheduled to begin this month.

JBS Bordertown: case management is supporting a $6.5 million investment in new robotics equipment at JBS's Bordertown meat processing facility.

Qingdao Seaweed: case management is supporting an expansion of Australian Kelp Products, which was purchased by Qingdao Seaweed.

The Limestone Coast Economic Development Reference Group: the Department of State Development is a member of the Limestone Coast Economic Development Reference Group which was established in 2012 to maximise economic development opportunities for the region. The group is chaired by the president of the South East Local Government Association. Other members include the South East Local Government Association council mayors and chief executives, RDA Limestone Coast, the presiding member of the South East Natural Resources Management Board, Mr Dennis Mutton, and PIRSA.

Small business training: the RDA Limestone Coast has received two grants totalling $23,000 to deliver training courses related to web-based sales and marketing and how to prepare tender bids. The department has also supported 60 McCain Foods Limited workers retrenched in December 2013 as a result of the company closing its Penola processing plant, together with support provided to 121 Carter Harvey Holt displaced workers from the Mount Gambier north site.

On the Fleurieu Peninsula, customer-led innovation: the Department of State Development has partnered with the Australian Wine Research Institute and the McLaren Vale Grape Wine & Tourism Association to deliver applied learning workshops at the cost of $20,000 in 2013-14 to McLaren Vale winemakers to support them in developing high-value luxury wines.

The HALO project: the department has expanded upon this initiative to provide a further $30,000, with matching funds from the McLaren Vale Grape Wine & Tourism Association and Australian Wine Research Institute, to increase brand equity and product demand, particularly in high-priced categories and producer profitability.

Murraylands/Riverland: Business Sustainability Alliance Energy Efficiency Program. The RDA Murraylands and Riverland received a grant of $55,000 in 2012-13 to facilitate the delivery of energy audits to companies in its region in 2013-14. Six companies are participating in the program, while the seventh company from the region has also participated previously in the program, when it was delivered by the government during the three years to 30 June 2013. To date, six of the seven companies have completed their energy audits and identified total energy savings of $1.8 million plus, with an average energy saving of 16 per cent per company.

Community cabinet was held in Renmark in June 2014, where I met with some local industry and community representatives, including RDA Murraylands and Riverland, Laragon Almond Processing and Ruston Engineers—a very impressive firm. These firms have since been introduced to the state government's new business transformation voucher to accelerate the growth of their businesses.

Whyalla, Eyre Peninsula, Yorke, Mid North and Upper Spencer Gulf: the big story is Nyrstar. The state government has guaranteed third-party investment of Nyrstar for the transformation of the Port Pirie lead smelter into a multimetal recycling facility. This secures the future viability of Port Pirie as an important regional hub.

The Manufacturing Business Innovation Program: the Australian Industry Group has been provided with a grant of $50,000 to deliver the MBI Program in Port Augusta in 2014-15, through the University of Adelaide's Entrepreneurship, Commercialisation and Innovation Centre, in collaboration with Professor Göran Roos. The purpose of the MBI Program is to support participating companies to increase their capacity to innovate.

Global Maintenance Upper Spencer Gulf: this has been provided with a grant of $60,000 per annum in 2012-13 and 2013-14 to support further development of the global maintenance Upper Spencer Gulf as an industry cluster, and to promote Manufacturing Works, PACE Manufacturing and Mining Industry Participation Office initiatives. PACE Manufacturing and MIPO, which are business units within the department's industry and innovation branch, have identified 10 companies with the global maintenance Upper Spencer Gulf that have the potential to access new opportunities in the resources sector. One of these firms recently participated in a study tour to Sweden to learn about advanced manufacturing opportunities in the resources sector.

ICNSA is currently working with Rex Minerals to identify and maximise local supply chain opportunities for its $800 million Hillside copper, gold and iron ore project, while the department's case management unit is providing support to aspects of the project that require approval under the Development Act, to such as the diversion of the Yorke Highway. Port Lincoln Seafood Trade Waste: case management is supporting local seafood processers in the area of trade waste.

Mr VAN HOLST PELLEKAAN: Given your comments about the cellulose project and your understanding of how important timber processing is in your manufacturing sector, have you advocated with the Minister for Forests or the Minister for Regional Development on behalf of the manufacturing sector for the replanting of the Wirrabara Forest so that the 50 jobs at the Morgan Sawmill can be retained?

The Hon. S.E. CLOSE: No, I have not had that conversation, but you are quite right: it was a tragedy what happened for Wirrabara.

Mr VAN HOLST PELLEKAAN: For many reasons, but certainly 50 manufacturing jobs hang on the replanting. I take the opportunity to ask you to do that, please.

The Hon. S.E. CLOSE: I know that the Minister for Forests has taken a very strong interest in what has happened at Wirrabara and is forming views about what the best approach is and whether replanting is the best approach, but I will raise that with him, and I am sure you have raised it directly as well.

Mr VAN HOLST PELLEKAAN: Yes, and I am sure support from the manufacturing and innovation minister would help.

The CHAIR: We have reached the point where the agreed timetable says we are switching to automotive transformation. I am happy if you want to keep ranging or if you want to have a minor reshuffle of advisers at all. Are you happy to just go ahead?

The Hon. S.E. CLOSE: Yes.

Membership:

Mr Williams substituted for Mr Speirs.

Departmental Advisers:

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

Mr L. Piro, Chief Executive, Automotive Transformation Taskforce, Department of State Development.

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

Mr D. Cussen, Acting Director, Manufacturing and Small Business, Department of State Development.

Mr P. Tyler, Director, Automotive Transformation Taskforce, Department of State Development.

Mr M. Ganley, Chief of Staff.

The CHAIR: I remind the opposition that the budget lines for the Department of State Development close at 12 o'clock. If you have an omnibus of questions, they need to be read in before that time.

Mr VAN HOLST PELLEKAAN: I do have one more question that relates particularly to manufacturing and then I will swap to the automotive questions that I have prepared. It is in a similar vein to the one about advocating for a regional area. Given that you said that of the issues that are most commonly brought to you as challenges by manufacturing sector businesses, the first one you mentioned—you did not say that it was the top or the most frequent, but the first one that came to mind—was access to skilled staff. Keeping on that regional theme, have you as the Minister for Manufacturing and Innovation advocated on behalf of your sector with your cabinet colleagues with regard to resources and support for regional TAFEs, so that local people can be trained locally to become those skilled employees for regional businesses?

The Hon. S.E. CLOSE: One of the many reasons I was delighted that the Department of State Development was formed out of what was DFEEST and DMITRE, and then some other additions as well, is that I see the nexus between training and state development—economic activity—as absolutely essential. Yes, I have had discussions about that. I understand that the minister, yesterday or the day before, in estimates expressed a firm commitment to regional TAFE and as I understand from the chief executive, significant government funding has gone into training in the regions, not just through TAFE but also through other providers. I concur with the sentiment of your question, that this is very important. It is something that is very important to me.

Mr VAN HOLST PELLEKAAN: Same book, turning to page 118 now, which is specifically automotive transformation. What is the annual budget for the automotive task force for 2013-14 and 2014-15? What was the budget and what is the budget for those two years?

The Hon. S.E. CLOSE: Can you remind me of the years that you asked about?

Mr VAN HOLST PELLEKAAN: Yes; 2013-14 and 2014-15.

The Hon. S.E. CLOSE: The automotive task force was only created on 1 July, so there is no task force. Obviously, it is trying to line up the budget. There is no budget for it until this year, because it was only formed this year as a single entity.

Mr VAN HOLST PELLEKAAN: So there was zero spending?

The Hon. S.E. CLOSE: The task force has been formed from existing areas of the government, but you cannot say, 'This is how much the task force cost last year,' because it did not exist. I am being advised that it is $19 million over the next four years for the rest of the period of Our Jobs Plan for the task force.

Mr VAN HOLST PELLEKAAN: Do you have an annual breakdown of that?

The Hon. S.E. CLOSE: Can we get that to you?

Mr VAN HOLST PELLEKAAN: On notice?

The Hon. S.E. CLOSE: I am confident that I have seen it in here but in the interests of time we will get back to you.

Mr VAN HOLST PELLEKAAN: So $19 million over the forward estimates period?

The Hon. S.E. CLOSE: That is my understanding.

Mr VAN HOLST PELLEKAAN: I would be grateful.

The Hon. S.E. CLOSE: We will make that precise for you.

Mr VAN HOLST PELLEKAAN: That would be great, thank you. How many FTEs are allocated to the task force?

The Hon. S.E. CLOSE: Sixteen.

Mr VAN HOLST PELLEKAAN: Is that expected to remain consistent over the period?

The Hon. S.E. CLOSE: Yes.

Mr VAN HOLST PELLEKAAN: How many members on the task force?

The Hon. S.E. CLOSE: So staffing? I think there is a little bit of complexity with the task force in that it sounds like it could just be a board but it is not, it is employees who are working, so there are 16 people working. There is a board that supports that task force. The chair is Greg Combet and he is then supported by John Camillo from the Australian Manufacturing Workers Union; Richard Reilly, the chief executive of the Federation of Automotive Products Manufacturers, so that is the supply chain; the Hon. Lea Stevens who is the director of Northern Connections; Mr Robert Chapman, who is the deputy chair of the Economic Development Board; and the Rev. Peter Sandeman who is the chief executive of Anglicare SA, and deacon, Anglican Diocese of Adelaide.

Mr VAN HOLST PELLEKAAN: That is what I was trying to start to understand.

The Hon. S.E. CLOSE: So that is the board.

Mr VAN HOLST PELLEKAAN: And those people are not part of the 16; that is the board that oversees those 16?

The Hon. S.E. CLOSE: That is right, and in fact only Greg Combet is being paid; the others are serving in a voluntary capacity.

Mr VAN HOLST PELLEKAAN: While I understand what you said about a particular budget line not existing for last financial year, has work been going on over the last few months? I understand the work has been going on over the last few months and it has not just really started on 1 July.

The Hon. S.E. CLOSE: Yes.

Mr VAN HOLST PELLEKAAN: What have they achieved so far?

The Hon. S.E. CLOSE: Essentially the components of the task force, in terms of the FTEs, come from the people who have been working on industry, and so we have talked in quite a bit of detail about the kind of industry work that has been occurring and the people who are dedicated to supporting workers as part of labour structural adjustment.

So that work was occurring previously and we have now been able to pull it into one place. This is the year where the expenditure on Our Jobs Plan starts seriously and we are expecting, although we will not be gaining the money directly from the federal government, we will be taking an interest in how that money is allocated and expect to be part of the panel in making decisions about allocation of funds to companies and institutions. So that work was occurring already but now has funding that is ramping up and has a focus by bringing the staff together into a single team.

Mr VAN HOLST PELLEKAAN: You mentioned Mr Combet is the only paid board member. What are the details of his contract?

The Hon. S.E. CLOSE: The contract for Mr Combet runs until 2016-17 at this stage and he is going to receive $140,000 in 2014-15.

Mr VAN HOLST PELLEKAAN: So $140,000?

The Hon. S.E. CLOSE: That is right, $140,000.

Mr VAN HOLST PELLEKAAN: What is expected of him? I am sure it is not the only thing he does; he would have other things. How have you contracted what his contribution will be in return for that $140,000?

The Hon. S.E. CLOSE: I think I might put on the record, even though it is not specifically the question, and I will get to your question, some of the strengths that Greg Combet brings, because I think when someone's salary is being discussed it is absolutely something that is reasonable to ask. It is also probably appropriate to put on record the worthiness of that person.

On 23 December 2013, the Premier appointed Mr Greg Combet AM as the Automotive Transformation Coordinator. He has been providing expert advice to the South Australian government to shape a strategic and integrated approach to the delivery of programs and services for the successful transformation of the automotive industry. Mr Combet's role has evolved from that of Automotive Transformation Coordinator and he is now providing strategic advice to me, as the minister, and chairing the newly established board supporting the Automotive Transformation Taskforce. The task force will drive the state government's support to automotive businesses and workers to adjust to the closure of Holden, Toyota and Ford.

Mr Combet's skills, experience and career achievements will be an asset to the state government in meeting the challenges that lie ahead for the automotive supply chain. His career highlights include being the federal minister for climate change and energy efficiency, the federal minister for industry and innovation, the federal minister for defence personnel, materiel and science, and secretary of the Australian Council of Trade Unions between 2000 and 2007.

South Australia is very fortunate that a person of Mr Combet's high calibre has agreed to assist us as chair of the Automotive Transformation Taskforce and specialist adviser. His experience and knowledge of Australian industry and the trade union movement will be a significant asset to South Australia. He is not new to the sort of challenges that we are facing and I know that he was significantly involved in other structural economic challenges that our economy has faced in the past. One example that comes to mind is the closure of the steel industry in Newcastle. He has also dealt with GM Holden and Toyota at the national and international levels and is experienced in targeted program delivery.

The three tasks that are essentially before him and the task force are: the support of the workers (which he has an enormous amount of experience in and will guide how we undertake that work); the diversification of the supply chain (which, as previous industry minister, he has a great deal of experience in); and working with GM Holden on the future of the site (and his gravitas and relationships will assist us in undertaking that). I speak to him frequently. He is a very available adviser. In addition to chairing the board and offering support to the staff, I find him useful.

Mr VAN HOLST PELLEKAAN: You said his contract runs to 2016-17. Is that 2016-17 inclusive, or does it finish at the start of that year?

The Hon. S.E. CLOSE: Inclusive.

Mr VAN HOLST PELLEKAAN: And is the $140,000—

The Hon. S.E. CLOSE: It is indexed.

Mr VAN HOLST PELLEKAAN: Indexed for inflation. Can you confirm, or share information with us if you have it, whether Holden have expressed any likelihood or possibility that they might close before 2017?

The Hon. S.E. CLOSE: No, they have not. It remains a matter that is on my mind. I am particularly concerned that the components suppliers remain sufficiently capable of providing the components, that that in itself not precipitate an early exit. Holden has—in fact, quite the opposite—indicated a very strong commitment to staying until then.

Mr VAN HOLST PELLEKAAN: That is good news. On the same page, regarding alternative use for the Holden site, who owns the GM site?

The Hon. S.E. CLOSE: GM owns it.

Mr VAN HOLST PELLEKAAN: Have you or the government entered into negotiations with them with regard to potential transfer or purchase by the government, similar to down south?

The Hon. S.E. CLOSE: We are at very early stages of those discussions about the future of the site and I am not inclined to try to take any responsibility away from GM to do something productive with that site and to address any contamination issues that sit there. This is a major company across the world and we are very concerned to have productive discussions with them about their intentions there.

Mr VAN HOLST PELLEKAAN: I certainly support you in that. You touched on contamination. Are you aware, or is the department aware, of what contamination might exist there?

The Hon. S.E. CLOSE: No, no specifics, but it is a reasonable starting point that there will be contamination.

Mr VAN HOLST PELLEKAAN: Obviously, it is an important issue if the government were to purchase it or if you had some transfer of ownership, even to another third party. That is obviously a key issue.

The Hon. S.E. CLOSE: Of course.

Mr VAN HOLST PELLEKAAN: When will you start to investigate that issue, because it will be important, whatever the outcome?

The Hon. S.E. CLOSE: I am advised that Holden has already engaged a site contamination consultant to undertake site contamination assessments, and we will continue to have what I hope will be productive discussions.

Mr VAN HOLST PELLEKAAN: Is there a time line on that? There will come a time when the government has every right to know. In fact, I am sure they already have that right, but there will come a time when the government says, 'We want to know what the contamination is.'

The Hon. S.E. CLOSE: I do not have a time line. I agree with you about its importance and we are just in the very early stages of discussions with Holden.

Mr VAN HOLST PELLEKAAN: Are you aware of any other potential liabilities attached to the site apart from contamination?

The Hon. S.E. CLOSE: I am not aware of any. I am not sure if there is a particular one you are thinking of.

Mr VAN HOLST PELLEKAAN: No.

The Hon. S.E. CLOSE: There may be a local heritage issue.

Mr VAN HOLST PELLEKAAN: Can you share with the committee how many manufacturing firms have been identified as at risk attached to the closure of Holden in South Australia? We are all aware of the broader numbers, but not the number of firms.

The Hon. S.E. CLOSE: The closure of Holden and Toyota, together with Ford scheduling closure in 2016, is likely to have a very serious impact on jobs, as we have canvassed frequently this morning. The Department of State Development recently undertook a detailed mapping exercise of the automotive supply chain in South Australia which established that there are 33 tier 1 suppliers located in South Australia, employing around 3,700 people. A significant number of the tier 1 automotive supplier companies located in South Australia are foreign owned with global expertise and local centres established to service domestic customer needs.

A further 719 companies in South Australia employ 28,000 to 32,000 people with around 2,800 to 4,100 of those being automotive-specific and they are estimated to supply a wide range of services and products to the tier 1 companies. This is in addition to the 1,700 jobs in Holden in South Australia. The South Australian government has of course committed $60 million. I think that answers your question sufficiently.

Mr VAN HOLST PELLEKAAN: Would you be prepared to take on notice to provide the list of the 31 companies?

The Hon. S.E. CLOSE: I will certainly take it on notice. If there are any commercial-in-confidence matters that I am not aware of, I will obviously have to pay attention to that, but in principle, yes.

Mr VAN HOLST PELLEKAAN: I accept that wholeheartedly. Are you aware whether Holden expects to offer or create any redundancies between now and 2017? They have indicated to you that they intend to stay as long as possible and operate as fully as possible.

The Hon. S.E. CLOSE: No, they have not come and talked to us about what jobs might go beforehand or whether redundancies might be offered beforehand.

Mr VAN HOLST PELLEKAAN: Are you expecting them to keep their full workforce to the end or are you expecting them to scale down?

The Hon. S.E. CLOSE: I think there might well be a reprofiling, but we are not aware of any detail.

Mr VAN HOLST PELLEKAAN: On the same page, regarding the Automotive Supplier Transformation Program, how many suppliers have been assisted as part of this program?

The Hon. S.E. CLOSE: We have not as yet provided any direct assistance to companies. We are in discussions with several companies. We are assessing what is occurring and I understand that Greg Combet is taking a role in helping to work that through.

Mr VAN HOLST PELLEKAAN: When it has in the budget that a highlight for last year was to commence the program, have you engaged with the industry at all or is it just a matter of—

The Hon. S.E. CLOSE: Yes, absolutely and we have undertaken the analysis that will help us to work out where we best spend the money, so we have engaged with companies, we have been in discussions and we are undertaking analysis.

Mr VAN HOLST PELLEKAAN: Where will you best spend the money?

The Hon. S.E. CLOSE: The nature of the analysis, at least some of it, is about where the companies have the greatest applicability into other sectors, so what kind of change could occur in a company that will make it able to move quickly. That analysis has been occurring and we will then start investing.

Mr VAN HOLST PELLEKAAN: I am just looking for a bit more detail on the outcomes of that analysis. Has it looked at particular types of companies or has it looked at specific companies? To say that in the last year a highlight was to complete the analysis, I am just looking to know what the results were.

The Hon. S.E. CLOSE: I am advised that the areas in which we have particularly concentrated to date are the suitability of the mining, petroleum and exploration industry and also the defence industry. We have also been trying to work with the commonwealth to change some of their guidelines for how they support automotive transformation.

Mr VAN HOLST PELLEKAAN: Do you have a target for the number of companies you plan to help? You have 31 core tier 1 businesses. This particular program is going to try and help them and you did say largely international companies but local jobs, so there is still a strong desire to help them?

The Hon. S.E. CLOSE: There is. I think there is a real challenge with the international companies. It depends on why they are here. I think several of them will be here because Holden is here and will go when Holden goes and that is going to be difficult. It may be that it will be more fruitful to be working slightly further down the chain to assist in the diversification, but that is the kind of analysis that is going on at present. You asked specifically if we have a number that we are interested in?

Mr VAN HOLST PELLEKAAN: Yes, do you have any targets? You have completed the analysis in the last financial year. Do you have targets for what you will achieve this year?

The Hon. S.E. CLOSE: Now that we have the task force and therefore are able to staff up our effort, we are proceeding apace to interview each of the companies in order to work out their particular diversification capabilities and that is necessary before we proceed. We are also interested in how much of the commonwealth money that is now available we will be able to assist companies to apply for.

Mr VAN HOLST PELLEKAAN: Do the companies approach you or do you approach them?

The Hon. S.E. CLOSE: We have approached all of them; that is the idea.

Mr VAN HOLST PELLEKAAN: You mentioned collaborational connection with the defence sector, which is obviously incredibly important. Can you tell me what collaboration has occurred so far in terms of whether it is trying to transition some current manufacturers from automotive to defence or whether it is trying to get defence to just grow and pick up some automotive workers? Where are you heading?

The Hon. S.E. CLOSE: I am sure it is both. Specifically on defence, there are a couple of highlights to talk about. One is the work that we have done with Defence SA on the possibility of LAND 400 coming here, and therefore we have been looking at which automotive companies would be able to retool or retrain in order to get benefit from that. The other is that the Premier announced support for the Defence Teaming Centre specifically for automotive workers to transition their skills into the defence sector.

Mr VAN HOLST PELLEKAAN: I refer to page 117, back one from where we were, grants and subsidies. Can the minister provide a breakdown of the $1.6 million allocated to be provided in 2014-15?

The Hon. S.E. CLOSE: I will take that on notice rather than churn through it now.

Mr VAN HOLST PELLEKAAN: Okay. With regard to supplies and services on the same page, can the minister explain the difference between the $1.96 million estimated result for 2013-14 and the $690,000 budget? That is just under supplies and services in the table in the middle.

The Hon. S.E. CLOSE: This is supplies and services, is it not? You are talking about the $690,000 and the $1.9 million?

Mr VAN HOLST PELLEKAAN: Correct.

The Hon. S.E. CLOSE: We will have to take that on notice and give you the details.

Mr VAN HOLST PELLEKAAN: Thanks, minister. When I asked about the potential transfer of ownership of the GMH site, you mentioned that you were reluctant to get involved, that they are a big multinational company (I am paraphrasing) and they could do that. I gather from that that quite understandably you did not want the government to jump in too quickly to solve their problems, essentially, which would cost taxpayers money. I understand that. Can you just go into potential alternative uses of the site? What I am really interested in is: of those alternative uses, what ones would actually be beneficial for the government to potentially control the use of the land so that it would have greater control of the development of those industries—in a Tonsley-style situation—versus uses where you would say, ‘Sell it all to company X, let them do this and we’d be grateful to have them come to our state.’

The Hon. S.E. CLOSE: I think it is simply too early to start to canvass those options. I am aware that we need to allow some discussions to start occurring with GM to see what they are prepared to consider with their own site. Given that this is a public forum, I am reluctant to start speculating too much.

Mr VAN HOLST PELLEKAAN: I accept that. I am not trying to damage our negotiated position as a state, but there must come a time—because 2017 will come very fast—when you need to become very actively involved in those discussions, even if it is in private and behind the scenes. How urgent do you see that? Is it a pressing issue for you now or is it something that can wait a year or two?

The Hon. S.E. CLOSE: No, it cannot wait a year or two. It is a matter that is on my mind and it is a source of discussion between myself and Greg Combet. I guess I do have that hierarchy where the number one priority is making sure that workers get the support they need, that we are doing all we can not only to diversify the existing supply companies but to help other manufacturing companies to develop to absorb employment. Then absolutely the question of the future of the site is on my mind, and I agree with you that it is not something we can just ignore, and nor are we. However, it is a delicate matter for discussion.

Mr VAN HOLST PELLEKAAN: On that same area, do you have a commitment from Holden, from GMH, that they will keep you and the government fully informed all the way through of their negotiations and their developments with regard to the site?

The Hon. S.E. CLOSE: We have had good-faith discussions to date and it is my expectation that that will continue.

The CHAIR: As important as it is, I do remind members of the time; but carry on.

Mr VAN HOLST PELLEKAAN: One last question. Page 118 of the same book, Budget Paper 4, Volume 4, looking specifically at the third dot point there, under Highlights, and the completion of a comprehensive automotive supply chain review. Can you tell me what the terms of reference were for that review?

The Hon. S.E. CLOSE: Given the time, I will take that on notice and provide that to you.

Mr VAN HOLST PELLEKAAN: Okay. Outcomes and recommendations? I will add costs to that as well, if that is okay, to take with you.

The Hon. S.E. CLOSE: So terms of reference, outcomes and the cost of the review?

Mr VAN HOLST PELLEKAAN: Thank you, minister.

The Hon. S.E. CLOSE: You are welcome.

The CHAIR: Thank you member for Stuart, and thank you minister. Thank you all for a positive discussion. There being no further questions for the Minister for Manufacturing and Innovation, and Automotive Transformation, I declare examination of the proposed payments for the Department of State Development and administered items for the Department of State Development completed.

Sitting suspended from 12:01 to 12:15.