Estimates Vote

Department of Treasury and Finance, $148,367,000

Administered Items for the Department of Treasury and Finance, $2,439,548,000

Minister:

Hon. R.I. Lucas, Treasurer.

Departmental Advisers:

Ms A. Hughes, General Manager, South Australian Government Financing Authority.

Mr T. Burfield, Director, Risk and Commercial Advisory, South Australian Government Financing Authority.

Ms J. White, Director, Insurance and Fleet, South Australian Government Financing Authority.

Mr D. Reynolds, Chief Executive, Department of Treasury and Finance.

Ms D. Bennett, Chief Executive, Super SA.

Ms J. Townsend, Chief Executive, Funds SA.

Ms K. Birch, Chief Executive, CTP Insurance Regulator.

The CHAIR: Good morning. As they say in the movies, take two. We will start with the opening remarks again. I apologise to everyone for that, but away we go. The estimates committees are a relatively informal procedure and, as such, there is no need to stand to ask questions. I understand the minister and the lead speaker for the opposition have agreed an approximate time for the consideration of proposed payments which will facilitate a change of departmental advisers. Can the minister and the lead speaker for the opposition confirm that the timetable for today's proceedings previously distributed and amended multiple times is now accurate?

The Hon. R.I. LUCAS: Yes.

The Hon. S.C. MULLIGHAN: Yes.

The CHAIR: Changes to committee membership will be notified as they occur. Members should ensure that the Chair is provided with a completed request to be discharged form. If the minister undertakes to supply information at a later date, it must be submitted to the Clerk Assistant via the answers to questions mailbox no later than Friday 5 February 2021.

I propose to allow both the minister and the lead speaker for the opposition to make opening statements of about 10 minutes each, should they wish. There will be a flexible approach to giving the call for asking questions based on about three questions per member, alternating each side. Supplementary questions will be the exception rather than the rule.

A member not on the committee may ask a question at the discretion of the Chair. Questions must be based on lines of expenditure in the budget papers and must be identifiable and referenced. Members unable to complete their questions during the proceedings may submit those questions on notice for inclusion in the assembly Notice Paper.

There is no formal facility for the tabling of documents before the committee; however, documents can be supplied to the Chair for distribution to the committee. The incorporation of material in Hansard is permitted on the same basis as applies in the house, that is, that it is purely statistical and limited to one page in length.

All questions are to be directed to the minister, not the minister's advisers. The minister may refer questions to advisers for a response, if appropriate. The committee's examinations will be broadcast in the same manner as sittings of the house are broadcast, that is, through the IPTV system within Parliament House via the webstream link to the internet and the Parliament of South Australia video-on-demand broadcast system.

The proposed payments to be examined this morning relate to the portfolios of SAFA, SA Government Insurance and Fleet, Funds SA, Super SA and the CTP Regulator. The minister appearing today is the Treasurer. The estimate of payments remain open for the Department of Treasury and Finance and administered items for the Department of Treasury and Finance. I advise that the proposed payments were adjourned earlier in the week and remain open for examination this morning. Treasurer, do you wish to make an opening statement?

The Hon. R.I. LUCAS: No, Mr Chairman. Other than to say this particular session is a bit complex with a number of different agencies and heads of those particular agencies, and because of COVID arrangements, I am in the hands of the committee, but I think it would be useful to minimise the extent of officers having to change at the front desk here, and to perhaps move sequentially in whatever order members of the committee would like.

At this stage, I have Ms Anna Hughes, the General Manager of SAFA here with me, so if it suits the committee, we could do SAFA-related questions, etc., and then separately questions in relation to superannuation with Funds SA and Super SA, and then issues in relation to the CTP regulator. Again, I am in the hands of the committee, but if it suits the committee we could propose to concentrate the questions in blocks, which would be useful and would minimise the extent of officers having to switch over.

The CHAIR: Sounds like a sensible approach to me. Mr Mullighan, as lead speaker for the opposition, did you wish to make an opening statement or perhaps provide some guidance to us in that regard?

The Hon. S.C. MULLIGHAN: I am happy to start with SAFA and perhaps after that we could move on to Super SA.

The CHAIR: Mr Mullighan.

The Hon. S.C. MULLIGHAN: Budget Paper 5, page 6, the Economic and Business Growth Fund. I understand that SAFA will be administering any payments or grants being made from that fund; is that correct?

The Hon. R.I. LUCAS: When you say administer, they will process the things. The allocations are taken by me but in terms of processing, if there are any grants and/or loans then they would be managed and processed by SAFA.

The Hon. S.C. MULLIGHAN: SAFA's most recent annual report outlined that of the $100 million that was committed to the Economic and Business Growth Fund, I think in the 2018-19 budget—

The Hon. R.I. LUCAS: Sorry, can I just clarify that? Was the member referring to the Economic and Business Growth Fund?

The Hon. S.C. MULLIGHAN: Yes.

The Hon. R.I. LUCAS: Sorry, my apologies, I was locked into the business and jobs fund. We have so many funds at the moment. With the Economic and Business Growth Fund, there is a process through cabinet committee where the government makes some decisions. But, ultimately, in terms of any grant and/or loan decisions made by the cabinet committee, of which I am a member, SAFA again would process those and manage the oversight of those particular grants and/or loans.

The Hon. S.C. MULLIGHAN: My question was: of the $100 million that was committed in the government's first budget, SAFA's annual report for the 2019-20 financial year outlined that it had so far processed or made available $10.2 million of that. Is there an update on how much has been provided say today, or to last week, or the most recent end of month?

The Hon. R.I. LUCAS: I am happy to take that particular question on notice and update it as per November this year.

The Hon. S.C. MULLIGHAN: What are the criteria to meet for a successful application to that fund?

The Hon. R.I. LUCAS: I think the criteria are up on the website. The eligibility criteria for that particular fund are actually on the Treasury website. The broad structure and guidelines are on our Treasury website but, as I have said in parliament on a number of occasions, this is primarily a fund that the government has directed in the main to industry sector support in terms of the government's growth agenda.

It is not a fund where we call for applications and consider applications; it is a fund the government uses to prosecute its growth agenda, of which again, the details are on various government websites. The specific answer to the member's questions is that the broad guidelines are available on the Treasury website in terms of how the government broadly makes decisions in relation to the economic growth fund.

The Hon. S.C. MULLIGHAN: Who did that $10.2 million, which SAFA says it has doled out either as grants or loans as at the end of the most recent financial year, go to?

The Hon. R.I. LUCAS: I would have to take that on notice. The fund actually allocates funds in a number of cases to government departments and agencies. As one example, the government has made funds available to the energy and mining department to broadly support growth plans in the minerals and resources sector generically, in terms of growth plans there.

Those particular allocations out of that fund are not processed by SAFA, so the $10 million to which the member has referred is not the sole allocation out of that fund for that particular financial year. It would just be that section of the fund that has to be managed by SAFA. In relation to government decisions that allocate money out of the fund to support industry sectors such as minerals and resources, that sort of funding is just transferred to the particular department. In this case, it would be Energy and Mining. They would manage the funding, and SAFA would not be involved in recording, processing and oversight of that.

The Hon. S.C. MULLIGHAN: How much has been transferred to other agencies like the energy and mining agency?

The Hon. R.I. LUCAS: I would need to take that on notice. I have a recollection we may have answered questions on notice in relation to allocations out of the fund in the 2019-20 financial year. Certainly, I can update it with the November figures as to what has been allocated.

The Hon. S.C. MULLIGHAN: Do you know how much is left unallocated from the Economic and Business Growth Fund?

The Hon. R.I. LUCAS: Yes, I think we do. If I refer to the Budget Measures Statement, Budget Paper 5, pages 12 and 13, from its original allocation of $100 million into this fund the government has made a number of subsequent decisions, including part of the stimulus package, which now sees the total allocation into that fund of $220 million. As I said, Budget Paper 5, page 13 indicates that, at the time of preparation of the budget documents, the balance available out of that fund, out of the $220 million to support future initiatives, was $112.7 million.

The Hon. S.C. MULLIGHAN: Is it your understanding that that figure, $112.7 million, still remains available, or has it been defrayed by some commitments in between the preparation of the budget papers and today?

The Hon. R.I. LUCAS: Again, I will need to take that on notice, but I have a recollection there might have been a small allocation out of the fund subsequent to the preparation of these budget papers. I am happy to take that on notice. Again, Budget Paper 5, page 12 makes it clearer that a number of those allocations out of the fund are essentially overseen by other government departments and agencies as opposed to SAFA having to manage a particular allocation.

The Hon. S.C. MULLIGHAN: On that same table, on that same page reference, the second to last line is 'Other', which is $16 million. Has SAFA been responsible for disbursing those funds on behalf of government?

The Hon. R.I. LUCAS: I think the answer would be 'part of them'. Some of those are not specifically listed because they are commercial-in-confidence. SAFA probably will be responsible for some of those, but not necessarily all of that particular allocation.

The Hon. S.C. MULLIGHAN: Are you able to advise which payments SAFA is responsible for out of that $16 million?

The Hon. R.I. LUCAS: No. As I said, that particular section is commercial-in-confidence.

The Hon. S.C. MULLIGHAN: So they can never be revealed; is that the advice?

The Hon. R.I. LUCAS: I am not sure about 'never be revealed', but certainly not at this particular stage. Consistent with the practice of the former government in relation to certain decisions being allocated, the details of those are not made publicly available.

The Hon. S.C. MULLIGHAN: So you cannot advise how much Accenture, for example, was provided by the government?

The Hon. R.I. LUCAS: I would need to take that question on notice to see what the Premier has made publicly available in relation to the Accenture arrangement.

The Hon. S.C. MULLIGHAN: Can I turn the committee's attention to Budget Paper 5, page 36, regarding school loans. Can I just be clear: the former government allocated $250 million in the 2016-17 budget for this purpose. Is it this budget's intention to increase the total sum to $320 million?

The Hon. R.I. LUCAS: Yes. Budget Paper 5, page 36, to which the member referred, indicates that there was a remaining balance of $122 million from that original allocation from the former government, quite some time ago, now—it is a reasonably longstanding scheme—and the government has added to that to take it up to the $320 million mark.

Briefly, one of the issues in relation to the scheme is that the Catholic school sector in particular did not find the provisions of the scheme attractive enough for them to utilise it. When it established the scheme, the former government obviously thought it may well be attractive and utilised by both the Catholic and the Independent school sectors. I think there might have been one non-systemic Catholic school—possibly; I will check that—that might have availed themselves of the scheme. By and large, the Catholic system, which is obviously a very significant part of the non-government school sector in the state, did not utilise the scheme, so there was a very significant proportion of the original allocation of $250 million which was not utilised.

We hope this new scheme is more attractive in that it is interest free for the first five years and then at low cost interest for the remaining term of the loan. The other inhibiting factor in the original scheme was that, by and large, the terms of the former government's scheme were for two central purposes: it was for STEM facilities and early childhood-type facilities within schools, so a whole range of other potential uses the non-government school sector might have had for a loan scheme were not eligible for the scheme.

We broadened the eligibility criteria beyond just STEM and early childhood. In the case of schools wanting to increase capacity, for example, if their enrolments are growing by way of general classroom capacity, those sorts of facility improvements will be eligible for this new scheme. So there is a much broader eligibility criteria and, secondly, a more attractive financial package for the non-government school sector.

The Hon. S.C. MULLIGHAN: You said that it will be interest free for the first five years of the loan term and then low interest rates there after. What is the maximum loan term that is available?

The Hon. R.I. LUCAS: It is 10 years. Consistent with the former government's scheme, which was 10 years, we are proposing 10 years.

The Hon. S.C. MULLIGHAN: And it is no longer ring-fenced, as you said, to early childhood or STEM facilities, so independent schools could apply to use it really for any purpose.

The Hon. R.I. LUCAS: I am not sure whether it is 'any purpose'. The eligibility criteria is on the website. I think 'any purpose' might be too long a bow, but it is certainly a much, much broader range of criteria for which a non-government school might be able to apply for the loan.

The Hon. S.C. MULLIGHAN: Is it a requirement that it be used solely for an educational purpose?

The Hon. R.I. LUCAS: Yes. I am sure if it is not explicit, it is implicit in the scheme that it is intended to be for improving school facilities for educational purposes.

The Hon. S.C. MULLIGHAN: So any other use would be precluded?

The Hon. R.I. LUCAS: Do you mean as in non-educational?

The Hon. S.C. MULLIGHAN: Yes.

The Hon. R.I. LUCAS: Yes.

The Hon. S.C. MULLIGHAN: Alright.

The Hon. R.I. LUCAS: Did you have anything in mind?

The Hon. S.C. MULLIGHAN: No. That is not of direct interest to me. I refer to Budget Paper 3, page 66, debt raising and costs. How much debt does SAFA have out in the market in SA as at 30 June this year?

The Hon. R.I. LUCAS: I am advised $20 billion.

The Hon. S.C. MULLIGHAN: And what are the durations of those debt holdings?

The Hon. R.I. LUCAS: I am advised that as at 30 June, total debt outstanding was, as I said, $20 billion with the duration of 4.62 years across all portfolios—funding, liquidity and Treasurer's cost of funds. The debt duration increased during 2019-20 as we issued a new 2023 floating rate and 2032 fixed-rate maturities to manage client new borrowing requirements and liquidity. We are forecasting that by 30 June this year total term debt will be $24.3 billion, with a duration of 5.59 years. So SAFA is extending the duration as part of its ongoing borrowing program.

The Hon. S.C. MULLIGHAN: Could you compare that number to 30 June last year, 2019? Do you have that handy as a comparison?

The Hon. R.I. LUCAS: I do not know that we would actually have that with us at the moment. We would have to take that on notice.

The Hon. S.C. MULLIGHAN: On page 66 of the budget paper, it says, 'Debt is managed within a duration range of one to five years' and I think your advice is that at 30 June next year, 2021, you expect an average date of—did you say 5.59 years? Could you explain to the committee how that works?

The Hon. R.I. LUCAS: I am advised that regarding the range of one to five years, which was valid at 30 June, very imminently the SAFA Advisory Board will be considering a paper which will be recommending extending that from one to five to one to eight years. That is consistent then with the proposal or the suggestion that the duration will increase to 5.59 years by 30 June.

The Hon. S.C. MULLIGHAN: So essentially what that would mean is that rather than having debt out which might mature in five years, for example, you could turn that debt over in an eight-year time frame?

The Hon. R.I. LUCAS: I think, as I have indicated publicly and also in parliament, given the current historically low interest rates, governments maybe across the world but certainly across the nation are looking to take advantage of that and locking in longer term borrowings.

I have indicated that the advice I have received is that, broadly, in the last 10 months I think we have borrowed $6½ billion approximately at an average rate of about 1.3 per cent. Shorter term bonds we have been borrowing at around about 0.69 per cent and 20-year bonds we have been borrowing at 2.29 per cent, I think. Consistent with that, the government, through SAFA, is managing its debt profile by taking advantage of those historically low, long-term interest rates.

I think I recounted recently that 100 years ago when I was last the Treasurer, we were looking fondly at long-term housing mortgage rates that we had with the commonwealth of about 4 per cent or 4½ per cent as being low interest and how good it would be if we had our total debt at that particular rate. The whole world has changed in 25 years, whatever it is, since I was last Treasurer, in terms of the interest rate environment. SAFA and the government are looking to take advantage of that by managing its debt profile and locking in as it can the benefit of the historically low interest rates.

The Hon. S.C. MULLIGHAN: That is right. So, as you say, SAFA is looking at changing its policy so that it can take longer term positions to take advantage of current low interest rates.

The Hon. R.I. LUCAS: SAFA has always had the capacity to borrow both short and long. The range that you are referring to, one to five, are sort of average figures, etc. There has been no restriction on the capacity for SAFA, even under the one to five, obviously as we have been doing, borrowing 20-year bonds and two or three-year bonds or whatever it might happen to be, utilising 20-year bonds or two or three-year bonds, so it is not a restriction in terms of particular bonds that can be issued.

As I am advised, it is a risk management tool in relation to how the government manages its debt profile. As I said, it does not restrict the type of borrowing that we might issue. It is the risk management tool and in the end it is an average over the lot in terms of the debt profile for the state.

The Hon. S.C. MULLIGHAN: So SAFA can have debt out that would mature in 20 years; is that right?

The Hon. R.I. LUCAS: Yes, and we have. As I have indicated publicly, through the last 10 months we have utilised 20-year bonds. Some state governments have actually issued 30-year bonds. We have not done that yet. So there is no restriction in relation to that, other than you manage your debt profile and your risk profile and you obviously have to look at what the costs are. The longer you go, the more expensive it is. At the moment, the shorter it is, the cheaper it is. It is a balancing act in terms of SAFA and the government having to manage its debt and risk profile.

The Hon. S.C. MULLIGHAN: Can I turn your attention to Budget Paper 3, page 167, regarding the Adelaide Oval Hotel loan. Has the Stadium Management Authority sought any additional support beyond the $4.1 million of relief provided to date?

The Hon. R.I. LUCAS: They have certainly sought relief on a number of occasions but—

The Hon. S.C. MULLIGHAN: I think my recollection is that it was publicly reported they asked for a lower interest rate, at one point.

The Hon. R.I. LUCAS: The history of this is that we provided some assistance, which I think we were asked questions on last year in the estimates committee, and reported on that. We may have been asked to lower the interest rate last time, I cannot remember. The assistance we provided last time was to, in essence, say to them that their money they had to pay into the sinking fund in terms of the maintenance of the asset for that particular year, they did not have to.

I think that was worth about $3 million that they did not have to pay into it; but that was actually money that was required under the original agreement for that. I think the money that they had to pay into one of the sporting recreation funds—

The Hon. S.C. MULLIGHAN: The sublease fees?

The Hon. R.I. LUCAS: On 31 March, we assisted the Stadium Management Authority with waiving the $3 million contribution to the sinking fund for the 2020-21 financial year. As I said, that is just their money that they are required to pay in. The second relief we provided at that particular time was ex gratia relief of the $1 million payment of the annual sublease fee which goes into one of the sporting funds, and the government allocated the $1 million into that sporting fund so that sporting facilities did not miss out. That is possibly the $4 million to which the member has referred.

We also did for them what we did for many other government loans as a result of COVID: we deferred and capitalised the interest payable under the facility for the six-month period to 30 September 2020, and that was consistent with a range of government loans that we entered into. Then, in June, I think publicly, and also to us, they wrote seeking relief in relation to a reduction in the interest rate, which I think is 4.5 per cent. We have not agreed to that but we have provided further relief this year in terms of the budget decisions.

My clear recollection, and I can clarify this, is that they certainly asked for a reduction on the 4.5 per cent interest rate on the basis that that was clearly above what I had publicly indicated that the government's current borrowing rate was—the figure that I referred to earlier. On average, we borrowed at 1.3 per cent, and their proposition to me as Treasurer was that, therefore, we were making a profit on the 4.5 per cent interest rate that we were charging them.

I politely declined the invitation or request to reduce the interest rate, so it stayed at 4.5 per cent, but we have provided further assistance, similar to the assistance that we provided earlier in the year, and that is in relation to the approximately $1 million contribution into the sporting fund. We indicated that they would not have to make that contribution and the government—

The Hon. S.C. MULLIGHAN: Again?

The Hon. R.I. LUCAS: Again, yes. The government would make that contribution into the sporting fund, so that assisted them to the tune of $1 million. Secondly, in relation to the sinking fund, my recollection is that instead of making a payment—it is a bit over $3 million now; I think it actually goes up by an indexation factor each year—the government, out of the budget, would put $2 million into the sinking fund. Again, that assisted them to the tune of about $2 million.

In broad terms, and again we can clarify the precise numbers, the assistance provided as part of the budget arrangements was about $3 million in terms of money that they did not have to put in, but the budget provided $2 million for the sinking fund so that the sinking fund was not further reduced from what the extent might have been over the 30-year period, I think, that they were planning, or 20-year period.

Community sporting facilities did not miss out because the government made a budget allocation into that and that assisted them to the tune of around about $3 million, but the interest rate request on the 10-year loan, which they asked to drop from 4.5 per cent, closer to the government's borrowing rate, remains at 4.5 per cent.

The Hon. S.C. MULLIGHAN: Was the SMA required to make up the balance of the sinking fund payment?

The Hon. R.I. LUCAS: Yes. In broad terms, it was a bit over $3 million in total, I think, that needed to be made up with the indexation factor. They continue to make an allocation of about $1 million and the budget made an allocation for this financial year of about $2 million.

The Hon. S.C. MULLIGHAN: What performance monitoring arrangements does SAFA have in place for the hotel's operations?

The Hon. R.I. LUCAS: The standard for all government loans. SAFA manages I do not know how many loans. I am advised it is around about 565, to be specific. Anyway, it is over 500 loans. Sorry, I am advised 300 loans, so I will correct that. I do not know whether it was under the former government, but certainly under this government SAFA has become in essence the agency that manages a whole series of loans. A range of loans that other departments and agencies originally had issued have now been transferred over to SAFA to manage the compliance of those.

This is just one of over 300 loans that SAFA has to manage compliance for. I am sure the member and all other members will be delighted that the hotel project was finished, as I understand it, certainly on time or within time and on budget and is, subject to COVID impacts, operating as it was intended to operate.

The Hon. S.C. MULLIGHAN: Is the SMA required to provide its monthly performance for the hotel to SAFA?

The Hon. R.I. LUCAS: I am not sure whether it is monthly, but whatever the standard compliance reporting requirements are. My advice is that, as with most of our loans, it is not as onerous as people who have government loans having to provide monthly statements. As SAFA obviously has ongoing contact with them, they provide at the very least certainly annual and quarterly reports. They have to meet their payments as with most of our loans.

If I can go to the other end of the continuum, because they meet their payments, for some of our people who have loans where they struggle to meet payments or they are late, SAFA obviously has a much tighter degree of compliance in relation to those and has more regular, ongoing contact. If you have someone who is meeting their payments on a regular basis and there are no red flags being raised, nothing as onerous as monthly financial statements is required. That is standard practice from SAFA.

The Hon. S.C. MULLIGHAN: I am happy to turn my attention to insurance services. On Budget Paper 3, page 166, business interruption claims, how many have been lodged and by whom?

The Hon. R.I. LUCAS: I am advised it is around about 12. For the benefit of the committee members, without going through the long list, it includes the Zoo, the venue management authority, the Festival Centre, the Convention Centre and those sorts of things, so mainly arts and related organisations.

The Hon. S.C. MULLIGHAN: What is the total quantum of those claims?

The Hon. R.I. LUCAS: I am advised that we will need to be clear in terms of this information; that is, broadly the claims that have been made have been just above $100 million, but there is now a complicated process of assessing what the actual losses are, and that is likely to be less than that particular number. Agencies will make claims, as anybody in terms of insurance will make a claim, and we are now going through a process of assessing what the actual losses are, and that is likely to be a number less than the claims number. Committee members should not assume that is going to be the final number in terms of assessed losses.

The Hon. S.C. MULLIGHAN: The Zoo is not a government entity in the same way as are the Art Gallery and Museum—I presume they are part of the 12 and the Venue Management Corporation entities. The Zoo does not fit into the same category as those. It is not really a government entity in the same way, is it?

The Hon. R.I. LUCAS: It is true that they are a different type of agency, but I am advised that under the former government there was an agreement that they would be covered by the insurance arrangements of the government. The member may or may not be familiar with that decision, or it may have predated his time in the ministry, but evidently on some previous occasion it was agreed that they would be included in the insurance arrangements.

The Hon. S.C. MULLIGHAN: It was 2001; is that right?

The Hon. R.I. LUCAS: I do not know.

The Hon. S.C. MULLIGHAN: 2000? Was this a non-performance clause for the pandas?

The Hon. R.I. LUCAS: That would predate the pandas, would it not? I do not think they have been trying for that long, have they?

The Hon. S.C. MULLIGHAN: It seems like forever so far.

The Hon. R.I. LUCAS: It does seem a long time, but I do not know that it has actually been 20 years.

The Hon. S.C. MULLIGHAN: Depends on which panda's perspective, I guess. How much is the claim for the Zoo?

The Hon. R.I. LUCAS: We would have to take that on notice and see what information we can provide. As I said, the claims and what we eventually agree on in terms of the assessed losses will be two different numbers. We will take it on notice and see what information we might be able to provide to the member.

The Hon. S.C. MULLIGHAN: On Budget Paper 3, page 67, how many claims have been received for the insurance fund established for the National Redress Scheme?

The Hon. R.I. LUCAS: I am advised that this process is one where the claims are actually assessed, as to whether they are eligible or not, by the commonwealth. We then make the payments on the basis of the decision the commonwealth makes in terms of eligibility. So far the commonwealth has assessed 49 claims as having been eligible, but evidently they are still assessing a number of other outstanding claims.

I am advised that the 49 claims the commonwealth has assessed appear to have been given an allocation of $4.9 million. So 49 have been assessed by the commonwealth as being eligible; we have made the payments on the basis of those decisions, and I am advised that the total payments are about $4.9 million.

The Hon. S.C. MULLIGHAN: Does SAFA receive any advice about how many claims the commonwealth is receiving, not so much forwarding on the payment to SAFA but how much they are receiving for assessment?

The Hon. R.I. LUCAS: I am advised that we do, but we do not have the information here. We might be able to take it on notice to try to find out what might be in the pipeline being considered by the commonwealth.

The Hon. S.C. MULLIGHAN: I turn your attention to the fleet management arrangements. What are the new fleet arrangements, which are outlined in Budget Paper 4, Volume 4, page 166? It is the last dot point at the bottom of that page. And sorry, when I asked you the questions about the business interruption claims I said Budget Paper 3. That should have been Budget Paper 4, Volume 4, page 166.

The Hon. R.I. LUCAS: I am advised that the outsourced provision of fleet management and also vehicle disposal just went through a procurement process again in 2019-20. The incumbent providers—which are LeasePlan in terms of fleet management and Pickles for disposing of the vehicles—were the successful tenderers in the procurement process. It was just going back to another procurement process, but the incumbents actually won the fleet management and vehicle disposal.

The Hon. S.C. MULLIGHAN: How many vehicles in the fleet are plug-in electric vehicles?

The Hon. R.I. LUCAS: We do not have any figures. We would have to take on notice the issue in relation to the number of plug-ins. The advice I have here is that as at 30 June we had 6,742 vehicles, and 51 per cent of them qualified as low emission, including 1,488 hybrid petrol electric vehicles. There were 44 vehicles in the fleet with the ability to operate as zero emission vehicles, and they include plug-in hybrids, long-battery electric vehicles and one other vehicle, so there is a mixture there. We would need to take on notice the issue of hybrid electric. It would be a very small number from the looks of that.

The Hon. S.C. MULLIGHAN: I am happy to move to Super SA.

The Hon. R.I. LUCAS: Mr Chair, Ms Anna Hughes is replaced by Ms Dascia Bennett, the Chief Executive of Super SA.

The Hon. S.C. MULLIGHAN: I refer to Budget Paper 4, Volume 4, page 168, regarding Super SA's activities. What modelling has been done by Super SA regarding the proposed choice of fund regime?

The Hon. R.I. LUCAS: Modelling in relation to what? The number of—

The Hon. S.C. MULLIGHAN: Superannuants and fund balances.

The Hon. R.I. LUCAS: There has been a lot of modelling done. I am advised that, as the member will know, the package that the government is asking the parliament to consider is a combination of both choice of fund for existing members but also a limited public offer that will allow Super SA to offer superannuation to employees, such as nurses and teachers, who might have employment both in the government sector and in the non-government sector.

Regarding the package that Super SA has put to the government and the government is putting to the parliament for consideration, their estimate at this stage is that once it settles down they are looking at a potential loss of somewhere between 5 and 10 per cent, with a combination of both of those. That is of both new members and existing members when it settles down.

The Hon. S.C. MULLIGHAN: I notice that Super SA's website outlines 'significant changes' or 'notifiable changes', I think they are called, or something similar. There is a recent series of notifications about an increase in fees. How much is this designed to raise in a financial year or in the current financial year?

The Hon. R.I. LUCAS: I am advised we will need to take that particular question on notice.

The Hon. S.C. MULLIGHAN: I note from Super SA's previous annual reports, there was in the 2017-18 financial year something in the order of $48,000 spent on consultants, and in 2018-19 it was $200,000. I received a response to a question on notice outlining that in the 2019-20 financial year—not the whole year, just up until April in that year—$917,000 had been spent on consultants. Can I ask why?

The Hon. R.I. LUCAS: Not unexpectedly, the issue of introducing choice of funds has required a quite comprehensive, detailed and expensive actuarial and specialist superannuation advice to Super SA which is not available within its current skillset base within Super SA. This issue of choice of funds has been quite complicated.

As the member would be aware, I think the Hon. Connie Bonaros introduced legislation some 18 months ago for choice of funds, not for limited public offer. Super SA and the government have been working basically over 18 months in terms of trying to resolve the complexity of what would be offered, what would be outlined in the legislation and what the impacts would be. Super SA and the board have required, as I said, specialist and expensive actuarial advice and superannuation advice to assist them in developing the proposal.

The Hon. S.C. MULLIGHAN: Is that the reason why fees are increasing as well? To cover additional costs across the management of the scheme?

The Hon. R.I. LUCAS: It would not be for the payment of the consultancy advice because that is one-off expenditure in terms of the preparation of the scheme. The second part of your question was in terms of the ongoing management of the scheme, did you say?

The Hon. S.C. MULLIGHAN: Yes; why are the fees increasing if it is not for consultancy fees?

The Hon. R.I. LUCAS: I am advised that Super SA had not increased its fees for eight years. In terms of providing improved member services, improving things such as their website, their member services and the like, the board took the decision they needed to increase the fees. Even after the increase in fees, I am advised that Super SA's fees in comparison to comparative funds are still in the best quartile—I was told the top quartile, but the best quartile—in terms of lowest cost fees. Super SA would maintain that their fees for their members are still very competitive with other comparable funds providing superannuation services.

The Hon. S.C. MULLIGHAN: I note on Budget Paper 4, Volume 4, page 169, that there is a budgeted increase in staff from 144.7 FTEs at the end of June 2019 to 210. I make that a more than 65 FTE increase, or a 45 per cent increase in staff. Why is that?

The Hon. R.I. LUCAS: I am told, again, coming back to the previous question from the member, that the increase in members' fees is associated with this particular question as well. That is, in terms of providing improved services to members, Super SA and the board have taken the decision to increase the staffing levels in terms of improving member services for members. There are also, as I think all members would be aware, increasing regulatory requirements from APRA and other regulatory bodies on all superannuation funds, and obviously Super SA is impacted by many, if not all of those directly or indirectly.

For those reasons, the board and management have decided there needs to be a significant increase in staffing levels to improve those member services and their capacity to manage the regulatory impacts. Again, that is included in the member fee issue that the member referred to earlier. As I repeat, even with these increased staff members for member services and increased fees, Super SA's fees remain super competitive when compared with other comparable funds.

The Hon. S.C. MULLIGHAN: This is part of an overall strategy signed off by the Super SA board, is it?

The Hon. R.I. LUCAS: Yes.

The Hon. S.C. MULLIGHAN: So fewer members and less funds under management as a result of super choice, higher fees and more staff; it does not sound like the most compelling strategy.

The Hon. R.I. LUCAS: And improved services; you forgot that bit.

The Hon. S.C. MULLIGHAN: Improved services?

The Hon. R.I. LUCAS: Yes.

The Hon. S.C. MULLIGHAN: So the investment returns will increase by how much?

The Hon. R.I. LUCAS: Improved services to the members in terms of being able to manage the services for those particular members.

The Hon. S.C. MULLIGHAN: To be fair, Treasurer, I guess that is, in part, true. Part of the consultancy was Karmabunny Web Design that was paid $5,700 to improve the website, and Spark Group were paid $940 for Super SA's online calculator modifications. Beyond that, what are the improvements in member services?

The Hon. R.I. LUCAS: I am advised there is a range, and we can take on notice the further detail of some of the improved services. For example, the call centre has had improved staffing levels in terms of being able to respond to, I am told at some stages, up to a thousand calls a day, to improve the member service in relation to that particular area.

But I am happy to take on notice the other specific details of the member services that have been provided to improve member services, and I think also try to respond to what has been indicated to me as some level of criticism from members in relation to the quality of the service that was being provided by Super SA.

The Hon. S.C. MULLIGHAN: I am happy to turn my attention to Funds SA.

The Hon. R.I. LUCAS: Mr Chairman, Dascia Bennett from Super SA has been replaced by Jo Townsend, Chief Executive, Funds SA.

The Hon. S.C. MULLIGHAN: In Budget Paper 3, page 81, there is a 60 per cent increase in FTEs for Super SA forecast across the forward estimates. Can I ask why?

The Hon. R.I. LUCAS: I am advised that there are a couple of factors: one is similar to the discussion we have just had with Super SA about the increased regulatory environment but also the decisions that Super SA has taken, which obviously had flow-on impacts for Funds SA in relation to choice of funds, and that particular impact was also on Funds SA. Funds SA and its board have also taken a decision in recent times to insource some investment functions.

I am advised that a better description is that Funds SA are increasing and enhancing their capability in terms of their investment function, giving them more capacity inside the organisation to interact, on an ongoing basis, with all these fund managers that Funds SA has always had and to have more capacity within Funds SA in terms of providing advice to management and to the board.

The Hon. S.C. MULLIGHAN: Are more investment classes being pursued or offered for clients of Funds SA?

The Hon. R.I. LUCAS: Can you clarify the question?

The Hon. S.C. MULLIGHAN: Are there more investment alternatives that will be provided as a result of having these additional staff on board?

The Hon. R.I. LUCAS: I am advised that there are a number of clients of Funds SA—that is, government agencies—who now require a bespoke investment strategy, whereas previously they might have just invested in the balanced fund option that was made available to everyone. One example of that is the Defined Benefit Strategy, which is now a bespoke strategy for that particular option. The LSA is also a bespoke strategy, I am told. For each of those bespoke strategies, Funds SA now has to develop and manage those particular differing options for some of the clients—there are about 10 clients currently; I think there was one new one in the last 12 months, the Legal Services Commission. So there is some increase in complexity in terms of the workload of Funds SA and its staff.

The Hon. S.C. MULLIGHAN: Do they pay a higher management fee for these bespoke services?

The Hon. R.I. LUCAS: The fees can be higher, but it is reflective of the investment strategy they require, so, depending on the investment strategy they require, it can be higher fees, but it might not be.

The Hon. S.C. MULLIGHAN: According to Funds SA's financial statements, in 2019-20 there were 19 executives remunerated at over $150,000 a year, up from 14 the year before, a 36 per cent increase, and they received $5.2 million in remuneration, up from $3.9 million, a 25 per cent increase. Why has there been an increase in the number of executives?

The Hon. R.I. LUCAS: I think it would be consistent with, in essence, the answers to the previous questions, in terms of improving the capability of Funds SA in terms of its funds management capability and the increasing complexity. Funds SA and its board made the decision that they required an additional number of executives, in terms of their starting profile.

The Hon. S.C. MULLIGHAN: Funds SA has its own enterprise agreement, I understand. Are there any provisions in that enterprise agreement for bonuses for staff or other remunerative instruments?

The Hon. R.I. LUCAS: I am advised there are no bonuses in the enterprise agreement.

The Hon. S.C. MULLIGHAN: When is the enterprise agreement due to expire?

The Hon. R.I. LUCAS: I think we are about to negotiate that. I am advised that it expires in May of next year.

The Hon. S.C. MULLIGHAN: Was that a three-year agreement or a two-year agreement?

The Hon. R.I. LUCAS: It was a three-year agreement.

The Hon. S.C. MULLIGHAN: What was the last salary increment afforded to those staff?

The Hon. R.I. LUCAS: Under the former agreement?

The Hon. S.C. MULLIGHAN: Under the current agreement.

The Hon. R.I. LUCAS: I am advised that it was 1.5 per cent.

The Hon. S.C. MULLIGHAN: Can I ask why IT expenses in 2019-20 increased to $1.4 million from $356,000 the previous year?

The Hon. R.I. LUCAS: I am advised there are a couple of reasons. One is just a general improvement in IT, in terms of the earlier discussions we have had about improving the capacity of the organisation, but one of the other impacts, which would not just be Funds SA—it is certainly across a number of government departments and agencies—is as a result of COVID to allow people to work from home. There was a larger number of laptops that had to be provided to staff so that they were able to work from home, rather than work from the office, and that was part of the reason for the expense in that particular year.

The Hon. S.C. MULLIGHAN: I think an earlier response indicated that the projected increase in FTEs over the forward estimates was in response to a strategy that had been adopted by the Funds SA board to take some of those functions in-house that were previously done by external managers. Was that a strategy that you were required to approve?

The Hon. R.I. LUCAS: On clarification, I think I was advised that the better way of describing what has occurred, rather than my first description, was to enhance the capabilities of Funds SA in terms of working with its funds managers, as opposed to my simplistic first description that we are insourcing certain functions that had been previously outsourced. Sorry, what was your question at the end of that?

The Hon. S.C. MULLIGHAN: If this is part of a strategy adopted by the board, was it one that you had to approve as Treasurer?

The Hon. R.I. LUCAS: No, I did not, and I am not sure under the act that I actually have the power. I think there is a restriction in relation to investment decisions or something. It says it is verboten for treasurers of whatever colour and persuasion to involve themselves in investment decisions or the like.

There is some strict provision in terms of limiting the power of treasurers in relation to those sorts of decisions. The answer to the question anyway is, no, I was not involved in that particular decision. I would have been advised in terms of my regular updates with the chief executive and the board chair of what Funds SA is doing, which is appropriate, but I do not approve or not approve of those sorts of decisions.

The Hon. S.C. MULLIGHAN: Other than the enhanced focus on clients' bespoke needs, is there any change, or is there forecast to be any change, to the investment return objectives over the forward estimates period?

The Hon. R.I. LUCAS: Mr Chairman, I am advised that, from 1 January next year, the revised investment strategy only impacts on the conservative funds. I will revise that: it is not the conservative one, it is the capital defensive. The Capital Defensive Fund for Super SA only is being revised down from CPI plus 1.5 per cent to CPI plus 1 per cent, and that just reflects what is going on in the market at the moment. The cash and bonds are obviously very low as we have been discussing earlier in relation to SAFA.

The CHAIR: With that answer, the time allocated and agreed for the examination of proposed payments in regard to the portfolios for SAFA, SA Government Insurance and Fleet, Funds SA, Super SA and the CTP Regulator has expired. Therefore, there are no further questions, and I declare the examination of the portfolio agencies just mentioned to be closed.

Departmental Advisers:

Ms J. Holmes, Commissioner of State Taxation, Revenue SA.

Mr D. Reynolds, Chief Executive, Department of Treasury and Finance.

Mr M. Carey, Executive Director, Government Services, Department of Treasury and Finance.

Ms E. Stavreski, Executive Director, Procurement, Department of Treasury and Finance.

Mr L. Jones, Acting Director, Financial Services, Department of Treasury and Finance.

Mr I. Nightingale, Industry Advocate, Office of the Industry Advocate.

The CHAIR: This next session runs from now until 10.15 am. The portfolios for examination are Revenue SA, Strategic Procurement, Shared Services and the Industry Advocate. The minister appearing is the Treasurer. Estimate of payments are as outlined earlier in today's session. I advise that the proposed payments remain open for examination and refer members to the Agency Statements, Volume 4.

Treasurer, would you like to make your opening statement with regard to these portfolios, and, if you could, introduce the advisers?

The Hon. R.I. LUCAS: I have no opening statement, but again we have a number of different sections represented in this 45-minute period, as understand it. I am joined at the table by Julie Holmes, Commissioner of State Taxation, RevenueSA. Again, if it suits the committee, if we could do the questions in blocks, with RevenueSA and then potentially, in whatever order members choose or you choose, Mr Chairman, we have Strategic Procurement, Shared Services and the Industry Advocate. We are in the hands of yourself, Mr Chairman, and the committee.

The CHAIR: Would the lead speaker for the opposition, member for Lee, like to make an opening statement, or are you happy to begin with RevenueSA?

The Hon. S.C. MULLIGHAN: I refer to Budget Paper 4, Volume 4, page 164. RevenueSA obviously has a responsibility under the current environment to administer the Small Business Grants. Can I ask, of the second tranche which was announced recently, how many applications have been received and how many have been paid?

The Hon. R.I. LUCAS: As at 9 o'clock this morning—hot off the presses—we have received 4,432 applications, of which 381 are sole traders or partners. We have currently paid 1,552. Of those, 127 are sole traders. The sole traders and partners are eligible for the $3,000 grant and others are eligible for the $10,000 grant. So far, $14.6 million has been paid out.

Treasury is getting much better, as I have said, at throwing money around and handing money out. The first one was quite complicated. There were more than 20,000 applications, and eventually I think about 18,700 payments of the $10,000. We had to set systems up quickly and manage applications and calls and complaints and the like, but the systems have been set up. My thanks to the staff within Treasury. It was within basically the first week, I think, that the first eligible grants were actually paid out to small businesses. We hope to get as much money out there into eligible small businesses, pre-Christmas, as we can.

The Hon. S.C. MULLIGHAN: How many of those applications have come from those who were in receipt of the initial round of grants? I ask that question because, when you announced the second round of grants, I think the Premier had in his press release that this would take the small business assistance up to $20,000 for eligible recipients.

The Hon. R.I. LUCAS: How many? I am not sure. We would have to take that on notice. I am not sure how easy it is to cross-reference those, but it should be able to be done. But certainly for eligible recipients, that would be true. That is, if you are eligible for the first one, you get $10,000; if you are eligible for the second, you get $10,000.

The Hon. S.C. MULLIGHAN: Can you just briefly remind the committee what the criteria are between the two for the $10,000 and the $3,000—the $3,000 for sole traders and those in partnership arrangements?

The Hon. R.I. LUCAS: There are specifically different criteria, which are on the website. But in relation to the $3,000 grant, there has been criticism in the first round that one of our eligibility criteria was you actually had to employ people. The government's response had been, yes, this was about trying to protect as many jobs as we could, and therefore we targeted the assistance. As I said, there were almost 20,000 grants paid, just under $200 million that was paid, to those small businesses that were employing people. That was our decision to do that, and there was criticism of that.

In the second round, we have actually extended it, I think similarly to Victoria, which had a similar scheme. I am not sure that every other state did. Essentially, it was for sole traders and partnerships, as long as they operated out of commercial premises for a period of six months, or something like that, and there are a number of other criteria as well. Broadly, they were the criteria that applied. The criteria for the $10,000 grant was exactly the same as the first, and then there was the different and new criteria, obviously, for the $3,000 grant that applied.

The Hon. S.C. MULLIGHAN: Does RevenueSA or Treasury have any visibility or idea of how many businesses in South Australia are in receipt of the JobKeeper assistance from the federal government?

The Hon. R.I. LUCAS: I think ex-post we might get figures occasionally. I am advised we do get the information. We do not have that with us at the moment, but the ATO do provide that information to Treasury and/or RevenueSA.

The Hon. S.C. MULLIGHAN: Are you not able to provide any past information that you can recall about how many were perhaps in months previous to the current?

The Hon. R.I. LUCAS: I do recall seeing past figures but, again, I would have to take it on notice. I do not have them with me at the moment. It is obviously a commonwealth government scheme, but I would have to take it on notice. There have been figures quoted, I think mainly from the federal government, in relation to the number of eligible JobKeeper business nationally, and I think there have been various occasions where they have broken it down state by state. That is certainly publicly available, not on a regularly updated basis, but certainly I have seen a number of releases or pieces of information that detail that sort of breakdown.

The Hon. S.C. MULLIGHAN: Can I ask, given the circumstances over the last week, whether the government is considering any further support to small business?

The Hon. R.I. LUCAS: As I have indicated, the whole budget has been geared around jobs and supporting small, medium and larger scale businesses. For example, the relief that we are providing in the payroll tax area is $230 million of relief, so every small business in this state with a payroll up to $4 million will not pay any payroll tax for 15 months from April through to June of next year. So any small business in the state is getting and will continue to get significant payroll tax relief.

At the top end of that range, my recollection is that the monthly benefit is about $14,000. I think it is a total of about $210,000 or something over the 15-month period. If those figures are slightly wrong, I will correct them. It is a very significant benefit at the top end of that $4 million range. Then, for businesses that are above $4 million, because there had been criticism of the government in relation to pay—'We are not uber-large businesses; we believe we are a medium-size business and all you have given us so far is a deferral of payroll tax if you are COVID impacted'—we are actually doing two things. We are actually saying to them that to assist their cashflow, if they were COVID impacted and they are no longer COVID impacted, that instead of having to pay all their payroll tax in January, they can pay their payroll tax instalments over 18 months.

Instead of having a large cashflow hit in January of 2021—that is, all the deferred payroll tax that had been deferred—they can make those payroll tax payments over an 18-month period through to June 2022 basically. So that significantly assists their cashflow. Secondly, for any ongoing COVID-impacted business of above $4 million, we will actually be waiving payroll tax from January to June next year in terms of significant further benefit.

So this is significant payroll tax relief. There is ongoing land tax relief, which the member would be familiar with. There was a reduction of over $100 million in land tax collections this year, either $200 million or $230 million over three years in terms of land tax reductions. There are very significant reductions in water prices.

I will not spend too much time, although I am tempted, in going over the history of that again, but we have had significant reductions in water prices for lots of businesses. An average business will save about $1,400 a year on their water bill. There are some bigger businesses, admittedly, saving about $1 million a year in terms of their water bill costs this year as a result of the decision we have taken in this particular financial year.

Right across the board we are providing, and will continue to provide, significant assistance for small, medium and larger sized businesses, together with these small business grants, to try to save as many jobs and businesses as we can and to help grow jobs as we emerge from COVID-19. But to make a final statement, as I have said on a number of occasions, the taxpayers just cannot save every job in the state and cannot save every business in the state, much as we would love to.

The Hon. S.C. MULLIGHAN: How many small businesses would otherwise be liable for payroll tax, i.e. have taxable payrolls above $1.5 million?

The Hon. R.I. LUCAS: I will have to take that on notice but we would have that number.

The Hon. S.C. MULLIGHAN: Could you also provide it for—

The Hon. R.I. LUCAS: When you say 'small business' are you defining that as over $1.5 million and up to what level?

The Hon. S.C. MULLIGHAN: Perhaps if you could provide those figures for the number of businesses liable for payroll tax.

The Hon. R.I. LUCAS: Above $1.5 million.

The Hon. S.C. MULLIGHAN: Above $1.5 million and also $4 million.

The Hon. R.I. LUCAS: So between $1.5 million and $4 million?

The Hon. S.C. MULLIGHAN: Above $1.5 million and also above $4 million. I will be able to work out the in-betweens.

The Hon. R.I. LUCAS: I think some people would say that some of the businesses above $4 million would not be a small business. They would—

The Hon. S.C. MULLIGHAN: No, just businesses. You do not have to—

The Hon. R.I. LUCAS: All businesses, not just small businesses.

The Hon. S.C. MULLIGHAN: Yes.

The Hon. R.I. LUCAS: That is doable. I am happy to take that on notice.

The Hon. S.C. MULLIGHAN: On Budget Paper 5, page 84, how many applications have there been for residential land tax relief? There is a $3.061 million fund that has been allocated for that.

The Hon. R.I. LUCAS: This is a complicated response but let me share all of it with the committee. As at 31 October, we have received 1,832 applications for relief from commercial landlords and 122 from residential, which I think is the member's question. These applications still have to be assessed. Some have been assessed and some are still being assessed. The estimated value of the 1,832 applications—again, I repeat, these have not been approved or agreed—is just under $20 million. The estimated value of the residential relief is obviously much smaller at about $325,000. Some have already been approved but some are still being assessed.

Just to remind members that the land tax bills started arriving for many people in October, so we are at this particular stage now where RevenueSA is receiving applications because landlords have received their bills. I am advised that some landlords in some cases will be receiving their June quarter 2019-20 land tax bills and some will be early receivers of their September quarter 2020-21 land tax bills. Some of those are occurring in and around October/November—this particular period now—so there will be a combination of bills from the last quarter of last financial year and the first quarter of this financial year all being received at the moment.

The Hon. S.C. MULLIGHAN: I refer to Budget Paper 3, Chapter 3, page 16. Can you advise how many landowners have higher land tax liabilities in the current financial year due to the application of the aggregation measures?

The Hon. R.I. LUCAS: The advice I have is still the same as the advice we shared some time ago, that is, 8 per cent of individuals as a result of the government's aggregation will pay higher; 92 per cent of individuals will pay lower; 75 per cent of companies and related companies will pay lower; and 25 per cent will pay higher. RevenueSA does not have any update on those particular estimates we made at the time of the debate.

The Hon. S.C. MULLIGHAN: So 8 per cent of how many individuals?

The Hon. R.I. LUCAS: So 8 per cent of individuals and 25 per cent of companies and related companies.

The Hon. S.C. MULLIGHAN: What is the number of individuals that the 8 per cent is derived from?

The Hon. R.I. LUCAS: I would have to take that on notice. The other thing to bear in mind, of course, is that as part of our stimulus activity we have said that in those calculations we would have included people who in the first year—that is, this year 2021—would have received, as a result of aggregation, an increase in land tax of between $2,500 and $102,500, and we have taken a decision to provide 100 per cent relief for those in this first year.

Those original calculations of 8 per cent and 25 per cent will obviously now be less; by what number we are not sure because we are now going to pay 100 per cent compensation for any increase in land tax in this first year as part of our stimulus activity. The impacts this year in terms of those numbers—the 8 per cent and the 25 per cent—will be lower but we are not sure at this stage by what extent.

We have not finished billing and therefore we are not sure yet what that number is, other than we know that that will now be a lower number because, as part of our stimulus, we are providing greater land tax relief. I think that is estimated to cost $13 million. I will take a punt. My recollection is that, of this over $100 million, I thought it was about $13 million. It has just been confirmed: $13 million, so I win compared to them, Mr Chairman. The $13 million was additional land tax relief that we are providing this first year to compensate those people who might have been in the 8 per cent or the 25 per cent category paying higher taxes as a result of the government's aggregation changes.

The Hon. S.C. MULLIGHAN: That is on application rather than automatic?

The Hon. R.I. LUCAS: Yes.

The Hon. S.C. MULLIGHAN: How many people have applied?

The Hon. R.I. LUCAS: Again, we are still going through the process of billing. At this stage, I am told, we have only received 30 to 35 applications, but it is still early in the process because we are still going through the billing cycle. People have to work out what the impacts are going to be on them before they decide whether they are in the 8 per cent category or the 25 per cent category.

One of the lessons, which I was aware of at the time and subsequently, was that a significant number of people who said to me, 'We're going to end up paying X dollars more as a result of your aggregation changes,' when they actually sat down with their accountant found out that they are paying less. That is contrary to what they were saying publicly—and some very prominent people, I might say. At some stage before I retire—

The Hon. S.C. MULLIGHAN: Name them.

The Hon. R.I. LUCAS: —it would give me great pleasure in identifying the people who publicly indicated that they—

The Hon. S.C. MULLIGHAN: Well, you enjoy privilege. Let's take it for a drive around the block.

The Hon. R.I. LUCAS: I think that is probably not allowed, but they might out themselves.

The Hon. S.C. MULLIGHAN: I think in a press release you outlined that the 8 per cent and the 25 per cent are approximately 7,400 people together between the individuals and the companies. So far, you have had 35 people apply for that transition fund.

The Hon. R.I. LUCAS: As I said, because they are only starting to get their bills, they cannot do the calculation to then apply. Until they get their bills, they cannot actually apply.

The Hon. S.C. MULLIGHAN: What is the additional revenue estimated as a result of the aggregation measure alone?

The Hon. R.I. LUCAS: We are not interested in the aggregation measure alone.

The Hon. S.C. MULLIGHAN: You might not be, but I am.

The Hon. R.I. LUCAS: Well, I do not have that number.

The Hon. S.C. MULLIGHAN: Could you get it for me, please?

The Hon. R.I. LUCAS: No. I will consider whether I can share any further information or not. I will reflect on that, but the government's position is quite clear. We are collecting significantly less land tax this year, next year and the following year from our changes as a package, and I am not much interested in revisiting the differences of opinion of the past.

The Hon. S.C. MULLIGHAN: You advised The Advertiser in September last year that it was forecast at that point in time to raise an extra $85 million a year. Subsequent to that, there were a number of different iterations to the legislative package. Do RevenueSA or Treasury have a final number for how much additional revenue is estimated to be received as a result of the aggregation measure alone?

The Hon. R.I. LUCAS: The whole world has changed since September last year, I might remind the member. I am not interested in going back—

The Hon. S.C. MULLIGHAN: Not everything in the world.

The Hon. R.I. LUCAS: Well, I am not interested in going back to the battles of September last year. We are interested in growing jobs and reducing land tax, and that is what we are doing. I will leave the member to go his hardest in terms of trying to revisit the battles of the past.

The Hon. S.C. MULLIGHAN: So you will not provide a number to the committee?

The Hon. R.I. LUCAS: No, I am not inclined to and I do not intend to.

The Hon. S.C. MULLIGHAN: How many people have sought deferrals of land tax?

The Hon. R.I. LUCAS: I am advised that we do not have any information on that. We offered the deferral to everybody. They do not actually have to apply. They get their bill anyway, and they might choose to pay. Some obviously do, and some will just defer. Eventually, we might get some sort of line of sight of that, but the offer of deferral is there for all. They do not have to apply, so we do not have a formal application process for that. They just have that option to defer.

Some people, for their own reasons, are not impacted and just prefer to pay their bills as they get them and pay the land tax bills as they go. We do not currently monitor that or have any number for those who have paid and those who have not. I assume that at some stage we will have a number of how much land tax we have collected, but in relation to how many people or individuals, I am not sure. We might eventually, when the dust settles on this, be able to produce a figure but we certainly cannot at this particular stage.

The Hon. S.C. MULLIGHAN: So you cannot advise how many bills have been paid by the due-by date?

The Hon. R.I. LUCAS: Not at this stage, no, I am advised. We are not in the position to do that.

The Hon. S.C. MULLIGHAN: RevenueSA is administering the federal government funded HomeBuilder scheme. That is correct, I think.

The Hon. R.I. LUCAS: Yes.

The Hon. S.C. MULLIGHAN: When the commonwealth announced the scheme, the federal Treasurer's press release estimated that there would be 27,000 grants available nationally. Is there a specific share that is available for South Australia or is it first in first served?

The Hon. R.I. LUCAS: No, it is uncapped. The notional share of the $27,000 estimate—it is not capped, so it is not first in first served—was just under 2,000 or something, was it not?

Ms HOLMES: Yes.

The Hon. R.I. LUCAS: We said publicly, and also to the federal government, 'We think you have underestimated the number of applications and grants that will be eligible in South Australia.' Some industry sectors were estimating up to 4,000 might be eligible. We certainly thought it was going to be more than just under the 2,000 number. Testimony to that is that, up to 9 o'clock this morning, I am told, we have had 2,464 applications, so that is already significantly greater than that.

I am aware of one particular large builder that is claiming that they have 700 applications which they have not yet submitted. I assume it is true, but even if it is only half true, that certainly heads us up closer to the 3,000 mark and then potentially over the 3,000 mark. As I said, one industry association was predicting we would have up to 4,000 applications. The answer to the member's question is that it is not capped.

The Hon. S.C. MULLIGHAN: So the federal government will pay however many come through?

The Hon. R.I. LUCAS: Yes; a very generous federal government.

The Hon. S.C. MULLIGHAN: It makes a change for the state.

The Hon. R.I. LUCAS: The point of view that I think the member would agree with—and he has heard me say this on any number of occasions—is why we resisted, with great respect, the calls that we got to add an additional state grant to the 40,000 combined grant for first-home owners, that is, 15 state and 25. It was our view that $40,000 in the Adelaide market was more than enough to stimulate residential housing in South Australia. It is more of a challenge in Sydney and Melbourne, and that has proved to be the case because 40,000 is obviously a smaller component of the total cost of land and housing packages in those particular capital cities.

Testimony to the fact that 40,000 is more than enough in South Australia is that you cannot get a tradie to scratch yourself at the moment. Two of our builders closed off their books a month ago or six weeks ago. They delayed lodging contracts because of this three-month provision because there needed to be a period of three months between the signing of the contract and the commencement of construction, so there was this delay.

We have announced, and the commissioner has made a decision consistent with what Western Australia and Victoria have done, a blanket exemption for six months between the signing of the contract and the commencement of construction. We hope that will bring some of these contracts forward. Also, it will inevitably bring some of the applications forward in terms of the scheme. It will be significantly more than our pro rata share of the original 27,500 national figure that the commonwealth talked about.

The Hon. S.C. MULLIGHAN: How many of the 2,400 applicants are first-home buyers?

The Hon. R.I. LUCAS: We do not have that information here, and I am advised that we are not currently monitoring that difference. At some stage we might be able to pull that sort of information out, but we do not currently have that information.

The Hon. S.C. MULLIGHAN: If RevenueSA is not monitoring that, how will it know whether to pay $25,000 or $40,000?

The Hon. R.I. LUCAS: The commissioner has advised me we would be able to pull that number out. We have not done that yet. But we would be able to pull that number out and provide some information to the committee.

The Hon. S.C. MULLIGHAN: How many of the 2,400 applications have been paid?

The Hon. R.I. LUCAS: Of those, 303 have been paid and conditional approval has been given to 500.

The Hon. S.C. MULLIGHAN: A further 500? Okay. And how many of those were also first-home buyers?

The Hon. R.I. LUCAS: Again, we do not have that information with us.

The Hon. S.C. MULLIGHAN: Do you know how many of those 303 or those 500 are for $25,000 or for $40,000?

The Hon. R.I. LUCAS: Just to clarify, the commissioner has advised me that the 303 and the 500 conditional approvals are solely for the $25,000 HomeBuilder scheme. Some of those would also be applying for and eligible for the separate $15,000 grant from the state, which was the member's earlier question. These particular numbers are just the numbers for the commonwealth's HomeBuilder scheme $25,000 grant.

The Hon. S.C. MULLIGHAN: So you have to do a separate application if you are a first-home buyer?

The Hon. R.I. LUCAS: Yes.

The Hon. S.C. MULLIGHAN: And how many are for new builds and how many are for renovations?

The Hon. R.I. LUCAS: The answer to the member's question is, I am advised, there are 392 substantial reno applications.

The Hon. S.C. MULLIGHAN: That is out of the 2,400, is it?

The Hon. R.I. LUCAS: Yes, of the 2,464, 392 are substantial renos. I am told that in the categories that RevenueSA has provided me there are 1,722 new builds, there are 344 off the plan and there are six unclear. I am not sure what that means. Please do not ask me what 'unclear' means.

The Hon. S.C. MULLIGHAN: Of the ones that have been paid and the 500 that have been conditionally approved, how many have been for renovations?

The Hon. R.I. LUCAS: We do not have that here. We could take that on notice and provide that to the member.

The Hon. S.C. MULLIGHAN: Can we turn to procurement, now?

The CHAIR: I just advise the member for Lee we just need a couple of minutes towards the end just from a procedural perspective to get things tied up for the extension post the sitting of the house. Minister.

The Hon. R.I. LUCAS: I am now advised by Elizabeth Stavreski, Executive Director, Procurement, in the Department of Treasury and Finance.

The Hon. S.C. MULLIGHAN: On Budget Paper 4, Volume 4, page 180, when will the new procurement arrangements be in place following the abolition of the State Procurement Board and the policies under it?

The Hon. R.I. LUCAS: That is a very good question, and I better give my response as opposed to Elizabeth's response to this. They would wish it to be much quicker than is currently in place. I currently have a whole series of very, very complex recommendations on my desk at the moment, which I am considering and seeking further advice on from Elizabeth and her team in relation to the implications.

It is fair to say that procurement services would wish it to happen much more quickly and much more imminently. It is likely to be delayed a little bit, because I need to satisfy myself of what the new arrangements are going to be in relation to it. I think procurement services would like this to all start with a new TI by December or January, but they might only just be getting advised by me publicly that that timeline is not going to be met. It will be later than that and we will work our way through how much later than that it will be.

The Hon. S.C. MULLIGHAN: Is it proposed that the new unit will have any direct superintendence over particular contracts or just provide guidance and policies?

The Hon. R.I. LUCAS: The team comprises two broad sections. To respond to the member's question, one does manage whole-of-government type contracts. The most recent example of that is the electricity or energy contracts for government services. The one that is on my desk at the moment is for managed platform services, I think, which was being managed by this particular section.

In essence, I think there are two pages of whole-of-government contracts I saw in a briefing note. So two pages is probably about 30. Yes, there are around about 30-odd whole-of-government contracts, ranging from energy to computing-type contract services. One section of procurement will manage whole-of-government services and have oversight; they will manage them and manage the procurement. Then there is the policy branch, which comes to the second part of the honourable member's question, and they provide policy advice to all the other government departments and agencies in terms of procurements that they manage.

The Hon. S.C. MULLIGHAN: Perhaps I could ask as a question on notice what those contracts are.

The Hon. R.I. LUCAS: The whole-of-government ones?

The Hon. S.C. MULLIGHAN: The whole-of-government ones. The term and the value of those contracts, where possible.

The Hon. R.I. LUCAS: I am not sure about the value, but we might be able to do the past value because just looking at the most recent one, the value obviously changes and generally increases. Hopefully, some of them might decrease. I think the energy one decreased. Yes, the energy one did decrease in the most recent procurement.

Certainly in relation to the list, I see no problem in relation to the whole-of-government list. As I said, there are two pages. I was having a look at those pages in the early hours of this morning and some broad details in relation to those. We will look to see what maybe historical value we can place on them. I suspect most of them must have gone on the tenders and contracts website. There is a required value there.

I am sure the member from the disadvantaged position of opposition has found, as I found over 16 years, that the value that goes on the tenders and contracts website is sort of like a maximum number and the reality is significantly different from that. It is generally a lot less when you look at what the number is on the tenders and contracts website and what actually is the delivery of the service.

The CHAIR: There being no further questions, I therefore declare the examination of the portfolio agencies Revenue SA, Strategic Procurement, Shared Services and the Industry Advocate complete.

Mr KNOLL: I move:

That it be a resolution of this committee that the committee having been disrupted in its examination of the proposed expenditures referred to it, and being unable to complete its considerations on the same, recommends that the house refer the further examination of the proposed expenditures back to the committee.

Motion carried.

Mr KNOLL: I move:

That the draft interim report of the committee, incorporating the resolution that further examination of the proposed expenditures be referred back to the committee, be adopted.

Motion carried.

Sitting suspended from 10:14 to 11:00.

Membership:

Ms Cook substituted for Mr Gee.

Departmental Advisers:

Mr J. Oliver, Chief Executive Officer, HomeStart Finance.

Mr A. Mills, Chief Financial Officer, HomeStart Finance.

Mr C. Menz, Chief Executive, Renewal SA.

Mr D. De Luca, General Manager, Corporate Services, Renewal SA.

Mr T. Perry, General Manager, Project Delivery and Property, Renewal SA.

Mr T. Cole, Manager, Major Projects and Pipeline, Renewal SA.

The CHAIR: The committee is reconvened by order of the house to further examine the remaining proposed payments in the Appropriation Bill 2020. The committee will now resume examination of the proposed payments that were postponed earlier this morning, 25 November. I refer members and the Treasurer's advisers to the opening statement that I made earlier this morning, and also remind members that all questions should be directed through the Chair and must be based on lines of expenditure in the budget paper.

During this session, which will run until midday, proposed payments will be examined in regard to the portfolios of Renewal SA and HomeStart. The minister appearing before us today is the Treasurer. I advise that the proposed payments remain open for examination and refer members to the Agency Statements, Volume 4. Treasurer, would you like to make an opening statement and introduce your advisers?

The Hon. R.I. LUCAS: Yes. I have no opening statement, but I introduce Mr John Oliver, Chief Executive Officer for HomeStart Finance. In discussions with Ms Michaels, she indicated a preference to lead with HomeStart Finance.

The CHAIR: Very good. Ms Michaels, as the lead speaker for the opposition, would you like to make an opening statement?

Ms MICHAELS: No, I am happy to jump straight in.

The CHAIR: Very good. Member for Enfield.

Ms MICHAELS: I refer to Budget Paper 4, Volume 4, page 193, the first line, under HomeStart Finance. My question relates to the impact of COVID on HomeStart's customers and whether there has been an increase in seeking alternative payment arrangements as a result.

The Hon. R.I. LUCAS: I am advised that in the early stages of COVID there were 766 applications generally seeking assistance in terms of deferral of payments, but as of this week that is now down to less than 50, so the other 710-plus have resumed making payments.

Ms MICHAELS: Has there been an assessment of the risk of default on those 50 you just referred to?

The Hon. R.I. LUCAS: Yes, obviously there is an ongoing assessment of risk, I am told, of the less than 50. Approximately 10 might be in the higher risk category, and the other 40 are in the lower risk category, if I can characterise them that way. There might be 10 in that high-risk category, where some of them might be at risk of default.

Ms MICHAELS: Other than the deferral payment arrangements that have been referred to, has there been any other assistance provided by HomeStart in terms of financial counselling or anything else?

The Hon. R.I. LUCAS: No, I am advised that it is just deferrals.

Ms MICHAELS: I now move to Budget Paper 3, page 80, line 9. In terms of the community service obligations funding that DTF provides to HomeStart, can you explain what the activities are for those obligations?

The Hon. R.I. LUCAS: I am advised that for 2019-20, the CSO payment to HomeStart of $7.3 million was made via the South Australian Housing Authority. I am advised that it essentially relates to the ongoing financial implications of the former Nunga Loans and the Advantage Loan, which is, I am advised, the secondary loan that HomeStart provides to low income individuals.

Ms MICHAELS: Can you advise how many Nunga Loans were provided in 2019-20 and what the target was?

The Hon. R.I. LUCAS: I am advised that Nunga Loans were no longer issued after around about 2011, so for around nine years there have been no new Nunga Loans issued. This particular ongoing CSO is just the ongoing financial implications of the preceding Nunga Loans in terms of the impact on the budget.

Ms MICHAELS: Can you advise how many Advantage Loans there were in 2019-20 and what the target was?

The Hon. R.I. LUCAS: I am advised that 258 new Advantage Loans were issued and I am advised also that the maximum amount of an Advantage Loan is up to $45,000, but it can obviously be less than that and it is subject to income.

Ms MICHAELS: Was there a target for 2019-20?

The Hon. R.I. LUCAS: I am advised there is not a target; it is on a case-by-case basis and demand from HomeStart.

Ms MICHAELS: Is there a program for domestic violence housing loans that is undertaken by HomeStart?

The Hon. R.I. LUCAS: I am advised that two years ago—I assume in our first budget—

Mr OLIVER: Yes.

The Hon. R.I. LUCAS: Very innovative government—we made an allocation of $5 million to the South Australian Housing Authority for a domestic violence procurement that the South Australian Housing Authority had been doing, evidently. There is a successful applicant, but that organisation has not been named. That applicant is to actually build a block of apartments that fits the original terms of the money that the government made available to the South Australian Housing Authority. We issued the money—in 2018, I assume—to the South Australian Housing Authority, and they have conducted a procurement exercise.

There is a successful NGO that has not yet been publicly named—I am assuming it is imminent, but anyway that is not my area—and that NGO is going to build apartments that will fit the terms of the domestic violence grant. Evidently, HomeStart are going to do the credit assessments. I am advised that HomeStart have done, or are doing, the credit assessment of the NGO, because it is a 20-year loan.

Mr OLIVER: Interest free.

The Hon. R.I. LUCAS: Interest free—very generous government. So it is an interest-free loan. HomeStart are doing the credit assessment, and it sounds like it is getting closer to announcement and, hopefully, offering the accommodation options.

Ms MICHAELS: Would we expect that in the current financial year?

The Hon. R.I. LUCAS: I am advised yes—hopefully, if we announced it in 2018.

Ms MICHAELS: Can I take you to Budget Paper 3, page 81, line 9, in terms of FTEs for HomeStart. Can you advise how many FTEs were employed by HomeStart in 2019-20?

The Hon. R.I. LUCAS: Are you talking about the reason for the increase?

Ms MICHAELS: I am talking about how many FTEs, which I think is in there.

The Hon. R.I. LUCAS: It looks like 106.6 in 2019-20, and it is estimated to go up to 111.5.

Ms MICHAELS: Are you able to advise how many of those earned more than $151,000 in 2019-20?

The Hon. R.I. LUCAS: Let's take that on notice, but I am advised that there are no new execs, based on our understanding, in those additional five. I am advised that the answer will be that there will be none, but we will clarify that on notice. If it is anything different we will advise you on notice, but if it is the same as that then we will not.

The Hon. S.C. MULLIGHAN: Can I ask how much debt HomeStart holds with SAFA?

The Hon. R.I. LUCAS: I am advised, as at 30 June, it would be just over $2 billion—$2.022 billion.

The Hon. S.C. MULLIGHAN: How much would you deem as being short-term as opposed to long-term debt?

The Hon. R.I. LUCAS: I am advised, at 30 June, short-term borrowings were $651 million—and 'short-term' HomeStart defines as less than 12 months and that has been refinanced since 30 June. If it is of any use, I am advised that, as of now, the average duration is about four years.

The Hon. S.C. MULLIGHAN: Are you able to advise the committee what proportion of HomeStart's loan book represents those customers who could not get regular bank finance?

The Hon. R.I. LUCAS: I am advised, as at 30 June, a very rough estimate of the percentage of customers who cannot get finance was 84.46 per cent.

The Hon. S.C. MULLIGHAN: So in terms of that 84.46 per cent, are you able to provide the actual number of clients and also the amount that their loans constitute together?

The Hon. R.I. LUCAS: I am told that we would have to take that on notice. We will be able to provide it, but we do not have that information with us at the moment.

The Hon. S.C. MULLIGHAN: Does HomeStart maintain any indicators or metrics around that proportion of customer, that 15 per cent, who perhaps could get regular bank finance? How many of those come onto HomeStart's books, and how many of them leave in a financial year—say, the last financial year?

The Hon. R.I. LUCAS: We are happy to take the specifics on notice but I am told, as a rough estimate at this stage if the member is prepared to accept it, the average loan length is about five years. This particular cohort of the 15 per cent or so is likely to be less than the five years—that is, they would move off more quickly—and the 85 per cent might be marginally higher than the five years. We can get some greater specificity in terms of the answer but, in terms of an immediate response, it is roughly that. Once people get sufficient equity, they tend to move on to another financier. The average loan length is about five years.

Ms COOK: My question relates to Budget Paper 5, page 14, Housing Stimulus Measure. In the last budget it was announced that HomeStart would provide $10,000 interest-free loans as part of that housing stimulus. How many $10,000 interest-free loans were applied for in the last financial year and how many of those interest-free loans were approved in the last financial year?

The Hon. R.I. LUCAS: I am advised that in the period from September 2019 to September 2020 there were 168 successful loans under that Starter Loan scheme. We announced just before the most recent budget a further extension of that to extend the income eligibility criteria so that it now includes couples earning up to $90,000 per annum and singles up to $65,000 per annum.

Our estimate at the time—this is not actual applications—was that it might enable another 1,000 households to receive interest-free loan assistance to help with the up-front costs of buying a home. But given that we announced that in September 2020, we do not have any updated figures. So the September 2019 to September 2020 were the government's first Starter Loan announcements which were the 168 successful loans.

Ms COOK: How many were applied for? So how many were unsuccessful?

The Hon. R.I. LUCAS: I will have to take that on notice. I am advised that there might be some limitations in terms of being able to access an accurate answer to that, but HomeStart will endeavour to have a look at their systems to see what they can retrieve in terms of how many were unsuccessful. I am advised that it is likely to be a very small number, as in it is not going to be a huge number, but in terms of whether they can actually give you a definitive a number they will take it on notice. We are not sure whether we can or we cannot.

Ms COOK: Was there any modelling done prior to the delivery of this budget to say why you would need to increase the thresholds in terms of income?

The Hon. R.I. LUCAS: I am advised that HomeStart got the advice, which was passed on to government, from brokers and others in the market. The advice was that income limits were too restrictive and there was demand for the Starter Loan from potentially worthy applicants with the increased eligibility criteria.

Ms COOK: Continuing with the same product, how many people currently residing in social housing would qualify for HomeStart loan packages?

The Hon. R.I. LUCAS: We might have to take that on notice and see, together with the South Australian Housing Authority, whether we are able to provide an answer or not. We are not sure. The reality, as I am sure the member acknowledges, is that there are some people in social housing who would be earning income significantly higher than the old levels and even the new levels; that is, they might have been eligible for housing years ago when they were in a certain income bracket, and they have continued to stay in social housing.

I am aware of people earning significant incomes in the public sector who are still in social housing, and they would be way above both the old income levels and the new income levels. We might be able to give some broad estimates. We will take it on notice and see what information, if any, we can provide, but it certainly will not be definitive. It will be based on estimates that the Housing Authority have looked at in terms of estimating who is in their social housing stock at the moment.

Ms COOK: It might interest you to know that 95 per cent of people living in social housing are in receipt of a benefit, so the incomes are quite low on average. In respect of this question that you do not currently have an answer for, I look forward to getting the answer, but has any modelling been completed by HomeStart or requested from HomeStart by any other department or minister related to being able to tailor this product to people to facilitate exit or transition from social housing to home ownership?

The Hon. R.I. LUCAS: Again, we are happy to take that on notice and see what information we can provide, but we are able to say that part of the reason the government agreed to this scheme was in essence to try to provide assistance to those people who were in social housing who might be interested in getting out of social housing and into their own home. One piece of feedback we received from government departments and agencies and the South Australian Housing Authority was about the up-front costs in terms of moving all your stuff and purchasing new stuff for a new home. It might be your own.

Essentially, part of the reason for the Starter Loan was that it was designed to assist someone who was having to move into their own home and had startup costs, hence the name. It was to assist them with that. The HomeStart loan packages were there in essence to help them with the purchase of the home, but there are these up-front or transition costs, as you move out of one option into another option, that are not insignificant.

If you are in social housing, you might not have accumulated savings to enable you to do it. One reason the government decided to agree to the Starter Loan—not the sole reason, but one reason—was to provide that sort of assistance to people in social housing to see whether that would assist them in making that transition. I am advised that, while that helps there, the big issue for social housing residents is the deposit figure that is required. That is the challenge for many.

Ms COOK: Do you know how many social housing tenants in the entirety of the last financial year applied for HomeStart products in general—that is the $10,000, a loan or any of part of—and how many were approved?

The Hon. R.I. LUCAS: I am advised that for 2019-20 it was a very small percentage of the total loans; Housing SA tenants were less than 1 per cent. So it might be of the order of 13 to 15—of that order, anyway.

Ms COOK: My last question is, has there been any marketing or any proactive communication to people living in social housing in order to try to increase this amount of people who are applying?

The Hon. R.I. LUCAS: The answer is yes. HomeStart has assisted the Housing Authority in terms of trying to market the availability of these products and to encourage those who might be interested in the product. I am sure you could speak to the minister, but certainly from the minister and the government's viewpoint we are very much about trying to encourage people to take advantage of these products. The reason the Starter Loan was offered was to provide an additional financial incentive for those who might be minded to exploring the option of moving to their own home. So the answer is: yes, there has been marketing, but at this stage there is a very low take-up.

One of the explanations someone gave me when we discussed this last year was that there was a view that of those people who are in social housing, those who were keen on moving out and taking up the option had done so through previous initiatives that governments had taken and that the ones who remain were the ones who were pretty set in, 'Hey, were going to stay there' in terms of social housing. So it was a much stickier group, if I can use an economic term, in terms of their capacity or willingness to move.

The CHAIR: Minister.

The Hon. R.I. LUCAS: Mr Chairman, Mr Oliver is replaced by Mr Chris Menz, Chief Executive of Renewal SA

The Hon. S.C. MULLIGHAN: Can I direct your attention to Budget Paper 3, page 78, which summarises Renewal SA's operations. There is a dividend, I think, to reflect the ASER site, the Adelaide station and environs precinct. The Auditor-General's Report outlines a change to the leasing arrangements for the ASER site. Can you provide some detail as to what the change in those arrangements is?

The Hon. R.I. LUCAS: I am advised that, on 1 January coming, this particular site will be transferred from what used to be DPTI, now DIT, to Renewal SA, so that will be the significant transfer of asset from one government entity to another government entity.

The Hon. S.C. MULLIGHAN: So the ownership will change. Will the lessee change?

The Hon. R.I. LUCAS: I am advised that all that changes is the landlord changes; Renewal SA will be the landlord, but the tenants remain the same.

The Hon. S.C. MULLIGHAN: Any change to the rental income proposed?

The Hon. R.I. LUCAS: Other than the complexity of the arrangement with DIT, which is another government entity, in relation to the others there is no change in the rental income.

The Hon. S.C. MULLIGHAN: Regarding the Lot Fourteen precinct, what is the total budget for the development?

The Hon. R.I. LUCAS: There is a very complicated answer to this one. I am advised that the whole-of-life budget that has been allocated by the state government to Renewal SA for this project is about $425 million, which includes both capital expenditure and operating expenditure. But, as members would be aware, the Department of the Premier and Cabinet has taken responsibility for one of the significant projects on Lot Fourteen—and the member's question relates to Lot Fourteen—and that is the Aboriginal Art and Cultures Centre, as it is now called.

The allocation we made in the budget for that was increased by $50 million, so there is a total $200 million budget for that, but part of that is actually federal government funding—part of that $200 million that we are talking about is for that particular centre. We will take the question on notice and give you a more detailed and specific answer.

There is this split control of the Lot Fourteen site between Renewal SA, whom we have before us today, and DPC—and I do not know if they have already been before the estimates committees—but DPC has control of a significant project on the Lot Fourteen site, which is this particular centre. If you are interested, as I am sure you are, in the total commitment from state and federal governments to this particular Lot Fourteen site we will take it on notice, but broadly that is the answer.

The Hon. S.C. MULLIGHAN: Thank you, I appreciate that. In coming back to the committee, if you could outline how much of that is for the demolition works, which continue, how much is for the renovation of the existing heritage buildings, and how much is for site works and construction that would be appreciated.

The Hon. R.I. LUCAS: Sure. We are happy to take that on notice and provide as much information as we can in relation to the member's question.

The Hon. S.C. MULLIGHAN: Have any leases been provided over any portion of the site to private entities?

The Hon. R.I. LUCAS: There have been lots of leases within existing buildings—I am told about 70 for businesses and entities within—but, if the member's question is more particularly, 'Have any ground leases been offered to private sector entities', at this stage, no. There has been a public expression of interest process for one particular site, which would involve—but it has not been signed yet—a ground lease once that decision-making process has been concluded. That is for the Entrepreneur and Innovation Centre (EIC), I am advised. Nothing has been signed in relation to a ground lease, but a public process has been conducted for a period of time. We are coming much, much closer to a final decision in relation to that, and potentially an announcement of that, but no ground lease has yet been signed.

The Hon. S.C. MULLIGHAN: Of the 70 or so other leases, presumably for tenancies in the building, have there been any lease incentives or rental subsidies provided?

The Hon. R.I. LUCAS: I am told that, from Renewal SA's viewpoint, all with the exception of the Space Agency (I will speak to that in a minute) are market leases, rents and incentives in terms of market assessment. In relation to the Space Agency the government provided a subsidy of $12 million for the Space Discovery Centre and mission control, which was to fund the fit-out costs and lease incentive for a period of time—we do not know what that period is, but we can take that on notice. That was part of the package in terms of the Space Discovery Centre and mission control.

The Hon. S.C. MULLIGHAN: You may need to take this on notice: can you outline to the committee what the value of the lease incentives or lease subsidies that are being provided by Renewal SA to those tenants are?

The Hon. R.I. LUCAS: For the Space Discovery Centre?

The Hon. S.C. MULLIGHAN: No, to the other ones.

The Hon. R.I. LUCAS: We will need to take that on notice to see what we can provide, but again the advice I have is that, in relation to the current market arrangements that are being offered, all lease arrangements and tenancies are a combination of both rental payments and lease incentives that commercial operators operate. I am advised by Mr Menz that Renewal SA is operating commercially in relation to those things. That is his assurance he has given me privately and just again then. It is a mix of both rent and lease incentives, but it is nevertheless attuned to current market conditions.

The Hon. S.C. MULLIGHAN: Does Renewal SA look after the government's interests with regard to the 88 O'Connell Street site, the old Le Cornu site on O'Connell Street?

The Hon. R.I. LUCAS: I am advised that that is not one of the challenges we currently have; it is the Adelaide City Council.

The Hon. S.C. MULLIGHAN: The government has no role in the site?

The Hon. R.I. LUCAS: We do not own the site, and Renewal SA has no involvement in that site. We got involved in a lot of others.

The Hon. S.C. MULLIGHAN: Budget Paper 3, page 81, with regard to the employees of Renewal SA. The financial statements for Renewal SA show that in 2019-20 the top remuneration bracket for an executive was $514,000 to $534,000 and in 2018-19, the top band was $434,000 to $454,000, so an $80,000 increase between financial years. Can I ask why the increase?

The Hon. R.I. LUCAS: I am advised that for one or two employees it involves termination payments. I am sure the member is aware that there are a number of agencies where people in the top bracket are not actually earning those salaries. It may well be their salary together with whatever termination payment there was in that particular year. I am reliably informed by the chief executive sitting next to me that that is not his salary.

The Hon. S.C. MULLIGHAN: Can I ask what the total of those termination payments is?

The Hon. R.I. LUCAS: All I am prepared to put on the public record is that the aggregate number for the two individuals is $425,000 and for one of the people that is just their statutory entitlements; that is, it does not involve any termination pay or voluntary separation package, it is just their accrued leave entitlements, etc., to which they are entitled. In the other case, it does include the payout of both their statutory entitlements and also a voluntary separation package payment for that particular individual. So the $425,000 in aggregate for the two combines statutory entitlements together with, in one case, for one individual, a voluntary separation package payment.

The Hon. S.C. MULLIGHAN: Can I ask how many staff have been recruited to fulfil the functions that were previously carried out by Georgina Vasilevski?

The Hon. R.I. LUCAS: Renewal SA is happy to take that on notice, but the position which that individual had, which was People and Place, no longer exists. It has been replaced by a series of positions, so Renewal SA would have to work out which particular responsibilities that individual had under the former title of People and Place Executive, or whatever it was called, and how those responsibilities have been divided up between remaining individuals. We are happy to do our best endeavours to assist the member in terms of providing some information.

The Hon. S.C. MULLIGHAN: I would be most grateful. So those responsibilities or duties of Ms Vasilevski are being carried out by other parts of the organisation at present; is that correct?

The Hon. R.I. LUCAS: I am told that some of the responsibilities of that individual are being carried out by others but some responsibilities are no longer being carried out by the organisation. There has been a decision taken that some of the responsibilities that former position had are no longer required and the remaining ones which are required have been allocated to other individuals within the organisation.

The Hon. S.C. MULLIGHAN: I understand from evidence provided by the chief executive to another parliamentary committee, the Economic and Finance Committee, that she was 'terminated' on 2 June, which was the day before her court appearance on 3 June. Can you advise the committee what the reason was for her termination?

The Hon. R.I. LUCAS: The advice I have received is that, putting the court matter to the side, the new chief executive had taken decisions in relation to a new corporate restructure and for the reasons I have partially outlined earlier, that is some of the functions of that old position are no longer going to continue to be functions, there was no longer the need for that particular position. So that is why there was no need for that position to continue and therefore that particular skill set base to continue, and that is why the decision was taken. The advice I have received is that was unrelated to the other issue to which the member has referred in his explanation.

The Hon. S.C. MULLIGHAN: How many other staff were terminated as a result of the restructure?

The Hon. R.I. LUCAS: The new chief executive has swept a new broom through the organisation, so I am told, and 13 positions were terminated, some of which were actually contract positions. So it was just a non-renewal of a contract position; that is, the reasons for the particular contract, in the new chief executive's view, no longer existed. Some of them were terminations; that is, the restructure meant that particular position was no longer required.

When Renewal SA comes to report the 2021 figures, there will be, again I assume, an aggregate figure. With the contract positions, obviously you do not have to make any termination payment, but there will be termination payments for some of the positions there. They were no longer required within the organisation.

The Hon. S.C. MULLIGHAN: Did their employment come to the end on the day before Ms Vasilevski's court appearance as well?

The Hon. R.I. LUCAS: The chief executive will need to check and will provide an answer on notice but some of the contracts might or might not have. We cannot recall, at this stage, whether some of the contracts expired prior to 30 June or after 30 June. In relation to the positions that are no longer required, they occurred after 1 July this year. In terms of the restructure, the new chief executive took the view that there are various responsibilities within the organisation that are no longer required. The member has referred to one, but there are a number of others. We will try to provide some detail in relation to those decisions the chief executive has taken.

The Hon. S.C. MULLIGHAN: On Budget Paper 3, page 76, Renewal SA has purchased the former Le Cornu site at Forestville. What planning controls are being sought by Renewal SA to manage future development on that site?

The Hon. R.I. LUCAS: My advice is that, at this stage, the existing zoning and planning requirements, together with the planning code, are within the contemplation of what Renewal SA has for the site. However, depending on which particular developer may be involved in the site, if they were to seek further changes Renewal SA would have to consider those at that particular stage. Certainly, in Renewal SA's current contemplation, it is just the existing planning requirements, and the new planning code is sufficient for what Renewal SA currently has in contemplation.

The Hon. S.C. MULLIGHAN: What would that mean in terms of density and height limits?

The Hon. R.I. LUCAS: We can take that on notice, but I am advised that the current height limits, whatever they are at the moment, would remain the same. We can take on advice as to what the current height limits are. The chief executive thinks it might be about eight storeys, but we will clarify that. The current contemplation is that it is whatever the existing ones are.

The Hon. S.C. MULLIGHAN: Is it to be offered to market either for sale as a whole or by portion, or are ground leases being offered? What is the intention of Renewal SA?

The Hon. R.I. LUCAS: In relation to Forestville, my advice is that Renewal SA are looking for a single development partner and that they are likely to go out to market sounding, as opposed to anything more intensive than that, prior to Christmas.

The Hon. S.C. MULLIGHAN: Have any works been budgeted for by Renewal SA for this site?

The Hon. R.I. LUCAS: The answer is, nothing at this stage, for this financial year. The only cabinet approval so far is the purchase of the site. Renewal SA and the government are not yet far enough advanced along the lines of the honourable member's question.

The Hon. S.C. MULLIGHAN: What was the purchase price?

The Hon. R.I. LUCAS: The government has not released the individual value of the two sites that Renewal SA purchased, but we have released publicly that the aggregate sum was $34.75 million for this site and the Prospect site.

The Hon. S.C. MULLIGHAN: In a similar vein, what is proposed for the Prospect site, in terms of development controls?

The Hon. R.I. LUCAS: At this stage, in terms of the development controls, there are no proposed changes from the ones that exist at the moment. The current thinking is in relation to affordable housing and, potentially, medium density, but this is in the early stages of Renewal SA's contemplation.

The Hon. S.C. MULLIGHAN: You might need to take this on notice, but how many square metres are the two sites?

The Hon. R.I. LUCAS: I will let you do the calculations. It is 3.6 hectares at Forestville and 2.36 hectares at Prospect.

The Hon. S.C. MULLIGHAN: Have any funds been budgeted for any of the works at Prospect?

The Hon. R.I. LUCAS: It is a similar answer to the one provided for Forestville: no, there is nothing budgeted at this stage.

The Hon. S.C. MULLIGHAN: Are you able to advise what the current development plan imposes in terms of heights and density at Prospect?

The Hon. R.I. LUCAS: We will clarify that if we have to, but the current understanding is that it is residential and four to six storeys maximum in height. If it is any different to that we will clarify that on notice.

The CHAIR: With that answer, the allotted and agreed time for the examination of payments in regard to Renewal SA and HomeStart has expired; therefore, there are no further questions. I declare the examination of the portfolio agencies Renewal SA and HomeStart completed and the estimated payments for the Department of Treasury and Finance closed. I declare that the administered items for the Department of Treasury and Finance be referred to Estimates Committee A.

Sitting suspended from 12:00 to 12:15.