Estimates Vote

Department of Treasury and Finance $170,231,000

Administered items for the Department of Treasury and Finance $2,365,934,000

Minister:

Hon. S.C. Mullighan, Treasurer.

Departmental Advisers:

Mr R. Persse, Under Treasurer, Department of Treasury and Finance.

Ms T. Pribanic, Deputy Under Treasurer, Department of Treasury and Finance.

Ms T. Blight, Executive Director, Budget and Performance, Department of Treasury and Finance.

Ms J. Burgess, Executive Director, Organisation and Governance, Department of Treasury and Finance.

Ms T. Scott, Executive Director, Financial Management, Reporting and Policy, Department of Treasury and Finance.

Mr G. Raymond, Director, Revenue and Intergovernmental Relations, Department of Treasury and Finance.

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

Mr A. Cadd, Director, Commercial Projects, Commercial and Economics, Department of Treasury and Finance.

The CHAIR: Welcome, everyone. The estimates committees are relatively informal and, as such, there is no need to stand to ask or answer 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 lead speaker for the opposition confirm that the timetable for today's proceeding previously distributed is accurate?

Mr COWDREY: Could I just ask one point of clarification. The Valuer-General, which session do you have for that?

The Hon. S.C. MULLIGHAN: I think she is appearing in Planning.

Mr COWDREY: And ESCOSA is the first session?

The Hon. S.C. MULLIGHAN: Yes, or I am happy to be flexible if you want to ask those in a different session.

Mr COWDREY: Yes, we might do that in the final one, if that is okay.

The Hon. S.C. MULLIGHAN: Sure.

The CHAIR: Changes to committee membership will be notified as they occur. Members should ensure 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 submitted to the Clerk Assistant via the answer to questions mailbox no later than Friday 2 September 2022.

I propose to allow both the minister and the lead speaker for the opposition to make opening statements of about 10 minutes each, if they so wish. There will be a flexible approach to giving the call for asking questions. A member who is not on the committee may ask a question at the discretion of the Chair.

Members unable to complete their questions during the proceedings may submit them as questions on notice for inclusion in the assembly Notice Paper. I remind members that the rules of debate in the house apply in the committee. Consistent with the rules of the house, photography by members from the chamber floor is not permitted while the committee is sitting.

Ministers and members may not table documents before the committee; however, documents can be supplied to the Chair for distribution. 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.

The committee's examinations will be broadcast in the same manner as sittings of the house are broadcast, 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.

I declare the proposed payments open for examination. I call on the minister to make a statement, if he so wishes, and to introduce advisers. I call on the lead speaker for the opposition to make a statement, if he so wishes. I call on members for questions.

The Hon. S.C. MULLIGHAN: I have no opening statement, but I can introduce Tricia Blight, who is the Executive Director of Budget and Performance in the Department of Treasury and Finance; Tammie Pribanic, Deputy Under Treasurer; and Rick Persse, Under Treasurer, with me at the front table.

Mr COWDREY: Treasurer, can I take you to Budget Paper 5, page 110, the table that lists budget initiatives. Can you confirm that your department is being tasked to find over the forward estimates nearly $21 million of efficiency savings?

The Hon. S.C. MULLIGHAN: I have not added those four years up, but I can confirm that the operating efficiencies required of the department are $4.2 million in the next financial year, $4.5 million in the financial year after that, $4.7 million the year after that, and $7.5 million. I would point out though that the scale of operating savings we are tasking the department with are substantially less than the task that was required of both this department and other similar departments in the previous government's first budget in 2018-19. The scale of the task was significantly larger than this.

What we have done in this budget is made sure that our task is not any lighter than the previous government's task, but unlike the previous government as well we have also excised frontline service delivery agencies. So in the previous government's first budget there were savings required of departments like the Department for Education, health, child protection, courts and so on.

We have made a decision that, in order to part-fund some of our record investment in health and in other election commitments which were made in the lead-up to the recent March state election, we have put a savings task on what you would perhaps consider as non-frontline service delivery agencies. With regard to the Department of Treasury and Finance, that is what is reflected there in that line.

Mr COWDREY: Treasurer, how are those saving tasks going to be achieved over the forward estimates?

The Hon. S.C. MULLIGHAN: As we have said both in the lead-up to the election, since the election and on delivery of the budget, it will be up to the chief executive in consultation with his agency heads and also me as minister as to how we seek to achieve those savings. Overall, for all agencies, including the Department of Treasury and Finance, we have made it absolutely clear to the agencies that there is no expectation that there is a separation of staff or a separation of a set number of FTEs.

Elsewhere, I cannot recall if it is in the Budget Measures Statement or in Budget Paper 3—I think it is in the Budget Measures Statement—there is an estimate that Treasury has provided that I think is if 50 per cent of the departmental efficiencies were achieved by separating staff what the full-time equivalent impact would be, and that is a number of roughly 400-odd staff per year growing commensurately across the forward estimates in line with the incremental growth in the savings task across those departments.

It is certainly not the expectation and by virtue, I think, of the fact that the estimate is only 50 per cent rather than 100 per cent or any other majority percentage, we recognise that there are opportunities to make efficiencies. Some of those areas that we foreshadowed, for example, included changing how agencies spend some of their more discretionary funds. We have all changed our habits in the last couple of years. There is perhaps less incentive to be travelling interstate for business meetings, etc., or intergovernmental meetings.

There is likely to be a continuation of the consolidation of office accommodation, which has been ongoing over the last seven to eight years under both Labor and Liberal governments. To my mind, we fortunately now have a consolidation of the expectation that people should have flexible working arrangements. We have also made it clear that some of the expenditures that have occurred—not just under the previous Liberal government but under previous governments—on contractors, consultants, short-term contract staff, labour hire staff and so on, are all opportunities to reduce expenditure without necessarily affecting the roles of public servants who have ongoing employment.

Mr COWDREY: Can you provide for the committee a breakdown of efficiency savings by branch?

The Hon. S.C. MULLIGHAN: I think that once the chief executive arrives at that we will be in a position to understand how we are going to achieve those savings. These are savings that need to be delivered from 2022-23 onwards. We have made it clear, both at a cabinet level and at the Chief Executive Council, that the task of agencies between now and the Mid-Year Budget Review will be to do the work to identify how each of them is going to deliver their savings, to make sure that they are locked in for the first financial year, which starts on 1 July, and also on an ongoing basis.

I would also point out that we have continued, for a short period of time—I think it is to the end of January next year—the availability of a TVSP scheme, if agencies do choose to make some positions no longer required in their agencies. Of course, we have also made it clear, in order to deliver our election commitment in this regard, that there will be a reduction of 50 full-time equivalent executive positions across government as well. They will need to be locked in in the period between now and the Mid-Year Budget Review.

Mr COWDREY: So for FY 2022-23, you are asking departments and CEs to find a full financial year's worth of savings, but you are not deciding what those savings are going to be until the Mid-Year Budget Review in November.

The Hon. S.C. MULLIGHAN: No, they have between now and the Mid-Year Budget Review to spell out to Treasury what those are and also to lock those savings in so that they are being delivered for 2022-23. It may be that some chief executives, including ours, hit the ground running and they are all locked in from 1 July, or it might be that in the first financial year there is perhaps a reduction in some costs that are not carried through to future years. So there might be a larger reduction in some of the more discretionary expenditures that I went through before—the use of temporary or contract staff, for example—before other measures are locked in for the remainder of the forward estimates, but that will be up to the chief executives.

Mr COWDREY: How far progressed is your chief executive in identifying the savings for this financial year? What percentage of savings has he already managed to quarantine?

The Hon. S.C. MULLIGHAN: My advice is the work is well progressed. The chief executive and agency branch heads are already working through that task so that we can meet our requirement for the 2022-23 financial year.

Mr COWDREY: What impacts does the Treasurer see these cuts having on service delivery for the department?

The Hon. S.C. MULLIGHAN: Generally speaking, the overall task will be to lock these savings in and minimise any risk to service delivery. Obviously, there are core functions that are encapsulated within the portfolio where it would be more difficult to make expenditure reductions without impacting on service delivery. For example, we have to put a budget together every year, so we would be cutting off our own noses to spite our face, so to speak, by launching into the budget branch. It is difficult to get bills out, for example, if we are not sufficiently resourced in RevenueSA and so on, so the focus for our agency and I guess for the other agencies is to lock these savings in and minimise the risk to service delivery, particularly as it impacts the community.

Mr COWDREY: Will the savings target have any impact on government apprenticeship and trainee commencements across the forward estimates?

The Hon. S.C. MULLIGHAN: Generally speaking, no, but I should point out that there has been an ending of a temporary scheme that the previous government funded, that they had badged as part of their response to COVID, their stimulus programs of a temporary increase in the number of traineeships across governments. What this budget does is it ends that temporary program and returns government agencies to where they were pre-COVID with the level of traineeships and, perhaps even in some areas, apprenticeships that were existing pre-COVID. So that is what we were aiming to do—get it back to what that regular level of intake was pre-COVID.

Mr COWDREY: Budget Paper 3, page 5, under the headline Cost of Living: what capacity does the Treasurer have in the budget to deliver a greater cost-of-living relief to South Australians impacted by unprecedented inflationary shocks?

The Hon. S.C. MULLIGHAN: I was interested to hear a member of the opposition claim on a TV news report that there is no cost-of-living relief in this budget. To be fair on them, they are a member of the Legislative Council, so we do not necessarily expect the same level of assiduousness as we do of members of the other place in the House of Assembly. Nonetheless, this budget did include more than $80 million of cost-of-living relief over a four-year period, including meeting our election commitment to double the Cost of Living Concession, which is providing an additional more than $220 for Cost of Living Concession recipients who live in their own properties, and for self-funded retirees and those who rent, they will be receiving an additional $112.30 for them.

For South Australians who hold a Seniors Card, which is a very large number of South Australians—I think you have to be over the age of 60 to receive a Seniors Card—in South Australia we have expanded free public transport to be free at all times that public transport is running rather than just at non-peak periods, which is how it has been in existence ever since a former Labor government introduced that measure. That will give people more viable opportunities to make the choice to leave the car at home and not incur what I saw not just on the weekend but also during the week, of petrol prices skyrocketing to $2.24 for unleaded, and save some money there.

We have also reintroduced the out of areas registration concession to people who register vehicles in areas including Kangaroo Island, Roxby Downs, Coober Pedy and some of—I will not get the terminology right—what are referred to as out of areas parts of South Australia, not in incorporated council areas. That provides a 50 per cent discount on the motor vehicle registration charge for light vehicles up to 4,500 kilos and a 40 per cent discount for the registration cost of vehicles heavier than that.

Something that got a bit of coverage yesterday during question time is we have also committed to a $100 rebate for the schools materials charge. I know I will not get the description of that right in front of a former education minister, let alone a former chief executive of the Department for Education during—

The Hon. J.A.W. GARDNER: Materials and services charge.

The Hon. S.C. MULLIGHAN: Materials and services charge—both for this financial year and next. Generally speaking, I think the question from the member was about what further capacity is there. It was important for me in handing down the budget to firstly get the budget back into surplus, to have a decent-sized surplus in this financial year but also have a growing surplus across the forward estimates, because we know, even when things are going well, that new spending pressures emerge in government. There may be revisions to revenues, for example.

Also, we have to be honest that in the last six to eight weeks in particular there are new economic challenges confronting South Australia, as there are the nation and the world, and making sure that we have some capacity across the forward estimates in the state's finances to meet those challenges was a feature of the budget too.

Mr COWDREY: In FY 2022-23, the budget provides $39.3 million as a once-off doubling of the Cost of Living Concession. Is the Treasurer going to extend that measure beyond this financial year?

The Hon. S.C. MULLIGHAN: That will be something we will consider closer to the point of the end of the coming financial year. My recollection is that the money in the 2022-23 financial year will start flowing to recipients from roughly September onwards, give or take, over a period of several weeks, and hopefully that will provide some welcome relief as people might be getting their winter quarter electricity bills, or maybe even provide them with a bit of a buffer coming up to the summer period.

If there is a pressing need for it and it is something that we arrive at a judgement that the state's finances can afford in the context of whatever other spending pressures or other issues emerge that place pressure on the state's finances, then that will be something we will give some further consideration to.

Mr COWDREY: How would the Treasurer quantify the pressing need in which he would trigger doubling the concession for the next financial year?

The Hon. S.C. MULLIGHAN: I think we would continue exercising the judgement which has served us well to date. In the lead-up to the March election, for example, we on our side of politics engaged with the community to the extent that we realised that there were cost-of-living pressures and that there was a role for a South Australian government to do more to assist South Australians with those cost-of-living pressures. That informed our commitment in the election campaign to provide additional cost-of-living relief, and those measures which I just walked you through were all features of our election campaign.

Now, that was not the view of everyone and the then government arrived at a different conclusion, that they did not need to provide any further cost-of-living relief other than the schools materials and services charge measure, which was announced as an election commitment by them and which we immediately matched. I think we had a greater appreciation and understanding of what was confronting the community, which was why we made those commitments. How will we assess whether the community might need some further support? We would start by using the judgement that we have demonstrated to date has served us better than our political opponents.

Mr COWDREY: Did the Treasurer explore any broad-based cost-of-living relief measures in compiling the budget? For instance, the former Liberal government provided cost-of-living relief via ESL reductions, water pricing and the proposed school materials cost concession that the Labor government matched.

The Hon. S.C. MULLIGHAN: In terms of broad-based cost-of-living relief, I think there are something in the order of 140,000 or 160,000 parents, families or caregivers who will receive the benefit of the materials charge. There are approximately 180,000 to 185,000 recipients of the Cost of Living Concession.

When it comes to the comment that the previous government provided relief for the emergency services levy and so on, you will note that not only have we continued on the $90 million of remissions that were put in place by the previous government, hitting the majority of households as well as other commercial and industrial premises, but we also did not do what was left to us by the previous Liberal government and that was rapidly escalate the emergency services levy on households and businesses for the 2022-23 rate-setting process.

The previous government had paid out of the Jobs and Economic Growth Fund, I think it was, over $4 million into the Community Emergency Services Fund, so that the percentage increase on households was temporarily lower than what the level of emergency services expenditure would have otherwise been.

Had they not made that commitment that more than $4 million—I am sorry, it was not; it was the COVID support fund, I think—that would have meant that the 2021-22 ESL rate would have been much higher. Obviously, that was a one-off temporary hit whereas the amount of expenditure on emergency services was continuing to increase at the very least by the annual indexation.

What we did was we made sure that all of our emergency services election commitments were funded by the budget rather than funded by the ESL and we made sure that we limited the ESL increases to 2 per cent for the average metro house price, or medium metro house price I think the term is, and we actually saw a reduction of over 2 per cent in the average ESL bill for regional properties.

Mr COWDREY: Is the Treasurer saying that it was inappropriate for the then government to respond to the Keelty review?

The Hon. S.C. MULLIGHAN: No.

Mr COWDREY: Can the Treasurer provide, perhaps on notice, the exact number of families that will have access to the materials charge remission and also the number of concession holders who are able to access the Cost of Living Concession, but also on completion of the program the number that actually were provided with the doubling?

The Hon. S.C. MULLIGHAN: It is $100. The cost of the materials charge is $12 million a year. I am merely a Bachelor of Arts graduate but my maths would indicate that that is somewhere in the order of 120,000 recipients for the materials charge but perhaps we will go back to Education and see what information is available.

I probably cannot quantify the actual number of recipients between dual caregiver or individual caregiver families and the gross number of recipients in that respect, but in terms of the number of rebates, we can provide that detail. The Cost of Living Concession we would need to provide after the fact, because it does fluctuate each year.

The estimate is 180,000 to 185,000 and while we might have reasonably steady numbers of pensioners and DVA gold card recipients, commonwealth low income healthcare card recipients, what does tend to fluctuate each year are the recipients of various Centrelink payments and that can fluctuate from year on year. Whatever further and better particulars we can provide, we will.

Mr COWDREY: Treasurer, during a radio interview on the ABC on 20 May, soon after the election, the Treasurer, when pressed, made a statement that if inflation wages continue to escalate, that it was up to the government of the day to not pass on the full extent of that increase and to adjust policy and provide some additional relief to households in relation to rates and charges. Does the Treasurer stand by this comment?

The Hon. S.C. MULLIGHAN: As I explained, I cannot remember if that was in the context of the radio debate that the member for Colton and I had where it was erroneously claimed in a press release from him that fees and charges rates were set to soar because of high inflation rates when of course I think the member had to eventually concede on ABC radio that that is not how the fees and charges are set annually.

In fact, it is a shandy rate, which is both the average public sector wage indexation as well as the Adelaide CPI rate. Given that average public sector wages are running and will for a period of time continue to run behind inflation because they are subject to ongoing enterprise agreements, many of which were struck well before recent inflationary periods, then we can expect that to continue onwards.

To give you a demonstration, we could have merely reflected the numbers left to us for the emergency services rate-setting process, which would have seen a percentage increase significantly higher than where we arrived at, but we chose not to do that; we chose to hold it at a lower rate, and we did that by adjusting some of the rates which are used to determine the overall emergency services levy. Also, as I said before, we chose not to roll our election commitments into the funding base by which the ESL rate is calculated, and we provided some relief there.

Where we can we will, but none of us know how long this inflation spike will go for. We do not know how long it will last and what impact that will have on public sector wages. As we have already seen from the Fair Work Commission, if they are setting a standard that wage outcomes across the economy need to be higher, then it is not likely that the public sector will be able to completely resist that, and if wages increase in the medium term, then that is likely to find its voice in the annual fees and charges setting process.

That will be one of the things we will have to consider, as well as other impacts on households and businesses, about how we set government fees and charges and overall state taxation burdens on an ongoing basis.

The CHAIR: We are drifting into some more general questions. If you can at least loosely tie back to some of the budget lines.

Mr COWDREY: Yes, but the Treasurer is responsible for the Budget Statement, Budget Paper 3, as well, from my understanding.

The Hon. S.C. MULLIGHAN: I think you were directing my attention to chapter 3, revenue and fees and charges, is my recollection.

Mr COWDREY: We will run with that. Can I take you to Budget Paper 3, page 9, table 1.4, general government grants. On 5 March, the Deputy Premier and other local Labor members and candidates announced that the government would fund a trial for electric planes at Parafield Airport. Has this trial been funded through a grant or any other mechanism in the budget and, if so, what is the quantum of the grant and to whom was it awarded?

The Hon. S.C. MULLIGHAN: Not with me in it—I make that commitment to you right here. I will have to come back to you on that, I do not have that detail in front of me, but I will provide what information I can get.

Mr COWDREY: Same budget reference: what existing grant programs are being cut through this budget process?

The Hon. S.C. MULLIGHAN: None that spring to mind. I should point out that the way in which we have made our commitments for the support to community and sporting clubs, etc., is to provide additional funding. It is not so much cutting grant programs, but there have been reductions to some of the measures from the previous government, some of which have been publicly ventilated. So we have not continued the scheme that required pensioners to give up their energy and Cost of Living Concessions in return for solar panels for a couple of reasons: one is that we do not agree with the policy outright; and, secondly, it had an extraordinarily low take-up rate, I think.

I think the level of registrations of interest in the scheme were about 6 per cent of the overall eligible beneficiaries, and the number of people who took it up were only a fraction of that 6 per cent. So not only did we not think it was a good idea but also the community has responded in kind.

We have also reduced the grant program for the Grid Scale Storage Fund. I think we are going through the process of honouring commitments and arrangements that were in train and being put in place up to the time when that decision was made, so we are not sort of ripping the rug out from people who are pretty far down the process. We recognise that, in the scheme of things, it was a more modest level of expenditure than what our grid-scale storage solution is, and that is a $593 million Hydrogen Jobs Plan, including storing hydrogen, which can be used either for export or for use in dispatching electricity through combined cycle gas-fired turbines which can run on hydrogen.

We have got rid of the grants to the Adelaide City Council. I think it was called Greening Adelaide's Heart. Rather than pay the city council to plant trees, we are instead providing $4 million to improve the streetscape of Hutt Street and Melbourne Street, something that the now member for Adelaide was very quick to identify in her engagement with the community in the lead-up to the election. We are also making sure that we are fully funding a more than $80 million redevelopment and operation of the Adelaide Aquatic Centre.

We have reduced the Greener Neighbourhoods program, and that reflects I think the fact that, as you alluded to earlier with specific reference to electric planes, there was much larger expenditure in this budget on community programs that councils would otherwise be expected to deliver. We have also discontinued, which I was surprised was still in the budget, a $20 million grant for the Glenelg jetty redevelopment, which I think was proposed to have a hotel on it.

I speak somewhat facetiously now, but I know the member for Morphett was a mayor in that area, but I did not think it was reasonable that we try to turn him into the Lucky Thompson of Glenelg and establish a boardwalk empire down there, so we have ended that grant. As for other grant programs that I cannot put my fingers on at the moment, I can see what other detail I can provide and perhaps take that on notice.

Mr COWDREY: Treasurer, what role has the Department of Treasury and Finance played in administering the local sporting club facility grants totalling $84 million, given the Premier's statement in the house on Tuesday that the Treasurer, along with the Premier's Delivery Unit, has been working diligently to make sure that each and every one of those commitments that was made is being delivered upon?

The Hon. S.C. MULLIGHAN: Your reference was to the sporting club grants. Our role primarily is making sure we are allocating in total the right amount so that the government can meet all of its election commitments. That appropriation is then being made, I think almost exclusively, if not exclusively then largely to the Office for Rec and Sport, and then it is up to the Office for Rec and Sport to, as we discussed in question time during the course of the week, contact those clubs and do the work to get in place grant agreements.

In terms of the Department of Treasury and Finance, it is making sure that we are getting the right amount of money allocated so that we can meet those commitments and then providing both the appropriation and the expenditure authority to the Office for Rec and Sport so that they can give effect to those grants.

Mr COWDREY: How many local sporting club facility grants has the government approved to date?

The Hon. S.C. MULLIGHAN: I do not have that figure. That would be something that Rec and Sport would have an up-to-date number on because, as I said, they are the ones who are doing the actual detailed discussion with the clubs, putting the grant agreements together and getting those effected. Our job was for the budget process to make sure that we had the overall amount of money correctly provisioned for and then providing both the appropriation and expenditure authority for Rec and Sport.

Mr COWDREY: Treasurer, can you explain why Treasury has changed the presentation of election commitments relating to sports infrastructure? In the 2018-19 budget, each project was listed individually, with a grant amount associated to each. Are you able to explain why in this budget it was presented as a single line item?

The Hon. S.C. MULLIGHAN: I do not have the 2018-19 budget reference before me, but suffice to say what we are doing is something entirely different from—

Mr COWDREY: I can show you a copy, if you would like.

The Hon. S.C. MULLIGHAN: I am sure you can. I am sure I could find one on my mobile phone because, like the ABS, the Treasury website is easily referable for the purposes of information finding. What we are doing is entirely separate to what the previous Liberal government did in 2018-19 and also what happens each year for the Office for Rec and Sport, and that is, in the lead-up to the most recent March state election, Labor members and Labor candidates engaged closely with their communities, sometimes over a period of years, to better understand what their priorities were.

When we understood those priorities, we made a series of commitments to local sporting clubs, as well as, you referenced separately elsewhere, to other community endeavours, and we made election commitments. We did not hide those; we were very public about them. They were if not released to the traditional media, then certainly plastered all over social media forums and communities were able to make their choice accordingly at the election.

As we committed, both in the lead-up to the election and immediately after our election, we want to deliver all of our election commitments. While there is certainly reporting that has been done previously and separately for other programs that have been run, either by the previous Liberal government or by the Office for Rec and Sport, that might explain why there is a different presentation, but I do not think there can be any reasonable assertion that we are seeking to hide those because I know that pretty much everyone who has been a recipient for one of these amounts of funds has been shouting it from the rooftops to let them know that, unlike the previous Liberal government, this Labor government is committed to its election promises.

Mr COWDREY: Treasurer, you referenced that Treasury's role in this process was to check the costings. On what basis was this done? I understand that councils in some instances had not costed or planned for some of these projects. Was Treasury's role to check the number that was provided to them in the Labor Party election costings, or was there a greater role for Treasury to interrogate the project being proposed and the actual costs of its construction?

The Hon. S.C. MULLIGHAN: No, not the latter, but more the former, if by what you mean in the former is: how much was committed by the then Labor opposition in the lead-up to the election for a particular amount and is that the amount that we are providing funding for in the budget? That was Treasury's role and then going through the process of providing the appropriation, providing money, and also the expenditure authority to the Office for Rec and Sport so that they can give effect to that.

You are right to say that there were some councils that were not expecting this. We have committed in these sporting grants, I think, a similar quantum as to what the Office for Rec and Sport would have provided to agencies across a four-year period in their regular grants. I do not have the figure in front of me and it is not my portfolio, but my recollection is that they provide something like $15 million or maybe $20 million per year across their different grant funding schemes.

This is something completely separate and different to that, but there is such a significant injection of support from this government into those community sporting clubs that councils, in some cases, cannot believe their luck that projects which they thought they might have only had the capacity to get to in five or 10 or 15 years' time they can now do much more quickly. That means that the task for councils, both in setting their current budgets for the coming financial year and presumably their next year's budget, is making sure that they can—where the councils are the property owners, I should say, or the owners of the facilities—accommodate those, and they can deliver those.

Then you have, as I mentioned before, the commitment that we made to the Adelaide City Council that we would take the Aquatic Centre off their hands, that we would rebuild it, and that we would run it, because I think we have now established well over the last 30 years that managing that facility, maintaining it and providing it at a high standard has just got beyond the capacity of the council. I do not mean in a competence sense; I mean just in a financial sense.

That is why we are committed to taking it over and fully funding its rebuild because the alternative was that it was probably going to be closed or may be sold by the council. Even if the Liberals were returned after the election, the commitment was only for a $25 million bandaid, for that proposal. Whether it is the Adelaide City Council, whether it is other councils, I think many of them are surprised and delighted that the government is funding what would otherwise have fallen to them in future years.

Mr COWDREY: Given the fact that there has been little rigour in terms of the costings that have been provided—you have just said that ORS has not provided any scrutiny of those costings, that Treasury has not provided any scrutiny in terms of those costings, and that in some circumstances council have not given any scrutiny in terms of those costings—have you been provided with or received any advice that projects could cost more than what has been promised by the Labor Party during the campaign; or that the clubs or councils in question have been promised more money than the amount requested or required to build facilities?

The Hon. S.C. MULLIGHAN: I am very sure that some councils will come back and say, Oliver Twist-like, 'Please sir, I'd like some more.' That is certainly the councils that I have come to get used to in my time as a member of parliament. That is not meant as a disparaging comment, but if councils think that there is money on offer they will ask for it, and if they think that there is the opportunity to squeeze more out of a state government they will do their best to get it. I do not think there are any surprises there.

I think these are largely—I will not say exclusively, but largely—council facilities which are being upgraded here or facilities that fall under the council's control. As I said in my previous answer, the councils are the ones that usually deliver these projects, usually deliver these upgrades, and they are the ones that are skilled and capable to do that.

As we have discussed on a number of occasions, we are in a high inflation environment. There have been cost escalations not just in residential construction but also in commercial construction, which would cover off on most of these facility upgrades. I am sure that what was envisaged by clubs, or maybe even envisaged by councils, as what can be delivered for the amount that is being provided is going to have to be reviewed.

There is no expectation that there is an open chequebook from the state government on this. A project which is X million dollars, the council comes back and says, 'Oh no, sorry, it's actually X plus Y now. We would like the balance.' That has certainly not been the nature of our commitments to date, and Rec and Sport, who are actually dealing with the councils, and dealing with the grant recipients on this, would probably have a further and better understanding of this, but certainly no-one has come back to me and said, 'You're going to have to dial this up,' or, 'All of them or some of the are asking for a lot more.' But I just reiterate the point that I would be flabbergasted if we do not have a council coming back and at the very least trying it on.

Mr COWDREY: I think that is the first time, Treasurer, that I have heard you admit that inflation is going to affect your $3.1 billion worth of election commitments. Have all of the projects that require a local government contribution committed to that contribution being made?

The Hon. S.C. MULLIGHAN: I am not quite sure what the passing jibe was about our election commitments, where they are funded, as they are in the state budget. As I said in my previous answer, inflation is running high and the costs of these projects are likely to go up, particularly if they are delivered in subsequent financial years. But there is no commitment from us that we will continue to dial-up the level of funding for each of these grants commensurate with that. That will be something for the clubs and the councils to consider and possibly review the scope of what they want to deliver. There is no open chequebook for all of this.

Mr COWDREY: If a commitment was for a specific project, as opposed to a commitment of money, and the cost blows out, does the government bear no responsibility for supplementing that?

The Hon. S.C. MULLIGHAN: The government does not bear any inherent responsibility for that. We have made commitments for particular amounts of money; that is what the commitment was for. The commitment was not a dollar figure that we provided with an asterisk at the end of the last digit, with a footnote stating 'Or any other such amount that the council might think is reasonable to ask for'.

Clearly, if we have made a commitment to an amount of money, perhaps the council says to the community group or the sporting club, 'We need a bit of time to scope this up and to engage some professional services to design the verandah or the shed or the change room or the facility. Understandably, that's going to take some time, and this is not something we are going to get to budget for to construct in the next financial year. It might be the one after that.'

Even if inflation were not running at 4.7 per cent in Adelaide in the last quarter and if it were running at 2 per cent, and even if construction costs were not running at 20 to 30 per cent increases for construction materials and so on, year to year, even if they were just running at 2 or 3 per cent, as you might expect in a lower inflation environment, obviously the costs of those projects are going to go up. But I would make the point that that does not entitle a council to come straight back to government with a hand out in the expectation that we are going to fund any increase in cost. There has to be a consideration of scope here.

I do not think all the sporting clubs and the councils have an understanding that they will determine what scope they want to deliver for their organisation and that that will immediately be financed and granted by the state government. At least, that is certainly not the understanding that I have had from my colleagues in considering these commitments.

Mr COWDREY: To be clear, the state government has committed to a dollar figure for each of these projects. Some councils were not aware or had not budgeted for some of these facilities coming online, and it is the council who will bear all the responsibility for any difference in terms of inflation, and it will be their responsibility in terms of de-scoping that project and perhaps delivering a project that is not what was expected by that sporting club.

The Hon. S.C. MULLIGHAN: Let me give you an example. Let's say, for argument's sake, we want to deliver the upgrade to the Brighton Oval facilities, which I think was about $9 million—was it $3 million from the state and local governments and maybe dollar matching from the federal government? That is an extraordinary—extraordinary—upgrade delivered in the electorate of Gibson, which is coincidentally the former sports minister's electorate, but I make no comment about that. That was an upgrade delivered in a construction sense over the last three financial years, I understand.

Let's say there was the appetite to replicate such an extraordinary commitment in one facility elsewhere in metropolitan Adelaide or regional South Australia. I do not think there would be any expectation that you would be able to deliver the scope of something like that for $9 million, given the increases we are seeing in construction materials and so on. To answer your question, I think in the first instance, yes, the first discussion has to be around scope: what does the club actually need versus what does the club want?

Mr COWDREY: You did not have these conversations with the clubs when you made commitments?

The Hon. S.C. MULLIGHAN: We certainly had a discussion about the increase in the activity levels of these clubs. In fact, member for Colton, I can remember you had one of these discussions in your electorate at the Grange Recreation Reserve. I think you said to the sporting organisations down there that you would match the commitment that was made by Labor to that community group.

Mr COWDREY: I did not say that.

The Hon. S.C. MULLIGHAN: You did not say that, for the record. It is good to have that on Hansard. That will come in useful. I made a commitment in 2018 for the upgrade of those facilities, if Labor was returned to government after that election. We were not. So I reiterated a commitment. It is not even in my electorate; it is in your electorate. I reiterated that commitment and realised that, over the course of time, the council had done an extraordinary amount of master planning work, which meant that that commitment was not going to be sufficient. As an opposition, we made the judgement that we would increase our commitment.

I have not seen it, but apparently one version of the council's master plan was going to cost $20 million. That has been pared back to less than a third of that. That is my understanding. That is a good indication that councils have to be pretty careful about how they are scoping these projects. We all want the Brighton-type facility across all of the facilities in metropolitan and regional South Australia, but that is not achievable.

So in the first instance I think the pressure has to be placed back on the council. They have, by virtue of Labor being elected at the last election, an extraordinary opportunity to achieve a step change in the number and quality of facilities across the communities that they are responsible for. They have to make sure they do it prudently because without these commitments we would be talking about upgrades that would have to be delivered over decades.

We think it is more important to deliver these improvements now, for a whole range of reasons. We are seeing youth participation in sport increase almost exponentially year-on-year. It is now the councils' responsibility, now that they have this really terrific opportunity for improving facilities, that they scope them so that they do not suffer further impacts on their own finances. What might have been delivered four or five years ago for $500,000 is not going to be $500,000. Now the councils are just going to have to be careful about what they deliver.

Mr COWDREY: The local sporting club facility grants program totalling $84 million has been included in the 2021-22 financial year. May I add it is a big contribution to the increased deficit this year. Does this require all of the grants to be paid to the approved recipients by 30 June 2022?

The Hon. S.C. MULLIGHAN: Certainly, the intention is that we will get most of them paid in the current financial year but, honestly, the reason we had the capacity to do that of course is because we had an absolutely huge unexpected increase in some of our revenue lines. The Mid-Year Budget Review did not think that we were going to get a couple hundred million dollars in a six-month period from conveyance duty receipts because of the strength of the housing market. So why would we not take the opportunity of getting these grants paid to communities as quickly as possible?

My understanding is that in many cases these projects have been well developed, have been well advanced and are ready to go. If we can get the money out to those councils so that they can deliver them, that is great. In the instances where they are not as progressed as what they would like, there is nothing wrong with the community knowing and the clubs in question knowing that the council has the readies to be able to start delivering these projects so that there is a bit of an imperative on the council to get cracking with it as quickly as possible.

Mr COWDREY: Are the grants being paid as a whole, as an up-front payment, or are they going to be paid in segments based on deliverables?

The Hon. S.C. MULLIGHAN: That would be up to the terms of the grant agreement. As I have outlined before, that is something that is being managed by the Office for Rec and Sport, so I cannot give you fulsome and accurate advice on that, but I am sure that is something that perhaps the Office for Rec and Sport can provide further detail on.

Mr COWDREY: The Treasurer advised the house on Tuesday that all the grants were taken to cabinet. Will he provide the date when this was done?

The Hon. S.C. MULLIGHAN: No.

Mr COWDREY: Treasurer, which agency prepared the cabinet submission?

The Hon. S.C. MULLIGHAN: I cannot recall off the top of my head. I will see if I am obliged to provide you with that information. If I am, I will bring it back.

Mr COWDREY: I have not asked you anything that is cabinet in confidence. I have merely asked you for the details of who took the submission.

The Hon. S.C. MULLIGHAN: Except about the preparation of the cabinet submission.

Mr COWDREY: Who took the submission to the cabinet?

The Hon. S.C. MULLIGHAN: You might—

Mr COWDREY: You sit in cabinet, Treasurer.

The Hon. S.C. MULLIGHAN: I do sit in cabinet and given that you have read the Ministerial Code of Conduct, you would realise the obligation on ministers not to reveal the content or the context of cabinet deliberations. What you are asking me goes exactly to that.

Mr COWDREY: Was it not the Department of Treasury and Finance?

The Hon. S.C. MULLIGHAN: Do you want to do the process of elimination now, do you? That is not going to work either.

Mr COWDREY: So no response, minister? You are not going to tell us which—

The Hon. S.C. MULLIGHAN: No, I have responded. I am just not giving you the information.

Mr COWDREY: It is your prerogative, Treasurer. Transparency around this process is something that—

The Hon. S.C. MULLIGHAN: No, it is my obligation as a minister of the Crown.

Mr COWDREY: In preparing the grants for cabinet's consideration, what was done to identify whether any conflicts of interest may need to be declared by ministers having an association with proposed grant recipients?

The Hon. S.C. MULLIGHAN: If there is an assertion that there has been a conflict, then you can furnish the details of that to the committee and we will consider it.

Mr COWDREY: Does the Treasurer have an association with any grant recipient and, if so, did he declare the interest before a grant payment was approved to this recipient?

The Hon. S.C. MULLIGHAN: For some of them, yes. I am a lower house member of parliament and I represent electorates within which some of those grant recipients fall.

Mr COWDREY: Your relationship with those clubs goes no further?

The Hon. S.C. MULLIGHAN: If there is an assertion that I have some interest which creates a conflict for me as a minister, then spell it out and we will consider it.

Mr COWDREY: To be clear, Treasurer, you did not declare a conflict?

The Hon. S.C. MULLIGHAN: Again, if there is an assertion that I have a conflict of interest and/or that I did not manage that conflict of interest—

Mr COWDREY: There is no assertion, Treasurer. There are just questions.

The Hon. S.C. MULLIGHAN: It is. That is the entire line of questioning and I am aware of the line of questioning because it has been ventilated well before you via media outlets.

Mr COWDREY: Your response is an assertion, Treasurer. These are simply questions for you to answer.

The Hon. S.C. MULLIGHAN: Thank you.

Mr COWDREY: Did any ministers declare conflicts of interest during the process of administering these grants?

The Hon. S.C. MULLIGHAN: I am not going to go into what ministers did or did not do in cabinet. As you can imagine, I am not responsible for that.

The CHAIR: Can we get back to direct budget lines? I would suggest that these questions are more appropriate for question time.

Mr COWDREY: We are on a budget paper line. These questions have been answered by the Treasurer up to this point. Treasurer, which chief executive has been responsible for ensuring compliance with Treasurer's Instruction 15 that requires certification that the local sporting club facility grants are justified by the particular circumstances and are in the public interest?

The Hon. S.C. MULLIGHAN: As I said, Treasurer's Instruction 15 talks about grant payments and these grant payments are being superintended by the Office for Rec and Sport.

Mr COWDREY: When did the certification process begin and was it completed prior to cabinet's approval of these grants?

The Hon. S.C. MULLIGHAN: I am the Treasurer; I am not the Minister for Recreation, Sport and Racing.

Mr COWDREY: You outlined the process that the grants were approved and then the Office for Recreation and Sport was tasked with seeking grant agreements. Were grant agreements in place with all grant recipients and are they in place?

The Hon. S.C. MULLIGHAN: I wish you all the best in asking the minister and agency responsible for this, as we have just countenanced in several of these questions.

Mr COWDREY: Will the government make public a list outlining each grant recipient, attaching completed grant agreements and amounts in line with Treasurer's Instruction 15?

The Hon. S.C. MULLIGHAN: I mean, you could just read all the questions in and I can hand them to the minister responsible.

Mr COWDREY: Are you not responsible for Treasurer's Instruction 15, Treasurer?

The Hon. S.C. MULLIGHAN: In an overall context I am, but the obligations within the different Treasurer's Instructions fall on different people around government and I think, as we have already established, almost ad nauseam, this is a process that has been conducted by the Office for Recreation and Sport, which has a separate minister responsible for that agency which is not me.

Mr COWDREY: Which agency is responsible for monitoring the use of the grants to ensure that they are only applied for the intended purposes and an assessment can be maintained about the overall effectiveness of the grant throughout the term of the grant and that the infrastructure is delivered?

The Hon. S.C. MULLIGHAN: My understanding is that it is the Office for Recreation and Sport but if I am advised anything else subsequently, I will come back and let you know.

Mr COWDREY: Treasurer have you received, or your department received, any advice on the local government contributions to these projects and the ongoing maintenance and running costs, the impact that this will have on council rates?

The Hon. S.C. MULLIGHAN: No, but as you could imagine, if these projects have been funded by the state rather than by councils, that would alleviate pressure on councils' budgets and balance sheets going forward, so it probably has the inverse impact than the one that you are inferring.

Mr COWDREY: I take you to Budget Paper 3, page 46, GST settings reference. Prior to the election, the now Treasurer went to great lengths to conflate the no-worse-off guarantee negotiated by the former Treasurer in the GST HFE changes that passed the federal parliament with support from both federal Labor and Liberal. In the days leading up to the state budget, the Treasurer admitted that he had not written to the new federal Labor Treasurer to push South Australia's want to see the no-worse-off guarantee either extended or made permanent. Can the Treasurer confirm that he has now done this?

The Hon. S.C. MULLIGHAN: Made comment before the budget?

Mr COWDREY: Have you written to the federal Treasurer?

The Hon. S.C. MULLIGHAN: No, but both the Premier and I have continued to raise this with the federal government.

Mr COWDREY: Has the Treasurer been given an indication, either formally or informally, as to whether the federal Labor government will at a minimum make the no-worse-off guarantee permanent?

The Hon. S.C. MULLIGHAN: No.

Mr COWDREY: Has the Treasurer been given an indication, either formally or informally, as to whether the federal Labor government will return to full HFE?

The Hon. S.C. MULLIGHAN: We have had a new federal government for less than a month now. We have not yet met as the Board of Treasurers, which is the meeting that state and territory treasurers have amongst themselves, and that is not anticipated to happen, my understanding is, until July. It will not be until after that that we actually have a formal meeting with the federal Treasurer, Jim Chalmers.

So while states and territories continue to make their own representations and while agencies across state and territory borders continue to discuss this, I do not think it is unreasonable to expect that we have not gone through the process yet to secure or be told that we have not secured a certain set of arrangements about this going forward.

In fact, as we speak right now, there is a national cabinet meeting that all state and territory premiers and first ministers are engaged in with the Prime Minister and my understanding is that this is one of the various matters that is being ventilated there. That is really the first in-person opportunity that states and territories have had to raise this with the federal government and federal officers.

Mr COWDREY: Prior to the election, PwC was commissioned by the former government to undertake a review of GST distribution to model a range of scenarios. Will the Treasurer update the PwC report, or commission a new report to argue the need for reform?

The Hon. S.C. MULLIGHAN: I do not work for PwC, so I will not be updating their report, but we all understand or at least some of us understand exactly what the challenge is. Remember that it was not until the previous Labor opposition, the previous Leader of the Opposition and me as shadow treasurer, started raising the fact that we were blithely heading towards a massive diminution in our financial resources as a state by not raising any concerns or issues with the change to the GST distribution arrangements that finally the former treasurer started making some representations.

The sum total of his representations, as we are lead to believe by the former Premier and also by himself, amounted to writing to federal MPs less than 48 hours before they were asked to vote on this legislation in the federal parliament. Then we subsequently were told by the member for Dunstan, the former Premier, that Mr Lucas had met with, first, Scott Morrison, when he was Treasurer (I am not quite sure of the relevance of that, given that it preceded this process by many months), but then with the former federal Treasurer, Josh Frydenberg, to negotiate this deal.

That, of course, was not true. It was the pressure put on by Domenic Perrottet and Tim Pallas that saw the federal government relent and provide a no-worse-off guarantee on a temporary basis until 2027. When I asked the former state Treasurer about this in estimates, again after the deal had been done, and what action was being taken about this, the first response was an airy, 'Oh, well, I've asked for the Productivity Commission review to be brought forward', which of course would be the worst outcome South Australia and other small states and territories could possibly have.

Remember, it was the Productivity Commission in its first report on this that came up with two options. One, is that the GST distributions are changed to a per capita basis, which would mean, I think, that we would lose something in the order of $2 billion a year in our GST grants, or that there be a change to the CGC's assessment, which would have meant a $500 million a year impact to South Australia's GST revenues. What we ended up with was something which is estimated now by both PwC and by Treasury to cost South Australia $289 million next financial year if it was not temporarily masked by a no-worse-off guarantee.

That was described by the former Premier as 'a massive win for South Australia'. A massive win for South Australia would be—

Mr COWDREY: The no-worse-off guarantee.

The Hon. S.C. MULLIGHAN: No. A massive win for South Australia would be no change to the GST arrangements at all, and if a federal government thought it was necessary to provide temporary financial assistance to Western Australia, then my view was and remains that the federal government is free to do that from its own budget. In the current arrangement we have at the moment, with or without a temporary no-worse-off guarantee, money is being taken from South Australia and from every other state and territory and being handed over to Western Australia and, even worse, it is happening while they are in the middle of a mining boom.

So they are getting—I think the number this year is approximately $4 billion in additional GST revenue and on top of that they are getting billions of dollars in higher royalties. It is just outrageous. The whole reason we signed up to a federation 121 years ago, and the whole reason we went through the GST reforms, is so that every state and territory had the same fiscal capacity to provide the same level of services as every other place around the country.

Now what we have with these current arrangements is one state that has the happy coincidence of having a dotted line drawn on a map with a lot of the iron ore resources on their side and not so much on anyone else's side, and a massive influx of national GST revenues collected right across the nation, which is being handed to them.

No-one in their right mind thinks that is a good outcome, and no-one expects that any state or territory is going to have anywhere near the same capacity to run health services or their schools or their police force or their roads or child protection services or anything else to anything like the standard that Western Australia has by virtue of having this completely unreasonable coincidence of capturing these record royalty revenues and being handed billions of dollars of GST revenue from the other states for the effort.

I do not support any of the activities that the previous Liberal government took in standing up for South Australia on this, because just like they did for the automotive manufacturing industry, just like they did for the submarines, just like they did in the funds that were cut by Tony Abbott and Joe Hockey for pensioner assistance funds in their 2014 budget, we constantly see South Australian Liberals failing to stand up for South Australia and now we are bearing the burden of it.

Debt has increased from $12.95 billion to $25-odd billion this financial year and is now estimated to increase to $33.8 billion. We have rising interest costs and now we are going to get a couple hundred million dollars less in GST. This is a catastrophic act of fiscal vandalism to smaller states and territories, including South Australia.

Mr COWDREY: Supported by the federal Labor Party. Budget Paper 3, page 96, economic forecasts: when were the economic forecasts contained in the budget papers—specifically volume 3, page 96, table 7.1—prepared and by whom?

The Hon. S.C. MULLIGHAN: They were prepared by the Department of Treasury and Finance. They were included in the budget that went to cabinet and they were tabled by me yesterday fortnight ago in the House of Assembly.

Mr COWDREY: Does the Treasurer believe these forecasts to still be accurate today?

The Hon. S.C. MULLIGHAN: I do not think anyone expects economic forecasts slated for two, three or four years' time to be completely accurate, no. That has never been the nature of an economic forecast. I do not think anyone—any government or any economist—has ever made an economic forecast that spans out over four years that has ever been completely accurate.

What we do is make a judgement in our economic forecasts based on the best advice that we have available to us. The sources that have informed these economic forecasts are principally the commonwealth Treasury, as referred in their commonwealth budget released in March, and also the Reserve Bank inflation advice that we had at the time the budget was prepared. Both of those have since moved and they will continue to move, if not on a quarterly basis then on a monthly basis, and that is why they get periodically updated in the state budget papers.

Mr COWDREY: Budget Paper 3, page 88, increases in wages and salaries: across the public sector, what is the average wage increase assumption as a percentage each year across the forward estimates?

The Hon. S.C. MULLIGHAN: I am not providing that evidence to the committee.

Mr COWDREY: Budget Paper 3, page 24, table 2.8: the risk statement notes that for every 1 per cent increase in wages and salaries above the estimates contained in the forward estimates, that would result in a $251 million impact on the budget. Nominal employee expenses are projected to increase by an average of 1.9 per cent over the forward estimates, well below inflation. Does this mean that the Treasurer is going to be offering lower than inflation wage increases, or will you be significantly cutting FTE numbers across the Public Service?

The Hon. S.C. MULLIGHAN: That is a question that is in part answered elsewhere in the budget papers. Our FTE-funded levels are contained in the same chapter in Budget Paper 3, so you can see what our estimates are of FTE numbers. In particular, you can see a few things happening. You can see that there is a very high level of FTEs in the current financial year, which is largely to do with the additional money that is being poured into some frontline services in order to deal with COVID. Then, touch wood, hopefully, as that level of expenditure on frontline services is not required to the same extent next financial year on an ongoing basis, that very high level of FTEs drops back to, perhaps I can very generally say, where we would have otherwise been pre-COVID.

Then, those FTEs going forward are adjusted for different initiatives in both the previous government's budgets and also in this government's budget. For example, where we were talking at the beginning of this discussion about what the impact would be if 50 per cent of the savings requirement was taken in that 400-odd staff, that is offset by I think more than 1,400 staff, which are the estimates for the increased number of workers required in different agencies in order to deliver our election commitments. To answer part of your question, that figure is in there.

In terms of what we will be offering public sector wage groups, we will be putting an offer to them according to what we think is a fair and reasonable outcome for those workers. I note that, for example, the previous government adopted a policy where it refused to provide wage increases backdated to the expiration of enterprise bargaining agreements, which is, in my understanding, not what has always been the practice in the public sector.

For example, if you are a government that chooses to go to war with ambulance drivers and staff in the middle of a global pandemic and you have not given them a pay rise since December 2017, by the time you might settle an enterprise bargaining agreement and a wage outcome going forward, you have to bear in mind that they would not have had a pay rise for more than four years and they would not have had a pay rise in more than four years in an environment where, as we have been discussing in various different contexts, we are in a high inflation environment.

How we provide our negotiating parameters to these enterprise bargaining groups will very much depend on the circumstances of those individual groups. It is also something which is settled not necessarily by me but by cabinet and, in particular, in consultation with the Minister for Industrial Relations and the Premier. I cannot really provide any specific detail about whether it is going to be below, at or above inflation.

Mr COWDREY: Has Treasury provided any direction or advice to Health through reduced COVID-related expenditure, and by when?

The Hon. S.C. MULLIGHAN: In fact, what we have done in the budget is the opposite. You would have seen in the budget that we provided an extra $648 million in this budget to further increase expenditure by SA Health. That is $448 million in the current financial year through to 30 June, and that reflects additional expenses, both in the months leading up to the March state election and also since the March state election, and we have provided them an extra $200 million to continue a level of effort in the months beyond 30 June, when otherwise the funding would have ended, according to the previous government's budget.

We are providing more capacity for SA Health to continue responding to COVID. We do not know how long that is going to last, but we think we have provided Health enough money to get through to a period that, if we still are combating the pandemic in a similar vein to as we are now, if we need to provide any supplementation we can make that consideration during the MYBR.

I should also point out, in addition to the $648 million, we have provided an additional $400 million of expenditure authority to SA Health, which effectively backs out $80 million a year of savings, which the previous government required of SA Health. We have recognised that not only in the current environment are they going to be unable to provide any savings to the budget, which were previously provided of them by the Liberals in the current financial year, next financial year we do not expect them to make the remnants savings task either, so we have provided a level of savings relief. That is a thousand and forty-eight million or $1.05 billion in additional resourcing to SA Health in recognition of the challenges they are facing in responding to COVID.

Mr COWDREY: Treasurer, which EBs are expiring within the next two years?

The Hon. S.C. MULLIGHAN: I am not sure I have that detail in front of me. If I can get it for you I will, but the person who would have it to hand would be Minister Kyam Maher, who is the Minister for Industrial Relations.

Mr COWDREY: Would you be happy to take it and provide it on notice?

The Hon. S.C. MULLIGHAN: If I can, but again Treasury and Finance does not have responsibility for industrial relations anymore. After the change of government, the industrial relations portfolio has been moved over the to the Attorney-General's Department with Minister Maher, and I will not get this right but whatever the group within the industrial relations portfolio that does the industrial relations advice—IRAAP.

Mr COWDREY: I think they are just called that, yes.

The Hon. S.C. MULLIGHAN: Industrial Relations Advice—

Mr COWDREY: Advisory.

The Hon. S.C. MULLIGHAN: —and Policy. That is over there, so that is not something we—I mean, we obviously have involvement in terms of providing costing comments and input into wage negotiation parameters and cabinet submissions and final approvals, and then of course having to provide the appropriation expenditure authority for wage outcomes, but in terms of the grotty detail of who is up when I am not sure we have that to hand. To the extent that we can get it for you or we can hand this over to Minister Maher so that he has that for his estimates committee we are happy to do that.

Mr COWDREY: Treasurer, are you able to advise why this Labor government has stepped away from previous orthodoxy to allow portfolio ministers to negotiate EBs?

The Hon. S.C. MULLIGHAN: Because that would be bonkers. All governments—

Mr COWDREY: You did it for a long time.

The Hon. S.C. MULLIGHAN: No, all governments have always had a centralised industrial relations minister who is primarily responsible with his public servants—his or her public servants I should say—to negotiate wage outcomes. Can you imagine the inconsistency of approach if you had a health minister or a police minister or another minister responsible for the administrative services streams of government or corrections all going off and doing their own thing. We are trying to provide not only wage outcomes which are fair and balanced for the needs of those particular workers in those particular areas but we are also trying to make sure we have consistent policies outside of just wage outcomes as well.

What we would not want to see is some agencies negotiating some particular policy outcomes within enterprise agreements, for example, perhaps related to various types of leave or other entitlements, which are completely different from other parts of the public sector. We have an industrial relations minister. The previous Liberal government had a single industrial relations minister, the previous Labor government before that had an industrial relations minister, suffice to say the negotiating parameters and the final outcomes both have to be considered by all of government, which is through cabinet.

Mr COWDREY: Are you aware of the status of the ambulance officers' EB?

The Hon. S.C. MULLIGHAN: I understand that—I am not sure whether an agreement has been struck, but if it has then Minister Maher would be aware of that—negotiations are ongoing. I do not know whether the ambulance employee representatives are at the stage that they have taken an offer to their members yet, but that is hopefully—touch wood—in the final stages of negotiation.

Mr COWDREY: Budget Paper 4, Volume 4, page 144, ministerial office resources. What policies are in place to ensure that ministers and ministerial staff cannot incur costs on office manager credit cards?

The Hon. S.C. MULLIGHAN: My understanding is that we have continued the same policy as the previous government where the office manager and the minister have credit cards and they are proactively disclosed. In terms of who incurs the expenditure, like any credit card, the person in whose name it is is responsible for the expenditure. If the assertion is that ministerial staff are saying, 'Can you go out and get this one for me?' I am not quite sure that is the way it works.

The Hon. D.G. PISONI: Just for clarity on that, minister, are you saying that if a minister is entertaining or going overseas or going to regional South Australia that all the expenses they incur will be on the minister's credit card?

The Hon. S.C. MULLIGHAN: No, that is not what I am saying.

The Hon. D.G. PISONI: What credit cards will be used in order to manage that?

The Hon. S.C. MULLIGHAN: I do not know. I have not undertaken one of these trips yet. I think the expectation is that we use, for example—what was the bloke's name? He used to be the Liberal federal treasurer (of the party, I mean, not of the parliament). He ran the travel company that you guys awarded the contract to. QBT services, I think. We used to have Carlson Wagonlit, and that was not renewed. It was Helloworld and QBT travel. They got the contract, so we are obliged to use them as the across-government provider.

The Hon. D.G. PISONI: There are other expenses.

The Hon. S.C. MULLIGHAN: Yes, that is right.

The Hon. D.G. PISONI: There are hotel expenses and there are expenses that you incur with meals or entertaining members. What is the expectation of whose credit card will be used for paying for those expenses?

The Hon. S.C. MULLIGHAN: The people who are on the trip, I would assume.

The Hon. D.G. PISONI: So if the minister is entertaining relevant stakeholders, for example, and a member of the department is there with them, or somebody from their ministerial office, say an MLO, what is the expectation of whose card will be used to pay for that?

The Hon. S.C. MULLIGHAN: That is a hypothetical.

The Hon. D.G. PISONI: No, it is not. It happens often when ministers and CEOs, for example, might be at the same event.

The Hon. S.C. MULLIGHAN: Well, no. You framed your question in the future and the standing orders preclude the consideration of a—

The Hon. D.G. PISONI: What is the expectation of which credit cards are used for expenditure for things the minister attends?

The Hon. S.C. MULLIGHAN: There are some expenses that are pre-booked and prepaid. There are some expenses that are incurred—

The Hon. D.G. PISONI: Okay, let's start with that one. Whose credit card will be used for those, if it is something for the minister?

The Hon. S.C. MULLIGHAN: I do not know because I have not gone on one of these trips yet.

The Hon. D.G. PISONI: What is the expectation?

The Hon. S.C. MULLIGHAN: The expectation is that we have to use the firm that your government awarded an exclusive travel contract to.

The Hon. D.G. PISONI: No, this is about paying for—

The Hon. S.C. MULLIGHAN: Yes, I understand the question and I am trying to answer it.

The Hon. D.G. PISONI: No, you do not.

The Hon. S.C. MULLIGHAN: You do not need to talk over the top of me.

The Hon. D.G. PISONI: Either you do not understand the question or you are deliberately—

The Hon. S.C. MULLIGHAN: No, I understand the question.

The Hon. D.G. PISONI: —not answering the question.

The Hon. S.C. MULLIGHAN: I am compos mentis to answer the question.

The CHAIR: Can an opportunity be given to answer the question?

The Hon. S.C. MULLIGHAN: I am going to provide an answer, and I am going to do it without you interrupting me. If that is not to your satisfaction I will not answer at all. So can I have the opportunity to answer the question? Silence. Okay, well, next question.

The Hon. D.G. PISONI: You do not ask me questions, I ask you questions. We ask you questions, you do not ask us questions

The Hon. S.C. MULLIGHAN: You ask me a question and then you talk over the top of me, so you clearly do not want the answer. I asked if you would refrain from talking over the top of me and I was met with a stony, Tony Abbott-like Channel 7 interview silence that was awkward for a long period of time, so I asked whether we could move on to the next question.

The CHAIR: Today, we have had a lot of questions and the Treasurer has been given an opportunity to answer those questions. I think it is just a matter of courtesy, if a question is asked, to give the Treasurer the opportunity to answer, and then feel free to follow up. It is not hard, it is not complicated; it is just basic courtesy.

The Hon. D.G. PISONI: Thank you for your advice, Chair.

The CHAIR: You are welcome.

The Hon. D.G. PISONI: Would you like me to repeat the question?

The Hon. S.C. MULLIGHAN: Repeat away.

The Hon. D.G. PISONI: The question is: if an event, whether that be an event where you might be taking stakeholders out for a lunch meeting or a breakfast meeting or a dinner meeting, for example, or whether it be entertaining stakeholders or people who have hosted you overseas, for example, or whether it be meeting with other relevant stakeholders, unions or businesspeople, and that booking was made in advance, what is your expectation, as the Treasurer, as to whose credit card should be used for making that payment?

The Hon. S.C. MULLIGHAN: It could be one of a number of different circumstances. You use the term 'pre-booked', so if you pre-book your flight, we have spoken about using the government's exclusive travel services contract. If we are pre-booking accommodation, for example, at a hotel, that may or may not be paid for in advance. It might be billed back to the office. It might be paid for by the office manager, for example, or it might not be. It might be pre-booked, but it might be paid on check-in or after check-out.

If you have pre-booked a hotel and that is the venue by which you might be holding one of these breakfast meetings or other functions or so on, it may be paid for at the time or it may be paid for after the fact as part of the total hotel bill, which is either paid at the time—on check-out, for example—by the minister or by another attendee of the travelling party, or it might be billed back to the office and it might be paid for by the office manager. Any of those scenarios or indeed a variation that I cannot think of off the top of my head could well occur.

Mr COWDREY: What is the expenditure on office manager credit cards? Are these consistent across government?

The Hon. S.C. MULLIGHAN: They will not be consistent across government because each office has its own office manager. They have their own level of staffing and resourcing and requirements and tasks, and so the level of expenditure probably will not be the same. I can easily imagine, for example, that Minister Brock might incur more intrastate travel than I might because he is the Minister for Regional Roads, so he might incur more expenditure on his own or office credit cards than I would. He is spending lots of nights out of the city or out of his electorate because he is spending time in regional communities. My understanding is that it is all proactively disclosed. Once it goes up on the relevant website, you will be able to interrogate it and make of it what you will.

Mr COWDREY: Have changes been made to the policy regarding purchasing alcohol and credit cards that was introduced by the former government?

The Hon. S.C. MULLIGHAN: I remember there was some, pardon the pun, song and dance made by the previous Premier about banning the use of taxpayers' money for the purchase of alcohol, which certainly was not consistent with what some of us witnessed over the last four years. Nonetheless, I am not aware that there have been any changes to any policies regarding—

Mr COWDREY: How many public servants are employed in your office on an FTE basis?

The Hon. S.C. MULLIGHAN: Is that not disclosed in the Agency Statement?

Mr COWDREY: It is. I would like your confirmation.

The Hon. S.C. MULLIGHAN: In Budget Paper 4, volume 4, page 144, there is $2.4 million allocated next financial year and 14 FTEs. It seems the lucky number is four.

Mr COWDREY: How many of those 14 are political staffers, Treasurer?

The Hon. S.C. MULLIGHAN: I will come back to you with that detail.

Mr COWDREY: How many public servants are seconded to your office, Treasurer?

The Hon. S.C. MULLIGHAN: I think we have two MLOs (ministerial liaison officers), but if there are any others, I will include that in the response as well.

The Hon. D.G. PISONI: Are you able to provide how many of the political staff are paid at senior adviser level?

The Hon. S.C. MULLIGHAN: Their remuneration is disclosed—in fact, I think it already has been, has it not—in the Government Gazette, so that information is in there.

Mr COWDREY: Treasurer, Budget Paper 3, page 51, dividend to government: can you please explain further detail behind the sharp increase in the dividend to the government for financial year 2022-23, rising from 57.7 in the past financial year to $139.1 million this financial year? This is regarding SA Water. The footnote states that the increases from 2022-23 mainly reflect revenue received by SA Water for third-party works for the Department for Infrastructure and Transport for the Victor Harbor Road and Main South Road projects.

The Hon. S.C. MULLIGHAN: I might have to see what further information I can provide you there. This may not be right, but my vague recollection is that when we do these road projects, both SAPN and SA Water are utility providers that we obviously have to provide money to to relocate services and it may be reflective of that. We undertake the works and pay for them and then we donate them to SA Water as contributed works and that is reflected in that manner in that line, as I understand it.

Mr COWDREY: Can the minister confirm whether or not he will be making changes to the regulatory asset base via a pricing order as part of the SA Water 2024-28 regulatory period process?

The Hon. S.C. MULLIGHAN: Firstly, that would be a hypothetical question because it is in the future, and secondly, it would be something that falls within the responsibilities of, in the first instance, the Minister for Water, the Deputy Premier, but I do not think I have received any advice about the next pricing period other than we are likely to have to do what the previous Liberal government did and that is somehow make some provision for the remainder of the cost of works for the CWMS upgrade in the north-eastern suburbs.

Mr COWDREY: I refer to Budget Paper 4, Volume 4, page 147. What is the government's plan for replacing the Masterpiece accounting software?

The Hon. S.C. MULLIGHAN: Like all government ICT projects, I am confident it will go swimmingly.

Mr COWDREY: I did not pick up the sarcasm.

The Hon. S.C. MULLIGHAN: I think our expectation is that we have to put a project team together and go out to market and replace this system in the coming years. That line that you make reference to anticipates that we estimate completion in June 2025. Like the total project cost, I am sure that will be delivered to the letter.

Mr COWDREY: Do you have a time line at all for the project?

The Hon. S.C. MULLIGHAN: I think, based on the department getting its project team together, scoping the work and going out to market with an understanding of what is currently available on the market for this sort of system, that is the estimate at June 2025. My facetious comments aside, these projects are inherently complex and difficult and subject to really significant amounts of risk, not just in terms of the procurement but also in the implementation, because even after you have procured a product you are effectively trying to install it at the same time that you are running the legacy system side by side.

My experience—and it is not as extensive as that of other people in this room—is that that rarely goes to plan. There have been successful ICT projects that Treasury has managed before, for example, the e-Conveyancing system, but they are not the majority of the experience across government over the last 30 years of ICT replacement projects.

Mr COWDREY: What is the estimated cost for the project at this point in time?

The Hon. S.C. MULLIGHAN: It gets better. This is the cost of the existing licensing arrangement. This is not the estimated total cost of what a replacement system would be. I think once we go out to market and we have a better sense of that, that might find its representation in perhaps a subsequent year's budget papers.

Mr COWDREY: Has there been an allocation made over forward years in anticipation of this project being delivered?

The Hon. S.C. MULLIGHAN: My understanding is that we are holding some funds centrally for that purpose, but that is being held in contingencies, and for obvious reasons of market sensitivity we are not disclosing how much that is.

Mr COWDREY: Can I move to Budget Paper 4, Volume 4, page 183, administered items. Would the Treasurer support a review of the local government disaster recovery assistance arrangements to more equitably support councils in claiming disaster relief funding?

The Hon. S.C. MULLIGHAN: I am not going to say yes or no to that without having a better understanding of what the complaint is with the current system. If local governments have a concern about them having insurance arrangements or underwriting arrangements from the state government, then of course we welcome that engagement with local government to get to the bottom of what their concerns are.

Mr COWDREY: Budget Paper 4, Volume 4, page 179, again administered items: will the government support the introduction of EVs in the community by expanding the application of the EV subsidy scheme to local government fleet purchases?

The Hon. S.C. MULLIGHAN: Sorry, are you looking at the top line, electric vehicle subsidies?

Mr COWDREY: Yes.

The Hon. S.C. MULLIGHAN: We have committed to continuing all of the electric vehicle support arrangements, if I can put it like that, that were in place by the previous government except for the program which provided $2,000 grants for—and this is not the right term, but smart chargers for people who got EVs in their private homes. We are not continuing with that element of it, but we are continuing with all of the other provisions of support from the previous government for the fast-tracking/better rollout of EVs or greater penetration of EVs into the private vehicles fleet.

Certainly, we would like to do far more than what was achieved previously in the last four years in terms of EV penetration into the state government fleet, but current market conditions are making that pretty challenging at the moment. I think whatever that Wheels Car Of The Year was, the Hyundai EV6 or something—

Mr COWDREY: It is not a question best directed to me, unfortunately.

The Hon. S.C. MULLIGHAN: There is a two or three-year waiting list for that vehicle at the moment, and electric vehicles are impacted like every other class of vehicle that is currently on the market, but in some cases disproportionately more so. Anyway, once market conditions settle down, we would hope to do far more when it comes to EV penetration of the state government fleet.

Mr COWDREY: In Budget Paper 3, page 35, table 3.3, taxation, land tax revenue for public land increases by 4 per cent year on year between 2021-22 and 2022-23. Land revenue relating to private land increases by 4 per cent year on year between 2021-22 and 2022-23? Why does the revenue relating to public land increase by almost three times that for private land between 2022-23 and 2023-24?

The Hon. S.C. MULLIGHAN: There are a couple of things happening here. As part of the previous government's land tax changes, the extraordinary impact of the aggregation changes in getting more land tax revenue in the end had to be counterbalanced with very aggressive cuts to the land tax rate at the very top end, in order to assuage the Property Council. The value of those cuts at the very top end, for people who own more than $1 million worth of taxable land, has on my understanding been more generous than what was originally anticipated.

As for the gradual increase going forward for private land, particularly at the end of the forward estimates, I am guessing that that would reflect what a longer term estimate of growth in land values would be. In terms of the intervening fluctuations between 2022-23 and 2023-24, where it drops from $391 million to $387 million, I am not sure if we have a particular view about—there is an explanation at the bottom of page 37 on what is driving these changes. In terms of the public land tax, I am not sure whether that is because of a revaluation that occurs between one financial year to the next.

Mr COWDREY: It is a fairly significant increase.

The Hon. S.C. MULLIGHAN: It is a significant increase. Perhaps I can leave my answer as: at this point in time we understand it to be something to do with how the agencies are valuing their land holdings. If it is something different from that, I will bring back the particulars in an answer, unless you have further questions you want to ask on it.

Mr COWDREY: I move to Budget Paper 4, Volume 4, page 145, workforce summary. What new positions are being created within your department during 2022-23?

The Hon. S.C. MULLIGHAN: We can certainly provide that at the end of the financial year comprehensively. In terms of whether we have plans to create new positions in the coming financial year—

Mr COWDREY: There is a budget for 35 FTEs as a net increase.

The Hon. S.C. MULLIGHAN: From 1,471 to 1,506 you mean? I will come back to you with an answer on that.

Mr COWDREY: Is this net number counteracted by any cuts as well?

The Hon. S.C. MULLIGHAN: That would be reflective of our FTE cap, including that reduction of $4 million-odd a year in 2022-23, but as for the actual positions and the need for the increase, I will come back to you on that. You can see the reconciliation underneath the machinery of government changes, but that does not provide an answer to the specific question you are asking, so I will come back to you with some detail on that.

Mr COWDREY: How many TVSPs were accepted last financial year, and how many have you forecast to be taken up this financial year?

The Hon. S.C. MULLIGHAN: Just to come back to your previous question—and again I will provide you with more detail on this—part of that 35 includes an increase in the number of FTEs in Super SA. They have been expanding their workforce over the last two years and intend to do it again next financial year because of some of the changes in operations that they are undertaking at the moment relating to the, for want of a better term, limited public offer of superannuation services that were subject to legislation in the last parliament. As for the final reconciliation of that, I will come back to you with the details.

Mr COWDREY: Can you provide those details by branch?

The Hon. S.C. MULLIGHAN: By branch if I can, yes. Also, I think your question was about TVSPs. I do not know that we have a year-to-date brief on it. We are trying to find those details. In terms of how many we plan, I do not know that we can give you a number on that, because it is highly reliant on people being interested in taking them up. In terms of year to date, depending on when we need to get the questions back—

Mr COWDREY: I appreciate that you probably have a forecast for budgeting purposes or a target.

The Hon. S.C. MULLIGHAN: We have four in the current financial year, 2021-22. I guess, concurrent with our earlier answer on agency savings and how they are going to be achieved, I am told there is no specific target or number of TVSPs that we are seeking for the 2022-23 financial year, but that would be something we would have at the end over the course of the year or at the end of the next financial year.

Mr COWDREY: Moving to Budget Paper 4, Volume 4, page 147, investing expenditure summary: what is involved in this year's minor capital works and equipment program?

The Hon. S.C. MULLIGHAN: I assume it would be those regular office-type expenditures: accommodation costs, lighting upgrades, chairs, refurbishments, IT improvements and upgrades, as I understand it.

Mr COWDREY: Does the government have any plans to replace the RevenueSA Rio system?

The Hon. S.C. MULLIGHAN: At this point in time I do not think so, but if that is not correct I will come back with a corrected answer.

Mr COWDREY: What is the annual cost of running that program?

The Hon. S.C. MULLIGHAN: Do you mean in terms of an operating cost rather than just the capital spend that is represented here?

Mr COWDREY: Yes.

The Hon. S.C. MULLIGHAN: I am not sure we would have that detail with us, unless someone has it to hand quickly. Perhaps I can take that on notice, if you like.

Mr COWDREY: Yes. I have a few more on that line, so perhaps getting a brief would be helpful.

The Hon. S.C. MULLIGHAN: If you want to ask them, if I can answer them, I will. If I need to keep taking them on notice, I will indicate that.

Mr COWDREY: Sure. How many people are employed to support the system?

The Hon. S.C. MULLIGHAN: I do not have the operating spend. I only have the investing spend, which is what is represented in Budget Paper 4. Did you ask how many people are supporting that?

Mr COWDREY: Yes.

The Hon. S.C. MULLIGHAN: I do not have that with me, but I will come back to you with that as well.

Mr COWDREY: Perhaps I will put a few more that you can take on notice in that regard.

The Hon. S.C. MULLIGHAN: Sure.

Mr COWDREY: How much is spent on Fujitsu to maintain the system? Has Fujitsu identified any risks to the system? Can you explain the 70 per cent decrease in the 2022-23 budget for the Rio system? What is the potential impact on services as a result of this?

The Hon. S.C. MULLIGHAN: I will come back to you with all of that.

Mr COWDREY: I will shift to Budget Paper 4, Volume 4, page 148, Port Bonython land and market process. Can you provide the committee further information regarding the status of the project?

The Hon. S.C. MULLIGHAN: Yes. As you are probably aware, the previous government went out to market for an EOI process and then there has been a further process of shortlisting of some proponents. There has been quite a bit of work undertaken, as I understand it, with the team managing that procurement—the commercial and economics branch—in order to try to accommodate those different proponents so that as many of them can achieve success as part of that tender as possible.

It is quite a significant parcel of land and the various proponents have not necessarily sought all of the land. They have sought a portion of the land for what it is that they want to do. In total it is 2,000 hectares, so there is a bit of master planning might be a more fulsome description of it, but it is basically a planning process to try to accommodate as many of these respondents as possible, as long as they meet the terms of the procurement, so that as many of them as possible can have the opportunity to do what they propose to do on that site in conjunction with other participants.

There is then the commitment that both parties gave at the last federal election to provide $70 million of funding to the location there for, I guess, common infrastructure, you could call it. The previous state Liberal government had $30 million set aside to provide some matching funds for that and we have retained that. The $70 million has been committed to and we expect that there will be a further up to $40 million of private investment so that it becomes a $140 million tripartite co-investment there.

With that money in mind, there is some work going on about identifying the right common infrastructure so that all the proponents have what they need for the various proposals in a form that means they can all take advantage of it as they need to. For example, it includes roads, electricity transmission, infrastructure and potentially also some upgrades to wharfage infrastructure.

Mr COWDREY: Who is the project lead?

The Hon. S.C. MULLIGHAN: The project lead?

Mr COWDREY: Agency.

The Hon. S.C. MULLIGHAN: Treasury is managing the approach to market and interface with the bidders and then there is also a cross-agency working group for the government's Hydrogen Jobs Plan to make sure that the two processes are coordinated.

The CHAIR: The allotted time is up. There being no further questions, I declare the examination of the portfolio of the Department of Treasury and Finance to be completed. Thank you for your contributions.

Sitting suspended from 11:00 to 11:16.

Departmental Advisers:

Mr R. Persse, Under Treasurer, Department of Treasury and Finance.

Ms T. Pribanic, Deputy Under Treasurer, Department of Treasury and Finance.

Ms J. White, Acting Chief Executive Officer, South Australian Finance Authority.

Mr A. Kennedy, Director, Treasury Services, South Australian Finance Authority.

Ms D. Bennett, Chief Executive, Super SA.

Mr A. Mills, Chief Executive, HomeStart.

Ms J. Townsend, Chief Executive, Funds SA.

Ms J. Holmes, Commissioner of State Taxation, RevenueSA.

Mr B. Naylor, Chief Financial Officer, HomeStart.

The CHAIR: Welcome back. The portfolios to be examined are the South Australian Finance Authority, Funds SA, RevenueSA, Super SA and HomeStart. The minister appearing is the Treasurer. I advise that the proposed payments remain open for examination and call on the minister to make a statement, if he so desires, and to introduce the advisers. I call on the lead speaker for the opposition to make a statement, if he so desires. I call on members for questions.

The Hon. S.C. MULLIGHAN: There has just been a change of personnel. With me here at the front table, I have Andrew Kennedy, a director at SAFA, and also Jenny White, Acting Chief Executive of SAFA, and Rick Persse continues. I have no opening statement.

The CHAIR: There is no statement sought from either, so we can commence.

Mr COWDREY: Treasurer, what strategies is SAFA implementing to reduce the impact of interest rate rises?

The Hon. S.C. MULLIGHAN: Generally speaking, there has been a change, as I understand it, of debt management policies, particularly in the last two years, to ensure that our borrowing program in each financial year is being done in a way to balance the increasing costs of government borrowing in each financial year but over the next four years as much as possible. There is a need in this year, for example, to—essentially, the debt that we raise is a mix of short-term and long-term debt and the average duration of the debt, there has been a change of policy now so that we can have periods longer than the previous maximum, which I think was five years.

Since the 2019-20 financial year, the weighted duration of the debt has been increased commensurately. Rather than having a maximum total position going out to 15 years, that has been extended to 20 years and SAFA is considering extending that out even further, making sure that we are able to take advantage of lower cost debt, if I could put it like that, where possible, while making sure we can still meet the short-term financing needs of government through ongoing raises during the course of each financial year.

Mr COWDREY: When was that policy changed?

The Hon. S.C. MULLIGHAN: I will check. It was either 2019-20 or 2020-21, but leave it with me. I will see if I can get that.

Mr COWDREY: Is there a projection as to when SAFA will readdress that policy again?

The Hon. S.C. MULLIGHAN: My understanding is that the SAFA Advisory Board approved a change in policy in 2020, and that was endorsed by my predecessor in January 2021. As for whether it may be changed again in the future, perhaps I will seek some further advice and come back to you. Generally speaking, SAFA's policies and procedures are under constant review, but as to whether any formal change is made to a policy there has not been any further change since that date.

Mr COWDREY: Are you able to outline in more detail SAFA's current borrowing profile?

The Hon. S.C. MULLIGHAN: I think in excruciating detail. As of 7 June, a week or so ago, SAFA had $27.8 billion of long-term debt on issue in fixed and floating rate format with maturities from September this year out to May 2040. The current duration of SAFA's long-term debt on issue is 5.23 years. SAFA targets the maintenance of approximately $2.5 billion in short-term debt to manage day-to-day liquidity. SAFA's current short-term debt profile is $2.42 billion of commercial paper at 7 June, half a billion dollars of AONIA RFNs, for a total of $2.92 billion.

Mr COWDREY: What is the proposed program for 2022-23?

The Hon. S.C. MULLIGHAN: I can tell you that whereas we forecast our long-term debt to be $27.8 billion, my first answer, at 30 June 2022, that is forecast to be $30.7 billion at the end of 2022-23, so at 30 June 2023. We anticipate raising $6.6 billion during the course of 2022-23 and then of course some of that is offset through maturities that occur during the course of the year.

Mr COWDREY: What is the total cost to service funds?

The Hon. S.C. MULLIGHAN: You mean the net interest cost?

Mr COWDREY: Yes.

The Hon. S.C. MULLIGHAN: The net interest expense for—which year were you after?

Mr COWDREY: Both 2022 and 2023.

The Hon. S.C. MULLIGHAN: For the current financial year (2021-22) the net interest expense for the non-financial public sector—both the general government sector as well as the government trading enterprises—is $720 million. On the same basis, the net interest expense grows to $997 million.

Mr COWDREY: What is the average interest rate on both the FY 2022 program—the $6.6 billion worth of funds that are being sought this financial year—and the net impact, as an average interest, across the 2023 program?

The Hon. S.C. MULLIGHAN: I am not sure I can give you the figure going forward, because of course it will depend on what the markets are offering when we actually go to market. But I can tell you what it has been in the most recent past, if you like. For the 2019-20 financial year the average rate was 1.21 per cent, for the 2020-21 financial year it was 1.48 per cent and for the 2021-22 year-to-date it is 1.58 per cent. We estimate that it will continue increasing commensurately.

Mr COWDREY: How much of the $6.6 billion for 2022-23—has none of that been negotiated yet?

The Hon. S.C. MULLIGHAN: I understand that so far we have raised $200 million of the $6.6 billion. That was done in floating rate format.

Mr COWDREY: What is the size of the largest and the longest debt held by SAFA, and at what interest rate?

The Hon. S.C. MULLIGHAN: The largest one matures in July 2026, which is $3.54 billion, and the longest is out to May 2040, which is $1.003 billion.

Mr COWDREY: What is the cost to service the $3.5 billion debt at the moment, and what does SAFA estimate the cost to be when that is put back out to market?

The Hon. S.C. MULLIGHAN: The July 2026 amount that I advised you of previously, I am advised that was put to market in 2016—a 10-year bond at a fixed rate of 3 per cent. We cannot anticipate, when we go back out to market for that, what the rate will be. It will be what is offered by the market conditions at the time.

Mr COWDREY: What is SAFA's financial performance for 2022-23?

The Hon. S.C. MULLIGHAN: I think they are expecting a total profit of $41.2 million.

Mr COWDREY: What is the expected dividend payment?

The Hon. S.C. MULLIGHAN: I understand the dividend payment is $51.3 million, which represents both the total profit figure that I outlined plus an additional payment reflecting a prior year obligation as well. It is $15.6 million for 2020-21.

Mr COWDREY: Treasurer, who are the main recipients of funding from the SA Venture Capital Fund?

The Hon. S.C. MULLIGHAN: I will have to take that on notice. I do not think I have a briefing on that in front of me today.

Mr COWDREY: Do you know how many businesses the fund has assisted to date?

The Hon. S.C. MULLIGHAN: I do recall seeing something in my incoming government briefs on this. There have been several recipients. I am sorry; I just do not have that detail in front of me, but I am happy to take it on notice and provide that detail.

Mr COWDREY: Would you like me to read into Hansard—

The Hon. S.C. MULLIGHAN: Yes, if you have further questions, absolutely.

Mr COWDREY: How many businesses have been investigated for funding? How many businesses have actually been funded? How much has been paid in medical malpractice payouts for 2021-22 and what is it projected for 2020-23?

The Hon. S.C. MULLIGHAN: The last one we might be able to answer. I have a figure from 1 July 2019 to 30 April 2022: SAFA paid medical malpractice settlements totalling $106.6 million. That is net of the deductible that SA Health pays on 21 significant claims. I do not have a specific financial-year-to-date figure for the current financial year, but I can get that for you.

Mr COWDREY: Can you provide that on notice by financial year, as opposed to the three-year aggregate?

The Hon. S.C. MULLIGHAN: Yes.

Mr COWDREY: Do you have a projection for 2022-23?

The Hon. S.C. MULLIGHAN: There are certainly claims that are in and being assessed and being managed, and we will see what information we can provide you about the number of those. I am not sure we would be able to provide you a dollar figure related to those, because obviously most of those are negotiated outcomes, but what information we have we will try to provide. We will have a 30 June assessment of our position, and we will have some level of forecasting or modelling, and we will see what of that we can provide. I think we have 30 days or six weeks after today to provide the response, so hopefully we can incorporate that into our response on this.

Mr COWDREY: Just for completeness in terms of taking questions on notice, can you provide us also with the actual number of claims for those years that we have discussed as well?

The Hon. S.C. MULLIGHAN: For the claims that are currently in, yes. We might not have an accurate projection of how many might come in in future years, obviously, depending on what happens. Here we go; I have located something. We currently have 58 claims under management for medical malpractice.

Mr COWDREY: Are you able to outline in any further detail the major claims over the last 12 months?

The Hon. S.C. MULLIGHAN: In fact, I think I read about one in the paper the other day. Specifically for medical malpractice?

Mr COWDREY: Yes.

The Hon. S.C. MULLIGHAN: I am advised that the number of claims is largely consistent with what we have had in previous years for the current financial year, largely but not exclusively related to the sorts of claims that we have traditionally had—so for problems with birthing process or misdiagnoses of people who have been in the public health system, for example—but we will see what further information we can provide you.

Mr COWDREY: Who is the scheme actuary?

The Hon. S.C. MULLIGHAN: Finity.

Mr COWDREY: When was the last time that Finity was consulted by SAFA?

The Hon. S.C. MULLIGHAN: They do a valuation of the claims on an annual basis and also provide advice on an annual basis for premium setting purposes.

Mr COWDREY: When is that done on a yearly basis?

The Hon. S.C. MULLIGHAN: The valuation occurs post 30 June and the pricing is done at the beginning of the calendar year, so roughly six months afterwards.

Mr COWDREY: November, December?

The Hon. S.C. MULLIGHAN: February.

Mr COWDREY: What is the average premium for builders under the builders indemnity insurance fund in FY 2021-22 and what is it projected to be in 2022-23?

Mr FULBROOK: Can I interrupt? I am just trying to find what budget line you are referring to here.

Mr COWDREY: Budget Paper 4, Volume 4, page 154.

The Hon. S.C. MULLIGHAN: There is a different premium depending on the size of the project. My recollection is that the premium has increased by 4 per cent. I am not sure I have the premium amount in there, but I will provide that to you on notice.

Mr COWDREY: You will take that on notice, providing a breakdown by business size?

The Hon. S.C. MULLIGHAN: Yes, it is done on the size of the building job, I think. Yes, we will provide that.

Mr COWDREY: How many premiums have been written in the financial year 2021-22 and what is the forecast for 2022-23?

The Hon. S.C. MULLIGHAN: We have had year to date $8.7 million of premium revenue from building indemnity insurance. Did you want to know the number of policies it covers?

Mr COWDREY: Yes.

The Hon. S.C. MULLIGHAN: I might have to come back to you on that.

Mr COWDREY: Are you able to provide a projection for the next financial year?

The Hon. S.C. MULLIGHAN: We might be able to. If we can, we will.

Mr COWDREY: When does the contract for QBE as insurance provider expire and are there any details regarding renewal of the contract?

The Hon. S.C. MULLIGHAN: I understand that the current arrangement with QBE finishes at the end of this financial year, and we are in the final stages of a contract extension for a further two years.

Mr COWDREY: Is there any risk to the fund should that contract not be settled in the coming—

The Hon. S.C. MULLIGHAN: There would certainly be a risk to taxpayers, because we underwrite it, but I do not think we have any expectation that there will be any issue. I understand the agreement is in preparation for execution, so the parties have largely agreed the continuation of it.

Mr COWDREY: It will be executed prior to end of financial year?

The Hon. S.C. MULLIGHAN: Yes.

Mr COWDREY: And does that contract continue the same broad arrangement that has been in place previously, in terms of conditions and payments?

The Hon. S.C. MULLIGHAN: Other than the change in premium, yes.

Mr COWDREY: Has the Treasurer been advised of any risk to premium increases due to potential insolvencies in the building industry?

The Hon. S.C. MULLIGHAN: Only anecdotally. I think it is a concern. We are not the only state that has some sort of involvement in this provision of insurance and given the extraordinary pressure that the industry is under for various reasons, it remains something that we are concerned about.

Mr COWDREY: Has any consultation been undertaken by SAicorp with the housing industry regarding the building indemnity fund and its sustainability?

The Hon. S.C. MULLIGHAN: SAicorp meets with the building industry associations on a quarterly basis and this is one of the matters which is discussed. I also have regular ongoing contact with them and it has certainly been a point of discussion in my discussions as well since coming to government.

Mr COWDREY: Has the housing industry expressed any concerns either with you or SAicorp about the level of premiums?

The Hon. S.C. MULLIGHAN: Not with SAFA and not with me. I think there is a general understanding of the pressures that the industry is under, the fact that we are in an unusual circumstance and we have been for quite a number of years now where the government is having to play an active role underwriting the insurance. I think there is a general understanding of the pressures that the industry is under.

The Hon. J.A.W. GARDNER: Can I ask if we can have a list of the current SAFA loans to non-government schools?

The Hon. S.C. MULLIGHAN: We should be able to provide that, yes.

The Hon. J.A.W. GARDNER: Sorry, just while on that: obviously the schools, the amounts and when they are due to be finished paying them off.

The Hon. S.C. MULLIGHAN: I think I have had to execute a few, as in give effect to a few, that were agreed by the previous government since coming in but I am pretty confident that we will be able to provide a list.

The Hon. J.A.W. GARDNER: Just one last question, when is the next round of those loans due to be identified or when will schools be able to apply for the next round of those?

The Hon. S.C. MULLIGHAN: I will have to take that on notice, and you would know this better than me, but my recollection was that the previous Labor government had a scheme in place, and there was a round or maybe even more than one round of that, which was undersubscribed. The previous Liberal government announced a scheme—I cannot remember which budget it was in, maybe the 2020-21 budget a couple of years ago, or 2020—and there has been one, maybe two rounds, but the pool of funding which the previous Liberal government set aside has not been fully subscribed. I have to say, other than giving effect to the grants that were in the process of being negotiated at the time of the election, I have not given any thought to issuing further rounds, but I am happy to come back with further advice on that.

The Hon. J.A.W. GARDNER: Maybe I can just clarify the question further, or add one more question then. When the program was announced both by the original Labor government and then extended again by the subsequent Liberal government, to be clear, it was always identified that there would be a number of rounds. It was not expected that all of the funding would be subscribed in one amount, so can I confirm that the remaining amount in that fund under the current settings, once the loans executed by the minister have been completed, remain for the purposes of future rounds for non-government schools to apply for?

The Hon. S.C. MULLIGHAN: I will be honest, I have not given it any consideration. My recollection is that there were one or two rounds under the previous Labor government and one or two rounds under the previous Liberal government, both undersubscribed. I do not think it has a material impact on our general government outcomes in providing those loans.

If there is a need for it, if it is identified by independent schools, if they would like to see more of this, or there are people who have changed circumstances now where they feel like they can apply for a loan whereas perhaps previously they were not progressed enough in their own plans, or they did not have their finances in a shape where they wanted to take on this arrangement, if they would like to do that, I am happy to consider that.

Again, the two of you would know this better than me, but there has been an intrinsic barrier to some of this and that is with the Catholic schools feeling like they are not as able to take them up as some of the other independent schools have, because of the unique arrangements that some of those schools have, which is regrettable because it is a large part of the school system, but we are happy to keep an open mind to doing more on this.

Mr COWDREY: Have there been any instances over the current financial year of builders not taking out cover notes?

The Hon. S.C. MULLIGHAN: My understanding is that there has been one incident, which is being investigated by Consumer and Business Services. That is the advice I have.

Mr COWDREY: Has SAicorp been forced to fund the shortfall in the event of a builder being declared bankrupt?

The Hon. S.C. MULLIGHAN: The policies provided for builders indemnity insurance have fixed maximum amounts, so to the extent that a policy is successfully claimed on they can claim up to that maximum fixed amount.

Mr COWDREY: To rephrase the question: how many claims over the previous financial year?

The Hon. S.C. MULLIGHAN: I understand we have had 39 in the current financial year, and I am further told that that is a relatively consistent number with the previous year.

Mr COWDREY: Has the government undertaken any work to determine exposure, should there be an increase in building companies going bankrupt?

The Hon. S.C. MULLIGHAN: I am advised that that forms part of the annual premium setting process, where they consider not just the state of play of the industry but also some of the broader economic prevailing conditions as well. That informs, I guess, the valuation of future liability and then the premium that is set in order to reflect that. In addition to that, there is the quarterly catch-up SAFA has with the housing industry bodies and then the ongoing dialogue we maintain at a political level as ministers with the industry.

Mr COWDREY: Has SAFA got a view as to whether that exposure has increased or decreased?

The Hon. S.C. MULLIGHAN: Generally speaking, increased because of the rise in premiums that I mentioned earlier, but beyond that not to any extent further than has been reflected in the premium pricing. So 4 per cent is a higher than normal average increase in premium. It was 2.7 per cent the previous year. If nothing else that increase in premium demonstrates, I guess, a growing concern.

Mr COWDREY: One final question for SAFA: what is the current status of the renewal of the government's reinsurance program?

The Hon. S.C. MULLIGHAN: My understanding is that the reinsurance has to be settled by 31 October this year, and that process is largely in train.

Mr COWDREY: Have there been any cost increases on previous years?

The Hon. S.C. MULLIGHAN: I am advised that there was a notable increase in the previous year's renewal, and in particular what was driving that was the prevalence of natural disasters. But it is the feeling of SAFA, I am advised, at the moment that the market has stabilised, and we do not anticipate any significant problem in renewing that on 31 October. If that changes, I will update the advice in a further response. The advice to date is—

Mr COWDREY: So 22 October?

The Hon. S.C. MULLIGHAN: On 31 October this year.

Mr COWDREY: Thank you.

The Hon. S.C. MULLIGHAN: I am joined by Dascia Bennett at the front table.

Mr COWDREY: The budget papers set out a roughly 43 FTE increase in terms of Super SA this year. Are you able to advise what these FTE will be tasked to achieve? This is in Budget Paper 4, Volume 4, page 155.

The Hon. S.C. MULLIGHAN: I understand this is part of an ongoing strategy that has been rolled out principally in the last two years to prepare for what was considered by the parliament in its last session before the new choice of fund arrangements. I am also advised that this reflects some additional resources for ICT and cybersecurity system upgrades, which is not unusual in the current context, but there has also been a strategy undertaken by the leadership and by the board to reduce the use of temporary staff and try to maintain permanent staff so that there is a high level of overall engagement and consistency in the services that are provided to members.

Mr COWDREY: Are you able to outline how many FTE are associated with each of those functions that you have mentioned—how many are dedicated to choice of fund, how many are dedicated to ICT, how many are dedicated to cyber?

The Hon. S.C. MULLIGHAN: Across those different functions—these are approximate numbers—I am advised that there are approximately 10 involved in the ICT cybersecurity efforts, there are 10 approximately in insurance services, there are approximately eight involved in the efforts for the choice of fund preparation and approximately five to 10 result from the change from use of fewer temporary staff and more ongoing staff. That does not add up to the 42 or 43 number you gave me before, but approximately that is basically the bulk of it.

Mr COWDREY: Who bears the cost for the additional staff? Is that borne by the members—

The Hon. S.C. MULLIGHAN: Everyone in this room and another 204,000 members.

Mr COWDREY: Yes, that I was suspicious of. Are fees going to need to increase to support this additional function?

The Hon. S.C. MULLIGHAN: My advice is that there is no strategy to increase fees in order to recover the higher cost of these staff.

Mr COWDREY: Can you confirm, as I think you have, that there is no general government revenue involved in offsetting any of the costs associated with the FTE increase?

The Hon. S.C. MULLIGHAN: You mean making a contribution from the general budget to Super SA for this?

Mr COWDREY: Yes.

The Hon. S.C. MULLIGHAN: No.

Mr COWDREY: This is linked to a question in the previous session, but the uptake in FTE for the whole of DTF was 35; obviously, this is the net 43—is the remainder of that difference being borne by DTF across other branches?

The Hon. S.C. MULLIGHAN: Yes, there is likely to be some swings and roundabouts across the different branches where some are increasing, like Super SA, and some are decreasing as well.

Mr COWDREY: What is the level of the membership reserve for this financial year and what is it projected to be in FY 2022-23?

The Hon. S.C. MULLIGHAN: Do you mean funds under management?

Mr COWDREY: Yes.

The Hon. S.C. MULLIGHAN: As of April 2022, funds under management is $35.56 billion.

Mr COWDREY: How is the increase in FTE—where are the savings being offset, or where is the funding for the FTE coming from if the result is not fees increasing for members?

The Hon. S.C. MULLIGHAN: I am advised that part of the cost is being met by a reduction in the use of temporary staff. Member for Colton, you were chairing last year's proceedings and you might remember I raised exactly the same issue and made the observation that the $10 million in additional employee expenses equates to something like $50 per member.

Mr COWDREY: Has there been a savings task attributed to Super SA this financial year?

The Hon. S.C. MULLIGHAN: I am advised the answer is no, or perhaps I should say not at this stage.

Mr COWDREY: Has there been any impact on the membership reserve fund, which I understand to be kept as fees paid by members as opposed to funds under management?

The Hon. S.C. MULLIGHAN: Is the question relating to those preserved members, so not active contributors in a sort of base accumulation scheme?

Mr COWDREY: Perhaps I will get some more information and come back. Is the Super SA ICAC investigation drawing to a close anytime soon?

The Hon. S.C. MULLIGHAN: My understanding is that the evaluation being undertaken by ICAC is drawing to a close. I have not received what that is. I am not sure that Super SA has.

Mr COWDREY: So you have no information in regard to a time line?

The Hon. S.C. MULLIGHAN: No, I do not know if imminent is too strong a word, but we are expecting it in the near future.

Mr COWDREY: Treasurer, do you have any idea how much the evaluation will cost taxpayers?

The Hon. S.C. MULLIGHAN: I have not been game to ask. No, I have not been provided with a figure. I think part of the cost is paid for in a similar way to the Auditor-General's activities where there is a charge to the agency that is in receipt of the attention. Part of it will be covered, I think, and if I have any further particulars I will come back to the committee, but my understanding is that part of it is paid for by the operating budget of the ICAC and part of it will be recouped from the agency that is being evaluated.

Mr COWDREY: Will the outcome be made public after it is received?

The Hon. S.C. MULLIGHAN: That will be, I think, up to the ICAC commissioner, but I do not have anything to suggest that it will not at this stage. I think, in the first instance, that lies in the hands of the commissioner.

Mr COWDREY: If I move now to the choice of fund rollout; is that on schedule?

The Hon. S.C. MULLIGHAN: My understanding is the current time line is for 30 November, and Super SA is on track to hit that target. I understand there was a previous earlier target for it to be given effect, but that was delayed for reasons relating to COVID and staffing availability in their capacity of getting systems up and running, etc.

Mr COWDREY: What is the time line or plan for the year ahead? What is looking to be achieved in the rollout?

The Hon. S.C. MULLIGHAN: From 30 November, I think, is the go-live date, and so for members who are seeking to take advantage of this new capacity then I am advised after that date is when they will be able to do it, so from 1 December I assume.

Mr COWDREY: Do you have a cost associated with what was required to be undertaken in terms of IT or other changes necessary within the organisation to deliver the choice of fund?

The Hon. S.C. MULLIGHAN: I do not think I have a singular number. I can get one for you. My understanding is that it has been significant. There has been a substantial increase in the last two or three years of expenditure of consultants and contractors, as well as additional staff that have come on board, for the purposes of this.

Mr COWDREY: Have all necessary IT changes been put in place?

The Hon. S.C. MULLIGHAN: My understanding is that there was a go-live system process which was undertaken at the most recent weekend and that the functionality so far has been effective, but it is really to make sure that the systems are in train for the capacity for it to be a service that people can take advantage of from 30 November.

Mr COWDREY: Is there anything else required to be undertaken by the organisation to be ready for 30 November?

The Hon. S.C. MULLIGHAN: I understand there is a new payment capability, which is required between Super SA and the ATO, which will go through some testing and demonstration to make sure that that can work appropriately, between now and 30 November. Then there is all of the client readiness communications efforts and promotions and that sort of thing which is being developed at the moment, so that everything is ready to go from 30 November.

Mr COWDREY: Has Super SA conducted any work to understand the impact on the organisation in terms of turnover from these changes?

The Hon. S.C. MULLIGHAN: I understand that some work was undertaken prior to approving this strategy, which anticipated a loss of membership of somewhere between 10,000 and 15,000 members. To put that into context, before these changes came into effect—I think it is in Budget Paper 4—there were about 214,000 members. So it is a reduction of that order.

Mr COWDREY: That is an impact in terms of members, but is there an impact in terms of a financial hit to the organisation, and what has that been quantified to be?

The Hon. S.C. MULLIGHAN: Do you mean in terms of both funds under management and available fee revenue in order to fund the organisation?

Mr COWDREY: Yes.

The Hon. S.C. MULLIGHAN: In a gross sense, yes, but it is anticipated that that will largely be offset by what is being called a limited public offer; that is, allowing people with dormant Super SA accounts—for example, people who might have worked in one of the public agencies who have since left but not done anything about their super—to opt back in and have their super managed by Super SA, even though they might not have active employment in the Public Service. As one cohort leaves, there is the anticipation of running a marketing campaign to attract old Super SA members to bring their other super back into their Super SA account and have it actively managed.

Mr COWDREY: Do you have any view on the reasonableness of that assumption?

The Hon. S.C. MULLIGHAN: I have ventilated it very well, in multiple Hansard excerpts, that I am not the biggest fan of this measure. My personal view is that there is a lot more risk to the organisation than there is reward. Notwithstanding that, Super SA has expended so much money, is so far down the path and has developed so much of its systems and operations, and legislation has been passed to give effect to this, in particular regarding choice of fund, that it is virtually too late to pull back on it now.

My problem with it is not so much that people have choice of fund, because I recognise that is where the community is at the moment, but my base concern, both personal and general as a minister and a member of parliament, is that we are the last jurisdiction around the country that enjoys tax-free status for our public sector superannuation scheme. We are lucky that we have not had a federal Treasurer, of either political persuasion, who, in a simple regulation change at the national level, has not removed our tax-exempt status. I remain concerned that us moving to a quasi-public/private superannuation model will raise the eyebrows and the interest of a future federal government, Labor or Liberal, and we may lose that tax-exempt status.

To give you an idea of what that means, the budget papers disclose that we spend $9 billion-odd in employee entitlements, and the superannuation guarantee amount is 10½ per cent of that. That is nearly $1 billion a year in superannuation payments that are not attracting a 15 per cent contributions tax at the moment. If we do get a 15 per cent contributions tax on that $900 million to $1 billion amount, that is a $100 million to $150 million per year hit to 200,000 South Australian superannuants. That is why I remained concerned about it and raised my issues with the legislation as it went through. Regardless, we are where we are.

Mr COWDREY: How is the government going to manage the Triple S scheme fund insurance?

The Hon. S.C. MULLIGHAN: I can tell you it will not be privatised on my watch.

Mr COWDREY: Has there been a revision of fees for the coming financial year in regard to the insurance related to the Triple S scheme?

The Hon. S.C. MULLIGHAN: I understand that this matter is currently being considered by the board—the pricing of the insurance products.

Mr COWDREY: Are the insurance fees subsidised by all members?

The Hon. S.C. MULLIGHAN: Currently across the scheme, yes, it is. That is my understanding.

Mr COWDREY: I am happy to move to HomeStart, if that is okay. Budget Paper 5, Budget Measures Statement, page 117, HomeStart Finance, Budget Initiatives, Low Deposit Home Loans: how many of the new homebuyer loans with a 3 per cent deposit does the government project will be written in 2022-23 and over the forward estimates?

The Hon. S.C. MULLIGHAN: I do not think we have a fixed projection on that. The election commitment we made was to provide an increase or a change to the product offering that is already being offered by HomeStart whereby some first homebuyers can receive a very low deposit home loan without incurring lenders mortgage insurance. There is an alternative loan product available, again a low deposit loan for people who are looking at building a new home or perhaps even purchasing a newly built home.

Our election commitment was to basically bring those two together. So similar to the eligibility criteria for the first-home buyer grant, if you are a first-home buyer and you are building a new home or purchasing a newly built home, you could get a 3 per cent low deposit loan with HomeStart, again, that does not attract mortgage lenders insurance. On my meetings with the chief executive and the chair, we reiterated our commitment to rolling that product out, but we have also asked HomeStart to look more broadly at what other opportunities there are to provide low deposit home loans particularly to first-home buyers so that they have better capacity to enter the market in what are very challenging conditions at the moment.

Mr COWDREY: Does the government project there to be an increase based on the change in product in terms of the total number of loans written next financial year and then moving forward?

The Hon. S.C. MULLIGHAN: What we had considered when we made the election commitment was that HomeStart, give or take, was approximately about $200 million below the lending cap at any one time and that there was enough capacity within HomeStart's lending cap, and the churn that HomeStart achieves with existing clients leaving the system and more clients coming in, that they would be able to write a number of loans, which effectively was that $200 million of capital available by the average of a first-home buyer home loan, which I think is about $350,000 to $400,000. If you divide that into $200 million, that would give you the capacity of what HomeStart could write without a change to its borrowing cap.

If we end up with a suite of products that are beyond what HomeStart currently offers and beyond what the Labor Party's election commitment was and there is appetite from HomeStart to change their lending cap, then we are happy to look at that to try to increase that number further.

Mr COWDREY: Does the product allow for shared equity as an option?

The Hon. S.C. MULLIGHAN: That would continue to be offered as a loan product, the current shared equity.

Mr COWDREY: But not in the 3 per cent product?

The Hon. S.C. MULLIGHAN: HomeStart has not got back to me yet, as minister, with what different products they want to offer. That is still being worked through by the staff and the board, and once that is done we will know whether that is going to be a feature of it as well. Our intention is to not change or undermine or remove any of the existing HomeStart products. It was to expand the range of products on top of what is already there.

Mr COWDREY: When does the minister anticipate receiving the advice from HomeStart and having the products be available to the market?

The Hon. S.C. MULLIGHAN: Hopefully in the coming weeks, so that we have something to publicly announce and start rolling out towards the beginning of the financial year.

Mr COWDREY: I refer to Budget Paper 4, Volume 4, page 175, still relating to HomeStart. How many staff are currently employed on an FTE basis at HomeStart?

The Hon. S.C. MULLIGHAN: There are about 116 FTEs at HomeStart as at May this year.

Mr COWDREY: What is the total remuneration package currently provided to the chief executive?

The Hon. S.C. MULLIGHAN: I am advised it is insufficient. Could I take that on notice and provide it subsequently?

Mr COWDREY: How many executive positions exist within HomeStart?

The Hon. S.C. MULLIGHAN: There are five executive contracts.

Mr COWDREY: What are the KPIs that HomeStart sets itself to achieve?

The Hon. S.C. MULLIGHAN: My understanding is that they are outlined in the annual report.

Mr COWDREY: I will rephrase: what are you anticipating the KPIs to be for the coming financial year?

The Hon. S.C. MULLIGHAN: Number of new loans, return on equity and cost to income ratio are the three main ones.

Mr COWDREY: You outlined churn in terms of how quickly products move through. Are you able to give us an understanding of the average length of loan through HomeStart and how this compares to the rest of the market?

The Hon. S.C. MULLIGHAN: Three to five years, depending on customer type, is the average duration of a loan, roughly similar to the general lending market. People will come into HomeStart, they will have three to five years and then they will go off to usually a more traditional lender, one of the big four, etc.

Mr COWDREY: But the average length of loan for one of the big four would be?

The Hon. S.C. MULLIGHAN: They anticipate it being similar, three to five years. We do not have access to their data.

Mr COWDREY: Who has been selected to provide marketing services to HomeStart?

The Hon. S.C. MULLIGHAN: We are out to market at the moment. I think the current agency is called Showpony, which is an Adelaide company, I am told. They are out to a market process for that at the moment.

Mr COWDREY: Is that tender available nationally or just to the South Australian market? What procurement process has been—

The Hon. S.C. MULLIGHAN: It is an open tender process. The tender documents, I am advised, are on the SA Tenders and Contracts website.

Mr COWDREY: What is the high-level budget for the marketing costs anticipated for the coming financial year?

The Hon. S.C. MULLIGHAN: I understand the media placement budget is approximately $1.15 million for the next financial year.

Mr COWDREY: How does that compare to the previous financial year?

The Hon. S.C. MULLIGHAN: It is an increase of approximately $150,000.

Mr COWDREY: What is the average turnaround time from loan application to execution?

The Hon. S.C. MULLIGHAN: I will take that on notice.

Mr COWDREY: Does HomeStart have any view as to the impact on their business that may be seen from interest rate increases?

The Hon. S.C. MULLIGHAN: HomeStart customers are largely protected from interest rate increases. Once the loan is struck the repayments are only ever calibrated to an annual change in CPI. HomeStart this year or most recently rather than applying the prevailing CPI rate, which of course has been quite high, has struck a lower rate in order to further protect borrowers. That is applicable from 1 July.

Mr COWDREY: Does HomeStart anticipate any increase—we have kind of addressed this in a roundabout way already—to the number of loans written based on changes in the broader market?

The Hon. S.C. MULLIGHAN: As in more people coming to HomeStart because they cannot get finance elsewhere?

Mr COWDREY: Yes.

The Hon. S.C. MULLIGHAN: Yes, we are expecting an increase next financial year on the current year for reasons including those you pointed out, that people will find the increasing interest rates and challenging housing market conditions harder to find finance with traditional banks and they will come to HomeStart.

Mr COWDREY: Have you quantified that number?

The Hon. S.C. MULLIGHAN: Next year, we are forecasting writing about 1,600 loans. The current financial year it was 1,450, so just about a 10 per cent increase.

Mr COWDREY: How do interest rate increases impact the average length of a loan by a HomeStart customer?

The Hon. S.C. MULLIGHAN: In terms of the repayments, in an immediate sense they are inoculated from the effect of interest rates affecting their repayments because of the annual change process which I outlined before, but otherwise—of course, then there is the impact of the appetite of other lenders who would usually come and grab a HomeStart loan recipient and refinance them into their organisation. Rising interest rates might change their appetite to take people from HomeStart into their own lending book, but that will be a 'by loan recipient' consideration.

The Hon. D.G. PISONI: Just on that point, are you able to clarify then whether, because of interest rate increases, if it does not affect the payment does that mean that the size of the loan will increase because of interest rates going up and the return through the payments that were renegotiated not changing?

The Hon. S.C. MULLIGHAN: It is the loan term which changes according to changes in interest rates. In recent years, loan terms have been reduced because there have been aggressive cuts to interest rates by the RBA. Now that interest rates are going the other way, loan terms will be increased. The idea is to make sure that the day-to-day cashflow impact on the person who has the loan is absolutely minimised and protects their position over the long term in being able to take ownership of that property.

They are not obliged to leave after three to five years, for example, they can simply continue on and then there is that nexus between the annual adjustment to their repayment based on CPI or calibrated to CPI and what is going on with interest rates, and that will determine the duration of their loan.

The Hon. D.G. PISONI: Does that mean that HomeStart clients could expect to see CPI increases in their payments of 5.2 per cent?

The Hon. S.C. MULLIGHAN: Unless the discretion has been exercised otherwise and, as we just discussed, the board has made a decision that, rather than pass on the most recent CPI increase, they have chosen to do a lower increase in order to protect their borrowers. So rather than Adelaide's CPI of 4.7 per cent, or a national one of 5 per cent, they have chosen not to increase people's repayments by that much, again to try to protect the impact on borrowers.

The Hon. D.G. PISONI: Does that have an impact on the length of the loan also?

The Hon. S.C. MULLIGHAN: It can, yes, on both how the repayments are struck through that annual indexation change, for example, and also what the prevailing interest rate is. Both those things will impact the duration of the loan. When those things are favourable to the borrower it will decrease the duration of the loan; when interest rates are increasing rapidly they will have the opposite effect and will increase the duration of the loan. HomeStart has always operated on the basis of seeking to protect borrowers, once they have a loan and they are locked into repayments, of trying to minimise the impact on their repayments of fluctuations in interest rates.

The Hon. D.G. PISONI: Whenever there has been an adjustment to their term because of interest rate or CPI increases that may have been deferred, are HomeStart clients immediately notified, and how?

The Hon. S.C. MULLIGHAN: They are written to annually, but not periodically, because those things may change more than just once a year, so HomeStart writes to them on an annual basis.

Mr COWDREY: I have a couple of questions for RevenueSA.

The Hon. S.C. MULLIGHAN: I have Julie Holmes from State Taxation with me.

Mr COWDREY: Treasurer, can you explain the $292 million decrease in the 2022-23 budget for grants and administered payments managed by RevenueSA? I refer to Budget Paper 4, Volume 4, page 153, grants, administered payments by RevenueSA.

The Hon. S.C. MULLIGHAN: This is largely due to the HomeBuilder grant program finding most of its effort in the 2021-22 financial year.

Mr COWDREY: Will the government continue providing the First Home Owner Grant?

The Hon. S.C. MULLIGHAN: Yes.

Mr COWDREY: Will the government continue providing the HomeBuilder grant?

The Hon. S.C. MULLIGHAN: No. It is a federal scheme; we will continue administering the federal scheme until it is exhausted and then we will not continue providing it.

The CHAIR: The allotted time is up. There being no further questions, I declare the examination of the portfolios of the South Australian Finance Authority, Funds SA, RevenueSA, Super SA and HomeStart completed.

Departmental Advisers:

Mr R. Persse, Under Treasurer, Department of Treasury and Finance.

Mr A. Wilson, Chief Executive Officer, Essential Services Commission of South Australia.

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

Ms T. Pribanic, Deputy Under Treasurer, Department of Treasury and Finance.

Mr M. Carey, Executive Director, Government Services, Shared Services.

Ms J. White, Acting Chief Executive Officer, South Australian Government Financing Authority.

Mr J. King, Deputy Director, Procurement Strategy, Department of Treasury and Finance.

Mr R. Howe, Chief Executive Officer, Lifetime Support Authority of South Australia.

The CHAIR: Welcome to the portfolio of the CTP Regulator, South Australian Government Insurance and Fleet, Strategic Procurement, Industry Advocate and Shared Services. I advise that the proposed payments remain open for examination. I know the minister does not want to make a statement and I know the member does not want to make a statement, so I call on the member for questions.

Mr COWDREY: I refer to Budget Paper 4, Volume 4, page 182, Administered Items for the Department of Treasury and Finance. Sales of goods and services for the Essential Services Commission of SA (ESCOSA) are budgeted to increase from $270,000 in 2021-22 to $1.045 million in 2022-23. Does this increase reflect the new statutory requirement for ESCOSA to review council long-term financial plans and infrastructure asset management plans pursuant to the amendment to section 122 of the Local Government Act 1999, or in some part?

The Hon. S.C. MULLIGHAN: My understanding is largely yes, there are some commencement costs or startup costs in order to allow ESCOSA to get its systems up to date and prepared and then we can expect to see in later years a return to a lower level of expenditure.

Mr COWDREY: Are you able to provide more detail? To what level do you expect costs to return?

The Hon. S.C. MULLIGHAN: I will have to take it on notice, but I am happy to.

Mr COWDREY: ESCOSA are currently considering submissions about their proposed review and a large number of interested bodies, including the LGA, are calling for ESCOSA to confine the scope of their review from what they had proposed in their draft framework and approach and instead only review the matters required by section 122 and so reduce the costs subsequently payable to ESCOSA by local councils. Does the publication of these figures in the state budget prevent ESCOSA from reducing its scope of review, therefore reducing the costs incurred by councils?

The Hon. S.C. MULLIGHAN: These costs do not reflect, I am advised, how much money is coming from councils for the new regime of ESCOSA running its eye over councils. This instead reflects money which is coming from Treasury to assist ESCOSA in gearing up for this new role. Going forward, what ESCOSA will be seeking from councils will be on a cost-recovery basis. This line that we are looking at here, the change from the current financial year estimated result from $270,000 to $1.045 million in the next year is not what is coming from councils, it is what is coming from Treasury.

Mr COWDREY: In what part of the budget paper, or have no estimates been provided in the budget papers in terms of cost recovery for councils?

The Hon. S.C. MULLIGHAN: My understanding is that ESCOSA has published some information on this which may have enlivened the interest of councils. They estimate that at this point in time it is about $760,000 a year to look at this scheme, but that will be subject to change once ESCOSA has gone through the process, for example for the first time, and has a better handle on what costs are actually required.

Mr COWDREY: Has ESCOSA sought in the order of a half a million from the consolidated revenue to establish systems and processes to undertake the section 122 review? Does ESCOSA foresee repaying this amount?

The Hon. S.C. MULLIGHAN: Yes, there was a provision of funding. Again, $760,000, consistent with ESCOSA's forecasts going forward, for them to get geared up for this, and then the expectation is that that will be recovered from councils and paid back to Treasury over a three-year period.

Mr COWDREY: I think that should do.

The Hon. S.C. MULLIGHAN: Do you want to move on to Funds SA?

Mr COWDREY: I am okay with Funds SA. Perhaps we will go with either Industry Advocate or Shared Services?

Departmental Advisers:

Mr R. Persse, Under Treasurer, Department of Treasury and Finance.

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

Mr A. Wilson, Chief Executive Officer, Essential Services Commission of South Australia.

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

Ms T. Pribanic, Deputy Under Treasurer, Department of Treasury and Finance.

Mr M. Carey, Executive Director, Government Services, Shared Services.

Ms J. White, Acting Chief Executive Officer, South Australian Government Financing Authority.

Mr J. King, Deputy Director, Procurement Strategy, Department of Treasury and Finance.

Mr R. Howe, Chief Executive Officer, Lifetime Support Authority of South Australia.

The Hon. S.C. MULLIGHAN: I introduce Ian Nightingale, the Industry Advocate.

Mr COWDREY: Treasurer, what is the total cost of the office for the last financial year 2021-22 and the forecast for 2022-23?

The Hon. S.C. MULLIGHAN: The actual for the office in 2021 was $1.699 million. The estimated result for the current financial year is $1.517 million, and the budget for next financial year is $1.829 million.

Mr COWDREY: How many staff are employed by the Office of the Industry Advocate, and how many FTE does that represent?

The Hon. S.C. MULLIGHAN: There are 10.6 FTEs. It will go up by one, and I will have to come back to you on the actual headcount.

Mr COWDREY: The next question may be predictable because you have heard it before. Are you able to confirm what the total remuneration package is for the chief executive?

The Hon. S.C. MULLIGHAN: I will provide that on notice.

Mr COWDREY: How many executive positions exist within the Office of the Industry Advocate?

The Hon. S.C. MULLIGHAN: One.

Mr COWDREY: I did suspect that to be the case. What are the KPIs for the Office of the Industry Advocate for this financial year, and are they changing in the coming financial year?

The Hon. S.C. MULLIGHAN: Largely, to date, it is monitoring the industry participation plans, which are struck as part of government procurements. Our election commitments have provided some additional targeted funding to the office to both better monitor the amount spent on local companies (goods and services providers), but also to continue working on their government workshops, industry briefings and one-on-one support. What I was struggling to recall was the name of the meet the buyer events.

Mr COWDREY: How many businesses does the office engage with on a yearly basis, and how do they record or monitor that number?

The Hon. S.C. MULLIGHAN: That figure that I raised before, that 650 Industry Participation Plan, so that involves engagement with businesses that are subject to those plans, that occurs on a six-monthly basis, and due to the last two years has largely been conducted online, but that will increase with the additional tasks that we have required of the advocate.

Mr COWDREY: Is an evaluation of the effectiveness of the Office of the Industry Advocate planned for the coming financial year, and how frequently are these conducted?

The Hon. S.C. MULLIGHAN: The reporting requirement for the businesses that the Industry Advocate deals with is on a six-monthly basis, but was your question more on the evaluation of the function of the Industry Advocate?

Mr COWDREY: Yes.

The Hon. S.C. MULLIGHAN: That will largely be driven by a couple of things. One is how many of the procurements in the industry participation plans they are able to get to in a financial year, and I guess our overall target, which is not the sole responsibility of course of the Industry Advocate, but our overall target of increasing the proportion of state government goods and services expenditure on local suppliers. That is ostensibly a requirement that is across all agencies that procure goods and services, but the advocate's role is to assist as far as possible with the successful delivery of that.

Mr COWDREY: How frequently do you imagine this being reviewed, and who by?

The Hon. S.C. MULLIGHAN: We made a commitment at the election that we will require the Auditor-General to take on an additional reporting role to provide advice to the parliament about how much money is being spent by government and government agencies out of their annual spends on goods and services; how much is spent locally versus how much is spent on interstate and overseas suppliers.

The Auditor-General has expressed his preference that he has that requirement established in legislation, so I will be bringing some changes to the Public Finance and Audit Act to make that responsibility clear. That will give the Auditor-General some time to refine his metrics about, for example, what constitutes a South Australian business as well as how he can interact with agencies in order to capture data as efficiently and painlessly as possible.

Mr COWDREY: Does the Industry Advocate report on the compliance of agencies to local procurement policies?

The Hon. S.C. MULLIGHAN: The Industry Advocate's role is more about educating and assisting the agencies in the successful implementation of the industry participation plans. In terms of compliance with the state's procurement policies, there is a relatively new procurement branch within the Department of Treasury and Finance that oversees that. This is a change that was made when the former state procurement board was disbanded and this new unit was set up. It is subject to what will need to be drafted as a new Treasurer's Instruction 18—or a revision, I should say, to Treasurer's Instruction 18.

Mr COWDREY: Can we go to Shared Services?

The Hon. S.C. MULLIGHAN: For Shared Services, I have Mark Carey with me.

Mr COWDREY: I think Mark is anticipating the yearly name and shame; we will get there. Treasurer, what agencies have recorded the worst performance in terms of late payment of invoices?

The Hon. S.C. MULLIGHAN: Generally speaking, it is Health, but specifically speaking, it is the metropolitan local health networks.

Mr COWDREY: Are you able to provide the percentage of late payments associated with each department and unit, in the case of health networks?

The Hon. S.C. MULLIGHAN: They are available. They are published monthly on the Shared Services website. I do not have a breakdown by agency, but I can give you the headlines. In the 2020-21 financial year it was 97.84 per cent, and to date, this financial year to the end of April, it is 98.56 per cent, so an increase of 0.72 of a percentage point, an improvement.

Mr COWDREY: Let's go to fleet services.

The Hon. S.C. MULLIGHAN: Once again, I have Jenny White from SAFA here.

Mr COWDREY: Can I make an admission that, for some reason, I do not have a budget line allocated to this, but I can safely assume it is Budget Paper 4, Volume 4, page 158, give or take. Why has there been a 60 per cent increase in the budget line for fleet leases?

The Hon. S.C. MULLIGHAN: I might need a budget reference for that.

Mr COWDREY: Yes, I will try to pull it out for you. Perhaps I will ask some further questions and then come back to it. How many electric vehicles does the government currently have in the fleet, both as a total number and as a percentage?

The Hon. S.C. MULLIGHAN: I think for hybrid vehicles it is approximately 57 per cent, but for fully electric or battery electric vehicles I think it is 60, roughly.

Mr COWDREY: As a total number?

The Hon. S.C. MULLIGHAN: Yes; it is 60 out of a fleet of about 6,700, so 0.9 per cent are fully electric. As I have mentioned, there is a much higher proportion of Camry hybrid-type vehicles.

The Hon. D.G. PISONI: Are you able to provide the average fuel bill for this current financial year for fleet services, the total?

The Hon. S.C. MULLIGHAN: We could take it on notice.

The Hon. D.G. PISONI: So the total amount and the average per vehicle.

The Hon. S.C. MULLIGHAN: We have a cross-government fuel card contract, so we should be able to dig out some data on that.

Mr COWDREY: How many electric vehicles and hybrid vehicles is Fleet SA—may I still continue to call them that—planning on purchasing over the next financial year and the forward estimates?

The Hon. S.C. MULLIGHAN: I think, as at April 2022, the order bank contains 673 hybrid vehicles, 18 battery electric vehicles and 24 plug-in hybrid electric vehicles. The difficulty with all of the vehicles is stock availability, and so we are heavily restricted in terms of what we can conceivably purchase of any type of vehicle at the moment, but should we be able to get stock I think that is the plan.

Mr COWDREY: I am getting closer with the reference. What is the government's policy on misuse of vehicles with regard to defacing or damage?

The Hon. S.C. MULLIGHAN: I think the same as it has been for many years, and that is motor vehicles are provided to specific groups of employees with varying requirements on them, including who can use them and appropriate use of those vehicles. My understanding is that each recipient of a publicly provided vehicle is given some terms and conditions about the use of that vehicle, which regulates what they can be used for and how and when and so on.

Mr COWDREY: I have the budget reference: page 147, Budget Paper 4, Volume 4, the table 'Investing expenditure summary', Leases, Fleet, Total leases 2022-23, budget $1.387 million, then a significant drop down to $733 million as an estimated result and then budget moving forward.

The Hon. S.C. MULLIGHAN: Yes.

The Hon. D.G. PISONI: Are you able to provide the number of notices for traffic offences that have been identified to drivers of fleet vehicles?

The Hon. S.C. MULLIGHAN: I do not think I have that with me, but the answer is, yes, we can provide that.

Mr COWDREY: Does Fleet SA have statistics in regard to the number of accidents?

The Hon. S.C. MULLIGHAN: I am pretty sure we do have those statistics and we can provide them, yes

Mr COWDREY: Do you have them on hand?

The Hon. S.C. MULLIGHAN: We do not have them here, but we will provide them.

Mr COWDREY: Yes, on notice for prior financial year.

The Hon. S.C. MULLIGHAN: Yes.

Mr COWDREY: What is the average term for a lease vehicle and does it differ by segment?

The Hon. S.C. MULLIGHAN: My understanding is that the general term is three years or 60,000 kilometres. There may be some slight differences with more operational type vehicles, but by and large it is the three years/60,000 kilometres, whichever comes first.

The Hon. D.G. PISONI: First, just on that same point, how many vehicles in the fleet are older than three years or have more than 60,000 kilometres because of delays that COVID has caused for vehicle replacements?

The Hon. S.C. MULLIGHAN: Out of that cohort that relates to the three years/60,000 kilometres, I do not have the number, but I am sure it would be a reasonable number of vehicles. I am advised that it might actually be now most that are due. My advice is the vast majority of the fleet is subject to the three years or 60,000 kilometres. There are 6,700-odd vehicles. So the path would be a third of that you might turn over in a year, give or take, in order to comply with that policy.

I am aware of instances where vehicles are being kept for longer because they have not been able to get replacement vehicles. Four-wheel drives are a good example of ones which are heavily behind, where automotive manufacturers and dealers simply have not been able to secure the stock into Australia and hence distribute to clients like Fleet SA on a timely basis.

Mr COWDREY: Has there been an impact on the residual value of the fleet caused by these delays?

The Hon. S.C. MULLIGHAN: Yes and no. Ordinarily, you would think that hanging on to it for longer, maybe hanging onto it for four years or 80,000 kilometres, would mean that there is a diminished resale value, but we are in the middle of a really remarkable vehicle market at the moment. You only need to jump on Carsales or Facebook Marketplace to see that people are selling four-wheel drives and dual-cab utes particularly, often used, even a number of years old, for more than what they paid new for them. Residual values overall have been quite robust, I think is the advice that we have, so we have not suffered a net reduction in resale values as a result.

Mr COWDREY: Very good. I did notice that I had an outstanding one for Shared Services.

The Hon. S.C. MULLIGHAN: That is okay. You can ask it.

Mr COWDREY: What is the government's program for replacing the Chris21 payroll software system?

The Hon. S.C. MULLIGHAN: My understanding is that the current arrangements for Chris21 expire in about two years' time and so Shared Services is at the very early stages of considering what options there are for either the continuation or augmentation of that system or the replacement of that system at that time. I think the two-year process between now and then should mean that Shared Services has sufficient time to work up those plans and get to market, if that is the desired strategy.

Mr COWDREY: Has there been an allocation for a business case provided in this budget?

The Hon. S.C. MULLIGHAN: No.

Mr COWDREY: Does Shared Services intend to bring a business case for the next budget?

The Hon. S.C. MULLIGHAN: Most of the preparatory work, I am advised, can be undertaken internally. If there is a need to do further work beyond the resources of what Shared Services has, the cost of that can probably be managed internally, so in terms of putting forward a bid for additional resources for that purpose, not at this stage.

Mr COWDREY: Does Shared Services have a view in terms of the likely cost implications for either of the two options of a complete new system or modifying the existing system?

The Hon. S.C. MULLIGHAN: A continuation or augmentation of the existing system would be far less than the alternative, which is the procurement of a new system, which could be very expensive, into the tens of millions. As I was referencing earlier with respect to Masterpiece, of course government ICT procurement projects go swimmingly and ahead of time and under budget.

Mr COWDREY: What is the current cost to Shared Services from an operational perspective in terms of maintaining the software?

The Hon. S.C. MULLIGHAN: It is about $6 million to $7 million a year.

Mr COWDREY: That is including FTE support as well as licensing fees?

The Hon. S.C. MULLIGHAN: That is the licensing cost to the vendor or the payment to the vendors, not so much the staffing.

Mr COWDREY: Do you have an idea of what the staffing cost is?

The Hon. S.C. MULLIGHAN: I will have to come back to you with further detail on that.

Mr COWDREY: Has Shared Services been tasked with the savings task this financial year?

The Hon. S.C. MULLIGHAN: The Under Treasurer advises not yet—which is an ominous remark! I was referencing earlier in a sort of in globo sense for Treasury that consideration is going on between the Under Treasurer and branch heads about the allocation of the savings task and, to the extent that there is a requirement on Shared Services, that will be borne out in those discussions.

Mr COWDREY: I anticipate that you will not be willing to add any further detail around FTE and service delivery impact in that.

The Hon. S.C. MULLIGHAN: I think we took on notice that, once we have a division of that, we will provide what information we can.

Mr COWDREY: Thank you. I might just read in the omnibus questions, and then procurement.

The Hon. S.C. MULLIGHAN: Yes, sure.

Mr COWDREY: The omnibus questions are:

1. For each department and agency reporting to the minister, what is the total cost of machinery of government changes incurred between 22 March 2022 and 30 June 2022?

2. For each department and agency reporting to the minister, which administrative units were created, abolished or transferred to another department or agency between 22 March 2022 and 30 June 2022 and what was the cost or saving in each case?

3. For each department and agency reporting to the minister, how many executive appointments have been made since 22 March 2022 and what is the annual salary and total employment cost for each position?

4. For each department and agency reporting to the minister, how many executive positions have been abolished since 22 March 2022 and what was the annual salary and total employment cost for each position?

5. For each department and agency reporting to the minister, what has been the total cost of executive position terminations since 22 March 2022?

6. For each department and agency reporting to the minister, will the minister provide a breakdown of expenditure on consultants and contractors with a total estimated cost above $10,000 engaged between 22 March 2022 and 30 June 2022, listing the name of the consultant, contractor or service supplier, the method of appointment, the reason for the engagement and the estimated total cost of the work?

7. For each department and agency reporting to the minister, will the minister provide an estimate of the total cost to be incurred in 2022-23 for consultants and contractors, and for each case in which a consultant or contractor has already been engaged at a total estimated cost above $10,000, the name of the consultant or contractor, the method of appointment, the reason for the engagement and the total estimated cost?

8. For each department and agency reporting to the minister, will the minister advise whether it will be subject to the 1.7 per cent efficiency dividend for 2022-23 to which the government has committed and, if so, the budgeted dollar amount to be contributed in each case and how the saving will be achieved?

9. For each department or agency reporting to the minister, how many surplus employees were there at 30 June 2022, and for each surplus employee, what is the title or classification of the position and the total annual employment cost?

10. For each department and agency reporting to the minister, what is the number of executive staff to be cut to meet the government's commitment to reduce spending on the employment of executive staff by $41.5 million over four years and, for each position to be cut, its classification, total remuneration cost and the date by which the position will be cut?

11. For each department and agency reporting to the minister:

What savings targets have been set for the 2022-23 financial year and each year of the forward estimates;

What is the estimated FTE impact of these measures?

12. For each department and agency reporting to the minister, will the minister advise what share it will receive of the $1.5 billion the government proposes to use over four years of uncommitted capital reserves held in the budget at the time it took office and the purpose for which this funding will be used in each case?

13. For each department and agency reporting to the minister:

What was the actual FTE count at 30 June 2022 and what is the projected actual FTE account for the end of each year of the forward estimates;

What is the budgeted total employment cost for each year of the forward estimates; and

How many targeted voluntary separation packages are estimated to be required to meet budget targets over the forward estimates and what is their estimated cost ?

14. For each department and agency reporting to the minister, how much is budgeted to be spent on goods and services for 2022-23 and for each year of the forward estimates?

15. For each department and agency reporting to the minister, how many FTEs are budgeted to provide communication and promotion activities in 2022-23 and each year of the forward estimates and what is their estimated employment cost?

16. For each department and agency reporting to the minister, what is the total budgeted cost of government-paid advertising, including campaigns, across all mediums in 2022-23?

17. For each department and agency reporting to the minister, please provide for each individual investing expenditure project administered, the name, total estimated expenditure, actual expenditure incurred to 30 June 2022 and budgeted expenditure for 2022-23, 2023-24, 2024-25 and 2025-26.

18. For each grant program or fund the minister is responsible for, please provide the following information for the 2022-23, 2023-24, 2024-25 and 2025-26 financial years:

Name of the program or fund;

The purpose of the program or fund;

Budgeted payments into the program or fund;

Budgeted expenditure from the program or fund; and

Details, including the value and beneficiary, or any commitments already made to be funded from the program or fund.

The Hon. S.C. MULLIGHAN: I introduce Jody King from procurement.

Mr COWDREY: Very good. Treasurer, could you give us information relating the current status of key across-government contracts, including stationery and electricity provision?

The Hon. S.C. MULLIGHAN: I understand the across-government stationery contract only came into effect earlier this year, and that is with COS and Winc. The across-government electricity contract is currently being renegotiated with the selected supplier. You may be familiar with the announcement that was made, I think a couple of years ago, by the previous government that they had reached agreement with ZEN Energy for an across-government electricity contract on terms that included not just a price for electricity, etc., but on the basis that ZEN would partner with SIMEC, a subsidiary of GFG, to build some renewable energy projects in South Australia's north.

SIMEC has not been able to deliver those renewable energy projects and meet those contractual obligations to ZEN, and hence ZEN has not been able to provide those obligations to the government, so the government is hopefully in the final throes of negotiating a revised contract with ZEN Energy for the across-government electricity contract. Did you mention another one—I mentioned stationery and electricity, but was there a third one.

Mr COWDREY: I did not propose reading them all out, but if you want to focus on the maintenance and all of the larger contracts—

The Hon. S.C. MULLIGHAN: If you want to read them out, and if I do not have the detail I can come back to you with the details.

Mr COWDREY: Maintenance would be the next.

The Hon. S.C. MULLIGHAN: Maintenance—like the facilities management?

Mr COWDREY: Yes.

The Hon. S.C. MULLIGHAN: I think the Department for Infrastructure and Transport manages the across-government facilities management contract, and there are other agencies that have their own discrete arrangements, but none of those are managed by Treasury, but whatever details we have we can provide to you subsequently.

Mr COWDREY: In total value, what are the three highest across-government contracts?

The Hon. S.C. MULLIGHAN: I will take it on notice. It may well be that the facilities management, for example, is one of them, but because we do not manage it directly I cannot be firm on that detail, but I will come back with a response.

Mr COWDREY: What are the planned major procurements for 2022-23?

The Hon. S.C. MULLIGHAN: They are:

Microsoft Enterprise enrolment: an across-government contract for the provision of desktop Microsoft licences and services;

Microsoft support services: an across-government contract for the provision of proactive and reactive support services for Microsoft software and products;

network devices: the establishment of an across-government panel contract for the provision of network devices and related support services;

network management services: an across-government contract for the provision of services to monitor and maintain the operation of the state's central data network and agency local area networks;

telecommunications services: the establishment of an across-government panel contract for the supply of fixed voice mobility data and internet services;

temporary staff services;

fuel cards or card fuels;

audit and financial advisory services;

natural gas; and

postal services.

I am not sure if there is a competitive market out there for postal services, but we will see how that procurement goes.

Mr COWDREY: What is the current status of the credit card or retail banking?

The Hon. S.C. MULLIGHAN: We do have that information; I will just have one last look for it. If I cannot find it quickly, I will take it on notice and provide it to you. I have found it. Two invitations to supply for transactional banking services, including merchant facilities and purchase cards, were released on 16 July 2021 and closed on 13 September 2021. It is expected that the procurement will be finalised prior to the end of the current contract terms. Those contract terms respectively finish on 11 November this year and 1 January 2023.

Mr COWDREY: Who is the current supplier of those services?

The Hon. S.C. MULLIGHAN: The transactional banking contract is with the Commonwealth Bank, the merchant facilities contract is with the Commonwealth Bank and the purchase card contract is with the ANZ.

Mr COWDREY: How do the government's procurement policies in regard to local contribution interact with the procurement opportunities that the Treasurer has just—

The Hon. S.C. MULLIGHAN: For banking?

Mr COWDREY: No, the broader list of the major planned procurements for 2022-23.

The Hon. S.C. MULLIGHAN: I guess, generally speaking, we will be going through a process of dealing with both chief executives and agencies about the scope and nature of our election commitments and what they were hoping to achieve, but we are also conscious that there will need to be some redrafting of procurement policies and Treasurer's Instructions to give effect to those. That will be work that continues to occur over the coming weeks, so it will not neatly come into effect from the beginning of this coming financial year, 1 July.

Mr COWDREY: When does the government anticipate those election commitments being fully implemented?

The Hon. S.C. MULLIGHAN: We would hope to have the policy documents and TIs established and promulgated in the coming months, and then we would obviously expect the agency behaviour to be conducted in compliance with those from thereon in.

The Hon. D.G. PISONI: Just on the procurement, you took a policy to the election that required that apprentices, trainees, Aboriginal workers and the long-term unemployed must deliver 20 per cent of all labour hours on major projects. When will that start and how will it be measured, and will there be regularly reporting?

The Hon. S.C. MULLIGHAN: The good news is it has already started. The previous Northern Connector contract, which was won by Lendlease, had that same provision in it. It led them to establish the north hub, which you may be familiar with, which was basically the project base for the Northern Connector project on Port Wakefield Road, sort of towards the upper end of where that project was eventually delivered.

Lendlease, effectively, for the duration of that project, basically also had to become a quasi-employment agency to ensure that not only were we meeting the apprentices and trainees side of things but also, for long-term unemployed and so on, that we were meeting the cohort. The state has, firstly, starting under the previous Labor government but continued on that project under the previous Liberal government, already successfully executed that requirement. Now it will be promulgating that requirement to a broader range of infrastructure projects going forward.

The Hon. D.G. PISONI: So is it only refined to infrastructure projects?

The Hon. S.C. MULLIGHAN: No, but just as an example. We have said major projects and it escapes my memory, there is a definition for a major project, a dollar value of major project, and so in line with what I said earlier to your colleague, we will be promulgating those requirements in the necessary policy documents, etc., getting that out to chief executives and agencies so that when they subsequently go to market they are aware of those obligations and they can put in place the requirements, not only to award contracts on that basis but to monitor the compliance for those contracts.

The Hon. D.G. PISONI: Does it include service contracts?

The Hon. S.C. MULLIGHAN: Like what?

The Hon. D.G. PISONI: Security services or services for delivery of—catering services at the Royal Adelaide Hospital, for example.

The Hon. S.C. MULLIGHAN: They are a little easier to deliver, those sorts of services contracts, because that is the physical provision of a service in a facility which is in South Australia. It becomes more challenging, for example, with some of the contracts that I mentioned earlier, like Microsoft, for example, where a lot of the product and support provided by that firm may not be located in South Australia. It is a new policy that this new government is bringing to the public sector and we will need to work through the detail of how we are going to make sure it is promulgated through the provision of those services as well.

The Hon. D.G. PISONI: Are there minimum requirements then for particular cohorts?

The CHAIR: Last question.

The Hon. D.G. PISONI: Is there a minimum requirement with net 20 per cent for lower socio-economic or Aboriginal and Torres Strait Islanders or apprentices and—

The Hon. S.C. MULLIGHAN: So you understand how the 20 per cent works, that is for all of those cohorts in there.

The Hon. D.G. PISONI: Twenty per cent for every cohort? So 20 per cent of apprentices, 20 per cent of trainees? Twenty per cent of them will be Aboriginal, 20 per cent will—

The Hon. S.C. MULLIGHAN: No, the sum of Aboriginal employees, long-term unemployed, apprentices and trainees together must add up to 20 per cent. As you can imagine, it would not be feasible to have, for example, 20 per cent each of apprentices and trainees and then a further 20 per cent of long-term unemployed because you would probably be in a position where you may not have the skilled workforce to deliver a particular project. That is why that 20 per cent is an in globo figure, rather than a per cohort figure.

The Hon. D.G. PISONI: I am not quite sure you answered the question about how often it will be reported and when it will be available.

The Hon. S.C. MULLIGHAN: We might make that part of the Industry Advocate's task, or we might make that part of the Auditor-General's task.

The CHAIR: Thank you, Treasurer. The agreed allotted time is up. There being no further questions, I declare the examination of the portfolios of the CTP Regulator, South Australian Government Insurance and Fleet, Strategic Procurement, Industry Advocate and Shared Services completed. The examination of the proposed payments for the Department of Treasury and Finance are now complete. The examination of the proposed payments for the Administered Items for Department of Treasury and Finance is adjourned until Thursday 23 June.

I would just like to acknowledge all of the work by the public servants leading up to estimates. I know that it can be an onerous body of work, never knowing what questions you are going to be facing, so it is a sincere thank you for all the effort that is put in. I also thank the members for their contribution.

Sitting suspended from 13:19 to 14:15.