Ministerial Statement

SANTOS

The Hon. M.D. RANN (Ramsay—Premier, Minister for Economic Development, Minister for Social Inclusion, Minister for the Arts, Minister for Sustainability and Climate Change) (14:05): I seek leave to make a ministerial statement.

Leave granted.

The Hon. M.D. RANN: Today the South Australian government has taken the historic step of agreeing to proceed with the removal of the 15 per cent shareholding cap that applies currently to SANTOS. The government will move to introduce legislation into the parliament as soon as practicable, and the shareholding cap will be lifted 12 months after the repealing legislation comes into effect. This follows a review of the 28 year old SANTOS shareholding restriction that was introduced by the former Corcoran government to prevent a takeover of the Cooper Basin assets by Alan Bond. Never has a premier been more wise in protecting South Australia's energy reserves from a corporate raider like Alan Bond.

The legislation protected SANTOS and the state's security of gas supplies. However, the company now believes the cap inhibits its growth potential. The legislation was introduced to prevent the loss of SANTOS, but now the cap is being lifted to allow SANTOS to grow in South Australia, nationally and internationally. The government has consistently stated that it would only consider the removal of the share cap if the state can be assured that this is in the interests of the people of South Australia.

Right from the start, after SANTOS asked the government to review the cap, the government has said, 'We will operate on one overriding principle: what is in the best interests of South Australia? What is it in for South Australia?' In particular, the state has sought guarantees to ensure an ongoing and strong corporate presence in South Australia and an enduring contribution to the development of the state, even if SANTOS was eventually to be taken over.

For the benefit of the Leader of the Opposition, who has made some statements on this issue, that is precisely what his fellow Liberal commonwealth ministers urged the South Australian government to do. We want to see SANTOS grow and we want to ensure that South Australia benefits from SANTOS's growth. In consideration of this matter, SANTOS has provided a deed of undertaking to the state—signed by SANTOS chairman, Stephen Gerlach—regarding the continuation of the corporate presence and contribution of SANTOS to the state.

Unlike any other company in South Australia, if we lift the cap, we get a guarantee of corporate presence in South Australia and also a guarantee of increased sponsorship by SANTOS in this state. It is not a deed of understanding: this is a deed of undertaking that is legally enforceable. The deed of undertaking provided by SANTOS provides three fundamental commitments which guarantee a strong and ongoing commitment by SANTOS to the state of South Australia. These include:

A continuing SANTOS presence in South Australia of effectively 90 per cent of the current South Australian-based roles, which includes 100 per cent of the roles at its major South Australian operational sites. This equates currently to approximately 1,700 jobs in South Australia. Even if SANTOS were to be taken over in the future, that guarantee is in place.

A social responsibility and community benefits fund of some $60 million over 10 years to be applied to a range of community development purposes. SANTOS has been a big corporate sponsor of the arts, universities and sport in this state. What we have done is gone further. In addition to the continuation of those existing sponsorships, we have secured support for the Royal Institution of Science, $5 million; support for funding for educational initiatives, including the University City and for scholarships; and also support for a major indigenous program. This is a win-win for South Australia and SANTOS.

These commitments will be supported by a $100 million legally enforceable compensation mechanism—a break clause—should there be a significant reduction in corporate presence. That is something which is a unique feature of the deal. This is a 10-year deal, but there is a break clause.

If some company takes over SANTOS it will have to pay $100 million in compensation to the state. The SANTOS deed of undertaking provides a platform for the future growth and development of the company while also providing assured ongoing benefits to South Australia. In order for this to happen the parliament must agree to legislative changes. I call upon all members of parliament—the opposition and members of the upper house—to put aside any temptation they may have to play games with the repealing of the cap and to put South Australia first. For years people have said that the cap imposes an undue restriction on the ability of SANTOS to grow. Not only was it an impediment to growth but it was also an impediment to an increase in shareholder value. This will allow SANTOS to step up to the plate. It will allow SANTOS to grow. It will also ensure that we have in place a deed of undertaking that covers 10 years which provides for substantial benefits for South Australia.