Parliamentary Committees

PUBLIC WORKS COMMITTEE: CAST METALS PRECINCT

Ms CICCARELLO (Norwood) (11:02): I move:

That the 278^th report of the committee, entitled Cast Metals Precinct—Stage 2, be noted.

The Cast Metals Precinct was established in 1996 under the management of the Department of Environment and Heritage, with the overall objective of providing suitable land for the relocation and/or expansion of business in the foundry and associated industries. The development has been opportunistic to capture the benefits offered by allowing the Civil Skills Training Centre to establish its operations on-site and receiving free fill material delivered to the site by members of the Civil Contractors Federation. In October 2003 the stage 2 land was transferred to the Land Management Corporation for no monetary consideration, but a requirement that it repaid money expended on developing the site when the first allotment sale occurred.

The LMC continued funding the Civil Skills Training Centre. Since coming under LMC ownership, lots 1, 2, 7, 8, 9, 10, 261 and the road reserve have been remediated, filled and certified and have either been sold or are under contract. The net value of these sales is approximately $3.1 million. The remaining lots have a market value of approximately $13.2 million. Additional expenditure of $1.745 million is required to complete the remediation and landfill of the remaining lots. The land was an Engineering and Water Supply rubbish depot, and the development involves removal of all rubbish and the remediation of the uncontrolled and uncompacted fill. This is assisted by support from the civil construction industry in supplying free clean fill material. The remediation and landfill work provides a long-term, on-site training environment for civil construction trainees.

The key aims of the development are, first, to provide appropriately zoned and development-ready land for the relocation and/or expansion of business in the foundry and associated industries. The foundry industry has been subject to increasing pressures as a result of changed environmental standards, encroaching residential development and changed community expectations. Development of the precinct provides some certainty to foundry industry businesses that locate there that they will not be subject to many of these pressures. Secondly, the development will continue the engagement of the Civil Services Training Centre to undertake the remediation and landfill work and provide benefit of trained construction plant operators to the civil construction industry.

Thirdly, the development will continue with the current contractual arrangements with the Civil Services Training Centre to provide free fill material to the site. The development is a difficult, high cost project because of the extensive remediation and landfill requirements. The existing access and services to the site are also inadequate, which has required the construction of a box culvert bridge over the existing drain on the western boundary. The use of the Civil Services Training Centre as the remediation and engineering contractor has delivered a significant benefit to the civil construction industry, as well as benefiting the Land Management Corporation through provision of free clean fill material to the site for the cost of testing only.

Since the LMC funding commenced, over 85,000 cubic metres of fill material has been received. If purchased, this would have cost over $1.6 million. By project completion in March 2009, over 150,000 cubic metres of fill material will have been received, with an equivalent value of $3 million if purchased commercially. The site development costs are regularly benchmarked against the estimated costs for a civil contractor to undertake the work. LMC saves in the order of 5 to 10 per cent compared with a civil contractor, with the added benefit of providing training for construction employees. Importantly, the project will remediate a severely degraded site and deliver completed allotments which will be fully graded, serviced and suitable for development by foundry and associated industries.

The anticipated financial return to LMC when all allotments are sold exceeds the corporation's financial requirements, but the current zoning and significant restrictions relating to non-foundry use mean that sales have been very slow in the precinct. Very few foundry operations have been attracted to the area and one which was subsequently went into receivership. In addition, the committee was told that a major industry survey of every foundry in the metropolitan area showed a very low likelihood of a significant uptake of the land by the existing foundry industry.

Given the very slow level of allotment sales, the committee was concerned about the potential for significant holding costs to accumulate. The committee was advised that LMC's intention is to defer any decision about the land for a couple of years until it becomes clear whether the processing and mining machinery needs of the resources sector leads to an increased level of interest in the land. In the event that this does not eventuate, LMC will seek to have the land rezoned as general industry, and effectively this would double the land value and lead to an improved financial return for the corporation.

Based upon this assurance, the committee accepts that the potential accumulation of holding costs does not pose a significant risk to the viability of this project. Based upon the evidence it has received and considered, and pursuant to section 12C of the Parliamentary Committees Act 1991, the Public Works Committee reports to parliament that it recommends the proposed public work.

Mr PISONI (Unley) (11:08): I will make a couple of points. I think that this project is close to a decade old now, that is, from the time it started to the stage it has reached now. A significant amount of the land is still unsold, which is a reflection on two areas. First, it is a reflection on the changing nature of manufacturing in South Australia. I remember that, in 1979 (I think it was), when I was applying for any possible apprenticeship that I could find, apprenticeships were still available for apprentice moulders. At that stage, I think it was at the Islington workshops. One of the four options I was given when I was eventually offered an apprenticeship after six months of searching for a job was that of an apprentice moulder at the Islington workshops.

Over the years, we have seen those types of jobs in heavy industry, the higher labour jobs, exported to China. Fortunately, they are buying our iron ore. I read, of course, that one of the significant factors contributing to our blow-out in the current account deficit is our inability to have enough port infrastructure to meet the demand for our exports, particularly of raw materials to China and India. Things have changed, and I am pleased to see that the Land Management Corporation will consider reviewing the zoning. One option that was raised was moving the Bradken foundry from its existing site (which is in the middle of a residential area) into the Cast Metals Precinct. We did hear from those appearing before the committee that no attempt had been made by the government to even canvass that project.

We know it will be expensive, and we understand that, but we are in a fluid economy, an economy that is changing all the time. We have some industries that are successful. The Bradken foundry wants to expand and employ more South Australians. Some would argue that where it is located is not the most suitable place for it, although it may have been so when it was established. However, things have changed, and it is now in a residential area surrounded by housing, and I was disappointed to read in the report that the Bradken foundry will not be moving to that site.

Obviously, I am very pleased that there will be investment in the clean-up of the area. When it is rezoned, it will be a great opportunity for small to medium businesses to move out of some other areas that are being encroached upon by residential development, particularly in the inner suburbs, although we are seeing it happen throughout the suburbs. For example, in my electorate of Unley, there was a strip of land along the creek bed, between Unley Road and King William Road. Five or six years ago, it was all commercial, with light industry, as well as some quite big factories. To the credit of the local council, it has been rezoned into residential. This saw some high-density housing brought into the suburb, which is obviously something I much prefer, rather than seeing beautiful villas and pre-1940s homes being knocked down to build high-density housing.

Those of us living in Unley make a significant investment in our lifestyle to live in the area, so I think that it is only fair and right that, when there are opportunities to enhance the area, they are taken. I think that the Cast Metals Precinct is an example of an opportunity for businesses to move, particularly once the rezoning has been done. Last year, the Hon. Gail Gago in the other place told us that the sell-off of land at Glenside was part of the plan to contain our urban sprawl. I think that was a surprise to everybody, including the planning minister, but that is what she said.

I think that if the government is dinkum about wanting to deal with that situation, it may want to give inducements to light industry operating in districts that neighbour residential areas to move out into Wingfield and free up that land for residential housing. Of course, this would also help to alleviate the housing affordability problem that is growing under state Labor governments across the country. I endorse the report and only hope that we can keep moving forward on the sale of the land.

Mr PENGILLY (Finniss) (11:13): I also rise to endorse the report. It is interesting that it has got to this stage because, as the member for Unley said, we have been messing around with this for around 10 years. Land that was formerly an E&WS rubbish disposal depot will become half useful, with around $16 million worth of land sales. It has been a project long in the making. I found it an interesting one to come before the Public Works Committee some time ago, and I took a great deal of interest in it.

The precinct was established in 1996 under DEHAA with the overall objective of providing suitable land for relocation and expansion of business for the foundry and associated industries. In due course, it will be interesting to see just what moves there and what happens with it. I am sure that whatever happens will only benefit the district and be good for the immediate surrounds. That was one of the main reasons that we looked at it in depth and asked a number of questions about its whole operation. I am very happy to endorse the report.

Ms CICCARELLO (Norwood) (11:15): I commend the report to the house.

Motion carried.