Ministerial Statement

DESALINATION PLANTS

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (15:04): I seek leave to make a ministerial statement. It is a good news statement, sir.

Leave granted.

The Hon. K.O. FOLEY: Last December, the government announced that it would build a desalination plant for Adelaide. That announcement was the culmination of months of planning and consideration on how to secure our water supply in the face of extreme drought conditions and record low inflows into the River Murray.

The desalination working group, which was formed in March last year, examined the impact of the drought on water supply, the feasibility of desalination, the preferred size and location, integration into the existing supply network, and cost implications.

The working group recommended Port Stanvac as the most suitable site for a reverse osmosis plant because of relatively deep seawater, marine dispersion characteristics, better access to water supply network, suitable land availability and lower construction costs. However final site confirmation remains dependent on environmental considerations. In the meantime, discussions have begun with Mobil (the owners of the Port Stanvac site) and we will continue to assess the options with them for the desalination plant.

Today we take another important step forward in the development of the project. Historic perhaps this could be called. I can tell the house that the government has decided to use the procurement method commonly known as design-build-operate and maintain, which is referred to by the industry as DBOM.

This follows an extensive review by consultants KPMG on behalf of the Department of Treasury and Finance and SA Water. The DBOM option came out in front after considering all the critical aspects of a project that is vital to secure the long-term future of Adelaide's water supply. The KPMG report considered key objectives such as how quickly the plant could be up and running, the total cost of the project, the ability to expand the plant if necessary in the future, the complexity of the procurement process, and what the optimal risk transfer was for each procurement option. The report concluded that, on balance, the DBOM method of procurement was preferable compared to other forms of procurement such as an alliance model or a public-private partnership.

The Rann government is committed to giving the people of Adelaide a desalination plant on time and on budget. A key consideration in selecting the DBOM approach rather than a PPP was KPMG's advice that the plant could be delivered in a shorter time frame. Under DBOM we can expect to see the Adelaide desalination plant delivering water to the people of Adelaide by the summer of 2011-12. A further factor was that a DBOM approach would provide greater operational flexibility than could be provided under a PPP contract.

Today's announcement on the procurement process comes on top of a series of other recent announcements that show that this project is well and truly underway. Just this week contracts have been agreed for the provision of independent technical advice and expertise in the desalination planning process.

I can announce that Mr Kevin Osborn, who is a member of the Economic Development Board (and also, from memory, deputy chairperson of the Adelaide Bank and former CEO of Bank One) will independently chair a cross-agency steering committee, which will manage the project. The contract for constructing a pilot plant at Port Stanvac has been awarded this week to Adelaide-based Water Technology Australia, which will start work immediately. By July, the pilot plant will begin assessing the filtration and pre-treatment technology required for the full-scale 50 gigalitre plant.

The Minister for Water Security has also announced that independent external consultants have been appointed to provide expert technical advice on elements of the project, including: design and technical aspects, community consultation, probity, appropriate governance and risk, commercial and financial aspects, engineering and environmental.

A $3 million baseline environmental assessment is continuing for the Gulf St Vincent and will be complete by the end of 2008. An independent environmental technical review panel involving experts from around Australia is reviewing all environmental work for the plant such as marine ecology, desalination outfall dynamics and eco-toxicology.

The government is committed to making the plant carbon neutral and work is continuing on how this will be achieved, including what mix of energy sources could be used. Community consultation will include stakeholder fora, information days, site visits and briefings for interest groups. The desalination plant will be up and running and delivering water to the people of Adelaide by the end of 2011. Today we can really start to see this project take shape.