BHP DESALINATION PLANT

Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (14:32): Has the Premier backed away from his commitment to the BHP desalination plant in Upper Spencer Gulf and does he stand by his assurances that the project will definitely go ahead? On 6 February 2007 the Premier said:

This government has announced that it will invest in the biggest desalination plant in the southern hemisphere...The government has announced it will co-invest with BHP in the largest desal plant in the southern hemisphere.

On 19 February 2007, 2 May 2007 and 18 October 2007 the Premier repeated his definite commitment to the joint BHP-government desalination plant. Yesterday the Treasurer contradicted the Premier when he said:

The government has yet to agree that we will partner BHP in the Upper Spencer Gulf desalination plant.

Is it going ahead or not?

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (14:34): This Leader of the Opposition will knock anything. He would love nothing more than the BHP Olympic Dam expansion not to go ahead.

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: BHP is still working through the scope and type of desalination plant it requires for its operation. We have said consistently that we wish to partner them, provided of course—

Mr Hamilton-Smith interjecting:

The Hon. K.O. FOLEY: Hang on. We want to be a partner in that project because we see it as an opportunity to deliver desalinated water to the Upper Spencer Gulf and to take impact off the River Murray. That was at a time before Adelaide had committed to a very large desalination plant for our consumption. My advice—and I am being absolutely honest—is that, initially, when it was to be of potable standard, that is, drinking water, it was a very attractive option for us to be a partner. Do not get this wrong: BHP will build a desalination plant to service Olympic Dam. The attractive option for us as a government would be to then take an extra increment of that plant for our use. My advice is that BHP is now looking at non-potable water—non-drinking water. That makes it a more expensive and complicated option for us. This is what happens when you work through these projects.

We may yet be a partner if we think it is in the financial and economic interest of our state. We are building a major desalination plant in the south of our city—announcements about that are pending—and we are committed to ensuring—

Mr Williams interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: Pull the pin?

Mr Williams interjecting:

The Hon. K.O. FOLEY: Are you not listening? I am trying to be honest and upfront, and say—

Mr Williams interjecting:

The SPEAKER: Order! I warn the member for MacKillop. The Treasurer will just ignore the member for MacKillop, because he was giving a good answer. Ignore the member for MacKillop. I warned him; that is it.

The Hon. K.O. FOLEY: This a moving feast. Until BHP decides exactly what it needs, it is very hard for us to be certain. I will give you an example. One of the options for us initially was to simply have an off-take contract; that is, we would say to BHP, 'You build the desalination plant and we might want X percentage of output for the Upper Spencer Gulf.' That is fine when it is potable water, but we are hardly going to enter into a contract with BHP to take non-potable water. For what purpose?

If we now must have a secondary process to turn the non-potable water into potable water, the economics for the government change. That is where we are at. We are working it through, and we will make a decision based on what is economically and financially appropriate. It is still our expectation that we will be a partner, but we have to work these things through.

I will get those facts checked, because this is a moving feast, to make sure that nothing that I have said is incorrect; if there is, I will correct it. The desalination plant has already been prioritised by BHP as its preference for supplying water to Olympic Dam. That is a no-brainer. The question for us will be: are we a partner? We will make that decision when BHP decides the type of product that will come out of the plant—whether it will be potable or non-potable water. From memory, my last advice is that it is non-potable, and that puts up another level of complication. I would have thought that that was the prudent and right thing to do.