PUBLIC WORKS COMMITTEE: LOWER LAKES IRRIGATION PIPELINE

Ms CICCARELLO (Norwood) (11:55): I move:

That the 319^th report of the committee, on Lower Lakes Irrigation Pipeline—Jervois to Langhorne Creek and Currency Creek, be noted.

The key driver for the Lower Lakes irrigation pipeline is the drought conditions and predicted scarcity of water for the horticultural community from the Lower Lakes. Insufficient quantity and quality of water will adversely affect the horticultural industry in the region, the value of production and regional employment.

The new governance arrangements for the Murray-Darling Basin include $530 million for South Australia's priority project Murray Futures. That is an integrated package to sustain, support and reinvigorate communities and industries within the Murray-Darling Basin in South Australia. A further $80 million has been made available for the purchase of water entitlements from willing sellers.

An important component of Murray Futures is the Integrated Pipeline Project, a network of pipelines to provide potable water and irrigation water to communities and industries that rely on the Lower Lakes for their water supplies. The commonwealth has allocated up to $120 million for the project.

A pipeline will be constructed from the River Murray at Jervois to Langhorne Creek and Currency Creek to provide irrigation water to these areas. It will be constructed by SA Water but owned and operated by Creeks Pipeline Company Limited, a private company. The pipeline will provide irrigation water to a defined group of irrigators who responded to an expression of interest and hold a River Murray licence, as well as users with groundwater licences and riparian rights.

There are a number of key objectives associated with the project. By providing access for irrigation water supply needs it will ensure security and continuity of the water supply and sustain the valuable horticultural industries in this region. The project will also mitigate against the increase in salinity of water in the Lower Lakes by reducing the reliance of extraction of water from the Lower Lakes for irrigation use.

The primary economic benefits identified by the benefit cost analysis are:

the avoided cost of reduced quality and quantity of agricultural output from the impacted areas; and

the economic contribution of the agricultural industry that flows on to the surrounding areas.

Continued use of Lake Alexandrina as the primary water source has obviously seen an increase in the salinity levels of all water extracted and reduced accessibility.

The commonwealth investing principles for priority projects provide that cost sharing arrangements are on the basis of funding to a maximum proportion of 90 per cent by the commonwealth and state governments and 10 per cent by other sources. Consistent with this, the irrigation communities will provide at least 10 per cent of the capital cost of the project.

The community will own and operate the project and, as such, has formed a new special purpose entity for that purpose. The company is named the Creeks Pipeline Company Limited and will be owned by its customers, who will also become shareholders in the entity. Water will be delivered to the shareholder/customers according to the terms of a common customer contract that will be executed concurrent with the Share Subscription Agreement.

A state government contribution to the project will only be necessary if the total project cost is greater than $125 million, as irrigators have been informed that they will still need to raise $12.5 million for this project to be viable. Based on the current estimated total cost of $127.3 million, this represents a potential budget exposure to the state government of $230,000.

If the subscriptions amount to less than $12.5 million, and this amount reflects less than 10 per cent of the total project cost as confirmed subsequent to the tender process, the project will not proceed without further negotiations by the state government.

Based upon the evidence presented to it, pursuant to section 12C of the Parliamentary Committees Act 1991, the Public Works Committee reports to parliament that it recommends the proposed public works.

Debate adjourned on motion of Mr Pengilly.