House of Assembly Fifty-Second Parliament, First Session (52-1) 52 1 Parliament of South Australia House of Assembly published Auditor-General's Report Auditor-General's Report Auditor-General's Report AUDITOR-GENERAL'S REPORT In committee. The Chair House of Assembly The CHAIR: We now proceed to examination of the Auditor-General's Report in relation to the Minister for Education and Minister for Early Childhood Development. I remind members that the committee is in its normal session, so any questions have to be asked by members on their feet, and all questions must be directly referenced to the Auditor-General's Report. Mr PISONI House of Assembly Mr PISONI: Minister, I refer you to Volume 1, page 300, Salary Overpayments. The reference refers to a situation where we have not seen monitoring of the overpayments. Are you able to inform the house as to how much is currently outstanding in reclaiming overpayments of salaries? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: I will have to get back to you with that precise number. Mr PISONI House of Assembly Mr PISONI: Are you able to advise the house as to whether the overpayment of salaries has increased with the introduction of Shared Services and perhaps, if possible, bring back some comparisons as to salary payments when they were done by the department and when they were done by Shared Services? Are you also able to advise on the number of underpayments and late payments? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: While, initially, there were some teething problems with their new Shared Services arrangements, we have been able to bring back the underpayment issued to about the same level as it occurred prior to the advent of Shared Services by working closely with them on those arrangements. Mr PISONI House of Assembly Mr PISONI: The Auditor-General has received the SSA response advising that the salary overpayment spreadsheet has been brought up to date and that operational team leaders will monitor recovery action on a fortnightly basis, and failure to maintain a spreadsheet has not affected the recovery of salary overpayments. Minister, are you able to stand by that advice to the Auditor-General? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: The process referred to there was the managing of that question through the use of a spreadsheet. Since that time, though, there has been a change to a different process where Shared Services SA's operational team leaders check the recovered debts reports on a fortnightly basis to ensure that outstanding salary overpayments are actioned. So, we have moved to a different process and that is now the status quo for managing these issues. Mr PISONI House of Assembly Mr PISONI: I refer you to page 311 of the same volume, Public/Private Partnership New Schools. The Auditor-General's Report tells us that the total value of the contract with Pinnacle Education are at $323 million, which is the net present cost. The commitment for expenditure from the project agreement with Pinnacle Education is $871 million over 30 years. Are you able to tell the house when payments will begin and whether they will be coming from the annual education budget or a capital budget, or a combination of both? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: The first part of your question is: when did the payments begin on these Education Works Stage 1, the public-private partnership arrangement? The answer is: when the department takes control of the school. That will occur in two instances for John Hartley and Adelaide West Special Education Centre during term 4, and so payments will have commenced. In relation to the second part of your question—are the amounts coming from the annual capital budget or the recurrent budget—I think the way it is expressed within the budget papers is the distinction between operating and investing payments, and because this has been reduced to an annual operating licence for the purposes of the purchase of the services the capital is being spent by the public-private partner, then, essentially, it is an expense to us as an operating payment, but it does find its expression within our overall capital asset base. Mr PISONI House of Assembly Mr PISONI: If I could get some clarification, minister, what you are saying is that the capital expense (which we know in today's dollars is $323 million) in a government project—that is, a project that did not include a PPP or a public-private partnership—would be funded out of the capital budget. It would not be included in the annual budget expenditure for the Department of Education and Children's Services. Are you able to clarify then that the payments made to Pinnacle will all be coming from the recurrent budget? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: The first thing you need to understand is that $323 million is the net present value of the payments that are expressed over the 30-year period. It is a bundled up net present day value number. The second thing is that it is not directly comparable with a traditional capital investing program because some of the expenses that would otherwise go to the question of maintaining, cleaning or running a capital asset would, under the traditional model of procurement, find its expression in the operating part of the budget, but, save for that, these payments under the new public-private partnership will be expressed in the operating part of the budget. Mr PISONI House of Assembly Mr PISONI: Are you separating the building component itself out and it is coming from the capital budget, or is it coming with the recurrent education budget? If there is an increase in the budget next year that covers the payments for the public-private partnerships as they start, are you saying that they will come from the recurrent budget, or they will be divided so that the operating costs will come from the recurrent budget, and that payments that are allocated to the capital cost of the project will come from the capital funding? Is that what you are saying, or will they all be coming from the recurrent budget? I am just trying to clarify that, minister. The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: It probably needs to be explained that if there is a sum of money that is the payment that goes on an annual basis to Pinnacle, the private sector partner, originally, when the project is brought to account, it creates an asset in our books and also a liability of the equivalent amount. The annual amount will be applied partly for interest payments and the other components, if you like, of the operation of the building, and another part will be applied to the reduction of the liability that presently exists. So, you might start off with a liability of a certain sum, it will equal the asset of a certain sum, and then the liability over time will be reduced by a component of the recurrent amount that is applied each year to that payment. It is not completely straightforward to say that it is wholly an operating expense, although that is where it will find its expression within the budget papers. Mr PISONI House of Assembly Mr PISONI: Are you able to bring the amounts of the first two payments to Pinnacle for the two schools that have been handed control to the department, with a breakdown of the capital cost, the interest costs and the services provided costs? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: Yes, we can do that. Mr PISONI House of Assembly Mr PISONI: On the same subject, I take it that the breakdown of the services will be a detailed breakdown, so it will tell us what services will no longer be conducted by DECS, that will be conducted by Pinnacle? Will we get that in the answer brought back to the parliament? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: If you so request, we will bring that detail. Mr PISONI House of Assembly Mr PISONI: Just so that we are clear, I do so request, minister. Thank you. Currently, despite efforts by your department not to supply the resource entitlement statement of schools, the Ombudsman ruled that they had no grounds to hold those back. Will I still be able to access resource entitlement statements from the schools run by Pinnacle through the freedom of information process? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: I do not know. The freedom of information process is determined by an independent officer, not under any instruction by or from me, and they apply the provisions of the Freedom of Information Act. So, we will attempt to get some indication of their attitude to that, but it is governed by legislation and independent officers. Mr PISONI House of Assembly Mr PISONI: The project management expenditure for 2009-10 was $3.3 million. Can you provide a breakdown of that expenditure, minister? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: I can, but we do not have that with us. We undertake to bring that back to the house. Mr PISONI House of Assembly Mr PISONI: Minister, can you confirm that, in 2009-10, $794,000 was spent on consultancies relating to the PPP super school project, and can you bring the details of those consultancies back to the house? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: For 2009-10 the consultancies details that we have in relation to the public private partnership concern Aurecon (previously called Connell Wagner Pty Ltd). The contract was entered into in 2006-07. Expenditure was $308,738.53. It was advice and assistance in establishing a services infrastructure public private partnership. Mr PISONI House of Assembly Mr PISONI: So that was $300,000-and-something, so there is another $400,000-odd unaccounted for. Will you need to bring that back? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: We will supply the details of the balance of the consultancies that are being discussed. Mr PISONI House of Assembly Mr PISONI: Can the minister confirm that in the 2009-10 year an additional $2.5 million in departmental project management and administration was provided by DECS? From where was it provided, and where will we see that in the budget? Alternatively, did it come from another department? This is also on page 311 which says, after the reference to consultants, 'and $2.5 million relating to departmental project management and administration'. I am trying to determine where that came from—whether it was internal, whether it came from another department, or whether consultants were used. The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: The answer is that it does not concern other government agencies. It is the Department of Education and Children's Services staff and contractors, so it is a combination of both those two sources. Mr PISONI House of Assembly Mr PISONI: Is that $2.5 million on top of the $323 million contract value? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: That is included within the $323 million net present value sum. Mr PISONI House of Assembly Mr PISONI: So the contract with Pinnacle was for $323 million. Was that money paid by Pinnacle or was that paid to Pinnacle? The media release said that $323 million was the contract value. Now you are saying that $2.5 million of that was provided by the department. I am trying to determine just where that fits in. The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: We are not talking about the amount paid to Pinnacle. We are talking about the value of the contract, and the value of the contract is $323 million. The two things are consistent. Mr PISONI House of Assembly Mr PISONI: So how much was paid to Pinnacle, then? What was Pinnacle's value for the contract? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: The $323 million is an estimate of the net present value of what is expected to be the payments that will be made over the next 30 years. They are in the order of $22 million per annum, once all of the projects have been completed. There is also an allowance for the sum of money for the administrative arrangements that were necessary to put in place the contractual arrangements, and they form part and parcel of the $323 million. Mr PISONI House of Assembly Mr PISONI: I am even more confused now. The Auditor-General's report says that there was a commitment for expenditure for the project over 30 years of $871 million and I thought I just heard you say that the commitment was $323 million. The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: That is how net present value works. Net present value is the sum of money now which, with an appropriate discount rate or inflater, gives you the value of payments made over time. It is a bit like the reason why you get a smaller amount of money if you take a lump sum instead of a pension. Mr PISONI House of Assembly Mr PISONI: Now, the report also goes on to say that the super school project has so far cost $12.9 million in project management fees, including $4.7 million to consultants. Has that money been counted in the $323 million that is quoted as the value of the Pinnacle contract? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: I do not know the answer to that. We will take that on notice and bring back an answer. Mr PISONI House of Assembly Mr PISONI: Will you also bring back with you the details of the $4.7 million in consultants? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: Yes, we can do that. Mr PISONI House of Assembly Mr PISONI: I now take you to page 308, minister. We have a breakdown of the number of staff employed under the Education Act. Are you able to advise the house how many of those 13,827 staff are actually placed permanently in schools? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: Yes, we would be able to do that; not presently, but we will bring back an answer. Mr PISONI House of Assembly Mr PISONI: I will now go back to school enrolments. On page 309, we can see in the government schools column a reduction of nearly 2,000 in the five years from 2005-10 that are mentioned on the graph. At the same time, we have seen an increase in the non-government school sector of close to 6,500 in that same period. Are you able to advise whether the department has done any savings calculations on the net benefit to the education budget of that transfer from the public sector to the private sector that has happened over the last five years? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: Unlike the previous Liberal government, we have not taken the opportunity to close schools in a wholesale way. We have tried to make sensible economies where we can, but if the implication of your question is that we should use the opportunity that falling enrolments in some areas give us to consolidate schools, then that might be your policy but we are not pursuing that. We are pursuing sensible economies where we can but not wholesale forced closures of schools. That said, what the figures also demonstrate is that there is a small increase in the total number of students in public schools as between 2009 and 2010, so we are seeing an arresting of that trend of falling absolute numbers of enrolments. Indeed, the proportion of students who are choosing public schooling as opposed to private schooling, that falling proportion in terms of public schooling, is also itself narrowing. I think that what we are seeing is somewhat of a change in the trend, and care needs to be taken about what changes are made to the system in circumstances where there appears to be some evidence of growing demand for public education. Mr PISONI House of Assembly Mr PISONI: Can you advise how many international students we have in the government system at a high school level and also at a primary school level, and what is charged by the department to full fee paying international students? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: I can get the precise details. I have a general figure in my head, but I should give you the precise numbers. I will bring back an answer. Mr PISONI House of Assembly Mr PISONI: I refer to page 333, Remuneration of Employees. For clarity, are you able to differentiate between an employee and an executive when referring to this table? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: Yes is the answer to your question. In 2010, the number of executives represents 34, out of a total number of 1,447 employees, who receive more than $100,000 per annum in their remuneration. That represents the same number of executives as there were last year. Mr PISONI House of Assembly Mr PISONI: One less now, minister. Can you explain the growth in salaries above $150,000 to $400,000, where previously there were 80 and now there are 125? Can you inform the house of where this growth has come from and what these additional 45 executives are doing? The Hon. J.W. WEATHERILL House of Assembly The Hon. J.W. WEATHERILL: We will bring back an answer for you. The Chair House of Assembly The CHAIR: We now move to examination of the Auditor-General's Report in relation to the Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development and Minister for the Northern Suburbs. I remind members that the committee is in its normal session, so any questions have to be asked by members on their feet, and all questions must be directly referenced to the Auditor-General's Report. Mr GRIFFITHS House of Assembly Mr GRIFFITHS: I refer to Volume 4, page 1512. Under the heading 'Financial assistance grants', the very first line refers to DTED providing assistance grants to organisations and identifies that it is mainly for industry and regional development. Can the minister provide details of the regional development focus grants that have been provided for the 2009-10 financial year? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: Your interest is in the dollar amounts, or the purposes for which the grants were sought? Mr GRIFFITHS House of Assembly Mr GRIFFITHS: Ideally, if the recipients also were able to be identified, but, yes. The Chair House of Assembly The CHAIR: Member for Goyder, are you in Volume 4, Part B, page 1512? Mr GRIFFITHS House of Assembly Mr GRIFFITHS: I am, Madam Chair. The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: It runs to a couple of pages. Perhaps if I were to table it? Mr GRIFFITHS House of Assembly Mr GRIFFITHS: I am quite happy to accept that the minister have those tabled. As an extension to that question, I note further in the commentary from the Auditor's report, it regards comment about overdue obligations, and there were some 161 in February, down to, I think, 66 as of July 2010. While I respect the fact that a small number of those will only be devoted to the regional development portfolio, is the minister able to confirm if, in fact, any of the grant recipients that have overdue obligations were the recipients of regional development grants? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: The note I have is that as of 31 October this year there were six outstanding obligations for the regional development program. Mr GRIFFITHS House of Assembly Mr GRIFFITHS: Therefore, can the minister outline what is the course of action that is taken? I am presuming, therefore, that the number of people who have overdue obligations has decreased, but what action is taken against those organisations in receipt of grants that do not actually meet those obligations? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: I have been advised that the grants are actually paid in advance, so the recipient is not at a financial disadvantage. The obligation is to supply written certification, and that has been an issue for the department, but it has not halted the flow of funds. Mr GRIFFITHS House of Assembly Mr GRIFFITHS: I am certainly very supportive of the fact that the money is flowing out to those necessary businesses that have an opportunity to grow—and I can appreciate that—but they also must ensure that their obligations are met. For example, does not meeting an obligation within a specific time line then require that they can no longer be considered for future grants, or is there some form of penalty attached to it? My question focuses on ensuring that public funds are accounted for appropriately. I am sure you want to do that also, but I am just interested to know what the department does about that. The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: There is a process that DTED employs in conjunction with the RDAs to make the recipients aware of their reporting obligations; and I think it becomes a fairly hands-on activity. However, if the recipient ultimately is unwilling or unable to meet the obligation, then I think future application for grant funding would be considered in a moderately negative sense. We attempt to make them aware of the fact that, one, they do have the obligation and, two, if they wish to reapply at a future date it is in their interest. They are made aware of that, member for Goyder. Mr GRIFFITHS House of Assembly Mr GRIFFITHS: Thank you for that response. Minister, I now refer to page 1528, grants and subsidies. There are, sadly, very few references in the Auditor-General's Report about regional development, so this will probably be my last question area. Towards the bottom of the page, it has payment reference of $250,000 in the 2008-09 financial year for grants and subsidies paid or payable to entities within the South Australian government. Are you able to provide me with some details of where that money went and what it was for? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: That was a one-off payment to PIRSA for assistance with the development of the Riverland Futures Prospectus. Mr GRIFFITHS House of Assembly Mr GRIFFITHS: I am fully supportive of that after the briefing provided by your staff yesterday, minister—thank you very much for that—and I recognise that the commitment from both sides of the parliament to the Riverland with the Riverland Futures is important. So, well done. As an extension of that, under grants and subsidies it refers to payments made in the 2008-09 and 2009-10 financial years for regional development to entities external of the South Australian government. Is this a different grant area to what my first question was about, and, if so, can you provide me with some details on that? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: It encompasses RDA funding, regional development funding, grant funding and a couple of other grants. But it is largely to RDAs and regional project grants. Mr GRIFFITHS House of Assembly Mr GRIFFITHS: May I seek the indulgence of the minister and ask if he is prepared to provide to me, on a separate occasion, a breakdown of those grants? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: I think it is in the material that I was going to have tabled; it is all there. Mr PEDERICK House of Assembly Mr PEDERICK: I will start on some primary industries questions. I refer to Volume 3 of the Auditor-General's Report, page 1016, Remuneration of Employees. The chart at the bottom of the page indicates that employee costs for individuals receiving $250,000 or more have risen by between $3.8 million to $4 million a year. The explanation for the increase from 2009-10 in non-executive staff receiving more than $100,000 is described on page 1017 as mainly due to the inclusion of 46 employees previously below $100,000. However, the chart indicates that by far the greatest proportional increase in staff numbers in wages has occurred in the $250,000 plus bracket. My initial question is: how does the minister explain or justify this $4 million increase in the face of significant budget cuts across PIRSA (including the $80 million over four years and the 180 jobs), miserly cuts to the advisory board and also closing down the night shifts at Ceduna and Yamba inspection stations? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: That is largely explained by TVSP payments that are bulked onto salaries. I can get the specifics, but a large number of individuals would have taken separation packages, and the value of those separation packages is added on to the salaries. The TVSP payments were to the value of $1.85 million and associated terminal leave payments of $0.941 million. These are included in the total remuneration to employees who received remuneration of $100,000 or more. Mr PEDERICK House of Assembly Mr PEDERICK: On the same line, I probably need more of an explanation. How many of those positions of the 46 have gone, and how many are at risk of losing their jobs under the planned budget cuts? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: I have been informed that that particular area was dealt with in estimates, but I will supply the necessary detail sought by the member for Hammond. Mr PEDERICK House of Assembly Mr PEDERICK: Would you also be able to inform us as to what sections of PIRSA those staff have come from who have taken packages? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: I can do that, yes. Mr PEDERICK House of Assembly Mr PEDERICK: I go to Volume 3, page 1016, activity 3, where it states: Support the sustainable development of an internationally competitive forest industry, regional development and the provision of services from state government forest reserves. How will the proposed sale of up 111 years of timber growth (almost undoubtedly to a foreign company) sustain the development of an internationally competitive forest industry? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: I think the Treasurer dealt with this issue in some depth. The views being sought are really not of a financial nature; they are more of a policy nature, and I do not think this is the venue. We are actually dealing with the Auditor-General's Report and the audit of the accounts of PIRSA, so I will take that in another venue. Mr PEDERICK House of Assembly Mr PEDERICK: Minister, you would have to agree that it is in the Auditor-General's Report. It is a statement under Activity 3. Obviously it is a significant issue not just for this state but for the people of the South-East. The Chair House of Assembly The CHAIR: As the chairman of this committee I must say that I cannot see why that question cannot be asked. I agree with the minister that the Treasurer has already discussed this, but it does seem to relate to a line in the Auditor-General's Report. The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: The Treasurer made the comment that ForestrySA will continue to manage the plantation on behalf of the owner and continue to harvest and contract. Instead of timber plantations appearing on our balance sheet or our books—and I think that is probably relevant within this context—we are transferring the ownership to the private sector for an up-front payment, but ForestrySA will remain the manager of that plantation under the agreement and it will be business as usual. So, in a sense, it is a balance sheet transaction and should not affect the operation of ForestrySA at all. Mr PEDERICK House of Assembly Mr PEDERICK: Further to that question, minister, and the same line in the Auditor-General's Report, what assurances can the minister give the people of the South-East that the government's intended sale of forward rotations will 'support regional development' and the many thousands of jobs in the South-East that are reliant on this industry? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: We have given an undertaking and we also have an obligation to prepare a regional impact statement which will give some guidance as to possible economic, social and environmental impacts of a proposed sale of one, two, three rotations, and issues that the member for Hammond has referred to would be taken into account in the preparation of that statement. That statement is to give guidance, and if it becomes obvious that a particular course of action leads to economic consequences that are totally unacceptable both to the parliament and the people of the South-East, then obviously we would heed the recommendations of the regional impact statement. Mr PEDERICK House of Assembly Mr PEDERICK: Just to get more clarity, if it looks absolutely untenable as a budget line and for the community of Mount Gambier and the South-East, you will rule out the forward sale proposal. The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: No, I did not mean that. I mean that we would look at another proposition. It could come down to an insertion of a particular clause in the sale contract. My view is the regional impact statement, first and foremost, is a guide to what provisions ought to be included in the conditions of sale and I believe that I made that reasonably plain at a meeting of stakeholders in Mount Gambier some three or four weeks ago. We have a situation whereby we have the opportunity for people to make constructive comment and observation, with a view that those comments and observations be taken into account in framing the sale contract. Mr PEDERICK House of Assembly Mr PEDERICK: In light of that answer, minister, why has that regional impact statement not been conducted in the last two years since the decision by the government to forward sell rotations was made? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: Basically because a body of work had to be carried out to determine what possibilities could be considered by cabinet. Cabinet has yet to consider those possibilities. Once it has made a decision then we are in a position to do a regional impact statement on the basis of going to the community and saying, 'This is the proposition that is currently being worked up.' So, we have not done a regional impact statement because cabinet has not made a decision. Member for Hammond, a decision has yet to be made on whether there will be one, two or three forward rotations and what the relationship with ForestrySA will be. The Treasurer has made it fairly plain that it is business as usual, but the real issue I think is that of the one, two or three rotations. Once a decision is made on that, we are then in a position to do the regional impact statement. Mr PEDERICK House of Assembly Mr PEDERICK: On the same line, how does the proposed forward sale support—and I quote from the Auditor-General line—'the provision of services from State Government forest reserves'? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: Could you repeat that? Mr PEDERICK House of Assembly Mr PEDERICK: Volume 3, page 1016, under the statement 'Activity 3' at the top of the page. The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: Which of the three paragraphs? Mr PEDERICK House of Assembly Mr PEDERICK: The whole line says: Support the sustainable development of an internationally competitive forest industry, regional development and the provision of services from State Government forest reserves. I am worried about how the forward sale will impact on the services that are supplied from state government forest reserves. The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: That is quite a good question, member for Hammond. That would also be encompassed in the regional impact statement. One of the options could be that the various services that are provided by ForestrySA in the management of the plantations in the South-East and in the Mount Lofty Ranges could be undertaken by a state government agency, or they could continue to be provided by ForestrySA. That level of detail, I think, would be picked up within the regional impact statement and would ultimately be attached to a contract of sale. It could well be that it would make more sense on the one hand for it to go across to DENR or, on the other hand, remain with ForestrySA—that is yet to be determined, and it would have some bearing on the sale price. Mr PEDERICK House of Assembly Mr PEDERICK: I go to Volume 3, page 1025, note 1 at the top of the page under the heading 'Reconciliation of non-current assets classified as held for sale'. It refers to the sale of sections 223 and 224 Bookpurnong Road, Loxton, and the proposed sale of section 222. My question is: for the two blocks that have been sold, what was the amount received for the sale of those properties? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: I have been informed it is the figure of $315,000. Mr PEDERICK House of Assembly Mr PEDERICK: Minister, can you explain what is being done with the proceeds of the sale? Have they been reinvested in rural services or facilities or have they been absorbed into general revenue? Also, will the proceeds of section 222 go the same way? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: I have been informed that, under a Treasurer's Instruction, part is retained by Treasury and part has flowed on to the department and will be employed for changes to the regional network. The amount that comes back to the agency will be employed in the development of the regional hubs. As to the exact breakdown, we do not have it at the moment but, when the figure becomes available, I will make the member aware of it. Mr PEDERICK House of Assembly Mr PEDERICK: I refer to Volume 3, page 1019. Item 11(5) mentions the closure of the Flaxley Dairy and subsequent sale of the cattle herd for $1.468 million. At page 1020, item 17(2) appears to contradict this by declaring the sale income to be $921,000. I guess there is some confusion and there may have been a misprint in the Auditor-General's Report, but can the minister clarify what was actually received for the sale of the Flaxley cattle herd and indicate the net result? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: There is some confusion and I will have it clarified. The reference on page 1020 to an expensed inventory is the value of stock on hand, if you want to describe it that way, which was not realised in the actual sale of the assets. The actual sale value was $921,000 but it was on the books at a value of $1.468 million. That is the explanation that I have been given. Mr PEDERICK House of Assembly Mr PEDERICK: Can you give me a breakdown of where those funds have gone? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: We plan to reinvest that within SARDI. Mr PEDERICK House of Assembly Mr PEDERICK: So, would that be recurrent funding or capital expenditure on SARDI? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: I have been informed that it was applied to recurrent, and the bulk, if not all, of it has been spent. Mr PEDERICK House of Assembly Mr PEDERICK: I will go to another topic. In Volume 3, page 997, referring to the Jervois to Langhorne Creek pipeline, paragraph 2 describes the payment of moneys for the construction of this pipeline, and I have some questions around the final wash-up of the figures on this project. What was the full cost of construction? Has the state government been paid in full and, if not, what amounts are outstanding, and from whom? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: I will step through this. There are still outstanding liabilities which are the result of the identification of defects which we have to recompense the contractor for. The total expenditure on the project was around $90 million. What else, member for Hammond, did you— Mr PEDERICK House of Assembly Mr PEDERICK: Obviously, there are some issues. You have to pay some defect costs to the contractor, and I would be interested in a full outline of that. As to as the whole contract, what was the state government's contribution? The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: This state government was not a funding partner. It was a partnership between the irrigators and the federal government, but we were the funding mechanism. There are some matters to be resolved, but they will be resolved on the conclusion of the liability period: 12 months from the date of commissioning, and I do not have the date of commissioning before me at the moment but, again, I will get back to you on that. Mr PEDERICK House of Assembly Mr PEDERICK: Thank you, minister. Progress reported; committee to sit again. [Sitting suspended from 13:07 to 14:00]