INDUSTRY DEVELOPMENT

Mr HAMILTON-SMITH (Waite) (15:21): Thank you, Mr Acting Speaker, and I always like to see you in the chair—a very good chairman. I want to talk on the subject of economic development policy because I think this parliament, and both major parties within it, may be doing our constituents a disservice by the way in which we are approaching our relationships with major multinationals as they look to invest in this state.

We need a new approach dealing with major enterprises with regard to mining but also into other industrial and manufacturing investments. There are plenty here: we have had BHP looking at Roxby Downs; we have had Navantia here (we are building their air warfare destroyers); we have issues going on with General Motors-Holden and its future in respect of co-investment; and we have lifted the share cap for Santos and required certain things of them. In each case we have dealt with each multinational differently without one common set of parameters, and with singular goals in mind.

These multinationals are often much bigger than we are. They are Goliaths and the South Australian parliament must be very clever in the way in which it deals with them. Take BHP for example, if I turn for a moment to Roxby Downs, an enterprise with $27.2 billion of earnings before interest and tax, and $17.1 billion of profits just last year alone. We were successful during the Playford period because Playford managed to ensure a level of bipartisanship in many of the investment proposals he took to the parliament and to the people. Even during the Hawke and Keating period there was a level of cooperation with the Howard opposition. I recall Howard saying on a number of occasions that the opposition did not oppose the sale of Qantas, the sale of the Commonwealth Bank, or the deregulation of the banking system because it was the right thing to do for the country.

The Olympic Dam expansion, to take that example, was first given major project status by the Rann government in September 2005. Frankly, I think the state Labor government so over-promised and so over-hyped this deal that when the time came to negotiate the indenture we got done over like a dinner. I think the Rann/Foley leadership left itself with little choice but to give in to BHP on almost everything they sought in their indenture: royalty arrangements were generous; employment outcomes, little was guaranteed for South Australians; value adding was compromised; flow-through benefits to South Australian based manufacturers and businesses were not guaranteed in the indenture; we freeholded land; taxes and charges arrangements were generous; and we required little in the way of intellectual infrastructure and other co-investment back into South Australia.

You cannot blame BHP for that. It did a fantastic job in its negotiations. However, I think we do need a new approach. First, we must make sure that we encourage exploration and investment. Secondly, we must reduce the capital costs of major projects. We must get their costs down so they can invest. Thirdly, we must ensure taxation on projects is fair and reasonable. Fourthly, we should insist, as we do with defence projects, on a level of local participation on both labour and contracts. Multinationals are skilled negotiators, and, where practical, governments and oppositions should agree on the negotiating strategy from the outset so that the parliament is not divided and conquered. This requires quite a bit of leadership courage from premiers, from opposition leaders and from cabinets, on both sides of the parliament.

We must recognise that the resources are owned by our constituents, and our children and grandchildren must have something to show for it. We must take a holistic approach when measuring the costs and benefits of projects, with particular regard to GST revenues and wealth generation opportunities. We really need to question this concept of flying in and flying out workers and bringing workers in from overseas, and get the best deal for South Australia when negotiating mining projects. But this also applies with enterprises like General Motors Holden, where we must, when co-investing, get the best deal for our people.

I am calling for a renewed debate in parliament to improve the strategy for dealing with multinationals on major projects. We have the machinery through the committee process, particularly the Industries Development Committee, for there to be more bipartisanship in how we approach these deals so that the parliament goes with one bargaining position. When we deal with multinationals, we do so with the view of getting the best deal for South Australians, regardless of whether it is an air warfare destroyer, General Motors Holden, or a mining enterprise. We need to do better. I think we are failing our constituents.