Bills

Whyalla Steel Works (Environmental Authorisation) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 8 September 2015.)

Mr VAN HOLST PELLEKAAN (Stuart) (12:00): I welcome the opportunity to speak on the Whyalla Steel Works (Environmental Authorisation) Amendment Bill 2015. Let me just make it very clear that I, as an Upper Spencer Gulf member of parliament and also as the shadow minister for mineral resources and energy, and also my colleagues in the Liberal Party of South Australia are extremely supportive of Arrium and extremely supportive of the resources sector in general.

Arrium is one of the most important companies operating in South Australia and is by far the most important company operating in Whyalla with regard to the number of people it employs, and in other ways as well. Arrium employs well over 3,000 people as direct employees and full-time contractors in its two operations, both the Whyalla steelworks business and also the mining it undertakes in the Middleback Ranges. It is incredibly important.

From an Upper Spencer Gulf perspective, while of course there is often friendly rivalry between Whyalla, Port Augusta and Port Pirie, we all know that our futures are inextricably linked, that we will swim or drown together. We are all very optimistic that we will do very well in that part of the world, but have no doubt, in Port Augusta and Port Pirie we understand that we need Whyalla to be successful, in Whyalla and Port Augusta we understand that we need Port Pirie to be successful, and so on.

The mining industry and the steel industry are going through very difficult times at the moment. There are enormous challenges in Australia for both of those industries, largely brought about by international commodity prices, but not exclusively. There are industrial relations issues, cost of production issues and a range of other issues which provide challenges to these industries, but more than any other issue is international commodity prices which means that Arrium, as the operator of mines and also the steelworks at Whyalla, is going through very tough times. Not times that it cannot come out of, not times that the government and the opposition cannot help it with, but it is a tough time for anybody who is in these industries at the moment.

I am very supportive of Arrium and what it does. That does not mean in any way that I want to reduce vigilance or impact upon very important environmental protections, and I am sure the government is exactly the same in that regard. Protecting the environment is critically important, so we need to find a way to support Arrium and to simultaneously make sure the environment is protected.

The bill the government has put to us has two key parts. The first part is to extend an existing 10-year agreement whereby Arrium is responsible to what is currently the Department of State Development (before that it would have been DMITRE and no doubt had previous names over the previous 10 years) for its environmental performance. It wants to extend the existing 10 years, which runs out on 4 November of this year, to 20 years, so essentially give it an additional 10 years. The second part of the bill is the insertion of a section which gives the minister the opportunity to request variations through the commissioner to the environmental authorisation. So, they are the two key things we are looking at at the moment in the bill.

I turn to the first part first. I understand that extending the 10 years to 20 years (providing the additional 10 years) gives Arrium certainty and security. I think that it is very understandable that Arrium would want that and that the government would want to give that to Arrium, because it supports Arrium in their business and also, from a government perspective, no doubt they are quite comfortable with the current situation. I say again that Arrium is operating in difficult times. They deserve as much support as possible. They deserve to be given that sort of security if they can demonstrate that not having that security would impede them with regard to their operations or with regard to their attraction for investment and, from my perspective, with regard to their capacity to continue to employ over 3,000 people in Whyalla and the surrounding area.

No doubt the EPA was not expecting this extension. It was not something that anybody was expecting 10 years ago. In fact, I would be quite certain that when this first 10-year period was entered into 10 years ago it was probably considered to be very generous, that 10 years would be more than enough time for Arrium (it was not actually Arrium at the time) or the company to transition to reporting to the Environmental Protection Agency rather than to DSD. Here we are again, being told that the next 10 years will be more than enough time for them to transition from reporting to DSD and changing that to reporting to the EPA.

I have to say that I am actually comfortable with that. There are a lot of questions to be asked and there is more information to be gathered before it would be possible for the opposition to form a position on that issue, and I think that asking those questions is very important. As the shadow minister and as a local area member of parliament, I am comfortable with that, but it is a very big thing to essentially rule the EPA out of this work for 20 years, and I am looking forward to receiving a briefing from the EPA on what its view on that is.

The second part is with regard to the additional flexibility that the government wants in its ability. I will read a short sentence from the minister's second reading speech:

The Bill also inserts Section 20 to set out provisions for Schedule 3 of the Whyalla Steel Works Act to be updated to reflect variations in the environmental authorisation at the request of the Minister.

It seems to me that on the one hand the government is providing more security and more certainty to Arrium by extending the 10 years to 20, but it is also potentially taking some security and certainty away by inserting that clause. I do not doubt that if I was the minister I would want to do that as well, so I can really understand where that is coming from for a whole range of reasons, and it may well be that it is not only the environmental authority that the minister could request a change to.

The opposition's position on this bill is to not oppose it in this house and to reserve our final position until it is debated in the Legislative Council. I say very clearly to members of the government, to you, Deputy Speaker, to the industry and to Arrium that it is very unfortunate that we cannot give our unequivocal support to this bill today. I believe that we will provide that support. I would like to give it today, but I do not have the right to speak on behalf of all of my party. The reason that I cannot give my support today is that the information required to make that decision was not provided to the opposition in a timely fashion.

There would be a lot of things going on in the background in government that I would not be aware of. There might be very good reasons for that; there might be very bad reasons. There might be completely unacceptable reasons for that to have happened, but whatever the reason is it is unacceptable to have received for the first time a copy of the bill at nine minutes past 11 yesterday morning when the bill was to be debated at 11 o'clock yesterday morning. No rational person could think that it would have been possible to organise an opposition party room meeting to form a position on that bill in the two hours between 9 o'clock and 11 o'clock that morning and to put a position forward. I think it is a great shame that we cannot put a position forward, and I think it is the government's responsibility wholly and solely that we cannot put a position forward at the moment.

I say again that I am comfortable with the bill, but for the opposition to have been able to gather to take a position required the government to provide this information in a timely fashion. There might be reasons why it was not possible, but the bottom line is that the information was not provided.

I am also waiting for some information to come back from Arrium. I do not think for a minute that that information will do anything other than support my personal view that this is going to be good legislation that is good for Arrium, good for the state and good for Whyalla and the Upper Spencer Gulf. But, nonetheless, I have not received that information either and, as I said before, I am waiting for a briefing from the EPA.

The EPA have been good enough to say, 'Yes, we will do that. We need permission from the minister for environment to provide that.' I understand that is the process. I have asked if we can have that as quickly as possible. I have not had confirmation of when the time is. I have asked for it to be immediately if possible.

They are the things that need to be done for the opposition to actually put forward complete support. I would have hoped that we could do it in this chamber. Unfortunately, it is not going to be possible. I am very optimistic that we can do that in the Legislative Council but, of course, I rely upon my colleagues' support for that.

The opposition is very supportive of the Arrium company. The opposition is very supportive of the resources industry and the opposition is very supportive of Whyalla and the Upper Spencer Gulf, and I look forward to working through the committee stage of this bill with government and opposition members. I look forward to receiving the information that I still need so that I can put a position forward to my colleagues in time for the bill to be debated in the other place.

Mr WILLIAMS (MacKillop) (12:12): The shadow minister has put a very considered position on behalf of the opposition, and I congratulate him for doing that. I find myself in the position where I do not have to be quite as generous as the shadow minister. I think I was the shadow minister for this portfolio area when we addressed this last time about 10 years ago and can I say that the way this matter has been handled, obviously over the last 10 years and particularly in the last little while, and the way it has been brought to the house today smacks of incompetence. It smacks of incompetence of this government to manage the affairs of state.

I apologise to the house that because this has been brought on so quickly I have not had time to go back and research thoroughly the promises that were given to the house last time 10 years ago. But I feel fairly confident from memory that the house was told that the reason we were given a 10-year window of opportunity was that that would be plenty of time for Arrium (it was not called Arrium as I think it was OneSteel at that stage) to undertake its redevelopment change (I am just trying to think of the name they put to the whole project where they changed the process from utilising hematite to magnetite), invest a large amount of money (from memory I think it was something like $360 million or $400 million that was invested in that process) and then utilise their hematite resources as an export income earner and all of those things, and to change their system such that the company would be, within the 10-year period, well-positioned to be able to operate in the same sort of space that virtually all other businesses in South Australia operate.

I recall at the time reading the indenture under which the steelworks was operating—the business, because it is more than just the steelworks—and in the indenture which was current there were some money amounts and they were still expressed in pounds, shillings and pence. That is how far back it goes. From the smile on the face of the minister, I suspect it is still expressed in those same terms. I can remember 14 February 1966, so the indenture goes back prior to that. It has been around a long time. Notwithstanding that, 10 years is a period of time in which I would have thought the company, via negotiations with the government, would have been in a position to fulfil its obligations under our EPA Act and regulations and operate in a similar vein to, as I said, virtually all other businesses in South Australia.

I am reminded of another significant business in South Australia, Kimberly-Clark, that operates a paper mill in my electorate at Millicent. They had a 50-year indenture which was signed by the government in 1964. It expired last year, in 2014. I remember meeting with the management at Kimberly-Clark a few years ago and I raised the issue of the imminent expiry of their indenture and I asked, 'What is your position? Are you going to want to roll that over? What are you going to do?' They said, 'No, we don't want to be operating in an area in which other businesses are not operating. We want to be seen as a good, strong corporate citizen with a strong set of values commensurate with the way business is carried out in this state. We want to meet all of the contemporary standards in every way. We are not even asking for a rollover of our indenture. We will become licensed under the EPA in the same way as any other business, as we probably would be if we were starting up today.'

I mention that case because it is a very different situation from what we find is happening with Arrium. I talked about Arrium and the change in the way they operate their business—the change from hematite to magnetite, the issues they had with red dust and the fact that now a big part of their business is exporting hematite. All of those things do take time. I point out that Kimberly-Clark could see their indenture expiry coming and they changed the fundamental process they used at the Millicent paper mill from a chlorine-based bleaching system to a hydrogen peroxide-based bleaching system in the 1990s, a good 15 to 18 years before they were going to hit the end of their indenture. I think, as a business, they worked very diligently and in a timely fashion.

Parliament has already given Arrium (OneSteel) a 10-year window to get themselves organised. I have to tell you, Deputy Speaker, I am very disappointed that the parliament has been asked to extend that by another 10 years. As I said, I do not point the finger at Arrium: I point the finger at the current state government which, I think, has failed to work with Arrium to make sure they met their obligations within the window they were given.

I have just read the report and I have not seen anything in there which jumps off the page at me to say that there is a really good reason why we have to extend this. I certainly accept that the world steel market and the iron ore market is completely different now from what it was even a couple of years ago. It is completely different: I accept all of that. Notwithstanding that, I think the parliament should be given a good reason why Arrium was unable to meet their obligations, having (I can only presume) negotiated 10 years ago for a window big enough to allow them to do that. I just want to put on the record that I am concerned about the lack of managing the process by the government. I must add that I am fully supportive of Arrium, and I respect that the state government would be wanting to do everything in its powers to ensure the ongoing success of that business in very tough trading times. I accept all of that.

When I read the report, though, I am somewhat concerned that there does not appear to be any compelling reason why Arrium needs another 10-year window, but a fair bit of time is given to talk about the importance of Arrium as a business to South Australia and the number of employees, etc., and there is no doubt it is a very important business to South Australia.

I remember making the same argument about both Kimberly-Clark, Arrium and a handful of other businesses when I was previously arguing against the previous federal government's foray into carbon tax and the impact that it was going to have on those particular businesses, because they are all trade exposed, high-carbon emitters. Arrium is one of those and there is nothing that can be done about it. It is not as though it can change its technology and reduce its carbon footprint.

I have always been supportive of these businesses, and this one in particular. I do not have a problem with that, but I just question the logic put forward in the report that has been tabled in the house as to the importance—that if we are being asked to make this decision because of the importance, would we be given a different proposition if the business only employed 100 people or 50 people? I think that is the important question for us to consider.

Are the environmental restraints which would otherwise impact on this business so damaging to the environment that we are only giving this concession because of the number of people employed, and I think that would be questionable public policy if the answer to that is yes. If we would not offer the same to a much smaller and less significant business we would have to question our environmental credentials. The Labor Party always claims to be much more attuned to the environment than the Liberal Party is. It is a claim I have never accepted. I have never accepted it, but—

Mr Treloar: It's rubbish!

Mr WILLIAMS: It is rubbish, but I suspect that there is a very strong bit of evidence in this bill to disprove that claim that the Labor Party would have the community believe.

I have said enough about that aspect of the bill, but I do also want to canvass a few comments about clause 4 of the bill which, again, I think gives extraordinary powers. This goes way beyond powers that I believe—and the minister might correct me—are probably in any other statute of the state. The minister is grabbing his folder and he has obviously got an example. I am unaware of it at the moment, but the parliament gives ministers already extraordinary powers to make law, basically at the stroke of a pen, but reserves the right to review those, and I am talking about the regulatory-making powers, and regulations are a disallowable instrument.

I question the minister whether this power that is given to the minister of the day and the commissioner (and 'commissioner' means the Commissioner for Legislation Revision and Publication under the Legislation Revision and Publication Act 2002) are powers to make law. Subsection (4) of new section 20 of the bill—

Mr Griffiths: Who is that?

Mr WILLIAMS: Good question: 'Who is that?' Who is this commissioner? We know who the minister is. New section 20(4) states:

A revision of schedule 3 under this section will, for the purposes of the Legislation Revision and Publication Act 2002, be taken to be legislation revised under that Act.

So, I am not sure whether we are talking about a disallowable instrument here or it is not a disallowable instrument. However, if it is not a disallowable instrument I would suggest that if there is another example it would be a very rare example.

I have made my personal position very clear on innumerable occasions in this place about the use of regulatory powers and I think that we, as legislators, give ministers far too much scope to make law through regulation. Indeed, it started as a habit and it has become the modus operandi of this government to abuse the power that the parliament gives ministers to make regulations.

There is a clause in the relevant subordinate legislation that supported that legislation which allows the minister to promulgate a regulation and have it come into effect forthwith rather than waiting for the parliament to go through the process of having an opportunity to disallow it by the minister simply making a statement as to why he needs the regulation to come into power forthwith.

Again, I argue that that power would only be used under extraordinary circumstances or if you had a lazy government that failed to keep abreast of its responsibilities and all of a sudden had to make haste to make a new regulation. It seems that that is the situation we have. It is common practice today that virtually every regulation signed off by ministers of this government is brought into effect forthwith. That is not the way the parliament established the opportunity for ministers to make law; it is not what the parliament originally intended.

The parliament should have a serious look at the fact that ministers of this government have regularly abused the process. For many of the opportunities we give ministers to make regulations we should actually say 'No, put that in the act and if you want to vary it bring it back and argue the case in the parliament.' We would be doing our work as legislators to much greater effect if we legislated in that way rather than the way that we do, but I expect that my comments are falling on deaf ears on the other side because it is very convenient for a minister to have almost unfettered powers. It seems to me that the bill before us is, indeed, about to give the minister an unfettered power, but I will await the minister's response on this; he may be able to illuminate me further.

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (12:27): I reject the criticism of the opposition and dismiss it as being simply political grandstanding. The person speaking was the member for MacKillop, but they were the words of Adam Bandt, of Richard Di Natale, of Sarah Hanson-Young—they were not the words of a Liberal MP. Then again, the closeness today to the Greens of the Liberal Party is remarkable—and I am not talking about the member for Stuart, I am talking about the member for MacKillop.

I just wish that rank and file Liberal Party members would be here to see the former shadow minister and deputy leader of the opposition—the former shadow minister for mining—get up and say, 'You're granting an extension to an indenture that he agreed to 10 years ago to a company that makes steel in South Australia from iron ore mined in the Middleback Ranges.' I just wish that they were here to see the modern Liberal Party; I wish they were here to see it today. And I have to say I am proud that I am a member of a political party that stands alongside industry, that puts jobs and prosperity ahead of the ideological whims of minorities that the member for MacKillop seeks to represent.

Ms Chapman: Did you forget Bill Shorten?

The Hon. A. KOUTSANTONIS: I am a member of the Weatherill Labor government, and I stand on our record; I am proud of our record. I am proud of our record of environmental management, and I am proud of our record of supporting industry. But I hear the words opposite and I look up at Sir Thomas Playford and I look across the chamber and I wonder whether he would recognise them. I wonder whether he would recognise them.

Also, I want to thank the shadow minister for his qualified support for Arrium and just point out a few things to the house about the criticisms levelled at the government about this process. I will say at the outset that given what is occurring with commodity prices globally and what is occurring to Arrium, there is a sense of urgency about this legislation.

Ms Chapman interjecting:

The Hon. A. KOUTSANTONIS: I think there is, yes. I think there is a sense of urgency. But I will say at the outset that the Department of State Development is able to facilitate any briefings or information the opposition requires. It is my understanding that the opposition agreed on the evening of Friday 28 August to be provided with a phone briefing on the Arrium environmental authorisation extension by the Department of State Development and the Deputy Chief Executive, Dr Paul Heithersay. This was in lieu of a face-to-face briefing. The intent of this briefing was to ensure that the opposition was sufficiently informed as to take a position to the Liberal Party room on Monday 7 September.

Mr van Holst Pellekaan interjecting:

The Hon. A. KOUTSANTONIS: I am just saying what I am advised. I am just saying that is what I am advised. I am advised that Dr Heithersay conducted this briefing at 8.30am on Tuesday 1 September as arranged, during which the importance of having a party position secured before the parliament resumed so that the bill could proceed without delay was discussed. Following that briefing I am advised that Dr Heithersay subsequently arranged for information to be provided to the opposition by Arrium that indicated the company was working with the EPA towards an EPA issued licence. I am advised that despite this arrangement, Dr Heithersay was contacted on 4 September when he was informed that the opposition was unable to put a position to the party room and a subsequent written version of the phone briefing was required. This was provided by email on Friday afternoon.

Mr van Holst Pellekaan interjecting:

The Hon. A. KOUTSANTONIS: I am not disputing the opposition's version of events, I am putting the government's version of events. On Monday evening the opposition was advised that, while the Arrium environmental authorisation was discussed at the party room, a position on the proposed legislation could not be reached as members were not provided with an advanced copy of the bill—in advance of the Labor caucus. I have a responsibility to my caucus colleagues as well to show them bills before they are debated. A copy of the bill was subsequently provided by email, after which members of the opposition were nominated to be on a select committee to be appointed on the morning that the bill would be introduced to the house. Just before parliamentary proceedings began this morning, I am advised that the opposition requested that to proceed to a select committee they would need to delay it to contribute to the second reading debate, which is entirely appropriate, and this request was accepted.

Given the urgency of this bill and to ensure that we are able to proceed with the debate, I would again like to offer the opposition all of our assistance in ensuring that all of the information they require is afforded them. I also say that I suspect that the Deputy Speaker will declare this a hybrid bill.

The DEPUTY SPEAKER: I may not.

The Hon. A. KOUTSANTONIS: Well, then we are in serious trouble. Then there will be a select committee which the opposition will be on and can ask many questions, and then they will be afforded further opportunity here for witnesses, and then of course there will be a debate in the other house. So, while I accept that the time lines are tight, I do not accept that the government is trying to railroad this through the parliament. I do not accept that we are not supportive of democratic principles and I do not accept the criticism of the member for MacKillop, former deputy leader and former shadow mining minister, about the way we treat mining companies and the way we treat Arrium. I will just say this: this country should make steel, and we should support companies that want to make steel in Australia. No argument from opposite, okay.

Mr Williams interjecting:

The Hon. A. KOUTSANTONIS: Oh, and no argument from opposite—okay.

Members interjecting:

The DEPUTY SPEAKER: Order!

The Hon. A. KOUTSANTONIS: Well, the world is a difficult place, and there are competitive advantages that other countries have over Australia. We are doing everything we can to give an Australian-based company, employing Australians making steel, the ability to continue to make steel. Quite frankly, I would have thought that every member of the Liberal Party of South Australia would be in lockstep with the Australian Labor Party on this issue, and then we would be debating this with other members who do not believe that we should be living in an industrialised community.

While I thank the shadow minister for his support in steelmaking in this country and in the state, I reject categorically the member for MacKillop's remarks about environmental approvals and, quite frankly, the good corporate citizen that Arrium is. To try to make a distinction between Kimberly-Clark and Arrium, two very different industries, two very different processes, and in two very different parts of the world, and to say that somehow Kimberly-Clark are better corporate citizens because they want to have an EPA-issued licence rather than an indenture, what does that say about BHP? What does that say about every other indentured industry in this state? What does that say to companies that are investing in this state that have indentures, who are reading this debate, about what members opposite are thinking about indentured agreements? That means sovereign risk.

I think members opposite should think very carefully about the remarks they make in this parliament about companies that are investing hundreds of millions of dollars employing thousands of South Australians in this state about indentures. Indentures began under Sir Thomas Playford and he did a good job in bringing them about, and we support them and I hope members opposite would also.

Bill read a second time.

Mr van Holst Pellekaan interjecting:

The DEPUTY SPEAKER: I am on my feet, which means everyone has to sit down and listen.

Mr VAN HOLST PELLEKAAN: When do I have a chance for a third reading speech, Deputy Speaker?

The DEPUTY SPEAKER: When we get to it, I presume. When the report of the select committee returns.

Ms Chapman: Aren't we going into committee first?

The DEPUTY SPEAKER: No, I am about to read something, so if you let me read it you will be able to hear and make a decision about what I am about to say. The bill is designed to provide regulatory certainty to Arrium Ltd (formerly OneSteel Manufacturing Pty Ltd) who operate the Whyalla steelworks. The regulatory certainty provided by the bill is to extend by a further 10 years the environmental authorisation granted to Arrium Ltd under the Environment Protection Act 1993.

While the Whyalla Steel Works (Environmental Authorisation) Amendment Bill 2015 by its nature is a private bill, it has been introduced by the government and therefore the application of the joint standing orders as they apply to private bills is not relevant. This leaves the provisions of the joint standing orders as they apply to hybrid bills.

The joint standing orders provide for two forms of hybrid bills. The first is a bill introduced by the government, whose object is to promote the interests of one or more municipal corporations or local bodies and not those of municipal corporations or local bodies generally. The second is a bill introduced by the government authorising the granting of crown or wastelands to an individual person, a company, a corporation, or a local body.

Clearly, this bill does not fit the second category, but it does fit the first because Arrium Ltd, who operate the Whyalla steelworks, satisfies the definition based on precedent of a local body encompassing a corporation or company that has some benefit of, or operating within a confined geographical locality. Based on the precedents established by this house and the consistent application of the joint standing orders and the principles that guide the consideration of such bills, I rule the bill to be a hybrid.

Referred to Select Committee

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (12:38): I move:

That this bill be referred to a select committee pursuant to joint standing order 2.

Motion carried.

The Hon. A. KOUTSANTONIS: I move:

That a committee be appointed consisting of Mr Hughes, Mr Odenwalder, Mr van Holst Pellekaan, Mr Williams and the mover.

Motion carried.

The Hon. A. KOUTSANTONIS: I move:

That the committee have the power to send for persons, papers and records, to adjourn from place to place, and that the committee report on 22 September 2015.

Motion carried.

The Hon. A. KOUTSANTONIS: I move:

That standing order 339 be and remain so far suspended as to enable the select committee to authorise the disclosure or publication, as it sees fit, of any evidence presented to the committee prior to such evidence being reported to the house.

The DEPUTY SPEAKER: An absolute majority not being present, ring the bells.

An absolute majority of the whole number of members being present:

Motion carried.