Industry Participation Policy

Ms WORTLEY (Torrens) (14:12): My question is to the Minister for Small Business. Can the minister advise the house if it is true that hundreds of millions of dollars in government work are heading to interstate companies?

The Hon. M.L.J. HAMILTON-SMITH (Waite—Minister for Investment and Trade, Minister for Small Business, Minister for Defence Industries, Minister for Veterans' Affairs) (14:12): I thank the member for Torrens for the opportunity to clarify the facts because there was a claim made by the opposition, and reported in the newspaper last week, that over $421 million in government work had been sent to companies outside of South Australia since January 2015. The claim misleads and shows a complete lack of understanding of how the state's Industry Participation Policy works.

The state government established the role of the Industry Participation Advocate in February 2013 to provide the government with independent advice on maximising the economic benefit to the state from government expenditure. The Industry Participation Advocate has provided more than 40 recommendations, all of which have been approved by the state government. One of those recommendations was to stop measuring economic benefit to the state by the location of the business or its registered office. Instead, we measure those things that matter, and that is the jobs or the labour associated with the contract, the capital being spent in this state, the supply inputs and where they are being sourced.

We have seen a significant improvement since the Industry Participation Policy was established. From the state's estimated $4 billion of expenditure on goods and services, the value of contracts let to locally based suppliers which employ South Australians has risen to 90.2 per cent from just 51 per cent in 2012-13—an extraordinary increase, almost a doubling. This is in addition to major projects awarded under the revised Industry Participation Policy, which has shown extremely strong results, with over 90 per cent of subcontracts awarded to contractors where the majority of the dollars spent is here at home in South Australia. This state now has the most sophisticated yet simple appraisal of economic contribution of any comparable jurisdiction. The primary focus is to procure from locally based suppliers and suppliers whose source inputs locally.

The South Australian Industry Participation weighting system balances the economic benefit to the state as part of an holistic value for money assessment. This point seems to have been lost, with contract examples provided to The Advertiser which claimed that $421 million has been sent to companies outside our borders. This needs checking. A standout of how misleading this information can be was the inclusion of the across-government contract for supply fuels and lubricants, card fuels—

Mr GARDNER: Point of order, sir: standing order 98 specifically requires that a minister reply to the substance of a question and not debate, which the minister is now beginning to do.

The SPEAKER: No, the minister is entirely germane. Proceed.

The Hon. M.L.J. HAMILTON-SMITH: That's exactly what I am doing. Thank you, Mr Speaker. I am referring to card fuels or the supply of fuels and lubricants to state government agencies, which has a contract value of $123.9 million. The three-year contract covers fuel card purchases at Shell, Liberty, Caltex and BP, including On The Run. This means government fuel card access to hundreds of fuel sites across the state.

With the fuel card you obviously don't fill up your car at the head office, which might be in Melbourne or Sydney. It shows how completely irrelevant it is where the registered office of the company is considered to be the billing address. In this case, the focus should have been on the hundreds of service station businesses across the state, the hundreds of staff that are employed in the supply chain, truck drivers, etc.

I am advised that 94 per cent of the spend under this contract is at SA-based petrol stations; only 6 per cent elsewhere related to emergency services. This is a perfect example of why the state government moved away from relying on the location of businesses to measure economic impact. We deal in facts; others prefer to trade in misinformation. I offer the opposition spokesperson a briefing with the industry advocate. If you want to know how government works and how these matters are dealt with, ask for a briefing and you will get it, but don't go out with misinformation and upset people with false info.

Members interjecting:

The SPEAKER: I call to order the members for Davenport and Chaffey, and I warn the member for Hartley for the second and the final time. The leader.