Public Works Committee: Datacom Fit Out at Tea Tree Gully TAFE SA Campus

Ms DIGANCE (Elder) (11:31): I move:

That the 551^st report of the committee, titled Datacom Fit Out at Tea Tree Gully TAFE SA Campus, be noted.

This is a unique and interesting project and I am pleased to see TAFE SA and Investment Attraction SA working successfully with industry to create jobs in this state. This project will see Datacom locate its new contact call centre at the Tea Tree Gully TAFE SA campus instead of in New South Wales or interstate—other locations that were being considered by the company for its expansion. The TAFE campus is underutilised, with space currently available to lease to interested tenants. The campus is ideally located on Smart Road, Modbury, adjacent to the O-Bahn interchange.

Datacom currently employs 100 staff in South Australia not at the Tea Tree Gully TAFE SA site and not in contact call centre operations. With this new facility, Datacom will lease three floors in two buildings from TAFE SA. One floor in building 2 will be refurbished for a training centre where Datacom will train its new workforce in collaboration with TAFE SA, and the other two floors in building 4 will be refitted for the contact call centre. Datacom intends to employ a further 684 full-time equivalent staff within the first 24 months of operations, all at the Tea Tree Gully TAFE SA campus site.

These positions are entry-level, specialist and management positions and will require the support of training, education and recruitment organisations. There is the potential to expand this workforce to 856 full-time equivalents, should demand for Datacom services continue to increase. Coming back to the training centre, Datacom is proposing to significantly integrate training packages for its potential staff with TAFE SA. The intent is that students undertaking these courses will receive a recognised qualification and have the opportunity to gain employment following their training.

The fit-out costs for the project are estimated at $6.943 million (GST inclusive). The investment agency is providing financial support of $5.335 million (GST inclusive) for Datacom to establish its new contact call centre in South Australia, whilst Datacom will provide the remaining costs for the fit-out. The funds being provided by the investment agency incorporate a number of conditions, including employment targets. There will be other costs incurred by Datacom relating to the establishment of the contact call centre, such as recruitment and training costs. These have not been considered as part of this fit-out project.

Datacom will receive a three-month, rent-free period for the fit-out, and an initial 12-month, rent-free period as an incentive to establish at the Tea Tree Gully TAFE site. During this time, Datacom will be responsible for all outgoing costs for its facility. Following the initial rent-free period, Datacom will lease the area from TAFE SA. Given that the area is currently vacant with no interested tenant and TAFE SA is paying the outgoings, TAFE SA will have an immediate saving in outgoing costs once Datacom commences the fit-out, and will realise rental income from year 2 of the five-year lease.

Datacom is eager to commence work on the fit-out and establish their new contact call centre. Works on the fit-out will commence as soon as possible, with development approval already granted for the contact call centre. It is estimated that the full refurbishment will take around 14 weeks to complete, although Datacom will be able to commence operations as soon as one level of the contact call centre is completed.

This was a very interesting project, and I am pleased that Datacom is establishing a key component of its operations in South Australia. It is also always encouraging to see cooperation and practical training occurring at our TAFE campuses with the potential for real jobs at the completion of students' training.

I would like to thank the Department of State Development, including TAFE SA, for presenting this important project to the committee. I also thank the committee members past and present who reviewed this project: the members for Colton, Torrens and Finniss and also the member for Chaffey, who will be retiring from this committee. We will certainly miss his contribution. Given this, and pursuant to section 12C of the Parliamentary Committees Act 1991, the Public Works Committee reports to parliament that it recommends the proposed public works.

Mr WHETSTONE (Chaffey) (11:36): Sadly, this will be my last opportunity to make a contribution as a Public Works Committee member. It has been a joy for the almost two years now that I have been on the committee. I have found getting along with the committee members thoroughly enjoyable. They are obviously a good group to work with, and I think we have had quite a constructive process along the way. We have had a number of outings that have been quite robust, but I would like to thank the four members: Presiding Member (the member for Elder), the member for Colton, the member for Torrens and the member for Finniss. They are a great bunch.

What I would like to put on the record for the Tea Tree Gully TAFE SA fit-out is that part of this facility has been vacant for some time. There are currently about 200 students and staff using the campus with those 515 car parks. The Investment Attraction agency will provide the $5.3 million to Datacom to create a contact centre and training facility at the campus. The funding will predominantly be utilised to fit out the existing vacant space at the campus for Datacom's use. TAFE SA proposes to lease one level of building No. 2 and two levels of building No. 4 to Datacom, and Datacom will also receive a 12-month, rent-free period with that space starting at about 172 square metres. Further into the project, it goes down to 150.

Regarding some of the questions that I asked during the hearing, the amount of attraction money and the amount of negotiating that was done to get Datacom here raises a significant number of questions. There was a lot of information withheld from us. Datacom had a lot of in-confidence information that raised my suspicions—not only the $5.3 million from the Investment Attraction agency but obviously the rent-free period. I also think questions need to be answered on the concessions that are given around the tax discounts given to Datacom.

It was quite clear that Datacom was looking to head off to New South Wales and they were not coming to South Australia, but, with a large chunk of money, with rent-free periods and with other incentives for Datacom to come to South Australia, it shows that the state government is buying or paying for Datacom to come to South Australia. There are a number of credible, reputable companies right around the country, but, more importantly, there are a number of South Australian businesses that, if they had a leg up like this, they too would expand their operations, they too would employ more people, and they too would remain here in South Australia.

Again, more questions need to be answered around quite a bit of secrecy, because, after going through the Hansard after that hearing, it was clear that there was a lot of in-confidence answers given to questions that needed those answers, for transparency's sake. Currently, Datacom, with their hundred staff in South Australia, will continue to employ more people at the new site: 684 within 24 months. I will be keeping my eye on that number because we have seen these ambitious targets over and over again. That is an ambitious target, but even more ambitious are the 856 FTEs that will come, potentially, with the further expansion of that facility.

Obviously, with regard to the $6.9 million fit-out, Datacom has received a number of incentives that would justify that investment. I will not go on about it, but there needs to be more questions answered as to the incentivised offerings that were put to Datacom. My major concern is that there is nothing keeping Datacom from leaving. We do know that there are progress payments, we do know that there are payments made over a number of years, but once Datacom receive the investment attraction money there is nothing stopping them from leaving South Australia and going to New South Wales, for example.

It is reported that they were going to go to New South Wales, but, with the lure of money and rent and tax concessions, they are in South Australia. So, that is good for South Australia. On the point of risk of the company leaving voluntarily after funding is approved, the report stated that a strong business case and significant capital investment was to mitigate that risk. The report highlights the risk of the company leaving after the funding, or due to business failure, and this is countered by stating that the independent credit scoring agency, Dun & Bradstreet, concluded that Datacom has a 0.1 per cent probability of failure in the next 12 months.

The funding is to be approved over four years and the payments will be made over those four tranches, so that does give me some form of confidence that this company will not come to South Australia, take the money and run. Overall, I think it is a good outcome for South Australia. It does create jobs. If the Investment Attraction agency is put to task and will hand out that sort of money to a business, they need to, rather than looking at attracting international or interstate investment, just have a little bit of a look at trying to support South Australian investors that want to expand their existing businesses in South Australia.

Again, I would like to thank the Public Works Committee for their friendship and camaraderie over the last two years. It is a great committee and I am quite sad to be leaving. Apart from that, I look forward to the ongoing success of that committee.

Mr PENGILLY (Finniss) (11:44): I will not make a large contribution, but I will say a few words in support of this report that has come through today. Yes, we supported it in committee; however, the member for Chaffey has, quite correctly, raised some issues that need addressing.

As quite a bit of material was in confidence in the report to the committee, we are duty bound not to reveal it. But I would say that I felt uncomfortable about some of the things that have been done over this. I suspect that something smells in the state of Denmark, as the old cliché goes, and I think that applies in this particular issue. I do not know what has gone on behind the scenes, and we will probably never know, but I think it would be fair to say that the member for Chaffey and I are probably not the only ones who have a few questions that remain unanswered.

Indeed, we hope it is successful. It is really important that it is successful and that the companies involved stay the distance and act in the best interests of South Australia. But there are too many unanswered questions and too much was put in confidence. Clearly, deals were done between different organisations and the government. There needs to be a degree of transparency. In this case, I think there is a lack of transparency, but we are duty bound to keep that in confidence. I support the report.

Ms DIGANCE (Elder) (11:46): Thank you to my fellow Public Works Committee members for speaking on this report. It is certainly an exciting use of the TAFE space at Tea Tree Gully. I think the fact that it provides an opportunity for increased employment is welcome to the area.

Motion carried.