Parliamentary Committees

Public Works Committee: Barossa Infrastructure Limited Capacity Increase Project

Ms DIGANCE (Elder) (11:03): I move:

That the 570^th report of the committee, entitled Barossa Infrastructure Limited Capacity Increase Project, be noted.

This is not your usual SA Water project where they manage infrastructure for their own water and wastewater networks. This is a project whereby SA Water is upgrading their infrastructure to transport a third party's water. In this particular case, SA Water has a commercial arrangement with Barossa Infrastructure Limited (BIL) for the transport of their water allocation and purchased water supplies from the River Murray to the Warren Reservoir. Currently, SA Water transports eight gigalitres annually. In mid-2016, BIL approached SA Water to increase this to 11 gigalitres per annum.

To accommodate the additional three gigalitres, SA Water requires an upgrade to its infrastructure. It has also provided the opportunity for SA Water to address long-term water security for its own customers. The proposed works include the duplication of 3.7 kilometres of the Warren pipeline along Warren Road, the construction of a new pump station near Birdwood and the duplication of 950 metres of the Mannum-Adelaide pipeline between Mount Pleasant and Birdwood.

The cost of these works to SA Water is $11.2 million (excluding GST), and BIL will contribute a further $7.4 million to the project. In addition, BIL will invest $13 million to upgrade its own infrastructure. The project is expected to support at least 17 new jobs during the construction period, and BIL estimates an additional 84 permanent vineyard jobs and 90 wine production jobs could also be created.

The project will be staged, with the Warren pipeline and associated works to be undertaken first, commencing in August 2017. It is expected to be completed in early 2018. The second-stage works will ensure long-term water security for SA Water customers and is not part of the infrastructure required to transport the additional three gigalitres of water for the BIL project and their customers. The final stage should be completed by the end of 2018, weather permitting.

This project provides an opportunity to support the wine-growing region of the Barossa, an important industry in the South Australian economy. As the project is at the request of BIL, it has the support of local industry as well as the support of local state and federal members. 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 KNOLL (Schubert) (11:06): I rise with great pleasure to support the noting of this report. Barossa Infrastructure Limited is a triumph of looking at innovative ways to deal with a very important problem. In the mid-nineties, there was a large expansion within the Barossa. The grape-growing and winemaking industry was going gangbusters, but there were a number of issues in relation to the provision of water for grape growing and wine production.

There were issues around rising salinity within groundwater sources and there were also issues around capacity. In the past, small-scale irrigation based on natural rainfall was the only way that farmers could irrigate their grapes and potentially otherwise use SA mains water supply. If left unaddressed, those issues would mean that the Barossa Valley as we understand it today would not exist.

In the mid-nineties, we had—and I will not list all the names—Grant Burge, Ed Schild, Martin Pfeiffer and probably half a dozen local grapegrowers get together and said, 'We need to take control of our water future and we need to essentially get access to a better, more reliable but also high-quality source of water.' So they went to the government and SA Water, as it was then, and said, 'We want to be able to use your pipe network to deliver the Murray water that we want to buy through to the Barossa, where we will create a distribution network to pump that water around the Barossa.'

We recently discussed a third-party water access bill in this place, which is interesting because BIL did not need that bill or that act to get the job done; what it needed was political will. Even now, what we need is political will to get these things done. Essentially, there was lots of toing and froing and a reluctance by the water authority to become involved in this. It was done through the great leadership of then premier Olsen, who basically said, 'Guys, sit down and get this done because this has to happen.'

That political will to work through the bureaucracy and get this project off the ground has made the Barossa what it is today. Apart from growing some pretty good grapes, and apart from growers deciding to keep vines in the ground for over 100 years, in my view this is the key investment or the key change in the Barossa that has helped grow the Barossa into what it is today. These days, Barossa Infrastructure Limited underpins at least 50 per cent of the grape production in the Barossa. The figures came out last week.

This year, we had just over 70,000 tonnes. On an average year, we get about 60,000 tonnes of grapes, and over half of those are underpinned by water that comes from BIL. To think about what the Barossa is today and what it would be without BIL is quite something for us to fathom. Essentially, Murray water is pumped by SA Water's pipe network to the Warren Reservoir which, if the environment minister got off his backside, would actually be available and open to recreational boating use. We have only been waiting 10 years and we hope that this summer could be the year.

The previous member for Schubert still has a yacht that he bought for the specific purpose of boating recreationally on this patch of water, and if I am unlucky enough to be on the maiden voyage with him I hope I get out of the experience alive. I have this recurring nightmare that we go out and he does not know how to swim and he clings to me as he falls overboard and drags me down with him. Anyway, it will happen; it has been a passion project of Ivan Venning for such a long time, and I really hope it is delivered. That is where the BIL water starts. From there, BIL takes over, and they have a pipe network and a distribution network that covers an area of 450 square kilometres to deliver BIL water throughout the Barossa.

They keep adding megalitres to this program. It was six, then seven, then eight, then nine and we are now looking, I think, to go to a capacity of 11. I understand that this project takes it to 11, but moving these last extra couple of gigs requires BIL to actually put back some investment into their own network to have the capacity to deliver this water throughout the Barossa. The reason I mention this is that these grapegrowers got together and put their own money on the line to develop this pipe network. Apart from delivering high-quality, low-salinity water, it has also delivered them cheaper water.

At various times, it has delivered them water that is a quarter of the price that Clare Valley growers are paying for water from SA Water mains. It has delivered a competitive advantage to the Barossa growers, and their end of the pipework was all funded by themselves. In typical Barossa fashion, in typical thrifty, conservative Barossa grapegrower fashion, we had a party at Pindarie not long ago where BIL celebrated paying off all their debt. Somewhere in the order of $20 million or $25 million worth of debt was paid off over a 15-year period. BIL successfully paid off the debt, and we had a really big party with many dignitaries. It was a typical Barossa afternoon where we celebrated with a good glass of red the fact that we actually lived within our means.

BIL have now realised that there is a greater ability for them to expand the scheme, so they are now going to take on an extra $13 million worth of debt to upgrade their own pipe network and deliver $7 million to help fund SA Water's expansion of their end of the network. Again, this will help to underpin future expansion and future growth of grape growing in the Barossa. It comes at a pretty good time. It comes a time when grape prices have hit new records both last year and this year. Off the top of my head, I think the average price for shiraz was about $2,100 a tonne, which was pretty good—the highest on record.

Internationally, the demand for Barossa wine is growing. The dollar has come down and free trade agreements with Korea, China and Japan are starting to kick in. We are also seeing a bit of a resurgence in the US and probably our highest priority target is getting back into that market. We are also focusing as a region very much on ensuring that we produce a high-quality product when we put it back into these markets. We were very much in favour and in fashion as a wine destination in the late nineties and early 2000s.

We have fallen out of fashion, and I think that our wine industry now, compared with 10 years ago, is much more sophisticated and much more understanding of its place in the world and where it needs to be. We are seeing good growth in higher value exports, and that is very good because it underpins more profitable grape-growing production in the Barossa.

I commend this project to the house. I am glad that it has the support of the Public Works Committee. This is such an important project. I know, for instance, that the Clare Valley would like to see something similar happen in their region, and I know that there would be other regions around the place that would like to see similar things happen. The underpinning of water infrastructure across regions does help to create good growth. At the moment, we are looking at it with the Northern Adelaide Irrigation Scheme and we have looked at it, for instance, with the Virginia irrigation scheme, and I know that the Riverland obviously has their own as well.

These things are so important and, if done properly, they add so much to a region. I commend SA Water for the way they have gone about working with BIL on this. I commend BIL and those original pioneers for their ability to have the foresight to get this off the ground and for the struggles they went through in those early years to get farmers to part with their hard-earned cash on a promise of some water. I look forward to this growing and growing so that we can have a more prosperous Barossa that helps to facilitate export growth all around the world.