Whyalla Steelworks

Mr TELFER (Flinders) (14:19): My question is to the Premier. What, if any, provision has been made by the government for any additional taxpayer commitments to fund the Whyalla Steelworks administration? With your leave, sir, and that of the house, I will explain.

Leave granted.

Mr TELFER: By her affidavit, Ms Lara Wiggins, the administrator of OneSteel Manufacturing Pty Ltd states that in February 2025 the Treasurer entered into a deed under which the state agreed to fund the administration to a level of $400 million or, and I quote, 'such other amount that the parties may agree in writing from time to time'. The Premier said on radio today, and repeated again, that the administration would run for around 18 months. On the current rate, according to the affidavit of Ms Wiggins, funding for the administration alone could be around $2 billion.

The Hon. P.B. MALINAUSKAS (Croydon—Premier) (14:20): I thank the shadow treasurer for his question. As I enunciated in my earlier answer, we always anticipated that the first part of the administration would be the most expensive, for all the reasons I have given, amongst many more, and that is the point. The run rate, at which they use cash in the first instance, was always going to be higher. We anticipate it to decline. The other reason is this: through various arrangements that GFG had entered into when it owned OneSteel Manufacturing, we saw a lot of things that were—how do I put this?—compromising the cash flow. I am trying to choose my words carefully; others might be able to interject and help me out more freely—but compromising the cash flow.

By committing to pre-purchasing, and orders put in advance and various arrangements, there was reason to believe that they were chasing their tail. We know that to get the business in a stabilised position that it's not just about the amount of money going out the door to invest in the steelworks and employ people, and those other functions; it's also about the cash that comes in through the front door. That is to say, cash coming in from sales and revenue—whether it be from the mine or the steelworks itself—and that's going to take time to stabilise.

The order book of the business is going to take time to establish, because when the blast furnace went into shutdown last year that, of course, meant that other people who used to buy steel from Whyalla started to explore other options in the market, including importing steel, which is not good for the country. That has had an impact. So all of these things combined mean that it's going to take time for the administrator to stabilise the amount of cost that has been going out the door and get it sustainable, but also be able to start to generate the revenue that would negate the volume of cash that is required from the state during the administration process.

The other big variable in all of this isn't just the steelworks. Understandably, we spend a lot of time talking about the steelworks but then, of course, there is the mine. We know from data that is now publicly available that over $7 billion—

The Hon. A. Koutsantonis: It is 7.8.

The Hon. P.B. MALINAUSKAS: Seven point—which is over seven—so $7.8 billion of iron ore was expended. That's $7.8 billion worth of cash, and we want to see that number as big as possible because it is cash that is generated for the business. More than that, there is an opportunity to grow the yield, so to speak, by virtue of going into magnetite, but that requires the magnetite expansion program which GFG did not have the capital to bring to life. We want to see that come to life as much as possible during the course of administration, and KordaMentha is spending $15 million in just that first stage to start to generate that revenue.

So while I appreciate the simplicity—and I don't say that as a criticism, but it's a simple option just to extrapolate the run rate we see in the first instance—that isn't the way that KordaMentha advised us it will play out over the course of the period of administration. But again, while it is perfectly reasonable for the opposition to ask legitimate questions about what is the top-up, what's the plan around the top-up, and so forth, I would also hope that the line of questioning isn't seeking to draw a policy distinction between the opposition and the government about whether or not we think this is the right course of action.

If the opposition have other ideas, we are open to hearing them. We know what the position has been in the past—give Gupta 50 million bucks. Well, we are not doing that.

Members interjecting:

The Hon. P.B. MALINAUSKAS: We are not doing that.

Members interjecting:

The Hon. P.B. MALINAUSKAS: Whoa, whoa, whoa. Me thinks you protest too much in that instance.

The SPEAKER: The member for Morialta is on his final warning and the member for Unley is as well—one from a bit earlier on.