UPPER SPENCER GULF DESALINATION PLANT

The Hon. M. PARNELL (14:40): I seek leave to make a brief explanation before asking the Minister for Mineral Resources Development a question about the desalination plant proposed for the Upper Spencer Gulf.

Leave granted.

The Hon. M. PARNELL: Throughout the recently released environmental impact statement for the Olympic Dam expansion, frequent references are made to the state government's partnership in the BHP Billiton desalination plant proposed for Point Lowly. For example, in the EIS document under the heading 'Consequences of not proceeding with the plant', one of the benefits that could be said to have been forgone would be:

the potential to supply water to the Upper Spencer Gulf and Eyre Peninsula areas from the Point Lowly desalination plant (with the South Australian government's participation) thereby reducing the region's current reliance on the River Murray by up to 30 GL per annum...

Elsewhere, the EIS states:

a 280 megalitre per day...desalination plant at Point Lowly and water supply pipeline to Olympic Dam, comprising 200 ML/d for Olympic Dam and 80 ML/d for the South Australian government to replace River Murray water pumped to the Eyre Peninsula.

In the past, the Premier and other members of the government have spoken about the government's financial commitment to the project. For example, to quote the press release of 19 February 2007:

Premier Mike Rann today welcomed a firm commitment from federal Labor leader, Kevin Rudd, to a $160 million contribution to the proposed desalination plant in the Upper Spencer Gulf, should Labor win this year's federal election.

In the same release, the Premier said:

The state government has already committed a share of $160 million to the proposed plant and an equal commitment from the federal government means we can supply 22 gigalitres of freshwater—or one-third of the plant's capacity—to the people of that region.

The Premier and other members of the government have frequently justified the controversial location for the desalination plant at Point Lowly on the basis that water would be supplied to the Upper Spencer Gulf towns, including Whyalla, and also that there would be a positive environmental benefit through water no longer being extracted from the struggling River Murray, as Upper Spencer Gulf towns are primarily supplied from the river via the Morgan to Whyalla pipeline. Yet, in the wake of the Roxby EIS release, the government has sent very mixed messages about its commitment to the Upper Spencer Gulf desalination plant.

For example, on 4 May, the Treasurer—responding to questions from Matthew Abraham—was invited to recommit the government to its previous commitments. Matthew Abraham said that he thought that the government wanted to be absolutely locked in and that, if you have a desalination plant, it must do that—it must supply capacity for the Upper Spencer Gulf and Eyre Peninsula. Matthew Abraham asked the question:

...has that also become just part of the mix now, something you're prepared to let go?

The Treasurer's response was:

Well it is part of the mix. I've made statements previously that because we have now committed to and construction has begun on a desalination plant for Adelaide, the need to relieve pressure from the Murray has now been addressed through the desalination plant in Adelaide...

He continued:

...so therefore the need to build another desalination plant as it relates to the Upper Spencer Gulf may not be necessary because we are looking at other options about smaller micro desal for various parts of the peninsula.

It is clear that other stakeholders, such as the Whyalla Mayor, Jim Pollock, believes that the BHP Billiton-owned desalination plant is now not intended to supply drinking water to the Upper Spencer Gulf. I think it is clear that the community is confused about the state government's previously rock-solid commitment to this plant. My questions to the minister are:

1. Will the state government accept any water from BHP Billiton's proposed desalination plant for Upper Spencer Gulf towns, as it is clear that BHP Billiton thinks that this is still the case?

2. Will the state government stand by its previous statement that it will help fund the desalination plant up to $160 million?

3. If the state government does back out, as the Treasurer suggests, will the federal government also withdraw its matching funding?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (14:45): The honourable member has quoted the Treasurer. I can only reiterate the point that the Treasurer has made, that is, that things have changed since the original proposal for the EIS was put forward in 2007. Clearly, BHP Billiton has proceeded with the original proposal. It was always envisaged that it would operate a desalination plant to supply water for Olympic Dam but that there would be the capacity, if it was deemed appropriate, to add onto that particular desalination plant a state government component to supply the region.

The honourable member has correctly quoted the Treasurer, because my understanding since that time is that the government has committed to a desalination plant at Port Stanvac. That is now underway and the government has sought commonwealth support in relation to expanding that plant. Of course, regardless of the level of output by the Port Stanvac desalination plant, clearly it will take significant pressure off the River Murray, because the consumption of Adelaide is, of course, vastly greater than the consumption of Eyre Peninsula, notwithstanding the fact that there are significant water issues on Eyre Peninsula.

One of the factors that has changed in relation to the government position, as I understand it, is that BHP is proposing not to desalinate to potable standard to send the water to Olympic Dam. My understanding is that it will be desalinated to a lower level of quality, because most of the water that will be consumed at the plant does not have to be of potable quality. Of course, it has a secondary plant that desalinates water for distribution within Roxby Downs. This water is currently sourced from the GAB, which has a lower level of salinity than sea water but is not potable when it is drawn from the basin.

So BHP, as I understand it, will have the option of using a lower level of desalinated water, and I would have thought that the honourable member would appreciate that that is a good thing, because it obviously means that, if you are desalinating to a higher level of salinity because you can tolerate that, less brine will go back into the environment.

The Hon. G.E. Gago: And less energy requirements, as well.

The Hon. P. HOLLOWAY: And less energy requirements. So, I think that is a positive step. If the state were to tack onto that plant, it would not involve just an expansion of the plant; it would have to have additional means of desalination of not just the volume but also in terms of the level of treatment.

I think the Treasurer has indicated, as has the Minister for Water Security on other occasions, that the government is now looking for the option (as the Treasurer mentioned) of smaller desalination plants, where required, in that region. The main benefit to the river through taking the load off will be through the desalination plant here in Adelaide, for which the government is seeking federal funding. I guess we will know this evening when the budget is delivered whether or not that part of it is successful.