Legislative Council Fifty-First Parliament, Third Session (51-3) 51 3 Parliament of South Australia Legislative Council published Question Time Adelaide Ship Construction International ADELAIDE SHIP CONSTRUCTION INTERNATIONAL The Hon. J.A. DARLEY Legislative Council ADELAIDE SHIP CONSTRUCTION INTERNATIONAL The Hon. J.A. DARLEY (15:20): I seek leave to make a brief explanation before asking the Minister for Mineral Resources Development, representing the Minister for Economic Development, a question regarding land leased by Adelaide Ship Construction International at Port Adelaide. Leave granted. The Hon. J.A. DARLEY Legislative Council The Hon. J.A. DARLEY: Adelaide Ship Construction International leases land from Defence SA at Moorcroft Road, Port Adelaide, directly opposite the Torrens Island power station, from which it has operated a ship-building and slipway facility for the past 28 years. ASCI is the largest shipyard of its kind in South Australia, specialising in the construction, modification and repair of steel and aluminium vessels of up to 1,200 tonnes. The area is approximately 30,000 square metres. Defence SA recently advised ASCI that its rental, based on the unimproved value of the land, would be increased from $50,000 per annum to $152,000 per annum from 1 February 2007 for the ensuing five years. This was later revised down to $108,000 per annum. The ASCI lease clearly indicates that the rental is to be determined on the basis of unimproved land value. Coincidentally, the property immediately adjacent to ASCI, which comprises 8,000 square metres of filled land, was rented to the South Australian Research and Development Institute (SARDI) for $26,400 per annum, or $3.30 per square metre per annum. This rental was agreed to by both SARDI and Defence SA five months before the ASCI rent review. ASCI has spent in excess of $200 per square metre on filling the land over the years. One opinion of the value of filling the land is conservatively estimated at $30 per square metre. The rental equivalent of the value of that fill is considered to be $1.80 per square metre. The rental value of the SARDI-filled land was determined at $3.30 per square metre. My questions to the minister are: 1.	Given that the initial rental demand of $152,000 per annum was revised down significantly, was this initial demand a gross error on the part of Defence SA? 2.	Is the latest rent demand of $108,000 now considered to be correct, or is there still doubt about its accuracy? 3.	Does the minister agree that a reasonable rental of the ASCI site would be $3.30 per square metre based on the filled SARDI site less $1.80 per square metre, resulting in $1.50 per square metre, or, even less, having regard to the fact that the ASCI property is about 3½ times the size of the SARDI property? 4.	Is Defence SA attempting to profiteer from ASCI knowing that it would be difficult for it to relocate to other suitable premises? The Hon. P. HOLLOWAY Legislative Council Minister for Mineral Resources Development Minister for Urban Development and Planning Minister for Small Business The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (15:22): My colleague, the Minister for Agriculture, Food and Fisheries, who is handling this matter, is negotiating with Adelaide Ship Construction International. The government wants to reach a fair deal. Obviously, we are sympathetic to the situation that Adelaide Ship Construction International is in. At the same time, Defence SA is a government body, and I am sure the honourable member would be the first to criticise the government if we did not get a reasonable return on state land. It is the job of those agencies to get a fair value. In assessing fair value for land of this nature, given its history and given that a fairly unique activity is being undertaken on the land, it has been the result of some negotiation. My understanding is that the minister is negotiating, and I hope he can reach a suitable outcome. The Hon. D.W. Ridgway interjecting: The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: You are pressured by whom? At the same time, obviously— Members interjecting: The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: The honourable members opposite seems to be saying that the minister should conduct this in the media, that government agencies should decide rent based on how many column inches or how many minutes of airplay the minister has. The government, through Defence SA, has been trying to negotiate a reasonable outcome. My colleague, I am sure, will achieve a reachable outcome. The honourable member who asked the question referred to what it was like 30 years ago. The reality is that absolute waterfront land today has a different value than it did 30 years ago. Given that the honourable member is a former valuer-general, he would admit that it is not a simple matter of coming to a value. My understanding is that the rent for this particular place has not been adjusted for seven years. Government agencies have an obligation to get a fair rent. If they do not, I am sure the Auditor-General and, indeed, the opposition would be the first to criticise us for not getting an adequate return. As I have said, there is some complexity in this case, given the background and the fact that it is a unique site, and it obviously needs to be looked at. I am sure my colleague will do just that and, hopefully, come up with a reasonable and fair outcome for both parties.