ROXBY DOWNS (INDENTURE RATIFICATION) (AMENDMENT OF INDENTURE) AMENDMENT BILL

Second Reading

Adjourned debate on second reading (resumed on motion).

The Hon. R.I. LUCAS (19:48): Mr President, I commenced my contribution just before the dinner break, indicating that if we are talking about a game-changing decision in relation to South Australia's future, that description was more aptly used, I believe, for the decision that was taken back in 1982, rather than the decision that is being made today. As I indicated, it was to the credit of the then Liberal government, led by David Tonkin, and the mines minister, Roger Goldsworthy, and supported in this chamber by the Hon. Norm Foster, who crossed the floor and supported the then Liberal government.

It was a difficult decision, at that particular time, for the government because there was a lot of controversy. It was a difficult climate at that stage for uranium mining, and the nuclear industry in particular. It was a controversial time. At that stage, I was working for the Liberal Party organisation, and I was involved in the various discussions with the then premier and other ministers in relation to the various options that confronted both that government and the state of South Australia.

I was a mere bit player, I might say, not a major player, but nevertheless, an observer of what was going on. The bill was introduced and was unsuccessful as there were not the numbers for it to pass, and a number of months later a lot of work went on to try and convince other members in the Legislative Council to support the bill; in particular, the Hon. Norm Foster from the Labor Party. It was a momentous decision for him because, if he was to support the legislation, he would be expelled from the Australian Labor Party. He had been a significant figure within the Australian Labor Party; he had been a federal member, and had a significant history within the Australian Labor Party. It was obviously an important decision for him, as well as being an important decision for the state, and I think it was some three months later that the bill was brought to a vote for the second time and passed.

I know that during that period, within that government, views were being put to the government that it should take the issue to an early election. Of course, this was before fixed-term elections. We had a history of short-term governments through the seventies—an election in '73, an election in '75, an election in '77 and an election in '79—so an election in late 1981 or early 1982 would have kept that sequence of early elections, every two to 2½ years, during that particular period.

Having lost the first vote, the view was put to the then premier, and certainly to the government, that, as this was such an important issue for the people of South Australia, what ought to occur was that it should be put to an election. It was a divided view at the time. There were some who said that because it was a controversial issue the Liberal government might not win out of going to an election on an issue as controversial as uranium mining, but the alternative view was that this was such a game-changing decision, such a big project, such a big development for the future of the state, that the people of South Australia might support the Liberal Party and the then Liberal government in going to an early election.

It was the strong view of David Tonkin, in particular, having listened to those sorts of arguments, that it was in the state's best interests to get the project through, that if there were any prospect of getting it through then the Liberal government should do that, should try to get the extra support from Norm Foster to have the bill pass. If they were to go to an early election and were defeated at that election then clearly, under the Labor Party and Labor government at that time, which was implacably opposed to uranium mining and the Roxby project, that project would never have gone ahead.

So it came down, really, to a decision of the then premier. Having listened to the arguments on both sides for going to an early election, he took the view, 'No, let's see if we can get this project through by continuing to work on Norm Foster.' Ultimately, Norm Foster crossed the floor, the legislation passed, and he was booted out of the Labor Party. He was either booted out or resigned; I cannot remember the exact formalities. Sometimes they resign before they are booted out in the Labor Party. There are certainly recent examples of that, as we know. Nevertheless, he was out of the Labor Party as a result of having taken that decision.

At that particular time—and I know a number of colleagues in the lower house have referred to it, and I think the Hon. Mr Ridgway referred to it briefly in his contribution earlier today—Mike Rann was the leading opponent in the Labor Party and in South Australia opposed to uranium mining and opposed to the Roxby Downs project. I have a copy of a pamphlet of some 30-odd pages. It was a special supplement to the Labor Forum, which was the record for the Labor Party at that stage (in March 1982) entitled, Uranium: Play It Safe, by Mike Rann for the ALP (SA) nuclear hazard committee.

It is interesting, as we go back on the history of this particular project, it describes Mike Rann as the chairman of the nuclear hazard committee of the Labor Party, adviser to John Bannon, etc., and a 'leading activist in the campaign against French nuclear testing in the Pacific'. He was a member of the Dunstan fact-finding mission on uranium in January 1979 and in 1981, and used an overseas holiday to investigate developments since that time.

The nuclear hazard committee members included: Norm Foster, Bob Gregory, Colin McKee, Chris Schacht, John Scott, Don MacLeod, Sharon Mosler, John O'Neill, Carolyn Pickles, Jenny Russell, Mike Rann and David Ruff. Mike Rann thanked Wendy Jaffer, Margo Carmichael, Julie Vaughan and Kay Turner for their assistance in the production of the supplement. Those in the Labor Party and those who follow the Labor Party will know that a number of those members of that committee had long careers within the Labor Party and continue to have long careers within the Labor Party as well.

In this 30-page, in essence, attack on the uranium industry, let me refer to a couple of sections. Under the heading 'South Australia's Non-Boom' Mike Rann states:

In South Australia the Liberal Government has got itself into a tangle over the proposed Roxby Downs copper and uranium mine.

Since the September 1979 election, Premier Tonkin has pinned his Government's political hopes on the development he has described as eventually being as big as Mt Isa.

Faced with record unemployment, the South Australia Liberal Government has painted itself into a corner over Roxby Downs. No serious commentators are now likely to join the Premier in trumpeting the economic impact of Roxby.

Let me repeat that—this is Mike Rann:

No serious commentators are now likely to join the Premier in trumpeting the economic impact of Roxby. Even Western Mining, a partner with BP in Roxby exploration, will not publicly commit itself to actually mining the ore body despite its insistence that the Government pass an indenture bill for the project.

Negotiations over the Indenture have not gone well for the South Australian Government. The Indenture Bill was supposed to be presented in November 1981. It didn't appear. Then it was due to be presented to Parliament in December of that year. But negotiators failed to agree over electricity prices and royalties.

The Bill was finally introduced in March 1982. It was a disappointment even to the strongest supporters of Roxby. Instead of the 10 per cent royalties predicted by The Advertiser, the real figure was 2.5 per cent, eventually rising to 3.5 per cent. And there was no guarantee in the indenture that mining would proceed beyond the feasibility stage.

The companies knew that the government's political strategy hinged on a Roxby go ahead. With depressed uranium sales likely to continue throughout the 1980s and probably beyond, the government was in a weakened bargaining position. To put it crudely, the Roxby partners had premier Tonkin over a barrel, and the indenture publicity hype, full of ifs rather than whens, smacked of a political stunt.

That was Mike Rann, the former premier, but at that stage one of the leading anti-nuclear, anti-Roxby advocates in South Australia.

It has become urban folk law that Mike Rann said that Roxby was a 'mirage in the desert'. It is certainly my understanding that he probably wrote the phrase but did not actually use the phrase. The phrase was used by John Bannon. Nevertheless, I think it accurately describes the position Mike Rann was adopting at that particular time to the Roxby Downs project. As I quoted, his view was that no serious commentator at all believed in the claims about the economic impact of Roxby.

Attached to this ‘Play it Safe’ leaflet from Mike Rann was an interview that Mike Rann did with Walter Patterson, an America nuclear physicist based in Britain, who claimed to be an expert on the nuclear industry. He was interviewed by Mike Rann in London in April 1981. There are four or five-pages of the interview and I will not go through all of them, but to give a flavour of some of the hard-hitting questions as an indication of where Mike Rann was going, he states:

Will there be a market for South Australian enriched uranium then?

Patterson said:

Personally I very much doubt it.

Mike Rann further on, in relation to Roxby Downs, said:

Do you think that South Australia could be landed with a white elephant or is that going too far?

Patterson:

Not at all, I think there's likely to be a very large white elephant which once in place will be a white elephant that will be very difficult to get rid of.

Further on Mike Rann says:

Some critics of nuclear power in Australia are now arguing that, whilst there are still problems with international safeguards and with the ultimate disposal of nuclear waste, the actual uranium mining process doesn't pose any hazards: would you go along with this view?

Patterson:

No I would not. Any large mining operation poses immediate occupational hazards and environmental hazards, and the record of the uranium mining industry worldwide is nothing to be proud of. The problem, which is the most serious, which was so recognised in the royal commission report in Canada, is the problem of the eventual disposal of the uranium mine tailings. I'm referring to the fine sand that is left over when the uranium is dissolved out of the ground-up rock. This fine sand which remains contains radium and a number of the other very poisonous radiotoxic elements, and they are now in a finely divided state above the surface of the ground in very, very large volumes, literally millions of tonnes.

Uranium mine tailings, which now have accumulated in places like the south-western United States and in Ontario, have proved to be very difficult indeed to stabilise and manage in such a way as to prevent the eventual departure of these radioactive materials into local waterways and into the air.

Mike Rann's question:

What sort of problems would this pose?

Patterson:

Well the materials in question like radium are radiotoxic.

Then there is a long description of the problems they pose. As I said, it is a long and lengthy interview. The questions, all from Mike Rann, support the notion or are indicative of the notion that the uranium mining industry was a dangerous industry and that there was nothing much to be gained from the Roxby Downs project.

Finally, in terms of this leaflet, ‘Implications for Action’, Mike Rann and his committee recommended a variety of initiatives, but one which was very popular at that particular time, for those of us who can remember it, and which Mike Rann recommended, stated:

Concerned citizens should also press their local councillors to attempt to have their local area declared a nuclear free zone.

We will remember that activists like Mike Rann were encouraging councils to declare local council areas as nuclear free zones all through that period of the early 1980s. Mike Rann was a leading advocate and proponent of the nuclear free zone movement at that time. His anti-uranium and anti-nuclear activism extended into other areas as well. I have a copy of another story in the Labor Party Herald at the time, in the early 1980s, under the heading 'Campaign says boycott BP':

South Australia's Campaign Against Nuclear Energy is trying to persuade British Petroleum to pull out of the Roxby Downs venture. BHP has a 49 per cent stake in this uranium associated venture. It is also involved in planning for a uranium conversion plant. CANE has asked those opposed to uranium mining to show their feelings by buying their petrol from service stations other than those selling BP petrol. There are more than 70 BP petrol outlets in the Adelaide metropolitan area. CANE has issued thousands of boycott stickers, posters and leaflets.

Signed, Mike Rann. The contents of that clipping in the Labor Herald did not stop Mike Rann saying in the House of Assembly on 16 February 1988, 'I have never been a member of the Campaign Against Nuclear Energy.' If anyone wants to take Mike Rann at his word—and I certainly would not—if he was not a member of the Campaign Against Nuclear Energy he was certainly promoting their causes within the Labor Party Herald in that particular article, and a number of other articles as well.

The point of raising these issues is that Roxby Downs as a project is a neat bookend for the political career of Mike Rann and indeed the Australian Labor Party, particularly for Mike Rann. It is my strong view that Mike Rann, not only on this issue but on many other issues as well, is what I would refer to as a political chameleon. In the late 1970s and the 1980s it was popular to be opposed to uranium mining, the Roxby Downs project and the nuclear industry, and so at that time Mike Rann was a firm opponent of uranium mining and Roxby Downs.

As we have arrived to where we are now, when over the last 10 years or so it has become much more popular to support major economic development projects such as Roxby Downs, Mike Rann's views have changed to mirror the views of the community. In the late 1970s and the early 1980s, he was strongly opposed to uranium mining and opposed to Roxby Downs, but as a matter of convenience Mike Rann, because he sees votes in it, or because he saw votes in it, because he saw it was a popular position, has changed the views that he had to try to pick up political support.

That is why I said before the dinner break that, whilst I disagree with the views of the Hon. Mark Parnell and the Greens, I at least acknowledge that he remains true to his views and true to his principles. Thirty years ago Mark Parnell would have been an opponent of uranium mining and the nuclear industry and today his views have not changed at all, whereas it suited a populist, an opportunist, a political schizophrenic like Mike Rann to be an opponent of Roxby Downs in 1982. He led the charge against Roxby Downs in 1982, he was a leader of the opposing movement of Roxby Downs in 1982, but now, because it is opportunistic for him in a political sense, all of a sudden he has become the supposedly leading supporter and supposedly the reason why we have the indenture bill before us this evening.

As I said, the true leadership on these issues was shown by former Liberal premier David Tonkin, mines minister Roger Goldsworthy and the Liberal Party because, like the Greens, albeit with different views, we were and remain strongly supportive of the mining industry, uranium mining and the Roxby Downs project. It is not a matter of political convenience or political opportunism that we support the bill that is before us this evening. That is why, frankly, it is a little galling for those who know the history of Mike Rann and the Australian Labor Party to see them endeavouring to claim all of the credit for the most recent developments in relation to the Roxby Downs project.

You do not have to go back to the 1980s. It was only in the elections of 2002 and 2006 that Mike Rann and South Australia led the charge against a low-level nuclear waste dump in South Australia, somewhere in the north of the state; that is, that radioactive gloves and equipment which are stored in the basements of the Royal Adelaide Hospital, The Queen Elizabeth Hospital, the Lyell McEwin and in the suburbs of Adelaide—

The Hon. J.S.L. Dawkins: Roseworthy College.

The Hon. R.I. LUCAS: —Roseworthy College, the Hon. Mr Dawkins reminds me—that the collection of radioactive equipment and materials stored in hospitals and other locations in the suburbs of Adelaide and taking them away from those locations and putting them in a stable facility in the north of South Australia somewhere was something Mike Rann saw political or partisan advantage in leading the charge against during the early part of the last decade and during those particular elections.

In supporting the bill this evening, I do not give credit at all to Mike Rann, the former premier, on this issue because his political opportunism and hypocrisy, as I and others who have spoken in this debate have indicated, is only too self-evident. We welcome, nevertheless, their change in approach, but it is certainly not something that we are going to agree to; that is, that it is only as a result of decisions they have taken that we see this bill before us this evening.

In terms of the passage of this debate, I also want to commend the current leader of the Liberal Party, Isobel Redmond. Certainly, she could have played politics in relation to this issue if she had wanted to. She could have followed the lead that Mike Rann adopted back in 1982 and adopted that sort of spoiler approach to a project of major development for the state, but that was not the approach she adopted. Isobel Redmond, through the debate, did raise questions about important issues that were raised by the community, in particular, the desal plant, in the early days. She raised the questions that had been raised with her. She listened to the advice that was provided by both BHP Billiton and the government, and others, and came to the judgement, ultimately, as we all did in the Liberal Party, that it was in the state's best interests for us to support this project.

Mitch Williams in another place put the view on behalf of the party officially that, certainly from our viewpoint, there are aspects to the bill and to the indenture, in particular, that he indicated that he believed that, if we had been negotiating, we might have handled in a different fashion and a different way. Certainly, we believe it might have been handled in a way which would have seen even greater benefit for the people of South Australia and the public benefit from the project.

However, having been involved in these things, I accept that they are a matter of negotiation. It is always easier, either in opposition or from the observer's seat, in relation to negotiations, but I think that the propositions as outlined by Mitch Williams in his contribution in the House of Assembly were reasonable propositions and issues, and if we had been in the position of being able to negotiate we may well have achieved slightly different outcomes for the people of South Australia, but that is in the what-ifs and no-one will ever know.

What we have is what is before us at the moment. The options that confronted the Liberal Party were seeking to amend either the bill or seeking to put propositions to amend the indenture in areas where we believed that perhaps there should have been changes. I guess the issues of critical debate have been the royalty arrangements (which I will address some comments to later) and also the job benefits that accrue to the state from the project.

I accept that these issues would have been extraordinarily difficult in terms of the negotiations between the proponents and the government negotiators. The issue now for the Liberal Party and for the parliament is: what is it that we are prepared to do? We have indicated that we are going to support the bill but the other option was to seek amendment. The dilemma for the Liberal Party and, frankly, for the parliament, is that, whilst it is within our right to seek to do that—and I think the government and BHP Billiton have acknowledged that—ultimately, if we were to seek to go down that particular process, it becomes a question of calling each other's bluff. That is, BHP and the government have argued that if this is delayed, for example, to February/March, that it might miss the opportunity for being considered by the BHP Billiton board and might be overtaken by some other worldwide project in the flow of projects within BHP Billiton worldwide.

That would be the dilemma for the opposition and the parliament. Ultimately, the issue would be, if because of the problems in Europe or worldwide, the BHP Billiton board took a decision to not proceed with the project then, of course, the political dilemma for the opposition and also for those in the parliament who delayed the consideration would potentially be a significant issue. I am sure the government would seek to blame the opposition for potentially a delay in the project or perhaps the project not proceeding.

So it would have been a question of calling the bluff and the issue then is: is that in the public interest; is there a public benefit in that; would the parliament be able to force a negotiated better deal or, frankly, would BHP Billiton just sit on its hands and say, 'Well, we'll come back in 12 months' time or whatever and talk to you at that particular stage, but we're not going to change either the royalty payments or the job benefits from the project'?

Ultimately, that is where the reality of the position for the parliament and for the opposition comes home most starkly, I suppose; that is, whilst technically there is the power to seek to force change and amendment, in reality that is extraordinarily difficult and it would be fraught with potential public controversy if that was to be the course that parliament sought to go down.

For those reasons and for the others (as well as being, as I said, for 30 years or more, a strong supporter of the Roxby Downs project), Isobel Redmond and Mitch Williams have outlined that the Liberal Party is supportive and will continue to be supportive of the project and will support the bill that is before the parliament at the moment.

In terms of this issue of whether you play bluff with BHP or not and what is the true position of BHP, I was interested in the reported comments that came from BHP's recent annual general meeting, reported in the national media. I was interested to see the reported comments of Marius Kloppers, who essentially followed the script that we have heard from the government here and from Mr Kloppers and other representatives of BHP Billiton in South Australia, but it was interesting to see the reported comments of his chairman, Jac Nasser, because he clearly was not working from the same script.

He was off the leash, perhaps. Sometimes chairmen do those sorts of things, not just in this company but in others as well. It was interesting to see the piece written by Matt Chambers in The Australian, which stated:

Speaking after the company's annual general meeting in Melbourne yesterday, Mr Kloppers tempered chairman Jac Nasser's enthusiasm for the project, saying things needed to move quickly. 'In our base-case plan we've got a preferred date for Olympic Dam...and it's probably fair to say we're a little later than we'd like to be...If something gets delayed, then inevitably, probably what the management will do, it will present the board with other options. I think that's important.'

The comments were made after Mr Nasser said $US1.2bn of pre-commitment spending already approved by the board indicated how keen the board was to go ahead with Olympic Dam.

This is a direct quote from Jac Nasser, the chairman.

'It is always difficult when you are thinking of it as some kind of down payment, I think of it like the GDP of Nicaragua or something,' Mr Nasser said.

By that, what he's saying is, 'Look, we're spending $1.2 billion of precommitment. That's a fair indication that we, the board, are serious and this is going to get the nod.' People dismiss $1.2 billion as being some sort of down payment. He points out what a significant lump of money that is, and what a big precommitment it is from the company.

So, Jac Nasser's view is obviously publicly more bullish than the position that Mr Kloppers has adopted and the state government has adopted. I can understand that it is a political game that is being played in relation to this, and it does not suit the purpose to have both the state government and Mr Kloppers saying, 'Hey, this is going to go ahead anyway.' It obviously serves the purpose to continue to raise doubts about the project.

Certainly, in the discussions that I have had over the last four to six weeks with people from outside South Australia, people with experience both in the mining industry and in big national and multinational companies and people who have served on boards and in management positions in relation to this project—and they could all be wrong; that's business—can I say that universally, all those people to whom I have spoken believe that this project will go ahead, that there is no doubt about the project going ahead, not just the $1.2 billion precommitment but their view about the profitability in the long term of this particular project and the processes that have been adopted by the company and the government.

As I said, the universal view of that small number of people that I have spoken to, from outside South Australia, both with management experience at major companies and on boards of major national and multinational companies, is that they believe that this project is a goer, that it will go ahead and that much of what we are seeing at the moment is posturing.

As I said, they might be wrong. We might all be proved wrong in relation to that. Time will tell. However, from what I have read, heard and seen in relation to this—and I do not profess to be an expert—this project will go ahead. I cannot see that the circumstances that currently exist and are likely to exist over the coming six months, even with the instability and turmoil that we see in Europe, will prevent this project from going ahead. This is a long-term investment and a no-brainer, in my view, in terms of a company as big as BHP Billiton being able to manage this over the long term.

I must admit, I was interested in one of the statements that the Hon. Mark Parnell put on the public record from I think Mr Kloppers in London a little time ago. I had not seen that before, I must admit. However, again, I think that is further evidence that, when these discussions are occurring elsewhere—confidential briefings of investors and other companies—it is a more bullish view coming out of BHP Billiton management than we have seen publicly here.

As I said, I make no particular criticism of BHP Billiton over that. Having been involved with the electricity privatisation projects of the late nineties and early noughties here in South Australia, I know that big companies position themselves publicly, and in that case it was a tendering arrangement. These are the games that businesses play to get their projects up, and that is the way of the world. As I said, from my viewpoint, I make no particular criticism of the game that is being played to try to get this project up.

Another issue that I want to raise is that, in the public debate on this, some have sought to portray BHP as some sort of business ogre in relation to the development. If there was an option of thinking good things or bad things of the company, the bad things are automatically thought of the company and its motives. Improper motives on a range of things are generally attributed to them.

I am sure that BHP Billiton, as with most major businesses in Australia these days, knows that it is in their own corporate interest and in the interest of their shareholders, to the extent that it is possible in terms of making a buck, that they are seen as being as good a corporate citizen as they can be. It is not in their interest, as we have seen with other companies, to find themselves embroiled in major environmental problems, being dragged before parliamentary committees because of leakages or whatever else, or being dragged through regulatory regimes as a result of not having complied with some regulatory regime or authority.

That is not a good look for a big business these days. It is not a good result for their shareholders. It is not a good look for the management because sometimes, if these things get out of hand, managers and management do not end up seeing out the rest of the financial year. There have been many examples where, because of environmental problems, boards have made decisions in relation to the careers of senior managers within their company if it becomes a public issue for the company.

I think that the Hon. Mark Parnell rightly identified circumstances in South Australia, but I think also nationally and around the world, in the fifties and sixties where we tried to get projects up and indentures signed, such as the Lake Bonney indenture in my neck of the woods in the South-East. The Hon. Mark Parnell is right: as we look back now, how did we ever come to write, sign and approve those sorts of agreements? They were a product of their times. Times have certainly changed markedly since then.

As I said, it is not only governments and parliaments that are interested in a range of things other than just the budget bottom line, but companies themselves are increasingly aware of the problems it will cause for their brand, for their company and for their shareholders' interests if they are not cognisant of the sorts of problems that could ensue if they do not do as much as they can in relation to some of these environmental issues.

I do not accept the view that is often touted that this is a so many trillion-dollar project or whatever it is, or BHP Billiton has made so much money over the last 12 months, or a range of other phrases which are used by opponents of big businesses in general and BHP Billiton in particular. They are there on behalf of their shareholders—people, superannuation funds and individuals—who have invested in these companies. They want a return on their investment and it is in their interests, within reason, to get their projects up and going and to do the best possible deal on behalf of their shareholders.

From our viewpoint, we rely ultimately, as we have here, not on the parliament to do the best deal for South Australia but on the government and its negotiators to do the best deal possible on behalf of the people of South Australia. Some of the claims the government has made about the project over recent times have clearly over-hyped the project. I know the question has been asked, but in tracing the history of the claimed number of total jobs to come from this I went back and looked at the various claims from former premier Mike Rann in relation to the Roxby Downs project.

In February of 2006, just before the 2006 state election, Mr Rann released a press statement which said, 'And the Olympic Dam mine is poised to more than double in size, creating 23,000 jobs.' Then, in February 2010, there was another press release saying that there were benefits for all and 23,000 jobs from the Roxby Downs project. The history is that just prior to each election it was announced that there would be up to 23,000 jobs. I notice the number now is certainly not 23,000 jobs.

There seem to be various claims about jobs, and one of the members in this debate has asked for clarification of what, specifically, the government and the proponents are claiming. What that demonstrates is that there has certainly been over-hyping from the government on the project. The Hon. Mr Parnell referred to the press release on 12 July 2007 from the former premier, under the heading 'BHP Billiton's "China option" is not South Australia's option,' which stated:

Premier Mike Rann has told BHP Billiton that the South Australian Government will strongly oppose any moves by the company to do most of the processing of minerals from the expanded Olympic Dam Mine overseas.

Mike Rann is quoted as saying:

South Australians own the resource. South Australians own the minerals. And the South Australian taxpayer is being asked to invest massively in infrastructure to support this project...We have a right to expect a decent return on that investment in the form of jobs and economic development for the long term...We do not want this world-class resource to be unfairly viewed as some kind of giant quarry from which both jobs and minerals are exported. I'm aware that off-shore processing is not the only option BHP Billiton is now considering. I met with BHP Billiton executives earlier this week, and I have made my views perfectly clear to the South Australian Government, through our indenture agreement negotiations will maximise the benefit of this mine for all South Australians. I will insist that jobs and value-adding are the foundation of any indenture legislation. BHP Billiton is expecting the South Australian Government to invest hundreds of millions of dollars into this mine through the provision of infrastructure and services. It will require more roads, schools, health services, policing and so on. We want and expect a decent return on our investment.

They were the strong words former premier Rann was putting around on 12 July 2007. He was going to tell BHP Billiton executives that the China option was not an option from his viewpoint.

The sad reality is that he came whimpering back, tail between his legs, because the bill that we had before us makes no restriction at all on BHP Billiton in relation to the claims that premier Rann made. I think that the former treasurer Mr Foley has indicated that the government had to back off that particular position in terms of its negotiations, but it served a purpose from the government's viewpoint that, as I said, it was out overhyping the deal and that was the position that was publicly put until we saw the final detail of the indenture.

The current minister for mines and energy in terms of this project reminds me of a little puppy dog who has been taken off the leash by his owner and he is running around wagging his tail looking at everything and saying, 'How good is this? I am going to take all the credit for what has occurred.' I am sure he would have been a fearsome negotiator on behalf of the state of South Australia. The BHP Billiton executives would have been quivering with fear every time they fronted up to 'Turbo Tom' Koutsantonis. Here he is in a contribution in another place:

This signals to the entire mining industry that we are about to take our rightful place amongst the titans of mining: a safe regime to invest, the best regulatory system in the world, the fastest approval process in the world, and the highest environmental standards in the world.

And from earlier in his speech:

We are about to have the largest ever endeavour in human history.

Kevin Foley interjected, 'Any history!' The Hon. Mr Koutsantonis, which I am sure would be of interest to some other mining interests in the state, said that there are no sovereign risk issues in this state.

The Hon. J.M.A. Lensink: Just ask Marathon.

The Hon. R.I. LUCAS: Yes, well, I think there might be some other companies that would be interested. Marathon and the people who are involved with the negotiation of the PPP for prisons might have a different view as well. That is the ever-understated position of the current minister for mines, the Hon. Mr Koutsantonis, in relation to it. Just looking at some of those claims, clearly they are absurd, and I guess it does him no credit and the government no credit and, frankly, the state of South Australia no credit when major international companies like BHP Billiton executives see that sort of nonsense being trotted out by the minister on behalf of the state in the parliament.

'The highest environmental standards in the world.' With the greatest respect, I am no expert in the environmental area. I would bow, I think, to the Hon. Mr Parnell who knows slightly more than I do about the level of environmental standards. Now, whether or not you agree with them (and I think that there has to have been a balance in relation to the negotiation of environmental standards), the Hon. Mr Parnell indicated the sort of environmental standards that are used with other mining developments around the world, and certainly there are some which are much higher and tighter than the environmental standards in particular in relation to the management of tailings.

The processes that we have agreed are appropriate for this particular project, and we are supporting them, etc., in terms of managing it, but to actually say that the environmental standards that BHP Billiton is being asked to use in relation, for example, to the management of tailings are the highest environmental standards in the world is just palpable nonsense. Possibly the only person who believes that is Turbo Tom, and I am not even sure that he believes it, but he certainly says it in terms of trying to overhype his contribution and the government's contribution to the project.

As I said, I am not making criticism of the environmental negotiations that went on in relation to this particular project. Ultimately it was a process of negotiation, and the government has accepted various standards in relation to the management of tailings. We, the Liberal Party, are prepared to accept those as well, but do not try to dress them up as being the tightest, the toughest, the strongest and the bestest in the whole wide world, or the 'largest ever endeavour in human history'. Give me a break! Let us at least—

The Hon. A. Bressington interjecting:

The Hon. R.I. LUCAS: Yes. Let us at least try to keep our feet on the ground and make mature, rational and possibly sensible judgments about this project. Yes, it is an enormous project for the state of South Australia, and we are supporting it, but it is going to be a long-term project for the company, and we hope that, over the long term, we will see benefit for the state of South Australia from it as well.

Hopefully, someone might get the minister to pull his head in and, as I said, at least be marginally more realistic and rational in terms of this project and the government's contribution to the project as well. There are a number of areas that are seeking some response by way of answers to questions for the committee stage of the debate, or in reply to the second reading. The first one is that, in that press release of 2007, the government indicated that the taxpayers will be investing hundreds of millions of dollars into this mine through the provision of infrastructure and services.

I raised a series of questions when I met with the task force on some of these issues, and the position I put was, 'Look, if you can provide these answers to those of us who are interested at the time of these briefings' (two and three weeks ago), 'it would mean we would not have to put these on the record and wait for the answers before the passage of the bill in the parliament.'

We have not received those particular answers, and so I am going to pursue a number of these issues now. We know that we will be sitting next week. The deadline is 20 December, so we have this sitting week and next sitting week to get answers from the government and the proponents in relation to these issues.

This first one, as I said, is that the former premier has indicated that the state is going to invest hundreds of millions of dollars into the mine through the provision of infrastructure and services. There might be a change of government in 2014, and if there was it will be our side of the political fence that will have to manage this investment of hundreds of millions of dollars that the former premier has clearly negotiated or indicated with BHP Billiton.

What I am seeking is that Treasury would have done some estimate of the indicative costs over the forward estimates period. I am assuming that some of these hundreds of millions of dollars will be beyond the next forward estimates period for the next parliament; that is, 2014 to 2018, but the key thing is how much money in terms of these public infrastructure facilities. Public infrastructure and services will be required in that period from 2014 to 2018.

What does the government believe will need to be put into the forward estimates in this period from now until 2014? I suspect that might be relatively minor, if I am reading all of the information correctly. From the period 2014 to 2018, what does Treasury believe will be required in terms of public investment? For the period 2018 onwards, what is the particular horizon for the new schools, the childcare facilities, the roads, the health facilities and the hospital services? What is the time line in terms of Treasury outlay of the hundreds of millions of dollars that are going to have to be provided by taxpayers for these particular services?

The second area that I am seeking some information on is that four of five members of the Liberal Party who, on a confidential basis, were involved in looking at the indenture prior to the official release, were also privy to some other information in relation to the work the government had done and the reasoning for why it believed that the project should be supported.

My understanding is that the government, having been told by BHP Billiton that this was, in their terms, a marginal project; that is, there was an argument that it could go ahead or an argument (possibly) that it might not, that the government in terms of its own due diligence commissioned a UK-based consultancy—and I may or may not have the acronym correctly, CRU or CRA, something along those lines—to do some modelling on, in essence, the business case and to look at, I suppose from the government's viewpoint, second-guessing the decision-making process of BHP Billiton on the financial viability of the Roxby Downs project.

I think the government might have spent $400,000 or so. It was not a minor consultancy, it was a significant consultancy and taxpayers' money has been spent on it. I think that those members who are interested, prior to the passage of the bill, should be able to see the work that has been commissioned which evidently convinced the government to say that this was a marginal project, as I understand it; that is, it was not a no-brainer in terms of going ahead and that we would have to work hard to ensure that this project was going to be taken up by BHP Billiton.

As I said, I have not seen this particular consultancy report. My understanding is that opposition members have not seen the full report either; they may have seen an executive summary of the report. I think it is important for those members who have an interest in the information that is available to the government, and I requested this of Mr Carter and the people who briefed the opposition at one of the briefings and, as I said, I have not seen any response at all from the government in relation to this. We have two weeks to debate this bill and I think it is imperative that those who are interested be able to see the work that was done in terms of the modelling that convinced the government in relation to the importance of this legislation, the way it is being constructed and the current deal that has been negotiated in relation to royalties and other things as part of the bill.

The third area that I am seeking information from the government on relates to the royalties issue. I am not sure who is handling the bill on behalf of Family First, but either the Hon. Mr Hood or the Hon. Mr Brokenshire is moving amendments relating to royalty payments, as I understand it. Again, I ask the question. I am sure Treasury would have to have done some analysis on the budget benefit of royalty payments, not just the calculation of royalty payments, which I think we have seen that, at its peak, is going to be $350 million or so. I am not sure whether that is the exact figure, but it has been quoted in various documents.

The question that I put again is: what is the budget impact of the projected increases of royalty payments? When that number of $350 million was used, the former treasurer indicated that we in South Australia, because of horizontal fiscal equalisation, only get our population share of that, which is just under 7 per cent. I think he then said that, in essence, we end up with only $20 million out of $350 million. So, what he is saying is that, at its peak, we might get $350 million, but we only get 7 per cent of that because we lose grants over the Grants Commission process that take it away.

So, when we come to the royalties debate, one of the issues regarding the amendments from Family First is that, if we are only getting $20 million out of the $350 million, this issue of spending the $350 million becomes a very interesting debating point. If you are getting only $20 million out of the $350 million, then you do not have as much money to—

The Hon. R.L. Brokenshire interjecting:

The Hon. R.I. LUCAS: We may well do that as well, but we are entitled to talk about it during the second reading as well. I am asking the minister some questions in relation to the government's calculations because, before we get to spend the money, we need to know not just what is collected but ultimately what the net benefit to the budget is. If we are getting a lot of money in royalties but losing a lot of money in offsetting grants from the commonwealth, we cannot spend the money twice in terms of where we are heading.

What I want to see from the government is its estimates over the coming six-year period, which will obviously be much less and, for the early part, will be nothing, I would imagine, because the project will not be up and running. The government must have had some estimate done by Treasury of the net benefit.

My understanding of the impact of horizontal fiscal equalisation is that, certainly under the current arrangements, it sometimes takes about three years for the winkles in the system to be worked out; that is, it is not an automatic offset straight away: it is an averaging over a three-year period or so. So, as a state, if you have increased royalties, you might benefit for a period, but then you lose that benefit over a three-year period or cycle. So, it may well be that, in the early stages, we have a more significant benefit from the royalties and it is only with the current arrangements that the grants commission catches up with us and we then lose it and come back to this $20 million (or 7 per cent) figure that the former Treasurer has used.

I am seeking from the government some detail on what work Treasury has done in terms of the net benefit of the project to the budget. We know that there is going to be a benefit to the state economy. Hopefully there are going to be lots of jobs, and hopefully the state's gross domestic product, or gross state product, will grow as a result of increased activity, etc. All of those state-based economic aggregates might be positives as a result of the project but, from a government and an alternative government viewpoint, we need to see what the impact is on the budget's bottom line. So on the one side, what are our expenditure commitments in terms of schools, hospitals and build, and, in net terms, what is the impact on the state budget, taking into account royalties and any offsetting grants that might come into it?

I think they are reasonable questions for an opposition to ask, because you do not make judgements on big projects like this just on the basis of how it impacts the state budget, but they are issues which should be taken into account when you look at the project and the parliament should be made aware of what the impact will be. If there is a change of government in 2014, clearly, we would then be in a position, as a new government, to get the sort of advice which is currently available to Treasury and the government; but, if we are being asked to vote on something as significant as this, that sort of information which is available to the government should also be made available to the opposition. I seek from the minister handling the bill in this chamber information in relation to that.

The fourth area in which I seek to have the government put answers on the public record as we debate this bill is in relation to the total cost to taxpayers of negotiating the package and the bill. The last major business engagement, I suppose, of this sort of size was, as I said previously, the privatisation of our electricity assets, and the former government was transparent and accountable and indicated the total cost of doing the deal—the total cost of consultants, the total cost of lawyers and the total cost of in-house public servants who worked on the project. That is conveniently summarised by the current government as being $100 million spent on high-priced consultants from overseas—I might say, to bring $5.2 billion in revenue through asset sales or privatisation to the state.

Nevertheless, I think in terms of doing the transaction and the deal, as we debate this today, we should be privy to the total transaction costs over this five or six year period—the government says this has been going on for six years—in terms of the public servants' costs of working on the deal; the employment of consultants such as Mr Carter, and others; this particular consultancy that I referred to earlier, from the UK, as I understand it; and have we had to employ private legal counsel in relation to seeking legal advice to negotiate the indenture? There are clearly crown law costs involved. There is a range of transaction costs and, as I said, I think it is imperative that the government puts on the record what the costs are.

Ultimately, there is a billion dollar-plus benefit to the state of South Australia in terms of this project going ahead but, again, in terms of the impact on the budget, we should be made aware of what the total costs are. The Budget and Finance Committee, in its own way, with various departments has sought to get some of this information but has not been able to get all the information and I think, as we debate the bill, the government should put that on the public record.

I want to conclude by repeating the fact that the Liberal Party has been a strong supporter and will, through its support of this bill, continue to support the project. Certainly, it is our view that, had the last election result gone according to the majority of the two-party preferred vote and there was a Liberal government, we would be seeing this project proceed during this four-year term as well. It is not a fact of the Labor government and the Labor ministers having got this project up. As I said, it was the Liberal government in 1982 that got the project up. It is a private sector decision that is going to get this project up and to spend the money; and the government of the day, whichever government it was, was going to be party to the negotiations.

Whilst we obviously support the fact that the current government has changed its mind in relation to the project—and, in particular, the former premier—if it had been a Liberal government, we would still be seeing this particular project. As I said, and as Mitch Williams indicated, the bill and the indenture might have been in a slightly different form, but nevertheless we would be asking the parliament to proceed with the project hand in hand with BHP Billiton. We have been supporters, we continue to be supporters and we hope, in the public interest, that this particular project is a success.

The Hon. R.L. BROKENSHIRE (21:00): I will be brief in my remarks, but there are a few things that I want to put on the public record. The Hon. Rob Lucas has put a lot of what I was about to say on the public record, so I will not go over that again for another hour, in the interests of being fair to my colleagues.

The lead speaker for Family First, my colleague, the Hon. Dennis Hood, has already put our party position and that is that Family First does support the Roxby Downs (Indenture Ratification) (Amendment of Indenture) Amendment Bill 2011. We do so because we believe that it is in the state's best interest that we see this significant expansion of the Roxby Downs mining venture, but there are a few things that I just want to personally say.

First and foremost, I was disappointed that members of BHP Billiton who are responsible for government relations and, I would think, parliamentary relations, did not actually contact the crossbenchers until this morning to see if they wanted a briefing. In fact, we did not even receive one letter from them.

Of course, they were tactically clever. They got the government totally stitched up—and I will talk a little more about that in a while—and then, of course, they went to have a special party room meeting with the Liberal Party and stitched the Liberal Party up. We know that at times on the crossbenches we are very relevant and at times on the crossbenches we are totally irrelevant; however—

The Hon. R.I. Lucas: Which one are you on this occasion?

The Hon. R.L. BROKENSHIRE: On this occasion, clearly, we have got big BHP Billiton and we have got big Liberal and big Labor. When they get together, we are totally irrelevant. However, it may well be that, down the track, not too long from now, as this expansion rolls out, there may be some legislation and there may be a change of government even. I am not sure about that, based on the last poll; however, there may be, and we could see a totally different structure of both Liberal and Labor and perhaps BHP Billiton might actually need the crossbenchers.

I would have thought that it would have been prudent practice of them to actually be inclusive of the whole parliament a lot earlier than they were. So, I just put that there. I have got it off my chest now, but I find it interesting that we generally get lobbied like you would not believe on the crossbenches, far more than when I was with the Liberal Party in any of my privileged working capacity there, except on the occasion of this particular bill.

I also just want to say that I find it interesting the way the former premier, the Hon. Mike Rann pushed and pushed this and was so capable that he managed to actually bring all this to a head within a couple of weeks of him, not retiring, but being forced from being the premier of South Australia, mainly by the left, but also some of the right, of the Labor Party. Well done to them for that; however, on ideology, if you have a conservative form of politics or you have a socialist form of politics, I can understand that.

If you support GM modification, I can understand that or if you do not support GM modification you do not support it but, on this occasion, as the Hon. Rob Lucas has already said, Mike Rann, in quite a lot of roles, went out of his way to work against the opportunity for this mine to be developed in the first place. When it comes to honourable, I will put David Tonkin way ahead of Mike Rann any day. The Hon. David Tonkin and others did a sterling job.

The Hon. J.S.L. Dawkins: And Roger Goldsworthy.

The Hon. R.L. BROKENSHIRE: Yes, the Hon. Roger Goldsworthy—another very good honourable gentleman. I will credit them first and foremost, and the Liberal Party at that time, for being consistent in supporting this. Of course, it is only in recent times that we have seen the mining policy change by federal Labor, and it was only last week that we saw a complete backflip from the Prime Minister with respect to her proposal for uranium sales to India.

I will not go into that any more—I have a motion on the former premier tomorrow, and in private business I will talk more about his strengths and weaknesses, and the true record of former premier Mike Rann. However, I did want to confirm what the Hon. Rob Lucas in particular had said; I totally agree with his comments.

There are some things that Family First have some concerns about. I find this whole process interesting because we, as a parliament, have to come in here and support an amendment of the indenture agreement flying blind, because we are not even privy to commercial-in-confidence briefings on a lot of the arrangements.

We do not really know, as the Hon. Rob Lucas and others have said, whether or not this is the very best arrangement that could have been provided for South Australia. It really does concern me immensely that the former premier just happened to get this over the line before—did he actually do the best that he could for South Australia? We will never know.

I find it interesting that, when you get around to communities in either city or country electorates, people are saying, 'Why did all those ministers fly over to Melbourne to the headquarters of BHP Billiton? Why didn't they come to the State Administration Centre? Who actually had the trump card here; was it BHP Billiton, or was it the government?'

I think that the new Premier could have facilitated this negotiation just as well as the former premier. I do not believe that the former premier and former deputy premier were the only people who could negotiate such a complex arrangements, particularly when the former deputy premier spent a week or so overseas during the so-called detailed and complex final negotiations.

There are just a few things that I would hope the government has covered: Okay, it is going to be 100 years or more before we ever see a situation where rehabilitation of some sort will have to occur—when this mine finally exhausts itself. As large as it is, it will run out of its mining life, and I wonder what our great-grandchildren or our great-great-grandchildren will be saying about us as a parliament if they are left with a huge bill, or if they have to go through litigation, like we have seen with the Maralinga situation. Have we done enough to ensure that those things way down the track are covered? We are signing off here in the next few days to approve this, and we are actually putting a lot of faith in the government for generations to come.

With respect to water, I found it surprising that the water being pulled from the Great Artesian Basin—I think it is around 42 million litres a day—as I understand it, is only going to cost BHP Billiton $1,200 a day, when it is argued that the true value of that water is more like $88,000 a day. That is just one example of the arrangements that, as I understand, have been put in place, which you have to question. You have to question the impact this will have on our pastoral industry long-term.

People say, 'Robert, just relax; it's all fine, it's all been covered. We have been pulling water out of the Great Artesian Basin for the last 30 years for the current Roxby Downs project.' Of course the sales men and women are going to say that, but there is no science on what is going to happen in the next hundred years. We have already seen some issues of concern raised by pastoralists, and, whilst the pastoralists may not be as big as BHP Billiton, the fact is that they are very important to the South Australian economy, and they also do a lot to manage our pastoral and outback biodiversity.

I hope the government has had a look at that, because I for one—and you can call me naive—actually thought that the desal plant was going to start taking some pressure off the Great Artesian Basin, but I am surprised to find out that the desal plant will be cranked up, and I understand that, at the very least, the same amount of water that is being pulled out will continue to be pulled out, year in, year out.

There is the issue of where the desalination plant is going to go. I know they have done a lot of EIS work on it and they have spent money on it as a company, and I respect that, by and large, they are pretty good corporate citizens, but I wonder whether or not the financial bottom line came into the overall decision about putting the desal plant right where the cuttlefish are. I trust that checks and balances will be put in there to ensure that we can still look after that part of our ecology, because, whilst I am no extreme greenie by any stretch of the imagination, that particular cuttlefish breeding ground is very important not only for our state but also internationally.

As has already been acknowledged by the Hon. Rob Lucas, we are moving one amendment. That amendment does not oppose what BHP Billiton is putting forward for South Australia, but it does have a positive impact on regional South Australia. I watched with interest the debate that former member the Hon. Karlene Maywald got involved in before the last election, where she flew to Western Australia to work over there with Royalties for Regions. She proposed Royalties for Regions here. I actually believe that it should be more about equity for regions, not royalties for regions, but Royalties for Regions has worked well in Western Australia.

In fact, I had a discussion with a very senior government minister only a few weeks ago regarding my amendment. I knew he would be resisting my amendment, and he said 'Oh, Brokie, they have so much money from Royalties for Regions in Western Australia now they don't know how to spend it.' Well if that is the case then good on rural and regional Western Australia, but, as I said to the senior government minister, that will not be the case in South Australia. You could give us $200 million, $300 million or $400 million a year in the rural and regional areas and it would be spent, and spent wisely, but it still would not make a dent in what is needed to be spent on infrastructure and other services and facilities.

The Hon. J.S.L. Dawkins interjecting:

The PRESIDENT: Order!

The Hon. R.L. BROKENSHIRE: Thank you, Mr President. Members are entitled to their view, but the bottom line is that rural and regional South Australia is crying out for infrastructure, for economic opportunities similar to the city, the point being that this money is all coming from the regions. It is not coming from Adelaide; they are not mining Adelaide, they are actually mining part of South Australia's rural and regional geographic areas. We have seen this happening day in, day out, where there is more and more expansion for exploration, at least, in mining in rural and regional South Australia. There is very little money actually being kept in the regions, particularly with fly in/fly out and things like that.

I know that the government is a master at managing marginal seat campaigns. Hopefully, so we see some better competition at the next election, the Liberal Party might actually master the game of marginal seats as well, so that we have a real serious and pointy election, with at least a cliffhanger to see whether this government is re-elected, which would be 16 years, or whether we get a new government. Just because they are going to play the seven seat game again and pork-barrel the marginal seats, does not mean that rural and regional South Australia have to miss out again.

I will say more about that when I move my amendment tomorrow or the next day. Hopefully we will get the bill passed this week, but I will be pushing hard for the one amendment that Family First has put up, which is about Royalties for Regions. With those remarks I think I have covered the key points I wanted to highlight over and above what my colleague the Hon. Dennis Hood has said. I wish this bill good passage and trust that the Roxby Downs indenture ratification bill, and indeed BHP Billiton's Olympic Dam Corporation, will be a huge success for generations to come in South Australia.

However, it is concerning that we do not have commitments—as I understand it anyway—that, wherever possible, BHP Billiton will spend its money in South Australia with respect to the development of this mine. We have not seen enough value-adding out of BHP Billiton. They are mining very well in Australia, but it is all going out in bulk ore shipping, and that is not in the best interests of Australia and South Australia as far as I am concerned.

It would have been good to have seen more commitment from BHP on the value-added job opportunities for South Australia and Australia. That said, we are in a tight situation at the moment. We have certainly got at least a three-speed economy, but the one aspect of the economy that has been going well, and I trust will continue to, is mining. I would like to see better commodity prices in agriculture because agriculture certainly is up there year in and year out with mining; however, we do have at least a three-speed economy.

We are seeing some serious investment from BHP. Whilst I know they have the capability and expertise on their board and the executive of their organisation to deliver well for shareholders, I trust that they will also be able to deliver well for South Australian and Australian jobs in the future.

The Hon. J.M.A. LENSINK (21:16): I rise to make some remarks in relation to this particular bill, coming from it, as I do, with a particular interest in environmental issues. I would like to say that I will avoid as much as possible engaging in hubris or hyperbole, as other people, particularly in the House of Assembly on the government benches, have done in relation to this particular project.

It has been quite a fast and intense project and bill to be involved in for those of us on this side of the house. I note from some comments from my crossbench colleagues that they did not have the advantage of some of the briefings that we had with BHP and with some of the senior people from the Olympic Dam expansion task force, which is probably regrettable because I think that anybody who is part of the governance in any way, shape or form, also being through the parliamentary process, ought to have had the benefit of that information. It has certainly been very useful for me personally on a couple of particular issues, most notably the desalination plant, but on other ones as well. I will talk about that in a little more detail.

It has been a pretty intense process. We do like to do our due diligence on this side of the house—a very, very important part of the process. We never like to let anything slip through to the keeper without having spoken to all the relevant stakeholders and heard all the different points of view. BHP has done a good job keeping in touch with the Liberal shadow cabinet and joint party probably over a year or so.

We then had the issue of this indenture amending agreement dropped on us fairly late in the piece. I think it is fair to say that the former premier and former treasurer had something to do with that timing. Notwithstanding that, we do respect the fact that BHP desire to have this bill passed by 20 December, and that is a critical date.

I was a member of the shadow cabinet subcommittee that had access to information early on a confidential basis. I think the first briefing we had was on about 4 October, which was with former minister Foley and some of his senior officers. At that time, we made the point that if the government was so keen to get the bill through then they certainly needed to at least consider sitting for the optional sitting week because we were not going to be a rubber stamp.

I reject any comments by any of our crossbench colleagues that there has been some sort of cosy deal done with the Liberal Party and that we are in any way a rubber stamp. I also reject the Hon. Mark Parnell's comments that he is the genuine opposition in this debate, and I will make some remarks in that regard as well.

On 7 October, that same subcommittee met with BHP. On 12 October, we had briefings with the Olympic Dam task force, crown law and others. These briefings were then extended to our full joint party on 24 and 25 October, so it has been an exceedingly short time frame, particularly given this is, in financial terms, the largest project South Australia has ever seen. I think key to the debate in many senses is the question of risk. BHP has a huge amount of risk on its side of the balance sheet. A lot of it is up-front, it is a very high capital risk and it is on the scale of tens of billions of dollars—more than most people can contribute. Certainly in my personal sense it is more money than I can possibly think of, and it will be many years before the company is cash positive and before it turns into positive profit territory.

That is a very important part of this debate, because I hear from the Greens and others suggestions that BHP has endlessly deep pockets to do all sorts of things and fix all sorts of ills that may be about to occur. I think in some ways that is a pretty unfair proposition for anybody to make because it is other people's money we are talking about. It is the company's decision ultimately and will be a decision of the company board next year. It is shareholders' funds, and a lot of those people are mum and dad investors or superannuation funds and the like, and they deserve to have their funds treated fairly in the market and not to be impeded just because they are seen as the big player in South Australia, which in a wealth sense is shrinking, at a national level at least.

This project is not like anything we have ever seen: it will be a great big hole in the ground. It is proposed that ultimately it will become a tourist destination once the mine is closed. I appreciate that BHP has sought, through the deal and through the terms of the indenture, to mitigate some of that risk, and that explains some of the conditions it has. As stated by the Hon. Rob Lucas and Mitch Williams, who was the lead speaker in the House of Assembly on this issue, there may well have been negotiations that could have been done better on the government's part, but we will not know until the fullness of time because that is part of the nature of the deal. We may have done things differently, but that is hypothetical, so we will not really know.

Some of the assumptions about the royalties have been a bit fanciful, and I was surprised to see that an organisation of the calibre of BankSA would delve into the issue of a potential future fund, assuming that there would be rivers of gold flowing to South Australian coffers from these funds and that therefore we ought to preserve them, whereas in reality, as the Hon. Rob Lucas has also spoken about, the funds may at their peak be in the order of something liked $25 million per annum.

There is a lot of stuff that is a bit of urban mythology in the ether about this project that relates to the amount of wealth involved, but certainly there will be a huge benefit from the indirect benefits to the South Australian economy which will not necessarily flow through South Australian coffers but which will be benefits that a lot of South Australian businesses will enjoy because of the huge amount of infrastructure required through the building of a new landing strip, the huge trucks that will have to be purchased, and so on and so forth. I will not go through the long list of infrastructure because it is easily available to anyone who wants to look at it on the website.

The environmental risk is also potentially huge, and for this reason there has been an extensive environmental impact process, which has culminated in the assessment report provided quite recently. It is something I have been quite keen to get my hands on. I will refer to Mr Parnell describing himself as the real opposition, because on his part that was a bit of a Freudian slip. I believe he opposes this project, no matter how many hoops BHP jumps through. This for him is a cause célèbre and, as one of my house of assembly colleagues said, 'He was born to oppose this particular project.'

It is an area that I know a lot of people have environmental concerns about. A lot of those people have contacted me as well, and I have shared a lot of concerns about that too. However, I do think that the environmental impact process has been thorough, I think the assessment process has been thorough, and I think that those issues have been explored.

There are still environmental risks, but I believe the assessment report process seeks to mitigate those by placing conditions on approval. Some 600 licences still need to be approved, even though overall the environmental processes have been ticked off, and so those will be ongoing.

The assessment report is a document which was coordinated by the Department of Planning and Local Government and saw input from a lot of government scientific agencies across the board, particularly SARDI, the EPA and, to a degree, PIRSA.

This project includes a raft of new infrastructure: airport, roads, rail, etc.; the desalination plant, pipelines and corridors; the landing facility; the Hiltaba village; expansion of the Roxby township and conversion of the underground mine operation to an open pit; operation of the smelter; the new tailings storage facility and rock storage facility; and there are various chapters which deal with all of those in detail.

All the recommendations of the assessment report will become conditions or requirements of approval, and the indenture minister is to consult with the relevant agency as these arise. The conclusion of the assessment report was that the environmental impact is negligible, and ongoing monitoring will take place through those licences.

The specific question was put to the team that if they had had outstanding concerns would they have recommended approval of the project to the government, and the answer to that was no. So the assessment report has discussed all outstanding issues arising from the draft EIS, the supplementary EIS and the final EIS. For anyone who wants to read that document, it does refer back to each of those EISs where relevant.

At the end of the relevant chapter it states whether BHP's proposed methods are acceptable or not acceptable, and in each case it has agreed that they are acceptable. All the components of the project have been subject to EIS processes because it is a declared major development. A number of issues were raised in various chapters which relate to various parts of the process.

Chapter 4 relates to mine operations and processing, so it covers native vegetation, impacts on the arid lands recovery project, the tailings storage facility and impacts of drawdown on the local springs, and site contamination. There is an extensive consideration of groundwater issues; solid waste; the impact of dust, plant emissions, noise, light, and radionuclides on fauna; and greenhouse gases.

Chapter 5 is the desalination plant, which is probably the area of most interest to a lot of people. Chapter 5 covers some 19 different topics, and that chapter was coordinated by the EPA with expert advice from various agencies, including SARDI. I would just like to say for the record that I was the bunny who referred the issue of desalination to the Environment, Resources and Development Committee of the parliament, and we looked at both the Stanvac issue and Point Lowly.

The ERD Committee came out with a recommendation against the location, and I note since that a lot more work has been done by the government and BHP on that particular proposal. There are additional conditions, which I believe is a significant achievement. The assessment report's conclusion is that there is no threat to marine life from the desalination plant.

I think that this issue of the desalination plant does deserve further note because it is a very large concern, particularly to the communities that live in and around Spencer Gulf. It is described that the seawater north of Point Lowly is where that exchange is quite limited; however, there is a lot of exchange with the southern ocean throughout winter months. There is a condition known as dodge tides, which occur every six months, in late May and November.

Background salinity is an important point because concerns have been raised about increasing salinity over time in that area and the impact that will have on marine species living in the area. The background salinity is 35 to 36 grams a litre. The Point Lowly range is 40 to 43 grams a litre, which peaks in late autumn, before the winter rains arrive. Local fisheries there include snapper, King George whiting, blue swimmer crab, western king prawn and southern calamari, and we have aquaculture there through yellow tail kingfisher pens and Pacific oyster growing beds.

The choice of location of the Point Lowly plant, which is pages 148 and 149 of the assessment report, states the criteria on which that particular site was chosen, and it is a combination of cost and environmental concerns. I note, through the supplementary EIS, that the government required more detail on 20 potential other sites, which included the West Coast.

I would like to spend a bit of time talking about this issue. I have been critical personally and as part of the ERD Committee of that particular location, so it was pleasing that the other sites have been looked at in greater detail. The argument has always been that Point Lowly is the closest spot for BHP to locate the desalination plant, and the assessment report outlines the criteria for how it chose the site, those three criteria being length of water supply pipeline, distance to a water depth of greater than 20 metres, and suitable available land and infrastructure. The assessment report goes on to say:

The SEIS analysed a substantially expanded range of alternative sites in Spencer Gulf, lower Eyre Peninsula and the West Coast against an expanded list of criteria. The analysis confirmed Point Lowly as the preferred site because:

Dispersion of return water would be greater there than at any of the other alternative sites due to the high average current speed;

Costs would be lower and there were fewer logistical issues than at most of the alternative sites;

Alternative sites provided limited net environmental benefit.

...BHP Billiton also determined that discharging return (waste) water into the gulf was the best option, compared with land-based discharge to evaporation ponds or an inland salt lake, or injection into underground aquifers.

The reasons for not discharging return water onto the land involved cost and adverse environmental impacts, including having to clear 12,000ha [I assume, of native vegetation] to create evaporation ponds and the need for lining to prevent leakage into the groundwater.

I think those are important points.

It is not the final, final proposal, because the desalination plant is probably up to five or more years from being construction, but the outlet has been extended by an additional 200 metres so that the outlet pipe is now three kilometres from Whyalla and 10 kilometres from Backy Point, which are the two cuttlefish breeding grounds. The return water does, in fact, disperse rapidly from Point Lowly due to a local rip. The impact of the desalination plant, we are told, is equivalent to the evaporation of one day per year. Strong sea floor currents remove one year's salt over winter. A very important concession is that BHP is committed to real-time monitoring of salinity levels which will be overseen by the EPA.

The assessment report also talks about the reviews of the marine species that live in that area. The two species that people are most concerned about are the cuttlefish and the western king prawn. Ecotoxicity studies have been done of a number of marine species. The greatest concern of the substance that could cause toxicity was salinity or salt. A dilution factor of 1:70 was modelled to protect 99 per cent of the species.

Chlorine is not an issue because that is to be disposed of on land. Testing was done on 16 species to detect what is called, in scientific terms and according to the Australian standard, EC10 or effect concentration on 10 of the species. I point out that is not mortality but what are described as sublethal effects such as failure to thrive or sluggishness and so forth. This research—many studies, I would assume, have been done given that it was 16 species—was reviewed by Dr Michael Warne of the CSIRO. As a result of his reviews, Dr Warne proposed a dilution factor of 1:85 which was to increase the margin of safety. The cuttlefish deserve particular note, and 1:55 is regarded as a safe and conservative consideration for their safety. On page 168 the assessment report states:

...considers there should be no impact of return-water discharge on the Australian Giant Cuttlefish. However, it recommends that BHP Billiton implement an annual BACI-designed monitoring program to assess the biomass and abundance of cuttlefish throughout the Point Lowly region, including Backy Point.

It then goes on to nominate several conditions. Dissolved oxygen is also an issue that was looked at and is a concern for short periods when chlorine dosing occurs in the plant. There have been references to the Kwinana plant which operates in Western Australia's Cockburn Sound; however, I point out that these periods occur due to naturally occurring reasons. Modelling of this area suggests that the levels will cause a negligible difference, but the assessment report still recommends that BHP needs to do more work to establish a baseline prior to construction of the plant.

The hydrodynamics have also been examined and that has been done for various fields: the near field, which is within 100 to 150 metres of the diffuser was reviewed by the University of Adelaide; mid-field, which is from that 150 metres to four kilometres, was reviewed by SARDI; and the far field, which is effectively the gulf, which relates to potential accumulation in the gulf. I would like to read a quote in relation to that particular issue because that is one of the key concerns that has been raised many times, that the salinity will be increased over time in the gulf and will, therefore, present a threat to marine species. The assessment report states:

The supplementary EIS made the assumption that the annual seasonal cycle of the salt-ejection mechanism and the salt balances over the same time scales implied that Spencer Gulf flushed annually.

Further, in the next paragraph, it states:

Accordingly, the Assessment Report considers it unlikely that there would be any long-term increases in salinity in the northern Spencer Gulf as a result of a desalination plant. To provide ongoing data to demonstrate this finding, long-term accurate in situ monitoring of facility temperature would be required.

There are recommendations that more monitoring take place. In any case, there is time for this to take place because the plant will not be operating for some time and there will be, in the meantime, technological improvements. The EPA will be involved in licensing, so there will be least 12 months' more monitoring prior to commissioning of the plant.

I would just like to say for the record—because we in opposition get letters from people asking us what our policies are on these issues—we are quite dependent on the information that we are provided by independent sources. One of my jokes is that, in opposition, we do not have a marine science division sitting in the corner of my office or sitting in the leader's office anywhere, so we have sought to verify information as much as possible. However, I would like to say that I do have a great degree of confidence in those people who have managed this process and I trust their integrity.

Prawns came up as an issue later in the exercise, and obviously we would all be worried—particularly my leader (Hon. David Ridgway) I think would be quite concerned—if there were to be any impact on the wonderful prawns in the Spencer Gulf. Page 164 of the report states:

Modelling showed that the Western King Prawn was unlikely to be adversely impacted by return water discharge, as larval prawns were known to occur in areas of significantly higher salinity of up to 55 ppt.

I think the argument there was that the juvenile prawns are actually more tolerant to higher salinity levels than adult prawns, but in any case they do occur north of Point Lowly, which is high salinity.

For the sake of the member for Flinders, I would just like to read some of the replies that we received to specific questions which were put to the Olympic Dam expansion task force team. These responses have been prepared by that group in consultation with the EPA. These were specific questions that the prawn industry sought and we have sought replies, and I would just like to put them on the record:

How are you recommending that the EPA undertake real time monitoring? Have you been specific about location of data loggers and specific data that requires collection?

It's condition of the approval that real-time monitoring is carried out by BHP Billiton. The details of the monitoring will be developed as part of the licence conditions set by EPA. It's at least five years before the desalination plant will be constructed, so there's adequate time to get the monitoring design right. We have deliberately not specified the location and type of monitoring stations as technology is rapidly changing and we want to give the EPA and BHP the flexibility to negotiate the best technology closer to the time that it's needed.

The Assessment Report recommends the further analysis of 5 species from 4 taxonomic groups. Have you made any recommendations to the EPA which five species should be monitored as part of the conditions for monitoring impacts of the desalination plant?

The Assessment Report accepted the primary data set provided from the ecotoxicity testing, but has required that further testing be carried out in order to optimise the final design of the diffuser and to inform the EPA licence conditions. The species to be tested will be determined by an independent panel to be appointed by EPA but funded by BHP. While we cannot pre-empt the independent panel, a condition of the Assessment Report is the further testing must include Australian Giant Cuttlefish and is likely to include Western King Prawns as these are important species given the proposed location of the desalination plant.

Do you believe the 2000 ANZECC/ARMCANZ guidelines used for the ecotoxicology assessment are adequate for calculating potential risks to species through all of their life stages?

Dr Michael Warne is a nationally and internationally recognised expert on ecotoxicity testing and the derivation of water quality guidelines. He has conducted testing for a range of species and number of desalination plants in Australia, including the proposed BHP desalination plant. For that reason he was invited to answer questions at the recent Liberal Party briefing. At that briefing, Michael stated that the ANZECC and ARMCANZ guidelines have been adopted for use nationally and the testing procedures recommended therein have been used for desalination plants and other large infrastructure projects all over Australia.

For evaluation of toxicity risk, we would ideally conduct toxicity testing on every life stage of each organism tested however this is not practical. Rather, the approach recommended by the ANZECC and ARMCANZ guidelines is to use sensitive life-stages and organisms that are representative of the organisms that will be exposed to the toxicant. This approach is deemed satisfactory by the Australian and New Zealand whole of governments and a similar approach is used in other developed nations.

Understanding that SARDI has only been asked to assess the Supplementary EIS, as SA's leading marine research agency, where would you recommend building a desalination plant of this size, and what factors would you consider?

SARDI did not assess the Supplementary EIS, nor did it make an assessment of the alternative sites, as this was carried out by DPLG, with the EPA providing advice to assist in the Assessment Report outcomes. The conclusions are outlined on pages 154 to 156 of the Assessment Report.

If BHP started their operations with only one 5-port rosette, will the dispersion rates still be appropriate?

Regardless of the throughput of the desalination plant at commencement, an Assessment Report condition is BHP Billiton will be required through its EPA licence to achieve the design dilution factor of 1:70 at 100m from the diffuser and 1:85 at the nearest cuttlefish area at all times. BHP Billiton has proposed a 4 rosette diffuser for the plant outfall. Diffuser optimisation studies in the EIS documents indicate that the required dilutions can be achieved in a number of ways and discharge velocity and port diameter are the most important factors affecting dilution. Another condition requires BHP to undertake additional modelling at a range of discharge rates and the final design of the diffuser must be approved by the indenture Minister in concurrence with the EPA prior to operation. Additionally, a further condition requires that the plant be constructed to enable the diffuser to be modified to achieve these factors.

BHPB has committed to monitor and identify significant changes to marine flora and fauna communities in the USG. The concern is around the implementation of the term 'significant' as in lay man's terms could be interpreted to mean large irreversible change. 1. What confidence level will the Govt be seeking to determine when a significant change has occurred? 2. What are the processes or how are any changes going to be proportioned to the desalination plant or environmental or other factors? i.e. where will the burden of proof lie in determining whether any impacts are a result of the desalination plant?

The EPA has required that BHP Billiton undertake what is known as BACI designed monitoring. This essentially provides before (construction) and after (construction) monitoring which through advanced statistical techniques, enables more sensitive detection of ecosystem change. If any changes are detected and are clearly attributable to the desalination plant then it will be up to the EPA to determine whether the changes are significant. Some level of scientific judgement will be required but changes that are irreversible will not be acceptable.

Given adult prawns were identified as the most susceptible through the ecotoxicology testing, and it has been highlighted through an independent review there is still a gap in the testing of the reproductive cycle, there hasn't been a recommendation to monitor juvenile prawns in the vicinity?

Ecotoxicity testing results show that adult prawns were more sensitive than juvenile prawns, but they were not the most sensitive species. Juvenile prawns are known to live in the upper reaches of Spencer Gulf where salinities are significantly greater than what is expected in the immediate vicinity of the desalination outfall. This was supported by the ecotoxicity testing results which found Juvenile prawns to be one of the most tolerant species tested.

A final question...Given the work you have undertaken through this assessment, what areas still cause you for concern?

The Development Assessment and Conditions adequately addresses the environmental impacts for elements of the proposed expansion project. There are no further areas of concern.

Bear with me; there is more. Questions for the EPA:

How is the EPA going to ensure that the community is comfortable with the monitoring process? What steps are going to be taken to ensure monitoring is transparent and data/reports are distributed (to the community including business with vested interest in the gulf's health) within a reasonable amount of time i.e. less than 3 months post data collection?

BHP Billiton has committed to (and EPA will require) that its monitoring data be available through a web site. The EPA expects that this monitoring and reporting will be in real time however the precise nature of these arrangements will be determined at the time of setting of licence conditions.

Given the establishment of Marine Innovation South Australia (MISA), SARDI, industries (seafood and tourism) we have either strong vested interests or skills relating to the marine environment in the upper Spencer Gulf, what steps is the EPA taking to ensure a level of independence to oversee the monitoring and reporting of BHP and its licence condition?

Under current legislation (and the proposed indenture), the EPA is independent of government for development assessment, licensing and compliance and enforcement. As with all licensees, the EPA will require a licence for operation of the desalination plant. The licence will include monitoring and reporting conditions. Where necessary the EPA will consult other experts (such as SARDI) in determining the licence conditions.

Have the EPA considered the establishment of an independent board to provide oversight of ensuring licence conditions are being implemented?

The EPA is already governed by a Board established by the Environment Protection Act. The EPA is specifically independent for Part 6 of the Act (licensing) as well as compliance and enforcement.

Given desalination plants of this magnitude are relatively rare in Australia, how will the EPA ensure it will have the skills necessary to ensure it drafts a robust licensing arrangement right with BHP?

We disagree with the statement. There are now six major desalination plants around Australia.

It mentions the Gold Coast, Perth, Kurnell, Southern Seawater and Port Stanvac:

Given that all of these plants are licensed under State laws...there is plenty of opportunity for the SA EPA to exchange information with other EPAs around Australia and gain the best practice knowledge and processes on licensing and monitoring for the BHP Billiton desalination plant.

The last question on this list is in regard to BHP:

Through this meeting we would appreciate the support and encouragement for future collaboration between BHP and the Association for ongoing monitoring of the upper Spencer Gulf.

This is something you would need to ask BHP however our observations would suggest that they are keen to work with the prawn fisherman association to develop and improve future monitoring and management practices that ensure the long term sustainability of the prawn industry.

I asked some questions directly of BHP, and I would like to read those and their responses to save us time later, in the committee stage. The first question is:

Is it envisaged that the Environmental Management Plan, its Annual compliance plan, Approved Mitigation Plans, audits etc will be public documents?

The Environmental Management Plan and annual compliance report will be public documents. Whether the mitigation plans and audits will be made public is for the Minister to decide.

My second question was in relation to part 13 of the indenture—Water, subparagraph (d). Payment of equal money to the ALNRM will go to an 'Approved Offset Project', which is not necessarily the board, so that suggested BHP's own projects:

Is this likely to be the Arid Lands Recovery project or are there other projects in the pipeline?

Not at the moment. Any project must be approved by the Minister before it can be accepted as an offset. It then must be demonstrated by the company that the money has been appropriately spent. A likely project may be further GAB bore capping, but we have no current plans.

There will be extensive monitoring of native species and other environmental programs. Does BHP intend to employ staff in-house to undertake this work or will it contract the work out?

Both, as we currently do. We have a significant number of environmental staff at Olympic Dam and in the Adelaide office as well as employing experts when work is highly specialised or short-term.

I have some more questions which I have already put to the ODX task force, but they have not had the opportunity to reply so I will put these on the record. One of those questions I have already asked BHP, which I ask anyway. The Environmental Management Program (EMP) is clause 11 of the deed. Is the annual compliance plan to be made available to the public?

In relation to the indenture, clause 8, new section 9(5)(a) of the indenture, implies that Aboriginal heritage sites must be identified up-front. What audits have been done and what sites, as far as we are able to be advised, have been identified? In clause 16, which refers to 19(3) of the indenture, the holder of the licence is not entitled to access any part of the SML unless a 'statement of environmental objectives is in place'. What does that actually mean? Part 5, clauses 19 to 21, powers of authorised officers: are these officers already authorised officers under another act or are they exclusively appointed for the purposes of this indenture and for monitoring and enforcement of the EMP and mitigation plans? Do NRM native veg authorised officers' powers still apply to BHP?

My final question is in relation to geothermal energy and whether opportunities for applying that to this project have been fully explored. Given the hour, I am not going to go into all the other issues about mulga, native vegetation and the Pernatty knob-tailed gecko or the plains rat, but people can read those. They are discussed in detail in the assessment report and environmental impact statement process. I am pleased that the detail of each of these species has been examined and that they will all be under management plans of some type. With those comments, I endorse the bill.

Debate adjourned on motion of Hon. J.S.L. Dawkins.