SA WATER

In reply to the Hon. J.A. DARLEY (1 March 2012).

The Hon. I.K. HUNTER (Minister for Communities and Social Inclusion, Minister for Social Housing, Minister for Disabilities, Minister for Youth, Minister for Volunteers): The Minister for Water and The River Murray has been advised:

1. The Adelaide Services Alliance contract allows for monthly invoices to be submitted by Allwater and paid within 30 days of receipt by SA Water.

The $1.129 billion figure is not a contractual amount, it is SA Water's internal estimate of the total cost of the contract over its ten year life and includes allowances for escalation, contingencies, expected scope changes and potential pain/gain payments.

2. As at 9 March 2012, none of the payments made by SA Water to Allwater have been late.

3. There is no penalty in the contract for late payment by SA Water.

4. & 5. There is no direct provision in the contract for SA Water to become involved should Allwater be late in paying its subcontractors. However, there are strong disincentives for under performance which could result from subcontractors withdrawing their services. Subcontractors are protected from non-payment by Allwater's parent companies Transfield Services and Suez Environment holding cross guarantees with each other ensuring Allwater's financial viability. Allwater does acknowledge that at the beginning of the contract there were complications with scheduled payments whilst the bank account was set up for electronic payments. This was resolved in October 2011 and since then in most instances subcontractors have been paid within the agreed payment terms. Incidences where payments have been late can generally be traced to invoicing date errors, incorrect addressing or IT system issues. The numbers affected have been small, with delays typically only one to two weeks.

6. Allwater's standard payment terms are 30 days from the end of the month. There are a few exceptions involving large payments where the payment terms are shorter, e.g. for chemicals, where there is an Electronic Funds Transfer payment run made once a week.