MINING (ROYALTIES) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 15 October 2013.)

The Hon. R.I. LUCAS (20:07): The Liberal Party supports the second reading of the Mining (Royalties) Amendment Bill. The member for Waite has adequately outlined our position on the bill during the debate in another place. It is a relatively simple bill. The bill seeks to change the timing of mineral royalty collections from producers with an expected royalty obligation of greater than $100,000. The measure was first announced at the Mid-Year Budget Review in December of last year. The legislation was not introduced until seven months later in July of this year and, of course, we are now debating it in the Legislative Council in November. So, it is almost a full 12 months since it was first announced as a budget measure in the Mid-Year Budget Review last year.

The government's intention, as it outlines in the second reading explanation, is that the bill is seeking to align large mineral producers' royalty payment arrangements with those of petroleum and geothermal producers who already pay their royalties monthly. The big miners or mineral producers currently pay royalties biannually. At present, they pay their royalty on 31 January and 31 July in biannual bulk payments. Transitioning to this new payment schedule will require monthly payments to government.

The original explanation says that, while the 31 July 2013 payment will proceed as required for the retrospective six-month period from 31 January 2013, the bill will bring forward the obligation to pay throughout this financial year to a monthly basis after the proclamation. The minister told the house that 30 mine operators would be affected but later on, I understand, according to the member for Waite, that advice was subsequently changed to 21 operators being captured by the measure.

It is essentially a timing issue. There are, or will be, significant cash flow problems, of course, for some miners, because they would be expecting to pay, as has been outlined, six months, in essence retrospectively, and now they will be paying on a monthly basis, which therefore, in terms of cash flow, brings forward six months' worth of payments on a phased basis, forward in terms of their royalty payment obligations.

The original explanation was that the normal payment would be paid in July of this year and then on proclamation of the bill, instead of the January 2013 payment there would be monthly payments. The question that needs to be put to the government, given the late passage of this bill and its proclamation, is what the government's intentions are. Is it going to retrospectively seek four or five months of payment, or is it going to leave the current arrangements until January 2014 and then commence monthly payments after that? It is an obvious question, which I am sure the minister and the minister's advisers will be in a position to outline to the committee.

It does come at a difficult time for the mining industry. I do not propose to spend an inordinate amount of time. The member for Waite highlighted, when he debated the bill, some of the recent announcements: Terramin announced their Angas zinc mine would go into abeyance, the mineral explorer UXA Resources ceased trading, and OZ Minerals announced 61 jobs being cut from their Prominent Hill operation. He mentioned those. Of course, today we have seen the announcement in relation to Honeymoon and the potential loss of 70 jobs from the Honeymoon mine site as well. It does come at a difficult period. It will involve some cash flow issues for some companies, but the Liberal Party, as the member for Waite has outlined, has indicated that we will not be opposing the legislation.

The PRESIDENT: The very casual, but still honourable, Mr Brokenshire.

The Hon. R.L. BROKENSHIRE (20:13): Mr President, you are very kind and very good at your job. I do not apologise for not wearing a tie at this time of the night. I will be speaking to the union if they force us to wear ties in this chamber at this time of the night. This bill, in effect, is purely about bringing forward mining royalty revenue to assist the state budget position—$31.6 million this financial year. The royalties are to be taken from the bigger miners and given the lack of protest heard from the South Australian Chamber of Mines and Energy about this bill, presumably this is something it is willing to accept.

However, the question is: should this parliament accept when looking at the question of royalties that a bonus payment of royalties to this government for its general budget is the only question that exists on mining royalties? Family First believes, and I suspect many colleagues on all sides of the house believe, that royalties for regions is something that we have to discuss. The proposal that we have put up, with some amendments, is for 25 per cent of mining royalties to be dedicated for expenditure in regional South Australia.

Royalties for Regions has yielded billions per annum in Western Australia; I acknowledge that it would not do that here yet, and I hear what the Hon. Rob Lucas has said about the situation with mining right at the moment. Notwithstanding that, it could in the future, and hopefully, provided it can integrate properly with agriculture, agriculture and mining will be two very important aspects of South Australia's future economy.

Speaking of the future, the Premier's version of royalties for regions is a future fund. He said we would have legislation for that, and so far we have not, with 1½ weeks to go before we rise for the ultimate 15 March 2014 election. With respect to the future fund, I think it is a bit of a magic pudding for all sorts of things. Some people in my area would describe it as a crock and I would have to agree with that, and I will explain why.

This future fund will include projects for the city, not just for the country, unlike royalties for regions, and only with the caveat that this government or future governments—but particularly given that this has been announced by this government—returns to surplus, which I understand it has failed to do in meeting its forward projections for some eight years.

Royalties for regions is a future fund for all South Australians. It improves the infrastructure in regional South Australia to bring even more primary production wealth through the ports and for the benefit of all South Australians. On top of that, it also leaves 75 per cent of all mining royalties for, in effect, metropolitan Adelaide. The proposal that Family First is putting up does not deny the city and metropolitan area of 75 per cent of all royalties, but it does enshrine in legislation 25 per cent of the royalties from mining going back into the regions.

The royalties for regions proposition does not make a significant hit on the present state budget: it is for the future, and will by 2016-17 projected be between $40 million and $70 million per annum into the fund. That figure will vary widely as we do not know what projects will come onstream by then. One project that is attracting considerable attention is the Hillside mine by Rex Minerals on Yorke Peninsula, south of Ardrossan. I am on record about my position on that mine.

The government has said that it will deliver $600 million in royalties over its 15-year lifetime, and we do know that it has been estimated that the Olympic Dam expansion will deliver $190 million per annum in extra royalties. My critical point, as a way of foreshadowing a second amendment to come on this bill, is that Family First believes that a farmer who can prove they are adversely affected—prove loss—by mining operations in the form of mineral extraction—not exploration, but actual extraction, because we know the numbers are not there on this front—they ought to have a statutory right no different to a farmer who is on the land where the operations are occurring.

A farmer, for instance, might be on the downwind side of a mine where the dust is ruining his or her crops, but the farmer on the property is not affected at all as they are upwind. It is a crude example, but it demonstrates the injustice of how the compensation provisions of the act operate at present. I will speak further to that amendment at committee stage, but I do foreshadow that amendment by informing the council that I will potentially need leave to the council to move that amendment, and I ask colleagues to begin to consider that when they receive that second amendment.

Mining revenue and royalties have of course been the subject of significant federal debate, with the former Labor government's mineral resources tax (later the resources super profits tax), an adjustment to the Henry review recommendations on mining taxation. The new federal government, which is sitting for the first time today, says it will repeal the tax. No doubt the new Queensland member for Fairfax, Mr Clive Palmer MP, as he takes his seat in Canberra this week, will be keen to see that happen.

The live debate in this nation is about the revenue that is returned to taxpayers from mineral extraction. I have seen from the Australia Institute's suggestions that the profit margins for miners are far, far greater than farmers, retail businesses and any other sector of the economy. Perhaps state and national governments allow that because of the risk in capital-raising and investment needed to get a mine started. Notwithstanding that, Family First believes we should see more of our mineral wealth being returned to our taxpayers but emphasise that, with our amendments to this bill, the amount taken is not increased. We simply want to better allocate it to where it comes from—namely, the state's regions.

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for the Status of Women, Minister for State/Local Government Relations) (20:20): I thank honourable members for their second reading contributions and their indication of support for this bill and notice of amendments. I look forward to this being dealt with expeditiously through the committee stage.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. R.I. LUCAS: I asked some questions in the second reading debate. I am just wondering whether the minister and her adviser are in a position to answer those.

The Hon. G.E. GAGO: I think the Hon. Rob Lucas asked when monthly payments were going to start to be made. I have been advised that monthly payments will only start once the legislation has passed, and there is no retrospective adjustment. If the amendment is passed in November, then in December—by 31 December—the first monthly payment will be made in accordance with the schedule that will be forwarded.

The royalty payment for the period July to November will be made as per normal as part of the six-monthly mining return process currently in place. Likewise, if we amend the legislation to say that it comes into play on 1 January, then at the end of January we will receive the mining return and royalty payment as per usual—the royalty being for the period July to December—and the first monthly payment will be made at the end of February.

The Hon. R.I. LUCAS: Can I just clarify that, because the second option seemed to be the simplest option. In essence, the old system operates where you have a six-monthly payment under the old system paid in January and then the monthly payments would start in February, but can I just clarify what the first alternative was? The minister was, in essence, saying that there would be a monthly payment in December and then the four payments—July through to November—would be paid in a block in January.

The Hon. G.E. GAGO: Obviously our preference and intention is to have this bill passed this week which means that if the amendment is passed in November, then in December (by 31 December) the first monthly payment will be made in accordance to the schedule that will be forwarded and the royalty payment for the period of July to November will be made as per normal as part of the six-monthly mining return process currently in place. So the second option was only if the thing is delayed, so we will be optimistic.

The Hon. R.I. LUCAS: I understand what the minister's adviser is saying there but, in essence, is the government's position that—and assuming this bill is going to pass this week, which clearly it is—the current arrangements in relation to the biannual payments remain possible? That is, once this bill passes I thought we would move to monthly payments and the biannual payment authorisation would disappear. What the minister seems to be saying is, 'This bill will pass, we will start the monthly payments for a month, and then somehow we will revert to the old legislation,' which I thought we were getting rid of, 'for biannual payments in retrospect.' That is, we will have a monthly payment under the new system and then we will have a four or five-monthly payment in retrospect in January and then we will start the monthly payments again in February. Maybe the minister's advice is that both systems remain possible under the legislation that we have; that would appear to be the only logical explanation to what the minister says is now possible.

The Hon. G.E. GAGO: It is really quite straightforward. If this bill were not taking place, normally what would happen is these miners would pay their royalties for the period of July through to December and they would pay that in January. If we pass this bill, the miners will still need to pay their royalties for the period of July through to November as part of their normal payment process in January, so they will still need to do that.

The Hon. R.I. LUCAS: Mr Chairman, I do not want to belabour this. I understand the minister's advice but it would appear that the minister's advice is that in essence, whilst removing the monthly payments, there is still the authority somehow in the legislation to collect the five-monthly requirement from July through to November in the lump sum in January. Clearly, that is the minister's advice and, if that is correct, I understand that and accept it.

The Hon. G.E. GAGO: The honourable member's understanding is correct. It does this because the bill allows for a true-up or a settlement for each half yearly period. Just to remind the chamber, this is only affecting 21 of the 300-odd miners. The rest of the 200-odd will be paying as per usual.

Clause passed.

Clauses 2 to 3 passed.

New clause 3A.

The Hon. M. PARNELL: I move:

Amendment No 1 [Parnell–1]—

Page 2, after line 9—Insert:

3A—Amendment of section 9AA—Waiver of exemption (including cooling-off)

(1) Section 9AA(9)—delete subsection (9) and substitute:

(9) On an application, the ERD Court may—

(a) if the mining operator satisfies the Court that—

(i) exceptional circumstances exist justifying the carrying on of mining operations on the exempt land; and

(ii) the adverse effects of the proposed mining operations can be appropriately addressed by the imposition of conditions on the mining operator (including the payment of compensation to the respondent),

make an order waiving the benefit of the exemption for the respondent and imposing conditions on the mining operator; or

(b) if the Court is not so satisfied—refuse the application.

In moving this clause I remind members that the words in this amendment are the same as those in an amendment I moved back in 2010 when this legislation was last reviewed. As members would recall, back in 2010 this amendment passed the Legislative Council. It had the support of the crossbench and it had the support of the opposition. In between the houses the opposition had a change of heart and they decided to not support this clause when it came back.

The reason that I have introduced the clause again now is twofold. Firstly, it has always been the right thing to do and so I am taking the opportunity now that the Mining Act is again up for review to move it again, but the second reason is that, as another member has already mentioned, the Hillside mine on Yorke Peninsula near the town of Ardrossan is a project that has brought to a head the conflict between farmers and mining companies.

Just to remind members, the Hillside mine is an enormous enterprise, but with a relatively short life. This mine is going to be some 3,000 hectares in size. It covers some prime South Australian cropping land. If we just look at two components of the proposed Hillside mine, the pit itself will be 2.4 kilometres long, 1.2 kilometres wide and up to 450 metres deep. It is a massive hole in our farming land. There will be three waste rock piles generated from this mine; the tallest of them will be up to 115 metres high. To put that into context, the tallest building in Adelaide is 130 metres high, so that gives you some idea of the size of this project. The main issue is that it is over prime agricultural land that is cropping land. Crops are grown on this land.

As members know, under the Mining Act cropping land—land that is used for growing crops—is exempt from mining. Under the Mining Act you should not be mining cropping land, yet under the act, as we know, there is a major loophole in the form of the waiver of exemption provisions. As those provisions work, if a farmer refuses to sign a waiver to allow the mining company onto his or her land, if the farmer does not believe that the compensation offered or the conditions attached are suitable, or if they want to make sure that that land is preserved for farming in perpetuity, they have the ability to say no, but they will be dragged before the Environment, Resources and Development Court.

That court, under the current provisions of the Mining Act, will only consider two things. They will only consider compensation and conditions. They will not consider the threshold question about whether prime farming land should be taken out of production in perpetuity for potentially very short-term profit, and that is the threshold question that I believe the Environment, Resources and Development Court should consider when it deals with these disputes between farmers and mining companies.

This amendment says that, when such a dispute arrives at the environment court, the court has to be satisfied not only that conditions and compensation can be addressed but also that there needs to be exceptional circumstances that justify the carrying on of the mining operation on the exempt land. The phrase 'exceptional circumstances' is deliberately not defined in my amendment to this bill because it will be a matter for the court to decide in each case.

It seems to me that if you have—as we have in the case of the hillside mine—3,000 hectares of prime cropping land taken out of production forever for potentially 15 years supply of two of the most abundant minerals on the planet, namely copper and iron ore, then why on earth are we sacrificing the next generation's ability to grow food there, and the one after and the one after?

Governments say that they have rehabilitation plans for mines, that somehow after rehabilitating this 450-metre hole in the ground cropping might be able to take place again. I do not think so. I am not aware of any major open-cut mine of this nature that has ever been rehabilitated back to its former condition so that it can be used for growing crops.

In relation to this amendment, I also draw members' attention to the comments made last Thursday on ABC 639 radio, on the Annette Marner program, by mining minister Tom Koutsantonis. What the interviewer did in that interview was ask the honourable minister about the rally that was held last Thursday on the steps of parliament house. As some members would know, because they were there—certainly the Hon. Rob Brokenshire, the Hon. John Dawkins and the Hon. Tammy Franks were there—it was a big rally. About 150 people were there, according to the ABC news report, and they made their views very clear: they wanted to be able to preserve exempt farming land for farming and that if they chose not to sign an agreement with the mining company, that should be their right.

I agree with that, but it is not an absolute provision. There may be some circumstances where mining is appropriate to go ahead. If it is lower value farming land, if the value of the minerals is absolutely extraordinary and if the minerals sought are not able to be obtained anywhere else, they may be exceptional circumstances. Anyway, back to the interview. The Hon. Tom Koutsantonis acknowledged that he had spoken to the protesters. He said, 'I wanted to hear their views and concerns and I assured them that I would be making my decision based on science and on a very firm principle that mining should do no harm. So, if they have concerns about dust and they have concerns about pollution, if they have concerns about the economic impact, my first principle is that you should do no harm.'

I accept and understand the minister's position, but he is taking a very narrow interpretation of doing no harm. He is talking about the present impacts of that mine on neighbouring landholders. He is not talking about the fact that land would be taken out of production in perpetuity. You do not need to be a student of history to know that we have farming land on this planet that has been productive for thousands of years—in the Middle East, in parts of Europe—yet here we have a short-term mining project, perhaps 15 years of mineral wealth, and these 3,000 hectares of prime cropping land are written off effectively forever.

In conclusion in relation to moving this amendment, I acknowledge the contribution of the Yorke Peninsula Landowners Group. They have organised themselves very well and they have clearly expressed to the government what their desires are in relation to the interaction between mining and farming. I urge all members to look at what that group is saying on its website, at yplandowners.com.au. With those words, I urge all honourable members to support the amendment.

The Hon. G.E. GAGO: The government rises to oppose this amendment. This amendment would modify the waiver of exemption provisions regarding exempt land under the Mining Act. It is not related at all to the Mining (Royalties) Amendment Bill currently before the parliament. The amendment proposed by the Hon. Mark Parnell is identical to the one that was proposed by him, amongst other amendments, in 2010, at the time the Mining (Miscellaneous) Amendment Bill 2010 was before the parliament.

As honourable members may recall, section 9AA of the Mining Act was an entirely new section accepted by the parliament to introduce a more equitable and transparent scheme to deal with exempt land under the Mining Act. However, parliament, rightly at the time, did not agree with the amendment that the Hon. Mark Parnell is now putting forward.

The proposed amendment seeks to introduce an overly burdensome requirement for mining operators that apply to the ERD Court for a waiver of exemption. As honourable members would recall, section 9AA allows the mining operator to apply to the ERD Court where it is not possible to reach an agreement with the person who has the benefit of an exemption.

The amendment would mean that before the ERD Court could even consider an application to authorise a waiver of exemption, the mining operator must first prove that exceptional circumstances exist to justify the carrying on of mining operations on exempt land. This would be in addition to the existing requirement for them to satisfy the ERD Court that the adverse effects of mining could be appropriately managed by way of conditions. The effect of the proposed amendment is to add an unnecessary and difficult step, which in practice would make applying to the ERD Court for a waiver exemption an almost futile process.

I remind honourable members that the exempt land provisions in the act apply to all mineral land, including pastoral lands, crown lands, as well as freehold. They also apply to all types of mining operations, including prospecting and exploration. Under the act, as it presently stands, the only way that mining activities can be authorised over exempt land is with the agreement of the landowner or person with the benefit of an exemption, or with the authorisation of the ERD Court.

The requirement to prove exceptional circumstances is a significant hurdle to overcome. The word 'exceptional' in its ordinary meaning relates to an unusual or extraordinary instance. It would, in effect, mean that a mining operator would need to be able to refer to an unusual circumstance to justify why a waiver should be granted. There is no easy way to measure what would qualify as an exceptional circumstance. What is exceptional in one case may not be exceptional in another; for example, if a mining operator wants to undertake low impact exploration such as geochemical survey or aerial magnetic survey (that is, flying an aeroplane over the land).

These activities could only be undertaken if the mining operator could prove that there was an extraordinary reason why those activities should be permitted. Under the act, presently, a mining operator can apply to the court for waiver of an exemption in cases where negotiations between parties break down. There could be many reasons why negotiations break down, including that a person entitled to an exemption has unreasonable expectations about compensation.

Currently, the parties can go to the court to resolve these issues appropriately. However, if the Hon. Mr Parnell's amendment were allowed this would mean that even if the landowner was prepared to waive an exemption, in principle, apart from the compensation issue, the mining operator would still need to first demonstrate an exceptional circumstance before the court would consider the application. This is unfair and imposes a requirement that is clearly out of step with section 9AA. The amendment has the potential to set an inequitable precedent.

Most importantly, the ERD Court already has an appropriate level of judicial oversight under 9AA(9) as it currently stands. The court already has the discretionary power to authorise an application for waiver or to refuse the waiver, as each case requires. For these reasons, the amendment should be strongly opposed.

The Hon. M. PARNELL: Just before other members contribute, I have leapt to my feet quickly because there are two grossly incorrect statements that the minister made, on advice I have no doubt. The first one is, she suggested that even if the farmer agreed it would still have to pass the exceptional circumstances test. No; if the farmer agrees, the farmer signs the waiver, it does not get anywhere near court. That is just wrong.

The second thing the minister said that was wrong is that someone might explore—I think her words were 'by flying an aeroplane over the land'. Flying an aeroplane over the land does not require a mineral exploration licence and it is not an intrusive activity for which you need the sort of permit for which a waiver of exempt land even applies. It is ludicrous to suggest that someone flying an aeroplane over a farmer's land needs that farmer's permission to do so. That is just not the case. So, two very inaccurate pieces of information that I thought members should be aware of before they consider their approach to this amendment.

The Hon. G.E. GAGO: I have been advised that if, in relation to this issue of exceptional circumstances of, say, an airborne survey, the landowner signs a waiver then obviously there is no issue because they have obviously come to an agreement. However, if they do not sign a waiver then there is no agreement. Therefore, the miner would have to prove that there was some exceptional circumstance needed for the airborne survey. That is the advice I have received.

The Hon. M. PARNELL: I love where this is going. Is the minister saying—

The CHAIR: The Hon. Mr Parnell, before you continue on, I have to advise that we are sailing very, very close to the breeze about whether this amendment actually becomes part of the bill or is within the purview of the bill.

The Hon. M. PARNELL: I will very quickly address my comment and then sit down before incurring the wrath of the Chair. I appreciate what the minister said, but it just strikes me that we have had over a period of decades aeroplanes flying around South Australia. PACE, I think, was one: the accelerated exploration activity. I am fairly confident that the pilots of those aeroplanes did not obtain the approval of landholders when they flew over farmland. A total of 90 per cent of Yorke Peninsula is covered in mineral exploration licences, and no doubt the whole of Yorke Peninsula has been covered by aeromagnetic surveys, for example.

An honourable member interjecting:

The Hon. M. PARNELL: And Eyre Peninsula as well. I just do not accept that that activity requires the landholders to sign waivers. If the minister does not want to redress it, that is fine, but I would love to see the rural media jumping on to this idea that they have broken the law if they were supposed to get waivers and they did not from every freehold property that they have flown over for the last, say, 20 years. I think the minister is wrong, and that is the point that I want to make.

The Hon. G.E. GAGO: I have been advised that in some circumstances, for example, where there is a very low level flight, such as an altitude below 100 metres, an explorer may need a waiver.

The Hon. R.I. LUCAS: I have been listening riveted to my seat to the debate, because I have been trying to toss up which way we go on this particular issue. Having listened to the debate, I will return to the instructions I have been given by the member for Waite and the Liberal parliamentary party room, and that is that the party room has considered the amendments being moved by the Hon. Mr Parnell and has resolved for the following reasons not to support them. The member for Waite outlines:

This amendment will require mining operators to satisfy the ERD court that exceptional circumstances exist to justify the carrying on of mining operations on the exempt land. The language of 'exceptional circumstances' is extraordinarily strong and it is unclear how mining operators would be able to prove this before the ERD court. The criteria would be left to judicial discretion. In conversations with opposition members and Primary Producers SA—

I repeat, this is the member for Waite outlining this, so I was not privy to these conversations—

Mr Parnell indicated that exceptional circumstances may only be in cases where the mineral to be developed cannot be obtained elsewhere in the world. Further, exceptional circumstances would need to be proven before, and in addition to, demonstrating that any adverse effects of mining would be addressed by the mining explorer or operator.

This would have the ultimate effect of ceasing the mining exploration and operation on all exempt land. Currently approved mines that would have been stopped by this amendment include Murray Zircon's Mindarie, Hillgrove Resources' Kanmantoo, Terramin's Angas zinc mine (which is in abeyance) and Centrex's Wilgerup, which has been approved for open cut; it is still in the feasibility stage.

Major developing projects, including Iron Road's Central Eyre project, Centrex's Bungalow, Lincoln Minerals' Gum Flat and Maximus Resources' Bird in Hand, amongst others, would all be stopped under the Hon. Mr Parnell's amendment.

He has a self-satisfied look on his face there. He can indicate whether or not he intends to stop all those mining projects and whether or not if his amendment had been in operation it would have stopped all of those other mines, as my colleague the member for Waite has outlined. Just to conclude this quote from my friend and colleague, the member for Waite states:

Although this particular amendment relates to the Mining Act, the principles of access and land use arrangements to farmland are also relevant for energy resource operations.

The member for Waite provided a comprehensive paper to all of us in the joint party room of the Liberal Party, arguing passionately, not to put too fine a point on it, that if the Hon. Mr Parnell had his way, we almost would not have a mining industry in South Australia. Again, that is probably not of any great concern to the Hon. Mr Parnell but it is certainly of great concern to the Liberal Party, which obviously hopes to be, at some stage in the future, in government in South Australia.

The mining industry is an important industry for jobs. It is an important industry for jobs in rural communities. I note the fervour which is being whipped up at the moment in relation to mining operations in regional communities, and I remind some people who are assisting that particular discussion and debate that in many parts of rural South Australia when times have been tough recently we have seen a considerable exodus of young men and women from those farming areas, getting jobs in mining communities. It has been the only way many farming families have been able to survive during some of the tough times.

The Hon. J.S.L. Dawkins: Roxby Downs.

The Hon. R.I. LUCAS: Roxby Downs, as my colleague the Hon. Mr Dawkins says, is a perfect example. A number of farmers from the West Coast of South Australia, and other parts of farming South Australia, have gone to Roxby—and other mines that are much smaller, obviously, than Roxby. Farmers and young farmers have been able to survive through difficult periods, add skills and then, on occasions, go back to farming or, in many cases, they have enjoyed mining so much they have stayed on in the mining industry.

It is easy to paint miners and those who work in the mining industry as some sort of ogres to be opposed on every front. It is easy to try to divide and conquer. It is much harder to try to work together with those in the mining industry and those in the farming communities and say, 'How can we coexist? How can we cooperate? There will need to be give and take.' There will be impact on some farmers and farming communities, if significant mines need to go ahead in the public interest in terms of providing jobs to young South Australians in the future, mineral wealth, export income and economic growth for the state.

At a time when this state is confronting the ongoing and, some would argue, inevitable decline of manufacturing industry generally, as we have seen over the last 30 years in South Australia and we are likely to see over the coming years as well, it is too easy to say, on the one hand, that governments need to do something about jobs and economic growth whilst manufacturing industry goes into decline. There is the capacity, potentially, for jobs and economic growth in the future but, with the sweep of the legislative pen, we can wipe out, in essence, almost all the mining industry in a glib and whimsical fashion and say, 'You go off and argue exceptional circumstances.' The member for Waite stated that the Hon. Mr Parnell indicated in conversation with opposition members and Primary Producers SA (so it was not just with politicians) that exceptional circumstances may only be in cases where the mineral to be developed cannot be obtained elsewhere in the world.

The Hon. M. Parnell: That is not true.

The Hon. R.I. LUCAS: The Hon. Mr Parnell can argue his case and dispute the description of that conversation that has been outlined by the member for Waite and opposition members, and it was a conversation he also had, evidently, with Primary Producers SA. As I indicated at the outset of the quote, I was not privy to the conversation. I can only repeat what my colleague the member for Waite outlined not only to me but to all my colleagues.

Even if the Hon. Mr Parnell argues at some level less than that, as the minister indicated, it is still an extraordinarily high hurdle he knows he is constructing and, in the end, he will concede, I am sure, that it will be up to judicial discretion. At the outset he said, 'Well, I'm not defining exceptional circumstances but I wouldn't like taking a punt on the economic growth and jobs growth of the state's future. I'm leaving it up to a judge' of whatever jurisdiction we are talking about—the ERD Court—to, in essence, make judgements about these issues, establish precedents—

The Hon. M. Parnell: It's what they do already.

The Hon. R.I. LUCAS: But not on this particular hurdle. No, not on the hurdle that the Hon. Mr Parnell is seeking to construct and what has been able to occur so far has been that, clearly, some mining developments have been able to continue.

The Hon. M. Parnell: They always win.

The Hon. R.I. LUCAS: And if they can be done in a way, in cooperation with rural communities, with farming communities, to the state's benefit, to jobs growth benefit and to economic growth for the state, then many of us in this chamber, the Hon. Mr Parnell, will have a different view to you. We would see that as a good thing from the viewpoint of South Australia's future. For those reasons, we in the Liberal Party just cannot and will not support the amendment from the Hon. Mr Parnell.

The Hon. R.L. BROKENSHIRE: I rise to indicate that, partly because of the debate by government and opposition, we will be supporting this amendment. I accept counsel's advice to me that a further amendment to the amendment of the Hon. Mr Parnell that we are now debating regarding third-party compensation is not in order to be tabled by me, and we will have to do that at another time.

I want to place on the public record that Family First is certainly not anti-mining. In fact, we support mining but it is about supporting mining in the right locations and it is about the balance between mining and agriculture and sustainability. It is also about the fact that agriculture has an even brighter future, Family First believes, than mining from the point of view of growth opportunities.

That is already backed up by material that the Premier has put out in recent times. In fact, one piece of material—booklet No.7 that the Premier put out—that I received today in my mail talks about food and wine growth opportunities. We do desperately and urgently need to be able to map out prime food bowl areas and have no-go zones for mining in those areas, certainly at this point in time, and capitalise on the more arid areas for mining that are not going to impinge on very intense and sustainable agricultural returns.

Having said that, Rex Minerals have done everything according to the book when it comes to where they are up to with their application. The Hon. Mr Parnell talked particularly about the Hillside development and notwithstanding that they have done everything according to the book—and my understanding is that if this amendment were to be passed it would not be retrospective and the Rex application would still be considered on current legislation because it is way down the track—the fact is that those landowners will have impacts on their farming and so will all the other farmers, particularly where exploration becomes mining.

Anything that can be done to give farmers a little bit more power in an act that is clearly weighted, in my opinion, far too much to the mining industry—and we tried to get amendments up in 2010 and were not successful with many of them because of the strength of SACOME as an organisation representing the mining industry. I think now we have no choice in raising the voice and giving some opportunity to farmers to support the Hon. Mr Parnell's amendment, and that is why we will be supporting it.

New clause negatived.

Clauses 4 and 5 passed.

New clause 6.

The Hon. R.L. BROKENSHIRE: I move:

Amendment No 1 [Brokenshire–1]—

Page 4, after line 42—Insert:

6—Insertion of section 91B

After section 91A insert:

91B—Regional infrastructure and investment fund

(1) The Regional Infrastructure and Investment Fund is established.

(2) The Fund must be kept as directed by the Treasurer.

(3) The Fund consists of—

(a) 25% of all royalties received or recovered by the Minister under Part 3, other than royalty in respect of extractive minerals; and

(b) any money appropriated by Parliament for the purposes of the Fund; and

(c) any income and accretions arising from investment of the Fund under subsection (4); and

(d) any additional money that is to be paid into the Fund under a determination of the Treasurer; and

(e) any money paid into the Fund under any other Act.

(4) The Fund may be invested as approved by the Treasurer.

(5) The Minister for Regional Development may apply the Fund—

(a) for such purposes directly related to regional development or regional investment as may be determined by that Minister (including by payment to any person or organisation (whether or not an agency or instrumentality of the Crown) for those purposes); or

(b) in making any other payment required by another Act to be made from the Fund; or

(c) in payment of the costs of administering the Fund.

(6) The administrative unit of the Public Service that is, under the Minister for Regional Development, responsible for regional development within the State must, on or before 30 September in each year, present a report to that Minister on the operation of the Fund during the previous financial year.

(7) A report under subsection (6) may be incorporated into the annual report of the relevant administrative unit.

(8) The Minister for Regional Development must cause a copy of the report to be laid before both Houses of Parliament within 12 sitting days after the report is received by that Minister.

(9) The Minister for Regional Development must, in connection with the operation of this section, maintain on a website—

(a) a statement of income and expenditure for the Fund (listing each allocation of money from the Fund separately and in a manner that identifies the purpose or purposes for which each allocation is to be used); and

(b) information about how applications may be made for grants or other payments from the Fund.

(10) For the purposes of this section, regional development or regional investment must relate to development or activities undertaken outside Metropolitan Adelaide.

(11) In this section—

Metropolitan Adelaide means Metropolitan Adelaide as defined in the Development Act 1993;

Minister for Regional Development means the Minister who has portfolio responsibility for regional development within the State.

This is regarding regional infrastructure and the investment fund. Given the hour of the night, I will not hold colleagues too long, because I referred to this in my second reading speech.

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

The Hon. R.L. BROKENSHIRE: It is a very late night for me, sir. The sun is well and truly down.

The CHAIR: The Hon. Mr Brokenshire, you have the call.

The Hon. R.L. BROKENSHIRE: Thank you, sir. To summarise, a couple of key points with this: we have already heard the government promise that at some time in the future, almost in a crystal ball gazing exercise, there will be a future fund. The reality is that that future fund at this point in time will not be a future fund—it will not happen, it will not occur. But what can occur if the house supports this amendment is that 25 per cent of all the royalties received or recovered by the minister under part 3, other than royalty in respect of extractive minerals (and it goes on from there), will be able to put into a dedicated fund, as of this term of government, to royalties for regions.

We have seen the great opportunities in Western Australia, where royalties for regions is law and is delivering for rural and regional people. We are debating a bill that deals with pulling money forward to assist the government with general revenue and help the Treasury coffers at this point, but this is important because it would be a dedicated fund to rural and regional South Australia. It is fair to say that rural and regional South Australia is screaming out for some money to be spent on infrastructure, growth, job opportunities and social services—you name it, they need it—and 75 per cent of the royalties will still come into the general discretion of this government or a future government to spend where they see fit, but would dedicate 25 per cent to the regions.

The final point is that, notwithstanding all the good things members have talked about tonight when it comes to the positives of mining, where the Hon. Rob Lucas' one example indicated that, when times are tough with a drought, farmers, siblings, their sons and daughters can go to the mining camps, work there and bring money back to the farms—it works both ways. At the end of the day this money is only generated for South Australia for the regions because, at this point in time, unless we see a change where maybe this government might want to set up a heap of exploration in the six or seven most marginal Labor seats in metropolitan Adelaide and do a bit of coal seam gas exploration, and so on, in those seats, the reality is that the mining will come out of country South Australia, and therefore I argue that a certain amount of that should be going back into the region it comes from. I commend the amendment to the house.

The Hon. G.E. GAGO: The government opposes this amendment. The subject matter of the amendment has no real or necessary relationship to the Mining Act and there is no relationship between regional development expenditure needs and 25 per cent mining royalties, a point conceded with the contemplation of other funds being allocated to the proposed regional infrastructure and investment fund.

Regional development needs can be dealt with adequately by access to the whole state budget revenues and borrowings if there is a priority and with the appropriate business case established for particular expenditures. While most mining activities are located in a few regional centres in South Australia, infrastructure, services and a skilled workforce are required in a range of places throughout the state. The future fund will provide the whole of the state, including regional South Australia, the best outcome to share the benefits generated from developing South Australia's finite mineral and energy resources in a financially prudent and responsible way that will harness the benefits to all South Australians for generations to come.

The government will bring a future bill before parliament to provide a rigorous transparent approach to setting aside funds to invest in the state's future. The future fund proposal deals with the situation of potential increases in royalty revenue but appropriately on a whole-of-state basis. The future fund is designed to capture both above trend growth in GST grants and state taxes revenue and state royalty revenue having regard to current horizontal fiscal equalisation treatment as well as the operating position of the budget.

This amendment is based on a fund established in Western Australia. In Western Australia we have seen the current government announce major changes to the Royalties for Regions program in response to rising debt levels and a credit rating downgrade. The proposed amendment increases budget risk for future governments, and royalty revenues would be transferred to the fund regardless of the budget's operating position. This could result in increased debt if future governments are required to spend money from the regional infrastructure and investment fund regardless of the overall budget position. The government considers that the future fund is a much better approach to ensuring that South Australians, including future generations, benefit from the state's finite mining and energy resources.

The Hon. R.I. LUCAS: The Liberal Party for many years now has been a supporter of the Regional Development Infrastructure Fund. It was the former Liberal government in the 1990s, of which the Hon. Mr Brokenshire for a period was a member, which established the first Regional Development Infrastructure Fund, albeit at a modest level of funding.

The Hon. J.S.L. Dawkins: There was a lot more than what's in it now.

The Hon. R.I. LUCAS: It is much more modest now, as my colleague the Hon. Mr Dawkins points out. That was established by the former Liberal government. The Liberal Party remains committed to a regional development infrastructure fund; however, we are not prepared to support this particular amendment, this particular structure at this particular stage. We will commit prior to the March election next year to a policy on a regional development infrastructure fund well in time for the people of South Australia to make a judgement about the worth of that particular policy proposal.

Two further points I will make are that I am advised that on a rough order of magnitude, 25 per cent of royalty payments may well at this stage involve up to $70 million a year being allocated. If the impact of either the Hon. Mr Brokenshire's proposal or indeed some variation of it was to involve new spending of $70 million in regional areas and, if it was that the $70 million is already part of our forward estimates, the reality will be that other areas of government necessarily in the metropolitan area will have to have a $70 million funding reduction.

The Hon. R.L. Brokenshire interjecting:

The Hon. R.I. LUCAS: We can do that but that will not get you to $70 million, Mr Brokenshire—it will leave you a fair way short. A government, if it was to institute this, and that was the actual model, would then have to reduce by $70 million a year existing forward estimate funding to the extent of $70 million a year.

As someone who is involved in the health portfolio, which is about a third of the total government spending, that works out on a pro rata basis at about $23 million a year extra in terms of funding cuts for health in the metropolitan area. I know that hospitals and hospital services, such as the McLaren Vale Hospital, for example—which is near and dear to the Hon. Mr Brokenshire—

The Hon. R.L. Brokenshire: Very dear.

The Hon. R.I. LUCAS: —who is arguing for a relatively modest amount of funding from the government. I know in the Modbury area the government is currently cutting paediatric services from the Modbury Hospital. It is right across the board, whether it be McLaren Vale, whether it be Modbury, right across the board—

The Hon. R.L. Brokenshire: Port Adelaide.

The Hon. R.I. LUCAS: There was an attempt to get rid of the Phillip Kennedy hospice funding for a million dollars.

The Hon. R.L. Brokenshire: And they can still build a stadium.

The CHAIR: Order, the Hon. Mr Brokenshire!

The Hon. R.I. LUCAS: The reality is that if there is to be $70 million of new spending it means somewhere in the metropolitan area $70 million of spending—in a number of places—will have to be cut to provide that additional free ball. We are not talking about new money over what is estimated, we are basically saying, 'What's there at the moment? Take 25 per cent of it which is $70 million under one model and allocate it to completely new projects in the regions.' Under those assumptions then some government is going to have to implement $70 million worth of cuts in the metropolitan area.

With the greatest of respect to the Hon. Mr Brokenshire, representing Family First as he leads into the 2018 election seeking his own re-election, I am sure he will be out there, if that was the circumstance, supporting additional funding in the regional areas and attacking every one of the cuts in the metropolitan area—

The Hon. R.L. Brokenshire: I wouldn't build a footbridge before—

The CHAIR: Order, the Hon. Mr Brokenshire!

The Hon. R.I. LUCAS: Under that particular arrangement. That is this government; we are talking about a future government. We will not be building a footbridge for $40 million, I can assure you. We will still be trying to pay $400 million a year for the new Royal Adelaide Hospital from 2016.

An honourable member interjecting:

The Hon. R.I. LUCAS: We are talking about the money that is involved in this particular proposal, which is $70 million a year. The alternative model, depending on how you look at the drafting, is not new spending in the regions, it is actually just allocated to spending which might already be in the forward estimates but it gets attributed to this $70 million. It depends on how you look at the Hon. Mr Brokenshire's drafting. If that is the case then nothing new is achieved for the regions anyway because it is already spending for the regions which was going to be spent anyway in the forward estimate period.

There may well be already within Health a proposal to build a Barossa hospital for example or something like that in the forward estimates which has not already been announced. Now, I do not know whether that is the case or not, I am just saying that would be an example. If that is the case then the particular model that has been suggested—if they were the assumptions—would not be offering anything new anyway.

The reason I outline those two particular sets of assumptions is because if one looks at the drafting of this particular amendment it is possible to argue both. That is, I know the intention is that it is to be new spending but if you look at the actual words in the amendment it is entirely possible that that is not what the reality would be. It could be just existing commitments in regional areas, some of which might not have been announced yet but are hidden in the government's forward estimates.

So, for all of those reasons, whilst we in the Liberal Party support a regional development infrastructure fund, and will release a policy on it prior to the election, this particular model, we believe, is not a good model and should not be supported. We cannot support it as an amendment to this particular bill.

New clause negatived.

Schedule and title passed.

Bill reported without amendment.

Third Reading

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for the Status of Women, Minister for State/Local Government Relations) (21:21): I move:

That this bill be now read a third time.

Bill read a third time and passed.