Plastics Granulating Services

The Hon. T.J. STEPHENS (14:31): I seek leave to make a brief explanation before asking the Minister for Manufacturing and Innovation a question about the closure of Plastics Granulating Services in Kilburn.

Leave granted.

The Hon. T.J. STEPHENS: I refer the minister to an article in The Advertiser on 27 June, which outlined the plight of Plastics Granulating Services, a family-owned business in Kilburn that employs 35 people. Managing director, Mr Stephen Scherer, cited soaring electricity prices as the major reason for the decision to close, which he found heartbreaking to make. Over 18 months, their power bill had spiked to $180,000 per month, up from $80,000 per month. The business was a modern and a green one, which reuses plastics presumably destined for landfill. My questions to the minister are:

1. Does the minister understand this type of business is exactly the sort of new tech industry that produces the jobs of the future?

2. Why does the government allow businesses like Plastics Granulating Services to fail through high electricity prices during its 15 years in office?

3. What will the minister say to manufacturing businesses that are going to the wall and which believe that the government is 'having a discussion about ideology instead of a discussion about commerce' and that 'we won't have a manufacturing sector left in the country if we keep doing what we're doing'?

The Hon. K.J. MAHER (Minister for Employment, Minister for Aboriginal Affairs and Reconciliation, Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for Science and Information Economy) (14:33): I thank the honourable member for his question and his interest in manufacturing and jobs in South Australia. I note the news—that I am sure the honourable member shares with me in being pleased about—regarding the announcement of the sale of Arrium, protecting so many jobs in traditional industry like steelmaking in Whyalla—which is a great result for this state. I note the honourable member has a significant interest in that area, and I have spent time with him in Whyalla talking about steelmaking.

In relation to the question he asked about Plastics Granulating Services, I know it was a company that was in the supply chain for Holden. It was one of those 74 tier 1 and tier 2 supply chain firms in the auto supply chain. What we will see over the coming months, as we lead up to the end of October when Holden closes its doors, is some of these tier 1 and tier 2 supply chain companies closing. We will see them close for a variety of reasons. Some of the companies in the supply chain will close because, for many decades, that's what they have done. They have supplied Holden or Toyota and Ford with parts, whether it's metal or plastics. The fact is, there will be a number of these companies that close.

Certainly, a couple of years ago, less than a third of those 74 tier 1 and tier 2 supply chain companies were intending to continue on past the closure of Holden. That number is now—and we welcome this—up to about three-quarters of companies that are intending to continue on past that date have already started transitioning from complete and partial reliance on the automotive sector. Of course, some of those companies will downsize, and some will downsize significantly. Some other companies are diversifying and increasing their workforce.

In relation to Plastics Granulating Services in particular, I know that the Automotive Transformation Taskforce, particularly in the Department of State Development as well as other parts of government, had been working with the company to see if there were ways to improve what they do and improve the efficiencies in the company to give it the best possible chance of continuing.

Certainly, energy prices is one of the input costs for companies that operate in South Australia. There are many other input costs that operate in terms of the cost structure of companies in this state. We recently were judged as the lowest-cost city to do business in in Australia, of the capital cities. Certainly, although energy is one component of the cost, there are many other components on which we are exceptionally competitive. In terms of cost of real estate, we are now the lowest taxing jurisdiction, eliminating completely the stamp duty on commercial transfers. There are many reasons why we are a lower-cost jurisdiction.

Certainly, energy prices are a challenge. This is not a challenge, as I think some of the members opposite would have us believe, that is unique to South Australia. This is a challenge that is being faced completely around Australia. It is well recognised that the national energy market is broken; it is fundamentally broken. It is not designed for the way energy is produced and distributed today, and that is why this government announced a plan.

I can remember that when we recently announced this plan, the comments from the other side were, 'It is good to have a plan.' They are right: it is very good to have a plan, and that is exactly what we have got, an over $500 million plan to secure energy in South Australia for South Australians, to increase the supply of energy in South Australia for South Australians and to put downward pressure on the cost of energy in South Australia for South Australians.

Yes, the cost of energy is a concern, but it is not a concern that is unique to South Australia. It is not just the cost of energy; the supply of energy is also a factor that is affecting states elsewhere. We have seen it in relation to things like the aluminium smelting in Portland in Victoria. We have seen the shutdown of facilities in New South Wales, who are huge energy consumers. This is a challenge that all jurisdictions in Australia are facing, and that is why we are taking the lead and we are securing our energy future with our energy plan in this state.