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House of Assembly - Fifty-Second Parliament, First Session (52-1)
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WATER INDUSTRY BILL

Second Reading

Adjourned debate on second reading (resumed on motion).

Mr VAN HOLST PELLEKAAN (Stuart) (19:31): I will not take too long. The member for MacKillop certainly made a fulsome and substantial contribution and covered very well all of the issues that the opposition would like to put. I am also a little bit humbled to follow the member for Chaffey, who we all know is an expert on the River Murray. I would like to make a couple of points with regard to the electorate of Stuart and how that fits into this Water Industry Bill 2011.

The really broad issues that we are dealing with here are water planning, regulated industry, technical regulator and authorised officers. That is obviously very broad and, as I said, has been covered by the member for MacKillop. The electorate of Stuart, though, as I think most people would know, is very, very broad. There are no more voters, no more people in the electorate of Stuart than any other electorate, but I am pretty confident in saying that the electorate of Stuart encompasses the broadest range of communities and the broadest range of water needs of any electorate in the state.

Look at a country town like Kapunda, which is nearly metropolitan fringe, a large regional centre like Port Augusta, the Mid North area—Morgan, Blanchetown, Cadell, Murbko, right on the River Murray—and then moving all the way up through outback South Australia—Marree up to the Northern Territory/Queensland/South Australian borders. We need water for an enormously wide range of issues. Some of them are exactly the same as in metropolitan Adelaide, and some of them are vastly different, including irrigation in the River Murray, including stock needs, including very small communities, which we all understand need water just as much as any large communities do.

I thank the member for MacKillop for including in his list of amendments two that are very important to the electorate of Stuart. Amendment No. 13 in summary asks SA Water to continue to provide services within those areas of the state in which services are provided immediately before the commencement of subsection (2). That is vitally important, because I would hate to see a situation where it became inconvenient or became unattractive for whatever reason to SA Water, or to the government, to continue to supply water to some of the very, very small towns in the electorate of Stuart, or any other small towns for that matter anywhere else in the state.

I really do understand the economics, I understand the practical realities of trying to run a massive water business like SA Water does, but I also understand how important it is that people get their water supplied even if it is non-potable water. Of course, we would all like to have high quality drinking water supplied everywhere that people would like in every home in the state. I understand that is not going to be possible for SA Water to supply it to every sheep or cattle station around the place.

There are small towns that get drinking water and there are small towns that get non-potable water as well. While they have to catch water on their roofs to fill up the rainwater tanks, and while they have to sometimes pay to have water carted in because they need drinking water, the non-potable water is still extremely important for doing the dishes, for bathing, for boiling up, and using for a wide range of reasons. So, amendment No. 13 is very important to me, and I hope the government will see the merit in that, and I hope the government will see the fairness, equity and importance of that to many communities in the further afield parts of South Australia, and how it applies to drinking water and also to non-potable water which is currently supplied by SA Water.

I would also like to talk briefly about amendment No. 23, which the member for MacKillop has included. In broad terms, this has regard to the principle that the prices charged to small customers for retail services should be the same rate for all small customers regardless of their location in the state. That, of course, is vital too, because we can all understand the economies of scale if you are trying to supply water into metropolitan Adelaide suburbs. That is one thing, and your economies of scale would be probably the best there of anywhere in the state. This does not relate to large customers necessarily. It is still possible to do deals with business and industry, and we are all looking, reading and learning about the indenture act for Roxby Downs at the moment.

There is a new example there of an agreement that has been done, outside of SA Water, of course, but there will always be reasons to do different deals with larger organisations. In much the same vein as I was discussing amendment No. 13, amendment No. 23 is really an issue of fairness. It would not be appropriate to charge excessively high rates for water in smaller towns throughout the state. Typically, of course, there are many of them in the electorate of Stuart.

I might point out that there are approximately 30 communities in the electorate of Stuart. The regional city of Port Augusta accounts for about half the population of the electorate, and another 25 to 30 communities make up the other half of the population. So you can imagine that there are a lot of very small places.

So, that amendment is vital, and it is in much the same vein as the electricity pricing that we have in this state, and I think that is vital, so I ask the minister and the government to take that into very serious consideration. It is absolutely critical for the people that I represent. It is absolutely critical for the people that I represent that they can have equity of pricing for SA Water supply. I will leave it at that. The member for MacKillop and the member for Chaffey have covered the issues on behalf of the opposition very well but, from a Stuart perspective, those two amendments are critical.

Mr PENGILLY (Finniss) (19:38): I rise to offer a few comments on the Water Industry Bill 2011. The shadow minister covered many of the points and indicated that the opposition has a series of amendments. I hope that the government listens to the opposition down here, because my view is that if some of these amendments (or all of them) do not get up here, they will get batted away in another place, and heavens knows where that will end up, with the collection of members up in that place.

However, I do have concerns about certain aspects any time the subject of water comes up. It is a very topical issue and it is not going to go away. I know that I have talked in this place before about the considerable number of people on fixed incomes in my electorate who are absolutely battling to meet the costs of water, electricity, council rates, fuel, gas, fruit and veg—the list goes on. But more particularly in relation to those things that they must have, such as water and electricity, and, if they own property, council rates, and despite the fact that they obviously have concessions (and I acknowledge that), they simply cannot pay over and above CPI. They do not have the money to pay these excess charges.

I suspect that they are probably coming through the doors of the electorate offices of government members as well, but I can tell members that, day after day, I have pensioners in despair coming through my office door. There is something inherently wrong here. We must have water. I have reticulated water across much of my electorate, on the mainland and on Kangaroo Island. In fact, I have the first desalination plant in the state on Kangaroo Island at Penneshaw, and I will come back to that in a minute.

Also, considerable areas of my electorate outside the town areas do not have a reticulated water supply supplied by SA Water. What they have to do is to manage their own water supplies through tanks and through dams. A number of members on this side would know all about that, so they actually know how to use water. Unfortunately, we are growing up with a generation of kids these days who think that, if you want milk, you get it in a carton out of the fridge, and if you want water you just turn on the tap. It is a bit more technical than that, I am afraid.

What does worry me in all of this is that there is just an expectation now that water is always there and that you are always going to have good water. Despite the lessons that are taught, many people still do not know how to look after their water supplies, they do not manage their water properly, yet we still have this enormous amount of money each year going into state Treasury—I think $300 million, approximately, last financial year.

Obviously, if you are in government you value that money, but I can tell you, Madam Deputy Speaker, that people are fed up to the back teeth with the state government ripping money off everywhere. Only today—and I raise this as an example—I had pensioners from Victor Harbor ring me up in despair. They were stopped by the police, I think, a couple of weeks ago, and the driver was issued with an expiation notice of $360 for not wearing a seatbelt.

I relate this just to charges and costs, but what happened was that he pulled out from the Esplanade around by the bowling club in Victor Harbor, and, as he pulled away, his seatbelt actually became unclipped and folded back, so he reached out and put it back on again. A police car going the other way saw him, stopped him and booked him and gave a pensioner a $360 fine. The point I am trying to make is that it has gone overboard in this crazy run for revenue.

We must have infrastructure. We have got this enormous desalination plant down at Port Stanvac, which was an initiative, as members may recall, of the Liberal Party under Iain Evans as leader, and it has gone on from there. This side of the house supported that. The Rudd government, I think it was, came in and doubled the size of it, yet even the other day we find that there is a $25 million bonus going to AdelaideAqua for the construction of this desalination plant.

Mr Williams: It's $46 million.

Mr PENGILLY: Sorry, $46 million, I beg your pardon. If members on the other side wonder why they are on the nose out in the electorate, they want to have a good look at where they are going. They really want to have a good look. Of course, this water industry bill has to go through the parliament; of course we have to have change. South Australians, and probably Australians generally, do not like change. However, we must change, but it has to be sensible change. The shadow minister has put forward a great list of amendments, and I sincerely hope, again, that the government sees fit to put them through.

Just returning to the Penneshaw desalination plant and to show members just how clever some of those in SA Water are, for months and months they have been losing water at Penneshaw. Members will love this. They have been losing it. So, what do they do? They have sent SA Water staff running around with water divines, or whatever they are called (I do not know, some sort of meter), looking for the location of the leaking water because they assumed that people were taking water illegally.

So what do they find? They find half a dozen or so houses in the township of Penneshaw, a tiny little town, with the odd leak. So they had to revisit their own infrastructure. So what do they find? They find the dam at the top of the hill that takes the water out of the desalination plant with a hole in the bottom of the bladder and it is all going straight out the bottom. Blind Freddie knows the first place you would have looked is in your own storage. How much other waste is going on around the place with examples like that? I really don't know.

I can also tell members that, on top of the cost of the water, people in my electorate have been fed up to the back teeth with paying the River Murray levy. The doomsayers said after the drought that it would take six or seven years to bring it back to health and I think the River Murray was filled up again in six months. Nature looked after that for us, and a few other things besides. However, the towns of Yankalilla, Normanville, Victor Harbor, Port Elliot and, going into the electorate of Hammond, Goolwa are all supplied from the Myponga reservoir with no connection whatsoever to the River Murray.

On Kangaroo Island, unless someone has done something that I have not learned about, there is no pipeline. There is a power cable that is stuffed across there but there is no pipeline, yet the islanders have paid the River Murray levy for years. It is a case of getting back to basics on this whole water thing.

We have to have the infrastructure. I heard the member for Stuart a while ago talking about the vast infrastructure and the large industry that is SA Water—it formerly went under other names such as E&WS—but it is worth remembering that a lot of that infrastructure was put in 60, 70 or 80 years ago. The Morgan-Whyalla pipeline and the pipelines that go here, there and everywhere to Adelaide were all put in a long time ago now. I do not know what the contingency is in the forward estimates to replace or add to a lot of that infrastructure, but I would suggest a lot of it has been well and truly paid for time and again, yet we still have hundreds of millions of dollars a year going into the Treasury providing revenue for a government on the slide.

I welcome visits from ministers and members on the other side in my electorate because my people down there leave me in no doubt as to what they think. They leave me in no doubt whatsoever as to what they think. But, in fairness, I will say the minister for agriculture has been down at my invitation and, indeed, the minister for the environment has been down at my invitation. We have done tours down there and I welcome them: it is good for them to see what is going on on the ground.

In relation to this Water Industry Bill, I sincerely hope, once again, that the government does take note of the opposition's amendments because, if it gets up in that other place with the collection of Independents and heavens knows what else they have there, anything can happen to it, and anything might happen to it, not only with this bill but with—

Mr Pederick interjecting:

Mr PENGILLY: Now, now, calm down and relax—not only with this bill but a host of others. This bill is won: this is fairly simple.

Mr Williams interjecting:

Mr PENGILLY: You can have your turn in a minute. The Roxby Downs indenture bill, anything can happen. The only person or persons who are going to make any mileage out of this Roxby Downs indenture bill are in the upper house. There is no suggestion that we will not support it and it is total nonsense to suggest otherwise. You can hardly wait for the Hon. Mark Parnell and the Hon. Tammy Franks to waffle on for about three months trying to delay the thing and put amendments in it. They will be grandstanding in the media and you will see them all over the TV. There are people in that other place who are going to save the world on a regular basis. That is exactly what is going to happen to the Roxby Downs indenture bill when the Greens get hold of it up there.

Let us be sensible about this water bill, minister, and take on board seriously the opposition's amendments and see if we cannot work through them in a manner that is in the best interests of the people of South Australia. At the risk of repeating myself, I say—

The Hon. P. Caica: Don't do it, then.

Mr Pederick: You've got 10 minutes. Repeat yourself.

Mr PENGILLY: I might start again. I am starting to get warmed up now. I once again draw to the house's attention the pressure on fixed income families and pensioners and their ability to get through these tough economic circumstances, when rates, water prices, power, etc., are all thrust upon them. So, I will watch with interest what happens to this bill and I will listen with interest to the next speaker.

Mr TRELOAR (Flinders) (19:50): I take this opportunity to speak on this bill and relate it particularly back to the situation on the Eyre Peninsula. It is probably no surprise to the minister, and I thank him at the outset for coming to visit earlier this year at our invitation and inspecting the Tod Reservoir which, of course, has been a feature of the Eyre Peninsula water supply over many years. In fact, it was the initial water supply for the entire Eyre Peninsula and was quite a feat of engineering in its early days. Unfortunately, it has seen increased salinity over the years and has been taken off-line as recently as the mid-2000s, I understand.

I would regard it as an asset still, but an asset that has been let go. I do not believe that it has been held with any regard by SA Water. It is supposedly held as water security for the Eyre Peninsula, but certainly the asset, the inflows, the pumping stations and the creek lines have all been let go to a point where it is almost irreparable. I think that is a sad thing because it has meant that we are now almost totally reliant upon the southern basins.

The southern basins are a series of underground lenses which exist to the west and south of Port Lincoln, and 85 per cent of Eyre Peninsula's water comes from those lenses. My belief is that we do not have a full knowledge and understanding of the geology and the function of those lenses. There are gaps in our knowledge, and I think they are gaps that need to be filled in the very near future, otherwise we will potentially be extracting a finite resource at a rate which is not able to be sustained.

More recently we have seen a spur line built from Iron Knob to Kimba, and that has allowed a small amount of water from the River Murray to extend as far west as Ceduna. The one good thing about this particular adjunct to our water supply is that it has improved the quality of the water to the area out west, as the minister would be aware. There have been water quality issues, particularly on Upper Eyre Peninsula, in our reticulated scheme due to high levels of calcium, and it has caused particular problems in smaller spur lines to farm troughs and farm watering points.

The River Murray water has actually improved the quality of the water heading west, and that has been a bonus. Eventually, because of this additional supply, the government was able to justify charging Eyre Peninsula residents the River Murray levy.

I put to the minister that, at this point in time, it may be an opportunity for some of the River Murray levy to come back on to the Eyre Peninsula and maybe be put in to the water reticulation scheme there. It may be that we use some of that money to investigate and rehabilitate the Tod Reservoir because, despite what I said earlier, it is still an asset and I think that, with some engineering, some effort, there is a possibility to bring it back on as a useful resource.

In recent times there has been a lot of mining exploration done on Eyre Peninsula and, lo and behold, the drilling that those mining companies have undertaken has actually added to our knowledge base. Lincoln Minerals are drilling west of Port Lincoln at a prescribed wells area. They have a tenement there and certainly have an iron ore deposit with some potential. They have discovered through their exploratory drilling what could best be described as basement water. Good quality basement water was a resource that we were aware of but still there are gaps in our knowledge about this particular body of water: how big it is, the rock structure that it exists in, where it comes from, where it goes to, and the potential of the water supply to be an adjunct to Eyre Peninsula's water.

There will be increasing demand on water on Eyre Peninsula—certainly an increase in industry and an increase in population—and, quite likely, mining companies will be requiring increased water. I understand that mining companies at this point in time are required to source their own water and they can do that in a variety of ways. It may well be that mining companies on Eyre Peninsula enter into a commercial agreement with SA Water. It may be that they establish their own desal plants or they may use groundwater that they find on their tenement should it be of suitable quality. There is no doubt that demand will increase, and I think that SA Water need to be aware of that.

In 2002, my predecessor, Liz Penfold, had been raising the issue of water security on Eyre Peninsula for some years. Then minister Conlon indicated to this house that the government would be intending to build a desal plant on the west coast of Eyre Peninsula to supplement water supply and add to water security. There is certainly no indication that that desal plant is any closer at this point in time. I do know that SA Water have investigated some four sites and are still undergoing investigations, but my feeling is that they are actually sweating off on this investment. Given the fact that we have had three years of reasonable recharge, security is reasonably well placed at the moment but who knows what might happen in the future.

My thinking has changed a little bit on desal plants. I think the opportunity now is for small coastal towns—and I have mentioned it before in this place—to set up their own small desalinating units to supply relatively small populations. It does not require the investment of a big plant and you certainly do not have the infrastructure requirements or the electricity requirements, and you do not have the issue of the outflow either with the small localised plants. But crucial in that scenario is third party access, and I understand this bill certainly indicates that third-party access is part of the government's agenda and I would encourage the government to proceed with this with some haste because there are commercial opportunities for other companies to get involved with the supply of water. BHP may well be part of that; a mining company may well be a part of that.

I have listened closely to the contributions of all the members on this and I am pleased with the amendments that the shadow minister has put forward. We have all taken the opportunity to highlight issues around water as we see them. It is our most precious resource; I do not think anybody could deny that. In closing, I commend the amendments that we have put forward. I concur with the member for Finniss. It would be nice for the government to consider these quite seriously because once it goes to the other place anything could happen, and I quite agree with that.

With those few comments, I am pleased to have the opportunity to talk once again about the water situation on Eyre Peninsula. We have not heard the last of it, minister, and I ask you to seriously consider once again the Tod reservoir and its future and that it could hold a place for Eyre Peninsula water.

Mr PEDERICK (Hammond) (19:59): I rise to speak to the Water Industry Bill 2011 which, in the introductory note, says it is:

A bill for an Act to facilitate planning in connection with water demand and supply; to regulate the water industry, including by providing for the establishment of a licensing regime and providing for the regulation of prices, customer service standards, technical standards for water and sewerage infrastructure and installations and plumbing, and by providing performance monitoring of the water industry; to provide for other measures relevant to the use and management of water; to make amendments to various related Acts; to repeal the Sewerage Act 1929, the Water Conservation Act 1936 and the Waterworks Act 1932; and for other purposes.

Currently, the supply of reticulated water in South Australia is regulated under the Water Conservation Act 1936 and it can also be under the Waterworks Act 1932. These acts confer the powers to enable the construction and maintenance of the necessary infrastructure associated with water supply, over both private and public land. They also provide for water rating and, in the case of the Waterworks Act, establishes the Save the River Murray Fund and imposes the levy. The Sewerage Act 1929 provides similar powers in relation to sewerage systems.

The government has published Water for Good in response to the ongoing drought, in June 2009, which proposed a number of reforms for the water industry, including an independent pricing regime and third-party access to water infrastructure.

The bill repeals the above mentioned acts and has established a new regime for the supply of water and sewerage services. The new initiatives include: firstly, water planning, which obliges the minister to prepare and maintain a state water demand and supply statement, which is to be comprehensively reviewed each five years with a progress report being tabled each year.

The regulated industry is part two. The water industry is declared to constitute a regulated industry under the Essential Services Commission Act 2002, thus providing ESCOSA the function of regulating and setting water and sewerage prices.

Part three is the technical regulator, which sets out the requirement of a technical regulator to develop, monitor and regulate technological standards. Part four is about authorised officers, which enables the appointment of authorised officers and establishes their functions and powers.

The bill also transfers many of the powers from the repealed acts relating to land access, the establishment of infrastructure and protection of infrastructure equipment and water supplies, and establishes the Save the River Murray levy and fund.

I note that the government has been promoting the policy of third-party access. The bill simply initiates a process to move towards third-party access. I note that we will be putting forward amendments to oblige SA Water to provide a transport service to farmers for stock water, where the farmer has acquired their own River Murray water entitlement. This is to reduce costs and to protect livestock production across much of South Australia.

I just want to talk about some of the issues that we have had with accessing water, especially in the previous five or six years with the drought that engulfed the River Murray and Darling River—the River Murray system. It has been shocking, to say the least, for many people the length and breadth of the River Murray, but I do not think more so than for the people who live, reside and try to operate businesses at the lower end of the river and around Lake Albert and Lake Alexandrina.

These fine people of this state took the biggest hit, I believe, in what happened with this drought. The people who live around Goolwa were engulfed in sand blowing off the dry lake bed into their homes, which were devalued by hundreds of thousands of dollars because of the lack of water. The people on dairy farms had to spend up to $5,000 a week to truck water in to keep stock going.

Many people, especially around the Narrung Peninsula and around both lakes—Lake Albert and Lake Alexandrina—had to lease water in when they could access good water, and then it got to the stage where the water was not useable. There were private desalination plants put in at a cost of many hundreds of thousands of dollars and people were doing what they could to keep their farms going.

Some people simply gave up attempting to irrigate and basically ran their properties as a dryland venture. Some could say it was an opportunity, but what some of these people then had to do was sell their water and perhaps buy or lease some more country so that they could grow their feed and run their dry stock, or their sheep and cattle, on another part of the area.

It has been tough—it has been darn tough. We still have high salinities in Lake Albert, and a lot of this is because of the poor policies that went in place during the drought. I still do not believe that the negotiators we had working for the state government were good enough to negotiate enough water for this state, and I think we could have done a much better job. I have been told that Victoria had a couple of red-hot negotiators that outdid us every time, and we were left partly at the will of nature, partly at the will of upstream people, and partly at the lack of action by the government.

We have seen tens of millions of dollars worth of infrastructure put in with bunds at Narrung, Currency Creek and Clayton. In regard to the Narrung and Clayton bunds, something like 25 per cent of those bunds will be left in the river that the government will not get out. The government said that it would get all of the material out, but it certainly will not get it out. The government has said, in the case of Currency Creek, 'It's underwater; it's too hard to get out.' How do they think the river was dredged? How do they think people dredged channels below Lock 1 when they had to try to get boats through? There are barges on which you can put long-arm excavators to do the job. It has been very, very tough.

This government hired a water commissioner, Robyn McLeod. I note she has not been with the government for quite a while, but I remember going to a meeting on a Thursday night after a sitting week with Mitch Williams (member for MacKillop).The meeting had been going for a while by the time we arrived, and there was a group of luminaries up the front, including Robyn McLeod, and she stood up in front of the crowd and started to talk about climate change.

When these people have seen the results of over-allocation and over-extraction from the river, and they have some bureaucrat from Victoria come in and start to tell them, 'This is the effect of climate change,' let me say that it caused quite a ruckus in the room. These are people who have suffered and who will not see a lot of the money that they have had to spend to survive. We have seen issues of salinisation right throughout the area and, because of government inaction, it will be a long, long time before Lake Albert is back to what it used to be.

I want to talk about some of the other policies that this state Labor government has had. Several years ago, they came out with a broad policy to increase the Mount Bold dam by 200 gigalitres from the 45 gigalitres it is at present. I remember having a meeting with then minister Maywald, and I asked, 'How are you going to fill it up? Ninety-five per cent of that water will have to be pumped from the River Murray,' and she assured me that it would not, and said, 'I'll get you another briefing.' Sadly, I am still waiting for that briefing, and I will not get it from that minister.

Thankfully, someone saw some sense and killed that policy. I remember it went halfway back in the previous budget, and then it just disappeared off the stream. I believe it certainly would have been $850 million of wasted infrastructure. Why build another storage into which you are only going to pump water from a resource that is climate reliant? It just did not add up. Do not get me wrong, I have no problem if dams are built and people can say to me that 95 per cent of SA Water will be caught in the catchment and stored in a dam. We certainly did not get that assurance with that proposal.

I note that many members on this side have talked about desalination. Certainly, after many of us visited the first desalination plant in Perth where for under $400 million they built a 50 gigalitre plant in a very good location at Kwinana. It basically had a hydraulic inflow. The water essentially fell into the plant. Only 250 metres down the way the outflow pipe went about another 250 metres out into the sea, and then it went quite a way in with a lot of diffusers, so that the brine was controlled. That was monitored 24 hours a day to monitor the effects on local sea life and that kind of thing.

What they found there was that, essentially, water diffused back to normal seawater counts of salt within 50 metres. So it shows that it can be done, and it shows that it can be done cheaply. We said in our water policy (I think it was early 2007) that we would build a 50 gigalitre plant. It would have cost, yes, more than $400 million, but I would assume somewhere in the scope of $100 million to $200 million more.

What we see in this state now is a $1.8 billion monolith, a 100 gigalitre plant, which is 50 gigalitres oversize, built south of the city so that water has to be piped through the city to the north. They have not even spread the risk by having two locations where, if another plant had to be built, it could have been built north of the city and just piped around those northern suburbs and areas. On top of that we see an over $400 million expenditure in the piping for this work to deliver this water.

There is always talk about something in the order of $130 million of commonwealth money that was going to come in, and we have been told that it is coming in to help fund it; but there was supposed to be some exchange of River Murray licence, but that has not happened. What will happen when there is plenty of water in the River Murray, as there is now? Maybe in the next decade the plant will get up to full steam. It is taking a while; it is certainly well over time. They will just turn it down and they will just turn it off. We will have this massive infrastructure, which, if the states can ever agree and Craig Knowles gets the appropriate water plan in place, we may never have to use at full capacity. I would be very surprised if we ever have to. Like I said, we have to wait for it to reach full capacity.

I certainly want to speak about the River Murray levy, which affects constituents right throughout my electorate. We have seen in former budgets many millions of dollars of this levy not even expended for the River Murray works like salt interception schemes and other ways that can improve the health of the river. This is just another levy that impacts on all of my constituents. I have a large retirement sector right throughout my electorate, especially down at Goolwa and throughout Murray Bridge and other towns. It is just another cost that these people have to pay. They have had to put up with the drought and put up with the worst quality water in the system.

We also need to look at agricultural viability in this state and the water delivery to producers. We now have River Murray water piped across to the Far West Coast of Eyre Peninsula, right over to Ceduna and, yes, that helps those producers with water supply but why could the proposals of the former member for Flinders to build local desalination plants, which were all rejected by the government, not have happened? No, we will just pipe a bit more water from the stressed River Murray.

People who live on the Keith pipeline that my farms feeds from have to pay ever-increasing costs for water. Water from that pipe also goes to the emergency pipe to Meningie and the Narrung Peninsula. Time and time again, whenever I am at the football or a local event, people say to me, 'Adrian, how are we going to survive? How are we going to water our sheep? How are we going to water our cattle?' It is costing people with large feedlot operations, or even a few hundred head of beef or dairy cattle out in the paddock, tens and tens of thousands of dollars extra to run their operations. We run the very real risk of turning a large part of South Australia into a desert because there are far more areas than those I have indicated near the Keith pipeline—it is right around the state. About 90 per cent of the state is reliant on River Murray water and these people, apart from the Barossa Infrastructure Ltd scheme, all pay the top industrial rate to get access to that water.

Piggeries with thousands of pigs in eco shelters are suffering this cost. It is true, and I have mentioned it here before, that farmers are price takers, not price makers. A lot of this extra cost has to be absorbed into their production, and it makes it ever harder for these people to produce good quality pastures and good quality stock for market. Last year we saw how this government denigrates agriculture when it announced an $80 million cut in spending over four years. At least 300 department staff disappeared to fund up to $9 billion of infrastructure projects in the city.

What help is that for people in regional areas, who are working in the one sector that provided the biggest individual boost for this state, still well above mining, and that was the agricultural sector? Part of that was because we had good rains, but we must remember that South Australian cropping families have not had good returns from cropping for nearly a decade. Most of them have scraped through pretty well but they have been tough times. It is nice to see that a lot of them had good returns last year albeit I believe a lot of people did not get more money because of poor classification at a lot of sites throughout the state but, thankfully, due to some late rains, most people throughout the state will get a reasonable harvest.

In closing, I would like to applaud the people of this state, the people of my electorate and the ones down at the bottom end of the river system, around Lake Albert and Lake Alexandrina, who really had to fight to get their case heard, and who took to the government proposals to get water delivered in the potable pipeline that went to Meningie and Narrung, and also The Creeks Pipeline Company that worked with the government. It took the government a long time to get there, and the bureaucracy took a long time to get through. However, they got these projects away, and most of it was federally funded, but I must admit that the state government helped to control these operations. When Leighton Contractors, I think it was, and someone will correct me if I am wrong, got in there to get these projects in place, they did it in record time and I commend them for their work.

Ms CHAPMAN (Bragg) (20:20): It is with pleasure that I stand this evening to speak on the Water Industry Bill 2011. A number of pieces of legislation in respect of water have come before us in the relatively short time that I have been in the parliament. They have included legislation to establish the stormwater authority, which the opposition generally supported. I did not, and I think that probably the lack of action on behalf of this authority since its establishment is one which bears out the concerns that I raised at the time.

Others, on the other hand, have had the comprehensive support of the opposition, including the safe drinking legislation. The government felt it necessary that we have a process to ensure that water that is for human consumption is kept and maintained at a safe level and that we have the regulations tightened to support it.

We have had various pieces of legislation which have had the comprehensive support of the opposition and others for which there has been some resistance. There was legislation to introduce a River Murray levy, which I can remember debating late at night with the soon to be late, great former treasurer, Mr Foley. He explained to us the need to protect the River Murray and that all South Australians needed to contribute towards the cost of protecting it.

I can tell members that, when I first came into the parliament, I put out a survey as to important issues, and the single biggest issue of concern to people in my constituency was the future life, protection and health of the River Murray, even above other water issues at the time. I think that, with the support of the opposition, we said to the then treasurer that we would not oppose this legislation but that we wanted an assurance (and we put it into the legislation late at night here) that the money would be spent, and that there would be no reduction in recurrent expenditure for projects that would otherwise be for the health of the River Murray and its infrastructure, maintenance, etc., and that it would not be diminished by the application of money from this levy—in other words, that it would just use this lump of money to reduce its responsibility to continue its existing liability as a government, and we had that put in the legislation.

Here we are tonight, nearly five, six, seven years since the fund was established and there is a healthy surplus in it. We have got millions and millions of dollars sitting in that fund. So, it does concern me when, again, the government comes to us and says that we need to look at legislation essentially to facilitate the planning so that other players come into the market for the private production, I suppose, of water, and for other industry people to be able to come in and use the system, use the infrastructure, that is, the access to it; but also to be able to meet certain standards to be able to come into the scheme, and to ask also in this legislation that we set up a licensing regime for the regulation of not just the provision of pricing and customer service standards (and all the other things for the new players) but that there would be a whole regulatory regime established for that.

I say this: first, I do not think that it is necessary for the government to put its nose into the planning in respect of facilitating access to water. That is not necessary. I that think it is premature for the government to ask the parliament to embrace a costly regulatory regime to manage the approval process of the industry. The most significant concern I have is that in this bill it is proposed that SA Water—the corporation as it now is, sitting with the responsibility to a minister and ultimately accountable to the parliament—is going to be in charge of it. Why do I say that? First, it has shown a history of resistance to embrace private enterprise in the establishment of the water industry, even without the regulatory licensing scheme. It does not like competition and it does not like people having access to water through other services.

The reason is very simple: its charter is to make money for the government and provide services. It has outsourced to a number of agencies for a number of years—I think for 16 years or so that has been done through United Water, a consortium. It has now been taken over by a contract with All Water to provide the plumbing services. It outsourced some of those services but, essentially, it loves being a monopoly. It is not in its interests to have that competition.

Why do I say that it is already resistant to that? I will just use an example of my colleague in the Barossa Valley in the electorate of Schubert who has constituents who have to pay thousands and thousands of dollars to SA Water when they purchase water to use the infrastructure and pipes and have that water delivered to them. So they have to pay for the water but they have to pay thousands of dollars to SA Water to be able to enjoy that service.

Some members would be old enough to remember Telecom. When the telecommunications industry was going to be opened up to other players, there would be access to the infrastructure. I want to remind members, because I saw a very impressive DVD, or video, as it was at the time—I think it was actually made into a DVD—of the history of the water and engineering services in South Australia. The Waterworks Act 1932, for example—

The DEPUTY SPEAKER: Was it a Beta or a VHS?

Ms CHAPMAN: No, VHS. It may have been available in Beta but I think that ended up being a rather superfluous piece of technology at the time. It was not really very accessible to transmission. In any event, there was a requirement that there be access to infrastructure under the telecommunications movement into the marketplace.

Here we have a situation, a proud history of engineering and water supply infrastructure development in this state, built up and paid for by South Australian taxpayers over the last 175 years. We have very impressive dams and infrastructure of which they can be rightly proud. The current configuration of that, of course, is the SA Water Corporation. It has inherited a very proud history, but I think it is time somebody reminded SA Water that, not only has it been paid for by the taxpayers of South Australia, but, if we are genuine about opening up the market to other players to allow them to come into the marketplace for the provision of water, they need to understand that this is not just their asset.

These are the assets of the people of South Australia and it is about time SA Water understood—notwithstanding the obligation for its profits to go off to government coffers to bolster the taxpayer-funded expenses of this government—that it has an obligation to make sure that it provides a healthy supply of potable water to South Australians; and, of course, it has other projects, some of which are supplemented by River Murray water. It has an obligation, in opening this up, to be fair, and I am not confident it will be either fair or responsible in its management. Let me give some examples.

This is a corporation that made a decision—at a time when South Australia was suffering a very severe drought—at a cost of nearly $50 million to move its people into Victoria Square into a refitted new office. Their current accommodation was not big enough, the then treasurer told us, and they needed new premises. The corporation needed to bring in some other people. It had to bring in the EPA. I do not know why, because that is a totally separate organisation, but the EPA has a floor down there in the new building. They wanted to bring their people together.

Of course, SA Water has people all over the state and in other commercial buildings in South Australia, because they soon ran out of space down there. Nevertheless, that was their excuse at the time. It was not good enough that they be housed in Pirie Street. That, of course, is now the new accommodation for the transport department because they have flogged off their Walkerville property.

Here is a decision made by an apparently responsible corporation. That they would spend that sort of money under minister Maywald's guidance at the time—whom I note is now on the board—when people in the Riverland were pulling up orange trees, when stock was dying, when we had a desperate situation even here in the metropolitan area where people were losing trees, their stock and infrastructure in gardening and the like, is just incomprehensible to me. There is a lot more. Let us look at the next aspect.

They entered into negotiations to borrow an enormous amount of money to develop a desal plant. Of course, we are not allowed to know what is in the contract because the government signed up the desal contract to borrow funds and to have a confidentiality clause. So, even though the ombudsman here in South Australia determined in a decision he made on the disclosure of that contract that it would be in the public interest for us to see it, the government has still refused. The government goes on blindly signing contracts with these confidentiality clauses—'All you mugs out there in the taxpayer world can keep on paying for these things, but you're not allowed to know how it's going to be spent.'

I was interested to read in the press that the desal plant has other costs coming out. I think there was a $46 million fee that was identified in the last few days that was to be paid for, notwithstanding that it is behind budget. People have already died on-site and everything else, but they have got all this extra money. The government's direct answer is, 'We can't discuss the detail of these things because, of course, the contract is confidential.' So, hundreds of millions of dollars are being spent. We still have no clue about the commonwealth government's $200 million-odd contribution and whether it will depend on whether we use less, more, the same, etc., of River Murray water, and so on.

The reason I raise this matter is this: this is an organisation which has gone from $144 million in borrowing costs—that is their annual borrowing costs, that is the money they pay to service the debt they had last year, that is, in the 2009-10 year and then the 2010-11 year—to now $206 million, and they are only halfway through the desal plant. We still have another financial year of development to complete that. The cost of the borrowings alone is exploding, and that should be of great concern to taxpayers and to people in this debate because the government is asking us to give SA Water the next charter, and that is to be in charge of the licensing and regulation of a new water industry.

We have their total bungling of the United Water contract. This was a company which was ultimately determined in the courts to have to pay back tens of millions of dollars to South Australia by final settlement terms in the Supreme Court while under the watch of SA Water. Where have these people been? This is a multimillion dollar contract which, again, the former treasurer came into the parliament to tell us when this whole stuff-up had been exposed that they had been negotiating it for three years. Again, taxpayers kept completely silent but, in any event, it finally settled. It was clearly exposed as a complete disaster.

In any event, we clawed back some of that money from United Water before the consortium disbanded. So we again have a management capacity which surely brings into question the proposal in this legislation. They have gone on to now be responsible for the management of the All Water contract, which is the new consortium in charge of the plumbing and distribution of water in this state.

These people in the new consortium may be very good people. I am not casting any reflection on them individually, or the players in that consortium, or, indeed, the second consortium that is now taking up a maintenance and small projects role. I cannot remember the full title of it now, but there is another consortium that that has been outsourced to. But what I do say is this: the taxpayers are relying on SA Water, and in particular SA Water's own audit committee, to keep an eye on these things, and it is clearly not.

If ever there was an exposure of a deficiency in the management of these important areas, one only has to look at this year's Auditor-General's Report to see their apparently hapless (I will give them the credit of that so as not to assert that it is deliberate) repeated ignorance and refusal to comply with advice given in respect of their own procedures, not just procurement of multimillion dollar contracts but of the management generally of their big projects.

Nothing could be more clear than their conduct over the operation of the north-south interconnector system project, which is a pipeline being built from the south to the north along existing pipelines. An extra pipeline was going in apparently to move all the water that we are going to be paying for coming out of the desal plant from the Happy Valley reservoir to move it up to the Hope Valley reservoir so that we can distribute it for the population growth in the north.

We have had the debate about how the government kept that whole project secret and we have had the debate about whether it should go ahead and they should be spending $403 million to do that, but it alarms me to find that this is a project that is now represented on pages of comment made by the Auditor-General in its very first year of development. It has screaming all over it issues of concern that are raised by the Auditor-General.

I place on the record again how it raised our concern that when SA Water first prepared a budget of a proposed direct pipeline, which was going to cost $300 million, they abandoned it later because when they went back to do the detail it was actually going to cost $1 billion, so that was one of the reasons they abandoned that project and they came up with this one. I am not confident that this is not going to blow out as well.

If I ever have any reason to corroborate that it is the fact that I see the people in my electorate busily working on this project. I have reports to me of days and days of work lost for things such as ordering the wrong equipment and so everyone goes home, or 'it's too wet, too cold, too this, or the truck has not turned up' and I have had issues raised with me about this many times. Why? Because my householders were given promises about the length of time that they would be inconvenienced and not have access to their properties or their own street during the course of construction. They were given all the assurances at public meetings, etc. and when they do not transpire, of course, they ring up their local member and they complain about it. They do find out what is happening there.

So, I am very concerned—in fact, I am so concerned that I have written to the chair of the Public Works Committee about this matter to ensure that this project is kept under scrutiny both in scope and in cost because this is exactly the sort of example that I say is concerning, and it is particularly when the Auditor-General this year said:

These issues have again been evident in the audit review of the NSISP procurement during 2010-11.

So, it was not just last year, but they are all showing up again—promises to remedy it, it does not happen and we bumble along with these multimillion dollar projects which the government have continued to leave under the responsible management, in this case of SA Water, only to find that we have cost blowouts and that we have a massive call on the people of South Australia.

If ever there was another telling statistic that raises great concern to me and I am sure to other members, it is in the information that is provided from the analysis of SA Water's income over the last five years. Just from last year to this year the money that has been brought in—this is as at 30 June 2011—from rates and charges was $799 million, and that is part of a significant portion of the income of SA Water. That is what you and I pay when we use its water service.

Last year, it was $689 million and, members, we have not even got the desal water happening yet. The desal plant is another year away before we even start to get access to it. That is the level of price increase that has occurred and been approved by this government. They are raking in the millions of dollars, in this case from $689 million up to $799 million; that is over $100 million extra in one year. So, minister, be aware that I do not trust SA Water to look after the water in my bathtub, let alone this project.

The SPEAKER: Order! The member's time has expired—well and truly expired. If the minister speaks, he closes the debate.

The Hon. P. CAICA (Colton—Minister for Environment and Conservation, Minister for the River Murray, Minister for Water) (20:40): I thank members for their contribution. I will be brief on the basis that the significant part of the contribution of the opposition had precious little to do with the bill, so there is not too much to necessarily respond to.

Mr Williams interjecting:

The Hon. P. CAICA: That's the truth. I will be very quick and, in doing so, I again thank honourable members for, at the very least, making a contribution to this very important bill. With respect to the comments of the deputy leader that this state has failed in water management with respect to integrated systems and a lack of management—I think they were the terms he used—I say that is bollocks, for want of a better term. Quite simply, this bill will go a long way to ensuring that we do have reliable water supplies underpinned by sound legislation for the future benefit of South Australia's citizens.

One of the comments that I would make—and I am deviating from the content of the bill as well—is that, on any assessment, it is clear that South Australia is a leader nationally in the area of stormwater recycling, re-use and wastewater. It seems to me that the opposition is in denial about that. You only need to check the reports that come out at the national level about South Australia being a leader in those areas. Of course, what this bill is going to do, amongst other things, is to ensure that we stay at the forefront nationally in the way in which we manage our water here in South Australia.

I very much enjoyed the lecture of the member for Bragg. We always get a lecture from the member for Bragg but, I guess, one of the points I would make when she talks about the relationship with United Water is, quite simply, the reason we were able to challenge some anomalies with respect to that contract was by virtue of the fact that we understood, and SA Water understood, what the contract was. It was only you people who kept the contractual arrangements away from SA Water. When you were in government, that information was never provided. On my best advice, that information was never provided to—

Mr Pengilly: You might have to retract that one, Paul.

The Hon. P. CAICA: No. On my best advice, it was never ever provided by the opposition, when they were in government, to SA Water.

I am getting onto some of the issues that were actually raised in the debate, as opposed to focusing on those issues that have nothing to do with the bill. With respect to ESCOSA, we are committed to independent pricing. The deputy leader shows concerns about the pricing order through the Treasurer's Instruction. We make no bones about that being a very important component of this particular bill.

I notice in the contribution, if not in the amendments, that the deputy leader wants the Treasurer's pricing order to have a component contained within it that relates to pricing for stock. You cannot have it both ways. You cannot say, 'We would not have a pricing order' and then say, 'Well, what we really mean is we want this particular component included in the pricing order.' You cannot have it both ways and we think it is appropriate for the government to provide, as is the case with energy, appropriate direction, if you like, and advice to ESCOSA for matters to be taken into account when it sets its pricing of water in this state.

Mr Williams interjecting:

The Hon. P. CAICA: Well, it still is independent pricing. There were several other issues raised, but I do not intent to dwell on those, and we can deal with those that related to the bill in committee. Quite simply, we would also say that this government is committed to third party access, and, of course, what is contained within this bill is the process and the mechanism by which we will eventually have a proper regime to third party access in this state.

The deputy leader talked about legislation that exists in New South Wales that does contain third party provisions but, in legislation, it has not worked. We want to make sure that we get it working effectively here in South Australia, and the best way of doing that is by talking to industry and getting it right. What this bill provides for is a provision for us to advance it in such a way that we do get it right.

I acknowledge the concerns that have been expressed by councils and the LGA with respect to easement and their request for exemptions, and we will deal with that matter in debate during the committee stage.

I very much welcome the thoughtful contributions from the member for Stuart and the member for Flinders, and his comments on the Tod reservoir. Presumably, those comments were in relation to—as much as anything else—the planning processes that need to be put in place to make sure that in regional South Australia and, indeed, across the state, we do have a proper plan to address supply and demand in those areas. I have chatted with the member for Flinders on numerous occasions about the Tod reservoir and desalination on Eyre Peninsula.

With respect to the comments from the member for Hammond on Robyn McLeod, I would say that Robyn McLeod had an important role to play in this state during her time as commissioner with respect to Water for Good, which is our blueprint that takes and ensures that we do have, from that blueprint, a road map to 2050 to secure water supplies in South Australia and diversify our water supplies and, in doing so ensure that, through that diversification, we quite simply are able to ease the load on what has traditionally been our potable water supplies.

I also say that the desal plant was a sound decision, to increase it from 50 gigalitres to 100 gigalitres. I also agree with the member for Hammond's comments on Mount Bold. The extension of Mount Bold was to extend an area for extra supply that was still totally dependent upon climatic and traditional water supplies that fall out of the sky; hence the reason to utilise the desal plant, and increase the size of the desal plant, to make sure that we do have climatically independent and secure water supplies.

I am going to leave it there, Madam Speaker. I could keep on talking for a very long while—I do notice that there seems to be a contest at the moment. I know they are a bit fragile over there, but there is a contest between the member for Bragg and the member for Davenport about future leadership and who is going to outdo whom in talking to this house. We will wait and see. We saw you filibuster yesterday, and I am sure you are going to do again tonight during the next bill—

Members interjecting:

The SPEAKER: Order! Point of order, member for Finniss.

Mr PENGILLY: Madam Speaker—

Members interjecting:

The SPEAKER: Order! I can't hear the point of order.

Mr PENGILLY: The issue is relevance: I think the minister has been sucking lemons.

The SPEAKER: Thank you for your contribution, member for Finniss. I am sure the minister will go back to the debate.

The Hon. P. CAICA: Madam Speaker, I guess the point I would make is that, having regard to contributions that were made by the opposition with respect to this bill that had no relevance whatsoever to the bill, I then, in winding up, have the opportunity to talk about issues that might not be relevant to this bill as well.

Members interjecting:

The SPEAKER: Order!

The Hon. P. CAICA: Madam Speaker, I commend this bill to the house. I look forward to its passage through the committee stage and, as was mentioned by many speakers over there, they hope that the government takes seriously the amendments put forward by the opposition. I take all amendments put forward in this house seriously, and I hope that we can deal with those particular matters in a sound way. Indeed, if they do make the legislation better than it is currently presented, then why wouldn't we talk turkey with the opposition?

An honourable member interjecting:

The Hon. P. CAICA: I don't know—I have not seen them yet, because you have only just filed them, and I need to digest them, but what I am saying is that if they make sense then why wouldn't we consider them? Madam Speaker, I commend this bill to the house.

Bill read a second time.

Committee Stage

In committee.

Clause 1 passed.

Progress reported; committee to sit again.

The Hon. I.F. Evans interjecting:

The Hon. P. CAICA: Just to give you the opportunity to filibuster, Iain.

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