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House of Assembly - Fifty-Second Parliament, First Session (52-1)
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ROXBY DOWNS (INDENTURE RATIFICATION) (AMENDMENT OF INDENTURE) AMENDMENT BILL

Referred to Select Committee

Adjourned debate on motion of Hon. A. Koutsantonis (resumed on motion).

Mr BIGNELL (Mawson) (17:40): I rise to conclude my remarks and to reiterate my support for this bill and this fantastic project for South Australia. I point out that it is beholden on all 47 members in this place to work with our communities to explain to them how they can be a part of this project. We can all be winners out of this project; it is not simply confined to Roxby Downs or to the north of the state, everywhere in this state can produce winners out of the Roxby Downs expansion.

As an example, I know that the winemakers in McLaren Vale are already talking about going up there to showcase the great wines that we have, but also to try to attract people who might be on a fly-in/fly-out working arrangement to settle around McLaren Vale, Aldinga or Willunga—a beautiful part of the world—and we can then start to hook into that two-speed economy.

At the moment, in our area, business is doing it tough, exporters are doing it tough with the high Australian dollar and it has been really hard on the wine industry, which is one of the biggest employers in our local area. If we can get some of the mining money into our local region then it will help to diversify our local economy, and that does not just go for the electorate of Mawson, it goes for the entire state. It is up to us, as I said at the outset.

So many South Australians do not have a real understanding of how enormous this project is, or maybe they think it is so big that they cannot be a part of it, but when you break it down into bite-sized chunks and work out what it is that your business, or your son or daughter or you can do to get a job, whether it is a job up in the mines or it is one of the thousands of jobs that will be created in related industries, then it is beholden on all members and business people and other members of the community to look at this project and say, 'How can we can benefit from this?'

As I said at the outset, I think this is a great day for South Australia. The future is looking very bright. A diversified economy with mining, defence, agriculture, manufacturing and other business, is only a good thing for South Australia. Long may this state prosper.

Mr PENGILLY (Finniss) (17:43): It is an interesting time.

The Hon. M.J. Atkinson interjecting:

Mr PENGILLY: I do not need the Speaker's protection from the member for Croydon, but if he cares to comment every now and then I will leave it up to you. It is interesting that 29 years ago in this place decisions were made on the original Roxby Downs bill, on this very carpet, probably with Tom Playford looking over their shoulders, and here we are 29 years later going through round 2 of it. So, I wonder where most of us will be in another 29 years. I think I know where a few of us will be.

Ms Chapman: The member for Morialta will still be here.

Mr PENGILLY: Yes, he will be. I guess in 50, 60 or 70 years time (as long as it takes for this project to work through the obvious) the benefits to South Australia from the decisions made in this place over the next two or three weeks, notwithstanding the nonsense that may go on in the other place, will be profound. I read with interest this morning in The Advertiser the headline about the amendments that the Hon. Mark Parnell in another place is proposing to pursue.

I also note with interest that the rules that apply to us in this place do not apply there, and they could go on for months, quite frankly, but they will not. I hope there is not a lot of nonsense takes place there. Some Independents will appear and grandstand and carry on, but at the end of the day, in a show of bipartisanship, the government and the Liberal Party will get on with things, and I suspect (without knowing) the Independents in this place as well, in the best interests of South Australia.

The Hon. M.J. Atkinson interjecting:

Mr PENGILLY: I am really looking forward to hearing the member for Croydon's contribution on this bill because I am going to sit here and bag him the whole way through—but, no, I wouldn't give him the time of day. There are a few things to do with this bill that need working through. I am not convinced of what effect the desalination plant is going to have on the gulf; I am not convinced, despite what BHP is saying. I am not sure that there will not be possible ill-effects, and I hope that over the course of the next few years as things start developing my mind can be put to rest.

I am a great supporter of desalination. I went to Kwinana in the west a few years ago, and I was astounded to see the sea dragons on the end of the outflow pipe living there quite happily. Circumstances are different in the Upper Spencer Gulf and, Madam Speaker, no-one would know that better than you. As long as you are in this place you will be keeping a pretty close eye on that.

Much has been said about the employment prospects, and I think there are some issues that need to be taken into consideration. The mining industry is a difficult industry to work in, but no doubt it is going to employ many people. Other members in this place have talked about the harsh conditions in which people work in that arid country and the effects they have; some of them do not stay and others go. It is going to be interesting to see what happens with the township of Roxby Downs, as that in itself is going to develop far beyond where it is at the moment.

I have numerous people in my electorate who work in the mines, as I am sure others do; some work off the North West Shelf in north-west Australia and in New Guinea but live in my electorate, and increasing numbers are choosing to live down in Victor Harbor, Middleton, Port Elliot, Goolwa and Yankalilla for the lifestyle. It is hard on family life as these people are away for two or three weeks at a time and the wives, husbands and children are left to get through those times. That is the life they choose.

However, as time goes on and more and more jobs are created and more and more people choose to live in electorates such as mine for the lifestyle, that is going to be a big drain on state government resources in providing infrastructure, whether they be health facilities or educational facilities. It is going to require increased power infrastructure and it is going to need more water. In my electorate on the Fleurieu, Myponga dam was built some 30-odd years ago, off the top of my head, and it catered for a very small population. Myponga dam is running full bore at the moment, and there is no threat of running out of water down there.

We will need to look at just what infrastructure is required, and I dare say that in 15 or 20 years' time one of my successors, whoever that may be, will probably be standing in this place talking about the necessity for increased infrastructure in the electorate. That is going to happen, and it is going to happen in the minister's electorate because there will be people down there. It is going to be good, but it is going to require huge amounts of additional state government resources over and above where we are at the moment.

I look forward to it. I know that it is going to be good for the people of South Australia. We have been given limited information, understandably, and I know that members of the government who were in on the contract—given that it is a contract between the government and BHP Billiton and not the parliament—are probably more conversant with many of the issues. There were members from our side who were involved and given information, some of which was in-confidence, and I appreciate and understand that, so there are probably a lot of things that they are aware of that we are not, and that is just how it is.

I must say that I am rather bemused, as I am sure other members are, to have members on the other side now avidly supporting this mine extension, given their depth of feeling about it some 29 years ago, but things change, people change and members come and go.

The Hon. M.J. Atkinson: I always supported it.

Mr PENGILLY: Good on you, Mick. That leads me to the next thing. I am all in favour of nuclear power; I am a great advocate for nuclear power, a supporter of nuclear power, and one of the things we do need to think about is the issue of uranium and the future needs of this nation for power. We are roaring around now selling a lot of this uranium and what not off, digging it up out of the ground and exporting it, but in 150 or 200 years' time, when they are seriously looking at opportunities for power generation in this nation and in this state, they might wonder why we are selling everything at the moment.

That does concern me, and I think there is no doubt that future generations will scoff at some of the things we put in place, including the Arkaroola Wilderness thing. They will mine Arkaroola; they will think keyhole surgery, or whatever they call it. They will mine it because they will need it. They will mine Antarctica. They will be looking for oil in Antarctica—

The Hon. M.J. Atkinson interjecting:

Mr PENGILLY: Well, you may be right; I am not getting into that debate. Future generations will question some of the decisions we have made as much as we now question decisions that generations in the past have made. You make decisions on the day that you hope will have long-lasting, good effects.

I see a great future for South Australia in the production of hydrogen fuel from the sea. Some years ago, when I was involved in the tourism industry, I had someone from the oil industry, from Mobil in Texas, who I took on a tour of Kangaroo Island. We stopped at Vivonne Bay, and he looked out across over the Southern Ocean and said 'You guys are blessed. There's your power source for the future.' I said 'What are you talking about?', and he said 'Hydrogen, that'll be the next source, when the oil runs out.' So perhaps that is something we could be looking at.

This mine expansion will be wonderful for the state of South Australia. It will be nine or 10 years, or whatever it is, until we get some financial benefit through royalties, but all the hard work has to be done initially. I remember the former premier standing here and talking, in his second reading speech, about how it will be the biggest truck order ever, the biggest open pit mine in the world, and so on. I read it with interest, and I actually distributed his speech to some of my branch members to read, so that they knew exactly what was going on.

I talked recently at a meeting of the Southern & Hills Local Government Association, a combination of a number of councils in our area. I gave them copies of that second reading speech, and I gave them copies of the bill for a bit of light reading—and wished them all the luck in the world. It is an important issue, and they need to understand—and I am not sure that they do—just how big this thing will be. They probably pushed them to one side and did not read them; however, in 10 or 15 or 20 years, when they come squawking to the state government about not having enough money to put in the infrastructure to cater for all the people moving there—and more than likely it won't be us worrying about it—they will need to be reminded that this material has been circulated.

I know that the member for Bragg spent countless hours reading the speeches from the original bill, back 29 years ago; reading through that and reading the contribution of Norm Foster. So whether they look back on the speeches we make now I do not know, or where they go with that, but it is in the best interests of the state and the nation. We have these two enormous nations to our north, India and China, that are developing rapidly. I am not getting into a debate on exporting uranium to India or whatever, but these places have such huge growth potential and they are looking anxiously for our resources. We have them, but we have to make sure that in times to come our nation has resources that can be used for future generations. We do not want to throw out the baby with the bath water, in my estimation.

So I look forward to the process. I wish the bill a speedy passage in this house, which I am sure it will get. I am not so sure it will get such a speedy passage up the other end of the building; we will wait and see. Should some of those members up there want to hinder, obstruct, or slow down the passage of such an important bill for South Australia they will know what I think, I can tell you. They need to know. They need to know, because you cannot pander to 10, 12, 13 per cent of the population who want to wrap everything up in cotton wool and not do anything—

The Hon. M.J. Atkinson interjecting:

Mr PENGILLY: You agree, Mick? Come over by me and we can get right into it. We cannot let minority groups push and shove and ruin the future for the vast majority of South Australians of this generation, future generations and our children who rely on jobs in an attempt to grandstand now and grab the spotlight. I do not think that I need to say any more. I think I have made my point, as have other members here. I am sure that when we go into committee there will be numerous questions asked. I wish the bill a speedy passage and conclude my remarks.

Mr PEDERICK (Hammond) (17:56): In rising to make my contribution to the Roxby Downs indenture bill and the report of the committee I would just like to note an interest in my family. When my wife was Sally Abernathy she was one of the major authors of the biology section of the second environmental impact statement into Olympic Dam—

Ms Chapman: And then she married you!

Mr PEDERICK: Yes, and then she married me in the 1990s when she was working for Kinhill. She told me many stories of her work up on the bore fields monitoring the water use and the flora and fauna and the hot days out there in the blazing sun with other Kinhill staffers monitoring for the environmental impact statement. She tells me a classic story of how she got back to Marree one day. It was about 50º, and she was not worried about how green the pool was—she was in there—at the hotel.

Be that as it may, I, like Tim Whetstone, the member for Chaffey, have had a little bit of mining experience in my career and worked in the Cooper Basin and the Jackson oilfield in Queensland, so I have a little bit of experience working in outback areas. It is not that hospitable for a lot of people, but you can make some good money.

As a young bloke, nearly 30 years ago now, it was good money earthmoving, building roads, oil rig leases and building campsites and associated earthworks. I was working for a company called Gearhart Australia on monitoring oil wells, gas wells and shooting wells for perforation jobs associated with the company Halliburton, which eventually took over Gearhart Australia.

People talk about the different options for Roxby Downs and what they are for living on-site and compare it to a site like Moomba in the Cooper Basin, which has been a fly-in fly-out site for over 40 years, I believe. I have been to Roxby Downs several times, and I can certainly see benefits in having families living locally. I know that some people travel in from towns further out and some drive up from Adelaide, Port Augusta and other associated places, and some fly in.


[Sitting suspended from 18:00 to 19:30]


Mr PEDERICK: I rise to continue my remarks on the Roxby Downs indenture bill. Before the dinner break, I declared my interest; that is, my wife, as an environmental scientist, previously worked on the second environmental impact statement for the Olympic Dam project. What I want to talk about now is the company and the decision BHP Billiton has made in moving on with the project. BHP Billiton now operates worldwide, and Dean Dalla Valle had to compete with nine other presidents of this company to get this project up.

One thing we heard about at the briefings was that, just to get down to a postage stamp sized ore body, BHP will have to shift 700 million tonnes of overburden. So, this is a big project, and it is not dissimilar to what has happened in Kalgoorlie with the super pit and gold mining. There were many individual companies, partnerships and single operators mining underground, and I believe it was a company owned by Alan Bond that established the super pit and opened it right up for broadscale gold mining. As we know, Roxby Downs is far more than a gold mine; it is a copper, zinc, silver and uranium mine, and it is controlled by one company.

We note that the 105 to 110 kilometres extension of the railway line from Pimba out to Olympic Dam will be built at a cost of $2 million per kilometre. This railway line is needed because of the intake of sulphur that will be imported from Canada for processing at the site at Roxby Downs and also to get ore out towards Darwin for export to China and other places.

Even though the indenture bill is drafted in a way that BHP does not have to list what work has been achieved and other kinds of procedures, they have made a verbal commitment in our party room that they will produce an annual list on their website, and I think that can be applauded. There is talk of a 10-million tonne tailings facility. We know that this mine will add $45 billion net present value to this state over 30 years.

In the establishment of this open-cut mine, 6,000 construction jobs will come and go and, once it is fully operational, 4,000 jobs will be involved. In fact, right across South Australia there will be 15,000 incidental jobs, and 6,500 of these are inclined to go to Upper Spencer Gulf, so it will be great for the local regional economies of Upper Spencer Gulf. Apart from a tranche of 250-tonne trucks that will be ordered, I am told at a cost of around $4 million each, I believe there will be around 100 400-tonne dump trucks purchased, at a cost of $6 million each, and eight dragline shovels, worth around $15 million each, to complete this project.

As we know, it will take six years to dig that 400 metres of overburden to get down to the good ore, so it is a massive speculative job. I know there is a lot of comment that there might be a trillion dollars of ore (gold, copper and uranium) there, but it is a massive leap of faith for a company to expend so much money—and thankfully they are going to do it in this state—to get to the point where they will get a positive outcome.

What we are told is that, if this indenture bill passes through the parliament before Christmas, $600 million will be invested into South Australia by June next year and that, over five years, there will be $5 billion to $6 billion invested in this project. Overall, it could be a $30 billion project to get this mine up and coming.

As we heard from one of our briefings the other day, we are looking right out to 2020 as the minimum for cash-positive revenue for BHP, but I want to talk about what BHP has applied for approval for, and as I understand it, this is for the next 40 years of the mine. What we are launching today comes after the good work of 1982, when we saw Labor so vehemently oppose uranium mining in this state and the opening up of Olympic Dam. I salute the Hon. Norm Foster and may he long rest in peace because what he did for this state was pay the ultimate sacrifice.

I am told that in 1982 one of the members in the upper house knew what was going to happen and when the time came for the vote they were beckoning Norm to come over so that this project would get up. As the member for Schubert indicated, once he crossed the floor, he just walked out the doors because that was the price he paid for being disloyal to Labor, but this state, this nation, BHP, Western Mining and all the others players involved in Roxby Downs have Norm Foster—and in no small way the Liberal Party—to thank, but it took Norm to take that courageous action to get the original Olympic Dam project off the ground and the original Olympic Dam indenture through this house.

As I was saying, BHP has applied for approval for an open pit mine that will eventually consume the existing underground mine with the potential to increase production to about 750,000 tonnes a year of refined copper plus associated products—uranium oxide, gold and silver—and to expand the existing smelter and build a new concentrator and hydro-metallurgical plants to process the additional ore and generate additional concentrate for export.

Other additional infrastructure contained within the special mining lease at Olympic Dam for which approval is being sought includes establishment of a waste rock storage facility—this is the overburden, as I understand it—which would cover about 6,720 hectares. Coming from a farming background, that is not a bad lump of dirt. It will eventually reach a height of about 150 metres.

There will also be a new tailings storage facility which would eventually reach a height of about 65 metres with the total area of this facility measuring about 4,000 hectares. This is a massive tailings storage facility. I understand that there will be eight different tailings dams measuring two kilometres by two kilometres and 65 metres high, so you just start to get an idea of the size of this project.

There will be a new gas-fired power station supplied by a new gas supply pipeline from Moomba as an alternative to electricity transmission from Port Augusta and this is what has been assessed for approval and establishment of a co-generation power station that would capture waste heat from the processing plant to supplement the primary electricity supply.

The major items of off-site infrastructure for which approval is being sought are a 280 megalitre a day coastal desalination plant at Port Bonython on Upper Spencer Gulf to supply 200 megalitres a day of additional water via a 320-kilometre pipeline connection to Olympic Dam and with the potential to supply 80 megalitres a day for other users and the establishment of saline wellfields providing for up to 50 megalitres a day largely for use during the construction phase.

Also what has been applied for is the establishment of a new 270-kilometre electricity transmission line from Port Augusta as an alternative to on-site gas-fired power station supplied by a new gas pipeline from Moomba or a combination of these facilities to meet an additional maximum electricity demand of 650 megawatts. From what I understand, this whole project at Roxby Downs could take 10 per cent of the total state power.

I have already talked about the rail line connecting Olympic Dam to the national rail network near Pimba to move product and supplies predominantly by rail instead of road; also, a radial road intermodal freight terminal at Pimba to be used as a means of reducing construction related road traffic prior to the operation of the proposed rail line. There is also talk of a new airport to replace the existing airport at Olympic Dam which will be larger and able to handle aircraft as big as the Boeing 737-800 or A320 and support both day and night flights.

There will also be a landing facility 10 kilometres south of Port Augusta to unload mine equipment from barges; an access corridor to a pre-assembly yard on the north-western outskirts of Port Augusta; a new accommodation village for workers named Hiltaba Village and located between Roxby Downs and Andamooka; and expansion of the Roxby Downs township, 14 kilometres south of the mine where most of Olympic Dam's operational workforce will continue to live. It will also involve additional port facilities in the Northern Territory at the port of Darwin to export product to be assessed for approval by the Northern Territory government.

I note there have been some concerns about the site of the desalination plant. It is a known fact that the process of handling the ore obviously needs water. I think BHP is drawing about 42 megalitres a day for its operations at the moment from the Great Artesian Basin, and this will be supplemented by water from this desalination plant. There has been a lot of discussion about whether the desalination plant will affect not only the cuttlefish, but also the prawn fishing grounds around Spencer Gulf.

I think this is a bit of a leap of faith. I know the assessments have been done, and I hope the assessments are right and that the desalination plant can operate successfully because, from what we are told, the Environmental Protection Authority has the power to shut down the desalination plant if need be. I would like to think that BHP has done the work that is necessary, because I do not think it would like to run that risk of running out of water for the process plant operations at Roxby Downs.

As I said, there are concerns with the prawn fishermen, who, I note today in the paper, received marine stewardship status from London for the sustainable way in which they manage the prawn fishery. It is an important way in which they manage that fishery, and for all the fishermen and other people who like the amenity of Eyre Peninsula and Yorke Peninsula, we do not want any of that affected by operations to do with this mine.

I would like to think that everything is in place. I know that BHP is doing some tunnelling for the mine's brine outlet that will assist with dispersing the brine and also assist with environmental outcomes for the mine's operations. I also know that this needs not only South Australian support but also Northern Territory government support and federal government support. I think it is a great time to be in parliament because, for the generation of members of parliament who are here today, this will be the biggest piece of legislation to impact on this state that we will ever have to deal with. As the member for Kavel indicated, you have to go back to the likes of his father, the former member for Kavel—

An honourable member interjecting:

Mr PEDERICK: —I forgot the father-son rule—and the work he did as the minister for mines and energy, and the taxing demands on their family, especially having to front up to the media cameras on Christmas Day; what an intrusion on anyone. The insight of David Tonkin, Roger Goldsworthy and the Liberal government back in 1982 to push this through was fantastic, otherwise we would not be here today. We are hearing today the Greens are trying to put up the barricades that Labor did back in 1982 but, as I said, Norm Foster crossed the floor—

The Hon. K.O. Foley: Great man.

Mr PEDERICK: He was a great man, an absolutely great man, and he got this project on. I commend the bipartisan support in this house—we do not get it all the time—and the work that the member for Port Adelaide and the former premier (the member for Ramsay) did. I appreciate that they took on board our members—our leader (the member for Heysen), deputy leader and others—and took them into their confidence to discuss this bill so that we could get it on track and get the time lines right so that an investment can be made in this state. People can make investment decisions so that companies such as Cavpower can gear up and get their trucks into the 92-week booking slots to get them on line, get the electric shovels on site and get this project underway. I wish BHP Billiton all the best for this project.

The Hon. J.W. WEATHERILL (Cheltenham—Premier, Minister for State Development) (19:46): The passing of this indenture through this place will mark another significant step forward in the life of this world-class project. The proposed expansion of BHP Billiton's Olympic Dam mine is a project like no other in this state's history. There is no doubt that this project is good for South Australia. It is good for our economy, it is good for our jobs and it is good for our future prosperity.

Not only will it ensure South Australia's place as one of the world's best mining jurisdictions, but the project will also provide a rare opportunity for huge benefits to flow on through our standard of living. It will lead to new opportunities for regional development, leveraging off the supporting structure. The project will transform South Australia by bringing unprecedented wealth and economic opportunity to the state well into the next century.

Olympic Dam is the world's largest uranium deposit and the fourth-largest gold deposit on the planet. It is also the world's fourth-largest copper deposit, currently producing around 180,000 tonnes of copper each year. Under the proposed expansion, that would increase more than fourfold to around 750,000 tonnes per annum. The ore body itself is valued at more than $1 trillion. By 2050, the size of the pit will grow to about 4.1 kilometres long, 3.5 kilometres wide and one kilometre deep, and the entire mine site will eventually stretch the equivalent distance of Gepps Cross to Flagstaff Hill.

Olympic Dam is already a significant contributor to the South Australian economy, contributing $1.7 billion a year to the gross state product and around 12 per cent of our state's exports. More than half a billion dollars a year is spent by BHP directly on contracts with South Australian businesses and services.

However, the expansion would see this contribution to the state's economy increase significantly, bringing Olympic Dam's total annual contribution to South Australia's GSP from $1.7 billion a year to $8.6 billion a year operating at full capacity. BHP estimates that the expansion would generate up to 6,000 new jobs during construction, a further 4,000 full-time positions at the expanded open pit mine and an estimated 15,000 new indirect jobs. Madam Speaker, you will be pleased to know that this includes 6,500 jobs in the Upper Spencer Gulf region.

Regional development is a key outcome of this expansion. The project touches many regional areas in the state, from Roxby Downs, Andamooka and Woomera to Whyalla, Port Augusta and Eyre Peninsula. It will generate considerable development opportunities in these regional areas, particularly through wealth generation, increased employment opportunities and the use of local services and companies.

The expansion includes a doubling of Olympic Dam's current smelting capacity, and the bill provides for BHP Billiton to process ore from other mine sites. This will not only value-add opportunities to existing and future mines in the region but will also increase the total volume of minerals processed in this state.

To facilitate these opportunities, BHP Billiton will develop an industry and workforce participation plan that outlines initiatives to maximise opportunities for local industry for the workforce and for the use of local service providers. Furthermore, the state government is also working to ensure that the local industry sector is positioned to take advantage of the long-term growth that the proposed Olympic Dam expansion offers.

To that end, the state government is developing a strategy to build local value chains from the proposed Olympic Dam expansion project, as well as the mining industry as a whole. And, Madam Speaker, this is where I think the real opportunity exists with this incredible project. It is crucial that we have a manufacturing sector that complements the mining industry in this state. It is here that the crucial role for government needs to be played, as well as the right policy framework, to develop the necessary relationships between mining, manufacturing and the public sector to ensure that the potential transformative effect of the expansion is realised.

I think that some of the enterprises that will spring from the expansion have not yet even been imagined. The opportunities exist in the minds of some of our best scientists, our best engineers and our best managers who can supply the solutions not only to this mine but also to mines around the world, and not only the mining industry but the civilian applications outside the mining industry for these new technologies that inevitably will spring through the opportunities presented by this mine.

Some of the members opposite have mentioned in supporting the bill that they could have negotiated a better deal for the state. I can assure this house that we did not discount South Australia's future to get this agreement signed. The member for Port Adelaide and the former premier should be commended for the way in which they negotiated this deal. Madam Speaker, BHP Billiton will pay the same royalty rates that other mining companies pay under the Mining Act. The company will pay the same rate for water from the Great Artesian Basin as others do—for the first time paying for water that, under the previous indenture, was totally free.

The new indenture sees more comprehensive environmental managing compliance regimes for Olympic Dam, bringing the legislative framework for the mine into line with our Mining Act. BHP will develop a stringent program for the protection, management and rehabilitation of the environment that is the subject of strong compliance and enforcement.

Madam Speaker, under the indenture, the Olympic Dam mine will be subject to the Environment Protection Act for environmental authorisations for the project, ensuring the independence of the EPA for environmental approvals, licensing and necessary compliance action. In addition, BHP Billiton is obliged to produce a greenhouse gas and management plan which will detail its commitments to greenhouse reduction and ensure that there are those consequential reductions. This includes using a renewable energy to totally power the desalination plant and the water pipeline (piping hundreds of kilometres) and installing solar hot water systems (or equivalent) at the Hiltaba Village.

Furthermore, BHP will provide the state with a rehabilitation security in the form of a performance bond to secure the performance of its rehabilitation obligations. This is a cornerstone agreement for the state, providing the state with guaranteed financial security against the rehabilitation requirements at any time with the Olympic Dam project.

I turn now to the opposition of those who have made their public remarks about this project in more recent media reports, and, in particular, I note the position of the Australian Greens. I note their opposition to the bill and, of course, to the proposed expansion of Olympic Dam. Their opposition to the bill springs from one fundamental proposition, that is, their declared policy to oppose uranium mining—no more or less than that.

The suggestions, the questions they raise, the amendments that they propose (we are told 100 in total) do not spring from an attempt to alter the nature of the indenture to permit the expansion to occur: it instead springs from an intention to prevent the mine from going ahead, because it is their declared policy to oppose uranium mining. There is no sense in which the Greens' amendments or questions they raise concerning this bill are about a genuine concern to improve the quality of the indenture. They are more honestly expressed as an intention to frustrate the whole intention to proceed with the expansion.

One powerful example of that is the proposition they raised today that no Roxby expansion should be considered if it was not considered exclusive of the uranium aspect of the mining. In other words, the proposition is that BHP should mine the uranium ore, separate it and then replace it back into, presumably, the ground from which it was taken. One only needs to reflect upon that for a moment to realise how absurd it is and to realise that at the heart of that proposition is not a serious attempt to propose an alteration to the arrangements in the indenture, but instead an intention to frustrate the whole purpose and viability of this scheme.

There is no mining company on the face of the planet that would accept such an absurd proposition, and the Greens either know that, or should know it, yet they propose it, not to honestly suggest that they are doing it to frustrate the operation of the mine, but somehow offer it as an improvement or alteration to the indenture agreement.

The SPEAKER: Excuse me, Premier. Could we have a little bit of quiet from my left, please. I can hear your conversation, so I am sure that other people can as well. If you want to have a chat, can you go outside. Can we hear the Premier in silence, thank you. Premier.

The Hon. J.W. WEATHERILL: The proposition being put by the Greens is that somehow this uranium should be restored to its place in the earth, ignoring the fact that the uranium is bound up with copper and other materials and that the process that would be needed to separate it from the other ore components would be at precisely the same expense that would be needed to separate the uranium for the purposes of sale. For them to promote that demonstrates that this is not a serious proposition to improve the project, but in fact an excuse to hide behind what is, in truth, their opposition to the project, their opposition to the mine as it currently stands and their opposition to the expansion of the mine.

One needs to reflect upon why it is that they would be promoting such an absurd proposition. There can be only one explanation for that; that is, they are aware that there is a community consensus for the government's position. The government's position is that we should proceed with this expansion and that the deal that has been negotiated with the company is a good one that is in South Australia's interests, and the Greens know that the majority of the community support that proposition.

Instead of taking that proposition head on and seeking to argue, as their policy suggests they should, that there should be no uranium mining at Olympic Dam and, consequently, no expansion, they would have to make their case about that, and they have chosen not to do that. What they have chosen is the least honest way of approaching it; that is, to seek to frustrate, to delay and to deter BHP from its course to seek to promote questions.

There is one fundamental question that they will refuse to answer; that is, what are the conditions upon which the Greens, as represented in the Legislative Council, would be prepared to permit this expansion to go ahead? They will not answer that question because there are no conditions upon which they would be prepared to allow this expansion to go ahead. That is the dishonesty in the debate and that is what we are having to grapple with at the moment. That is why I have asked to see the Hon. Mr Parnell and why I am asking him to drop the myriad of questions, questions that have been asked and answered before, and amendments which do not spring from a genuine attempt to improve the quality of the indenture.

Another example of the extent to which there is disingenuousness about the propositions being put by the Greens is their suggestion, in today's media reports, posing this innocent question: why isn't the company committing to an investment in cleaner energy to meet its increased electricity demand to reduce its enormous increase in the state's greenhouse pollution of 12 to 15 per cent?

That is obviously put out there to seek to excite community anxiety about the effect this is having on greenhouse gas emissions, yet they completely and wilfully ignore what has been probably the most significant commitment that the company has given in the indenture, which is that in its commitment to this BHP Billiton has created some of the deepest cuts in emissions through its greenhouse gas and energy management plan that have been committed to by any company in any arrangement of this type anywhere in the world.

This allows the company to make the most commercially viable decisions towards achieving its goal of reducing 4.7 million tonnes per annum of CO² equivalent emissions (the 250 target stated by BHP Billiton) to approximately 0.1 megatonnes, in other words, from 4.7 million tonnes to 100,000 tonnes per annum: the most extraordinary commitment to reduce greenhouse gas emissions.

This is the largest single greenhouse gas abatement undertaken anywhere in Australia and it would be amongst the largest, we imagine, in the world. Such decisions are obviously ones that will excite community anxiety when they are not drawn to the attention of the community. This information was known by the Greens and yet they chose, in posing their questions today, to wilfully ignore this commitment.

The public reporting that will occur on the roadmap developed by BHP Billiton will report on the progress towards meeting these targets and will quantify emission-reduction opportunities and achievements, and the decisions of the company will be exposed to public scrutiny along the way. The government will continue to work with BHP Billiton to develop a voluntary sector agreement on greenhouse and the use of renewable energy under our Climate Change and Greenhouse Emissions Reduction Act 2007.

The information that the Greens are putting out there is calculated to undermine community confidence in this project. The questions are not designed to extract concessions that will permit the Australian Greens to support this project: they are merely excuses and opportunities to frustrate and delay the progress in an attempt to deter BHP from making its decision, hoping that by putting some distance between the passage of the indenture and today they will frustrate the process of approval for BHP.

That is something that we are not prepared to cooperate in. We have responded to every reasonable inquiry from the Greens, and any other community member, for information concerning this project. It has been subject to the most rigorous environmental assessments, and we continue to make ourselves available to answer any reasonable question concerning this. I have made arrangements to meet with Mr Parnell. I will answer his reasonable questions.

I will ask him to facilitate the passage of this legislation in a reasonable time period, subject to the proper processes of the other place. This could not be a more important project for our state. It has the prospect of being transformative for our state and our economy, both socially and environmentally, and I commend the bill to the house.

Mr TRELOAR (Flinders) (20:04): I have the privilege of being the last speaker from the opposition on this particular bill, and I am pleased to take up that opportunity. I rise, as have my colleagues, to support this indenture ratification. It is an extraordinary document—176 pages—and I congratulate all those who have been involved with the development of this particular document. The Olympic Dam expansion is an extremely exciting proposal. It is obviously a critical project for the state's economic future; it is pivotal in the state's history.

It is not the first time that mining has played a pivotal role in the state's history. As has been mentioned in this house before, I am sure, the early days of this colony were quite difficult until the discovery of copper, firstly at Kapunda, followed soon after at Burra, and not too many years after that in the Copper Triangle around Yorke Peninsula.

The SPEAKER: Order! I ask members on my right to show the same courtesy that members on the left showed the Premier in the last part of his speech. I am finding it difficult to hear the member for Flinders.

Mr TRELOAR: Thank you, Madam Speaker. As I was saying, it is not the first time that a mining venture has played a pivotal role in this state's history. As we have heard a number of times today and yesterday, this will become the largest open-cut mine in the world. Various analogies have been drawn; one that I heard very early on is that the hole, the pit itself, when complete, will be the size of the CBD of Adelaide, including the Parklands, and the Premier mentioned that the mine site itself may extend from Gepps Cross to Flagstaff Hill.

It is an extraordinarily sized venture. We are looking at uranium, copper, gold and zinc. It will be the largest uranium mine in the world. Another significant analogy I heard was that to shift the overburden, before reaching the ore body of this particular mine site, will require BHP to shift a million tonnes of overburden every day for four years—an extraordinary effort and extraordinary commitment by the company before actually turning a profit.

This is an amendment bill, an amendment of an original indenture, and we have heard a little bit about the history of how the ore body was first discovered in the 1970s, the development of the original Roxby Downs mine by Western Mining, and some of the politics around that. The first indenture bill was passed through this parliament in 1982 and the Roxby Downs township was established. At that time, I do recall it being very much an employment opportunity for many young men from my part of the world on Eyre Peninsula.

The farming community at that time was going through some difficult times, and many farmers' sons ventured north to the mine at Roxby Downs for employment; some stayed just a short time, a couple of years, some stayed much longer, and some are still there. It gave an employment opportunity that would otherwise not have been there. I have had the opportunity to visit Roxby Downs, the township, three or four times in the last 12 months or so, and you cannot fail to be impressed by the layout of the town, the sense of community that exists and the commitment of the people to both the mining operation and to the town itself.

As a result of this, mining will now undoubtedly be an important growth sector of the South Australian economy in the coming years—the coming years, the coming decades, and possibly even the coming centuries. We have heard that the investment will be in the hundreds of millions of dollars, possibly billions; the jobs, both on site and those that it creates in support, will go into the thousands. One particular concern I do have about the increased employment opportunities, and the opportunities that mining gives with its attractive wages, is the potential it has to take workers away from our traditional primary industries, as in farming and fishing.

I know this is a challenge that our farmers are conscious of, and a challenge that our fishers are conscious of. On the plane coming over from Port Lincoln a few weeks ago, I happened to be sitting next to one of the employers, the tuna farmers, in Port Lincoln. I put to him. 'How are you going to be able to compete with the wages that are offered by the mining industry?' He was quite frank. He said, 'Well, we can't. We can't compete with those wages and we'll just have to make our industry attractive in other ways and achieve efficiencies the best way we can.' So the global market is going to be tight, there is no doubt about that.

There will be an opportunity for many South Australians to gain employment and provide services to this venture. The labour market now is global, and I have no doubt that the labour force at Olympic Dam will also be provided for from around the world, and possibly even those gaps in the labour market that I alluded to earlier that are as a result of these could also be filled by what is now a global labour market.

It has become quite obvious that our natural wealth in this state has become extraordinary. We talk much about the Gawler Craton. It is a huge area in the western north of this state. There are extraordinary mineral deposits, some yet to be discovered, I have got no doubt, but what characterises it is that invariably the deposits are at depth. There is a certain amount of risk and a large amount of investment required to access and develop those resources.

However, we are whether we like it or not inextricably linked to the Chinese economy in the 21st century. The demand from China is beyond belief almost. I have been fortunate enough to visit China twice, once in 1985 as a relatively young man, when China was just in those very early days embarking on industrialisation, and just three years ago I visited it again with my wife. I had the opportunity to speak at a conference, in fact. In the ensuring 25 years I was confronted by the change in the Chinese way of life and the Chinese economy itself.

China now is careering into the 21st century. Their demand for product is insatiable. We are in a good position to provide that product that they need in their quest for industrialisation. China is starting 200 years behind the west, most of Europe, and we cannot deny them that opportunity. There is a growing population. The population, think, is about 1.4 billion and the economy is growing quite rapidly. Following on from that, I have got no doubt that it will be India and ultimately South-East Asia as well. We are well placed to provide, with our natural resources, those economies with what they need.

For the last 10 years or so we have been told that South Australia is on the cusp of a mining boom. Indeed, the former premier, the member for Ramsay, was very fond of telling us here in this place about a number of new mines that have been developed during his premiership.

The reality is that we have yet to fully realise what that exploration activity has to offer, and reap the benefits of a mining boom. A good example of what can happen is what we have seen in Western Australia. That state has been spoken about in this place as has Queensland, and the economic activity and wealth that is generated from a mining boom. For any of you who have visited Perth lately it is interesting to see how that city has developed both its population and its infrastructure all on the back of the mining boom. We have that opportunity now.

As the representative of the electorate of Flinders in this place the Eyre Peninsula is also host to a great deal of mining exploration at the moment. I believe the future is bright in that regard also; but once again often the rhetoric has not matched the reality. Apart from Iluka in the state's Far West (north west of Ceduna) where mineral sands are being exploited by Iluka and shipped out of Thevenard—

Mr Pederick interjecting:

Mr TRELOAR: It's a huge operation and will be ongoing for many years. I visited that site and plan to visit it again soon. It is environmentally sustainable. The way in which the mine is operated and the landscape repaired after the mining operation has been done is a credit to the company. The development of the rest of the iron ore bodies, in particular, on Eyre Peninsula appears to be getting closer but, once again, it is fraught with all sorts of difficulties, both environmental and, not the least, raising the capital to be able to develop it.

It does offer, as Olympic Dam does, the opportunity to garner investment into infrastructure; infrastructure that would not otherwise be developed, such as ports, power generation and transmission, transport, roads, and we have heard about the railway line that will be servicing Olympic Dam.

Referring back to Eyre Peninsula, should the mining industry really take off on Eyre Peninsula, we have the opportunity to piggy-back off that really to establish and make real gains in our infrastructure, because investment in infrastructure has been sadly lacking, particularly in the regions, over the last number of years. Amazingly enough, we are not able to generate or transmit enough electricity to provide a sustained and equitable supply to the businesses and homes of the regions.

As we look at the Olympic Dam project in the context of the state's mining future, I do believe it is a good outcome that the parliamentary Liberal Party has supported the passage of this bill; it has been bipartisan in this house. As a result, the ratification of the indenture agreement will be for the benefit of the whole of South Australia. Our challenge will be to capitalise on the wealth generated and make good use of the wealth and the other investment opportunities that this will generate, and for all South Australians to share in this wealth.

In the few minutes remaining, I would like to touch briefly on the issue of the desalination plant associated with this project. As we know in this state, mining companies are required to source their own water. Up until now, BHP has drawn water from the Great Artesian Basin, free of charge, I might add. Of course, as we now know, the amount that they are drawing out and the fact that they are able to access that for free are not sustainable.

A desal plant was proposed as a way to supply the water required for this mine expansion and mine operation. A number of sites were proposed. The Upper Spencer Gulf is the site that has been settled upon. I have to say in this place, as I have said before, that there are many, many concerns still in my electorate about the siting of this plant in the upper gulf. Other sites were proposed, particularly on the West Coast. That, in the opinion of many of the residents on Eyre Peninsula, would have been far preferable.

I understand it would have been at a greater cost, but of course the environmental risks of siting a desal plant in the top of the gulf are great, despite the fact that the environmental impact study has been conducted, and BHP have made some changes to its proposal. The referral of the desal plant issues to the Environment, Resources and Development Committee of the parliament did, in my opinion, mean that the Liberal Party was able to articulate some of these concerns that various groups and industries had about this plant.

I would argue that referring these issues to the committee has helped to raise the profile of the environmental issues to the point where I believe BHP has made considerable concessions, and there are now strict environmental guidelines in place in terms of salinity, etc. The Environmental Protection Agency (EPA) will be required to issue a licence to operate this desal plant. There is an opportunity still, I believe, to have some input into the development of those licensing arrangements and responsibilities. No doubt there will be a number of environmental groups and fishing groups who will take the opportunity to do that.

The cuttlefish have been top of mind, of course, in regard to the desal plant and its outflow but, for mine around the Spencer Gulf, certainly some fishing industries—line fishing, aquaculture and the prawn industry in particular—have been quite vocal in raising their concerns. As the member for Hammond mentioned just a moment ago, the Spencer Gulf and West Coast prawn fishing industry just yesterday was awarded by the Marine Stewardship Council certification as a sustainable fishing industry. It is well deserved. They value it and they want to preserve that. They will be doing everything they can to ensure that their fishery continues.

I must say that the fishing industry and the seafood industry feel like they have been taking a bit of a battering of late with the announcement of the desal plant at the top of the gulf, and its unknown consequences, and the other proposal that the government has on the table at the moment around the marine parks. I guess the licensing arrangements, as I alluded to, around this desal plant will be thrashed out as this project progresses. The desal plant is still a number of years away, and we look forward to having further input into that.

This is a moment in history. It is one of the defining moments, I believe, of this state and of this parliament. One comment I would make is that I have been a little bit surprised by the lack of contributions from the government benches, given the historic nature of this indenture and the fact that it will have a lasting impact on this state's economy and the way we do business generally. I was a little bit surprised about that. I guess in a way if it is out of sight, it is out of mind, but we do all require a growing economy and we enjoy the luxuries of modern life, and there are things we need to do to ensure that that takes place.

I will finish by complimenting all on the work that has been done thus far: the member for Port Adelaide, the former premier (the member for Ramsay) and the contributions and efforts that have been made on this side as well. I do thank BHP for taking the time to include us at least for part of the way in their discussions and also giving us the opportunity to attend briefings, which was of great value I must admit.

During those briefings we also had the opportunity to pose questions, gain answers and satisfy ourselves as to the way the project was unfolding. My compliments go to all those who have worked on this thus far, and I must also say good luck and compliments to all those who will be involved with the project from hereon in probably over the next century.

The Hon. A. KOUTSANTONIS (West Torrens—Minister for Manufacturing, Innovation and Trade, Minister for Mineral Resources and Energy, Minister for Small Business) (20:23): We have passed a sizeable step in the long process of passing this indenture. We are not there yet, but I do want to place on record my thanks to members opposite and members of the government who have, I think, behaved in a most patriotic way in the way we have dealt with the passage of this legislation.

I place on the record my deep appreciation for the way I have worked with the Deputy Leader of the Opposition. They were faced with some very tough obstacles leading up to this. They were faced with very short time lines in terms of briefings. They were faced with allowing the second reading speech to pass with only two speakers, and they had to rely on the word of the government that they would be given the opportunity to speak during the committee noting the report. The government has delivered, and I thank the opposition for the trust that they have shown the government. I think this is a very good template for future legislation.

Members interjecting:

The Hon. A. KOUTSANTONIS: I know all is not that well, and I am looking forward to the committee stage to deal with some doubting Thomases.

Motion carried.

Committee Stage

In committee.

Clauses 1 to 13 passed.

Schedule 1.

Mr HAMILTON-SMITH: I found when entering into business contracts and negotiations, it is a very good idea to read the fine print and to understand what you are signing up to. Supportive though we are of this measure, and passing it unanimously as we are without delay, it behoves the parliament to have a very clear understanding of what we are signing up to. The reason for that is that we are signing up on behalf not only of ourselves, but also of our children, our grandchildren and our great grandchildren.

I am particularly focused on clause 12 which relates to the use of local professional services, labour and materials, because, as mentioned in the second reading debates, we need to ensure that South Australia gets the benefits. My concern with this clause is that, although the pathway towards creating jobs in South Australia and letting local contracts is paved with good intentions by BHP and the government, what is in the letter of the indenture ultimately will underpin whether or not BHP's performance on local jobs can be measured and enforced. Subclause (1) states:

The company shall for the purposes of this indenture, as far as it is reasonable and economically practicable—

and it goes on to describe a range of things that BHP undertakes to do, and particularly in paragraph (d) where it states: 'give proper consideration and, where possible...' etc.

My question to the minister is: while BHP has the best of intentions, I am sure, how can he use this clause to ensure that BHP does deliver on jobs? As I read it, the indenture and this clause do not require BHP to create one single job in South Australia. We all know they will and we all know that they have stated intentions to do this and that, but how does this clause require, in an enforceable way, BHP to do the things that it says should be done under clause 12(1)?

The Hon. A. KOUTSANTONIS: As the shadow minister for industry and trade would be well aware, there are WTO arrangements that prohibit jurisdictions precluding other jurisdictions bidding for work. Of course, the Australian Constitution itself precludes us compelling companies hiring just South Australian—

Ms Chapman: Not even an Australian.

The Hon. A. KOUTSANTONIS: Exactly. While I understand the member's point and I think his question is also paved with good intentions, of course, the truth is this: BHP and the government have come to an agreement that they will do their very best to ensure that local contractors, the local workforce and local bidders can, as much as practicable (and that is economic), be given an advantage to bid for work. BHP can break down the contracts to smaller sizes to suit local companies.

Ultimately, BHP is a publicly listed company that has the interests of its shareholders at heart and we have the interests of the South Australian people at heart. What will give the maximum benefit to the people of South Australia is that this mine is located in South Australia. Because it is located in South Australia, our local manufacturers and local suppliers have a cost-competitive advantage over their competitors; that is, they are closer to the site, they are closer to the workforce and their costs are less to deliver to BHP.

Ultimately, we cannot—and, quite frankly, will not—preclude interstate companies bidding for work, because other state governments would retaliate. For example, I suppose the obvious one is vehicle purchases. If we cease purchasing cars manufactured in other states or, indeed, cars manufactured overseas, those jurisdictions would retaliate and not purchase cars manufactured here. So we are trying to get the balance right. Is it perfect? No. But I think it is a very good outcome for the people of South Australia that BHP will do everything it possibly can to make sure that local manufacturers are given every opportunity to bid for work.

Mr HAMILTON-SMITH: Thank you, and I note the minister's response. Of course, this argument was used during the briefings, and I understand the point the minister is making. I am not talking about insisting or requiring BHP to use South Australian firms. I am not talking about any act in the indenture that might look like it is compelling or compulsory—I am not talking about that—because, as the minister points out, other states would retaliate and there is free trade across borders.

What I am saying is that this has been, in essence, a commercial negotiation. BHP is saying that it will provide a certain level of local business employment. They are saying that and they intend to do that, and my point is: on a commercial basis, BHP could have said in this indenture, 'We will ensure, we will guarantee you, that at least 15 per cent or 20 per cent of the jobs will go to people who reside in South Australia.' It could have been higher.

The minister might say, 'No, that would be wrong,' but just this morning the Public Works Committee heard that in regard to the Adelaide city stadium, DTEI has agreed with Baulderstone that a rate of, I think, 15 per cent of jobs will be sourced in South Australia in accordance with a certain industry participation formula the government has.

I guess I ask: why would it not be possible for BHP to state and bind itself to the commercial KPIs (key performance indicators) that it has publicly gone out and said it will meet but has not been prepared to put in the indenture—on a commercial basis. I am not talking about anything that breaches WTO rules.

The Hon. A. KOUTSANTONIS: I did not say you did, and I do not see that there is any reason to be combative about this at this stage. I accepted your question in the spirit in which you asked it and I answered it. I was not trying to be combative about it at all, but I will say this: BHP must provide, I am advised, an initial Industry and Workforce Participation Plan within nine months of the ratification date outlining initiatives to maximise opportunities for local industry, workforce diversification, use of local service providers through opportunities for employment and workforce development, local suppliers and value-adding activities, support for regional development and Aboriginal economic and workforce development and opportunities for research, development and innovation.

The plan will be updated by ODC every two years after the variation date, and the ODC must report annually on the outcomes of the implementation to the indenture minister. Within that participation plan, subsection (5) of clause 12 provides:

The company shall, by not later than nine months—

and it is required that it does do this—

after the ratification date, submit to the minister a two year plan describing the company's strategies or plans to maximise opportunities for local industry, diversification of its workforce and expansion of its use of local service providers (an 'Industry and Workforce Participation Plan') through—

(a) opportunities for employment and workforce development, especially for young people and Aboriginal people;

(b) opportunities for competitive local suppliers;

(c) opportunities for value-adding activity by local companies or through inward investment to South Australia;

(d) support for Aboriginal economic developments;

(e) support for regional development;

(f) opportunities for research, development and innovation; and

(g) any other appropriate opportunity for the expansion, development or diversification of local industry, workforce or service provision associated with a project.

It goes on to talk more about that Industry and Workforce Participation Plan. Ultimately, I think it is a very robust procedure that BHP has entered into and agreed to with the government. Of course, I will be held to account, or whoever the indenture minister is will be held to account, because that report will come to me every two years, and I think rightly so.

The public of South Australia will hold us to account on it as well, but I think that, when you look at any endeavour of this size, there is bound to be international and interstate investment in South Australia because of the size of the work, but it will also mean that BHP would look to local industries to supply its operations. It is only normal and natural; and, again, by preparing these plans which are legislated and which must be submitted to me.

I think that it is a very robust practice. I also think that, given what I said to you earlier about other states retaliating and WTO requirements, we have got a very good balance. Like I said earlier: is it perfect? No, but it is a very robust plan.

Mr HAMILTON-SMITH: I have got few questions on this clause, Mr Chairman. I have still been dealing with clause 12, subclauses (1), (2), (3) and (4). I thank the minister for his reply. I note that subclause (4) provides:

Nothing in this clause 12 shall require the company or an associated company to act other than upon commercial considerations.

Fair enough. I note that subclause (2) provides:

The state continues to support the availability of analytical, process, research and development and other scientific and technical service in South Australia and the company, in accordance with the provisions of clause 12(1), shall give reasonable consideration to the use of such services...

Again, this is the language of 'will use its best endeavours', 'will try', 'will do its best but will not be held to account on performance'. I accept that as a fact, but the minister a moment ago was talking about subclause (5), the Industry and Workplace Participation Plan, all of which is good. There will be a plan, and I will refer a question about that in a minute. But if you look at subclause (7), it provides:

The company or the minister may make the Industry and Workplace Participation Plan or annual report publicly available...

'May'. To me, what that means is that the company is under no obligation to make it publicly available at all. It is up to the government of the day to choose whether it wants to reveal BHP's performance to the plan. If BHP is not performing, the government of the day may have no interest in telling the people of South Australia that jobs are not being created in South Australia and that the workforce is predominantly flying in and flying out from interstate or overseas.

So, where is the openness and accountability in that? Why did the government not insist that the company make it available in its form? Let me leave it at that in the first case: why did you not require BHP, and use the words 'the company must make it available', rather than 'may'?

The Hon. A. KOUTSANTONIS: Because there are two parties to the clause. So, either the company may or the government may. There is no reason to compel both. I give this commitment, that I will make it public.

Mr HAMILTON-SMITH: You may make that commitment as the minister today, but you cannot bind a future government or future minister to that, whereas the legislation, were it to say 'will make it available', could. The other point I would make is this: the company is required to give you its report, but not to make it public. It then says 'the Minister may make the Industry and Workforce Participation Plan or annual report publicly available'. It does not say in what form. In other words, it does not give me an assurance that the plan or the report that the government might make available (and you have said that you would) will be an exact version of what the company has provided.

The government may choose to edit it, it may choose to produce an executive summary, or it may choose, if you like, to cherrypick what it makes publicly available and not make verbatim the actual performance report from BHP, because a future government—and it may very well be this side, it could be that side, it could be anybody—might be a little embarrassed or not want to take the heat if BHP is not performing to that plan. So, I would make the point that, would it not have been better for the bill to provide that the company must make it available and the government must make it available, and in fact, the government's comment and supplement available as well, because the government, I am sure, will have a report of its own on BHP's report.

The Hon. A. KOUTSANTONIS: I am not a conspiracy theorist. I do not believe that BHP (a publicly listed company) would do anything other than protect its commercial viability and any commercial contracts it may have. We will make things public; it is not in anyone's interest not to. I have just been given the example of the Alice to Darwin rail link where there was only one tenderer and the government was being compelled to release information that was commercially sensitive towards that one tenderer.

I think that what we are doing here is making sure that we are protecting a public company in doing its business, but also being as open and transparent as we possibly can. Obviously, I am not going to convince you that the government and BHP's intentions are the very best, because you are looking, I think, to make a point (probably a political point), but my view is that any minister who attempted to keep the workforce participation plan a secret from the public would not last very long in the job.

Going back to an earlier question: how can the minister use the clause to ensure that BHP will do the things in clause 12(1)? Not only is it the government's intention to make the plan and annual reports public, but it will contain those strategies and plans. So, I think that reporting process will also aid in that being made public. If you attempt in any way to hide that it would put a great deal of pressure on whoever the indenture minister is.

Mr GRIFFITHS: A question on timing: as I understand it the plan has to be presented to the minister within nine months of the ratification being endorsed. Within nine months of the ratification the plan has to be presented to you, as the minister. On that basis, if it is around Easter of next year when the BHP board makes its final decision (therefore, some five months into the future), there is a four-month lag time in between that final decision and the presentation of the plan.

I have some concerns about the level of decision-making that is going to occur over the next nine months. I think the term that we were given was a 'no regrets investment'. Four months after the final decision by BHP about the level of investment that is going to occur, where there is no publicly-available plan to scrutinise where the level of BHP is going to happen, what level of negotiation has occurred about the nine-month period? Was there an effort to bring that back to a tighter time frame to give South Australian businesses some confidence that they would have an opportunity, through the plan, to seek investment opportunities?

The Hon. A. KOUTSANTONIS: The truth is (the Leader of the Opposition explained it exceptionally well on ABC Radio in the Riverland) that the company is basically already out doing this work now because the preparation for this venture is so massive that the company cannot just wait for the ratification, it is actually out there now.

It is also important to remember that under the current operations at Olympic Dam, 65 per cent of the workforce is already sourced locally; that is, they are South Australian. Given that the company has already started that work—because you are right, you cannot wait nine months. We cannot have the ratification and nothing happens, because there is a queue of works in place that BHP must do. If they skip those time-slotted works that have been planned well in advance in preparation for the indenture passing in certain time lines that have been negotiated with the government, then they are set back dramatically, hence Mr Parnell's tactic in the upper house to try to delay the indenture for as long as possible.

Ultimately, if the company is not planning that now (advice is that they are), they are going to fall behind and miss those time lines. This is a very large venture so they are already beginning. You will find in your own constituency of the Yorke Peninsula that there are local suppliers supplying Rex Minerals, and I am sure if you speak to them that many of them will also probably be engaged by BHP Billiton.

Mr GRIFFITHS: That is the emphasis of my question—the nine months before the delivery of the workforce participation plan—why is it such a lengthy time frame? I base that upon the concerns that I have. There was a report in The Advertiser last Saturday of 3,000 accommodation units that are going to be sourced, as I understand it, from China; and 1,250 that are going to be Australian-sourced. I am sure there are suppliers within South Australia who would love an opportunity to do that, and I have had some level of contact with even small businesses in my electorate who would like to get their toes into the doorway of that. That is where they want these questions asked about what level of assurances exist for them to have an opportunity to be in the field of putting a price in to get some jobs.

The Hon. A. KOUTSANTONIS: I will say this: I would love to know where your suit is made. Is it made locally in South Australia? Is the pencil you are using made locally in South Australia? My point is that BHP will source the products that it needs for its mining venture. It would prefer to source as many of them as it can locally, but ultimately they are a business and they are going to base all their decisions—as well as a workforce participation plan (given the advantages of small businesses, by breaking the contracts down smaller to give them the ability to meet the time lines)—they are also going to make decisions based on cost.

Given the massive capital expenditure that they are putting in before they even receive a return on the expansion, it is no surprise that BHP has to source products from overseas, because it is so large. Even if the constitution was different and we could compel BHP to buy everything locally, it would probably struggle.

I see your point. We want to give many of your local constituents and small businesses every opportunity—we all do—to bid for this work. What we are not going to do is go down a path where the government directs businesses what to buy, from whom, and at what price. This is a free market economy. Ultimately, BHP will make decisions based on that.

The reason this state is so successful—and you heard my remarks today when questioned about our export growth—is because we are such a safe place to invest; people can have investment certainty in this state without being compelled to buy things that are uncompetitive. They can employ local South Australians, as they do currently, and make a profit.

That is the reason BHP is investing in South Australia, because we are such a safe jurisdiction to deal with. I think nine months from ratification is a very reasonable time. Is it perfect? Would we like it up and running immediately? Of course we would, but we are talking about a massive undertaking that is not rivalled anywhere on the planet.

Mr GRIFFITHS: When the industry and work force participation plan is presented to you as the responsible minister, is it your responsibility to critique it, to review it, to determine its performance, whether it meets the expectations of government when it comes to the negotiations about this indenture bill, and indeed the development, to seek an opportunity to review, to improve and enhance it or is it just to accept it as it is presented to you and then, with the assurance you have given, for it to be publicly available for scrutiny?

The Hon. A. KOUTSANTONIS: Cabinet recently approved an arm of the Olympic Dam task force to engage local companies to have a voice in the Olympic Dam task force to speak and liaise with BHP about these issues. However, ultimately, by making it public—which is the commitment I have just given in the house today—you shine a light on it, and I am sure that, if it is lacking, or if it is not good enough, if it is not rigorous, you will be the first person to get up and say 'Minister, you have failed in your duties.'

The whole idea of this plan is that by making it publicly available people can scrutinise it. BHP would be put under pressure, we would be put under pressure and whoever the minister of the time is would be put under pressure. Obviously, local companies are free to go to the paper and say 'We're bidding for work and we're not getting it; we're being excluded,' or whatever it might be. You can use the participation plan as a platform for that to be scrutinised publicly, so people will know what is going on. So, yes, of course; I will be critiquing it, you will be critiquing it, The Advertiser will critique it, independent associations will critique it, because it will be public.

Mr GRIFFITHS: But do you have the power to demand an amendment to it?

The Hon. A. KOUTSANTONIS: Ultimately, I would consult with BHP. It is not in my nature to direct private companies.

Ms Chapman interjecting:

The Hon. A. KOUTSANTONIS: Yes, but we are talking about me as indenture minister. I have a very consultative view, despite what you may think about me. I try to be as consultative as possible, and I will be talking to BHP if I am unhappy with it. They are here listening now, and I am saying that if I am unhappy with it I will let them know. I am not shy.

Mr HAMILTON-SMITH: Still on subclauses (5) and (6), the government has chosen, on a commercial basis, not to ask BHP to spell out what KPIs it might meet in regard to local jobs and local industry participation. There are promises but nothing that they can be bound to. I would like to make two points. Nick Bianco, when asked why his business was going into receivership (and I am sure there were many reasons), why he built a $50 million facility out at Gepps Cross, etc, was asked if he did that on the expectation that there would be work there in mining and defence. Did he over-prepare and overinvest, and make a poor business decision—

The Hon. A. KOUTSANTONIS: Yes.

Mr HAMILTON-SMITH: —but on the expectation that there would be work there? His answer to that was, 'Yes, that's right.' Now, there are businesses right here now, spending money right now, because they have heard ministers, the government and BHP in the media talk up this project. I went to one last week. They have moved to a new factory site. They have spent a substantial amount of money. They are banking on getting work from the BHP project. I do not know what is going to happen to this quite large company if they do not get that work. They happen to be in the steel fabrication business. They told me that they are competing with Chinese product.

They told me that Chinese companies with whom they are competing are able to take our iron ore, just like OneSteel is able to take our iron ore. Off it goes to China and Australia respectively, they manufacture it into steel, fabricate it, paint it, precondition it, and get it back here for less than the Australian steel manufacturer can produce the steel. I have not tested that; that is what they said to me. They say the reason for that is that the Chinese government owns the company, or the Chinese company is in receipt of a subsidy from the Chinese government, which is enabling them to undercut our people.

I hear the free market language coming from the minister, that we are not here to tell BHP how to compete, blah, blah blah; but, as my friend the member for Goyder has just pointed out, I have independently heard the same assertion from another company who tells me that the Hiltaba construction camp has already been let predominantly to Chinese companies. Aren't you raising the flag and saying, 'Well, look, we are basically going to let this work go offshore because BHP make that decision in the interests of their shareholders'?

The Hon. K.O. Foley: What would you be doing?

Mr HAMILTON-SMITH: I am asking you, you are the government, how—

The Hon. K.O. Foley interjecting:

Mr HAMILTON-SMITH: Well, we have had Bianco go belly up. I have had other companies tell me—

The Hon. K.O. Foley interjecting:

Mr HAMILTON-SMITH: I was at an industry meeting recently with Sophie Mirabella, the federal shadow minister. We had a series of companies come before us all day, and I was quite shocked at the number who said they were a whisker away from receivership. They pointed to issues such as those I have just raised, and they said their main gripe was that, with the taxpayers' money on investments like the stadium and other investments like this BHP indenture, they were not getting the work.

They understand they have to compete. They understand that, but what they want is openness and accountability. They want to know what work is out there. They want a visible process, whether it is a website or some sort of an open bidding process, so that they can see what they are competing with. What answer do you have for these companies? I have a serious concern that this has been overspruiked and talked up to a point.

We have heard language like, 'We are going to become the Dubai of the south.' I do not know if you have been to Dubai lately, but we are not going to become the Dubai of the south, I can tell you that now. I think a lot of South Australian companies are going to be disappointed because your government has overspruiked this and has everyone thinking that we are going to become the Dubai of the south.

Yet now you are telling us in this clause that actually you have signed up to an arrangement where there is absolutely nothing you can do if BHP lets every single contract. We know they will not, but they could under this arrangement let every single contract they write to an overseas or interstate company. My understanding of this clause is that there is not a thing you can do about it; is that correct?

The Hon. A. KOUTSANTONIS: No, I cannot alter the Australian Constitution. As much as I would like to be the one person who could, unfortunately I cannot. In terms of Nick Bianco, he is a friend of mine and I speak to him quite regularly. I was just as upset for him about his misfortune. I am not going to stand up here under parliamentary privilege and talk about his business practices because, quite frankly, he is a great South Australian who has done a lot of things for community groups and sporting clubs, and he deserves a lot better.

Mr Bianco made decisions that ultimately put his company at risk. If you are saying to me that there are manufacturing firms out there now who are taking risks to be prepared for BHP work and what can the government do if they fail to get that tender, the first thing the government can do is help case manage it to make sure that they are doing a pre-competitive tender, that they are pre-approved for tendering. We can do all we can, but what we will not do is risk taxpayers' money. It is not the position of the South Australian government that we will use taxpayers' money to subsidise business. I am not saying that is what he said, I am just saying that is our position.

In terms of Adelaide Oval, the opposition is doing the whole 'if you drown you're innocent, if you float you're a witch' thing again. If we had compelled Adelaide Oval tenderers to use South Australian prefabricated steel entirely for their work and the costs had blown out, you would have called us bad economic managers for not keeping on budget. If we keep on budget and they import the steel, you say we are letting down South Australian manufacturers. What we do in those capital expenditure works like Adelaide Oval is to provide a vision, much like the vision that you wanted to take credit for in the Public Works Committee when you talked about the stadium.

We agreed that the stadium in the city was a good idea. We chose Adelaide Oval, you wanted a standalone stadium. We think yours would have cost more, ours cost a lot less.

Mr Hamilton-Smith: You pinched it.

The Hon. A. KOUTSANTONIS: You say we pinched it—fine. Ultimately, governments make decisions that are in the best interests of the taxpayer. We think our decision to put these things out to tender to make sure we get the best price for the taxpayer is the right thing by the taxpayer. What you are saying is that it is better to pay a little bit more, or a lot more, and get work locally. Well, there is a cost to that—a big cost.

I cannot help the communist Chinese government subsidising local steel manufacturers. Of course, when we complain about them subsidising steel manufacturers, we do not complain when they buy our barley and wheat, when they bring over their international students to live in South Australia, or when they invest heavily in South Australian mining companies that employ South Australians and export minerals overseas. International trade is not perfect, but what it does do is guarantee that we will not become Cuba.

This state is internationally competitive, and we do it exceptionally well. When we put up protectionist barriers, what we are really doing is hurting local industry. We hurt local businesses when we put up trade barriers. If you want an example, go to Europe. Go to the most subsidised agricultural workforce in the world and look at how their farming sector is going because they are so highly subsidised. Go to their steel manufacturers and see how they are doing. See how their governments are running debts that are over 100 per cent of their GDP. Australia is a shining light, and that is why these firms can do the work that they are doing here and BHP can invest in Australia.

Mr Venning interjecting:

The Hon. A. KOUTSANTONIS: Thank you, member for Schubert. I know you are wearing the Communist Party of Australia (CPA) tie today.

Mr Venning: It's blue, not red.

The Hon. A. KOUTSANTONIS: I understand communists wear blue, too.

Mr Hamilton-Smith: The red ties are on your side.

The Hon. A. KOUTSANTONIS: I don't wear the—

Ms Chapman: Red stars on the hat.

The Hon. A. KOUTSANTONIS: No, no, no. Ultimately, the government cannot and will not compel BHP to make financial decisions that requires them to buy 100 per cent South Australian. We will do all we can to encourage them. We will shine a light on what they are doing. People will know and we will put them under scrutiny. Remember this: currently, 65 per cent of their workforce is locally South Australian. They have already started the work and they are encouraging local firms to apply and be pre-approved and pre-tender for work, but no politician can guarantee you that everything we do at Olympic Dam will be made here in South Australia.

Mr HAMILTON-SMITH: I thank the minister for his answer. We have established now through this exchange that under subclauses (5) and (6) there is no compulsion for transparency in regard to how BHP is performing with its workplace plans. It is only that they may make them public, so it could all be kept secret. Remember here, we are talking about future governments over the next 100 years. The minister may have certain feelings that he will make it publicly available, but there is no guarantee any future government will make it available or that BHP will make it available. So, we have basically signed an agreement—or your government has signed an agreement—that provides for no openness and accountability into whether or not BHP is delivering the jobs and economic activity they say they will deliver. There are the best of intentions, but there is no compulsion.

What I ask the minister is: how was it possible for us to build the Darwin to Adelaide railway line and to use Australian steel from OneSteel? How come we could do it then but we cannot do it now? I remind the minister that, I think in 2008, the Chinese government-owned company Chinalco considered a serious tilt at BHP—a very serious tilt. We have no idea who will own BHP.

The Hon. K.O. Foley: Rio.

Mr HAMILTON-SMITH: Sorry—but the point I'm making is that we have no idea who will own BHP or this mine, and I notice that assignment of this arrangement is something we can talk about in a later clause. Who will own it? The mine could be owned by someone else, so we have to remember that the party we are dealing with could be a different party in 10, 20 or 30 years' time and the government could be a different government—and will be—in 10, 20 or 30 years' time.

What we have signed up to, as I read it, is an agreement where BHP is not required to create a single job in South Australia. It is not required to let a single contract in South Australia. There is no transparency, and now I move to clause 8 which provides that the company will use all reasonable endeavours to implement—'all reasonable endeavours', those are good words—however a failure to implement the industry and workforce participation plan 'shall not be a breach of this indenture'.

In other words, there is nothing in this clause and therefore nothing in this indenture that requires BHP to spend a single dollar on creating—theoretically, and I know this will not happen but theoretically you have signed up to an agreement where they could fly every worker in from interstate or overseas, let every contract to an interstate or overseas company. It would not be a breach of the indenture, and there is no compulsion to tell people about your failure to meet the industry workforce plan.

That is possible under this clause. I know it will not come to that. We all know that that will not happen, but we could find BHP or whoever owns this mine in the future seriously underperforming on jobs and economic stimulation in this economy. Minister, you will be gone; I will be gone; the former treasurer will be gone.

Others will be held accountable, but people will look at this Hansard and ask: how did we sign up to this? I ask you: if it is not a breach of the indenture; if there is no openness and accountability, how can you be sure, despite BHP's best intentions, that South Australia will get the economic benefits that are promised with this? I just want some confidence that we are going to get delivery here.

The Hon. A. KOUTSANTONIS: I will give you a very simple example that is happening right now before the indenture has even passed. BHP has a very simple equation: quality, quantity, price. Camp accommodation for Olympic Dam: 3,000 units from China, 1,250 units from an Australian company. They are equal on quality only. The Chinese can deliver more than 35 per cent cheaper than the Australian company. BHP have bought 3,000 units from China and 1,250 from an Australian company. They have paid a premium of 35 per cent to purchase Australian, and this has not even passed yet.

The thing about mining which we often forget, because all we really hear, from maybe some shock jocks who talk about shut the farm gate campaigns and all the rest, is that ultimately mining companies do not look for a mining licence. They do not look for an indenture. They look for a social licence to operate, and that social licence to operate is employing local people.

Ms Chapman: They look for a cap on the tax.

The Hon. A. KOUTSANTONIS: I have to say this is really surprising me. Tony Abbott is out there railing against the MRRT and super profits tax, and yet comrades opposite from Moscow and Havana here are telling us, 'Bring in a super profits tax.' Quite frankly, make up your minds. Which one is it? I think that example shows—

An honourable member interjecting:

The Hon. A. KOUTSANTONIS: I have always been a right winger. I will die a right winger. I am a right winger. I believe in a free market. I make no apologies for it. That is where the Labor Party belongs. Ultimately, remember this: it is BHP's money, they are our minerals.

Mr Hamilton-Smith: South Australia's minerals.

The Hon. A. KOUTSANTONIS: I just said that: they are our minerals. If you think this is a bad deal, vote against it. You are a member of parliament representing the people of Waite and the Riverland. No-one can compel you how to vote. I always hear from the Liberal Party, 'We are never bound by party room decisions. I am a free individual to do as I please.' Well, exercise your conscience and vote against it.

Mr HAMILTON-SMITH: I might respond to the minister's point, even though it is not dealt with in this particular clause but he has raised it in this particular clause. The problem is, as he knows, is that the way in which the government has brought this matter to the house, along with BHP, is on the basis that not a single word in the bill or the indenture can be changed. You have made that very clear. You have said that if a single amendment is made, then the whole deal is off. It has to go back to the drawing board, and the public pronunciations from both the government and BHP have implied that that means deadlines will be missed, the thing will not go ahead, there could be a delay of a year or so, it is back to the drawing board.

As I said in my second reading address, I must take my hat off to BHP at the way they have managed this negotiation: they have been brilliant. You say no-one is going to vote against this, it is crazy, we are supporting it unanimously, and that is because of the way in which it has been brought to the house. The way in which it has been brought to the house is, 'It is this or nothing,' so no-one is going to vote against it. Your proposition is that this deal is perfect. It is not perfect. What we are doing here tonight is exposing for future governments some of the potential risks to performance on this agreement.

I hope that it will go extremely well and I am reasonably confident that it will, but when you sign a contract, minister, it is a very good idea to read the fine print. It is a very good idea to know what you are signing. This is probably the most important contract any of us have seen in this parliament or will ever see. The reason that we are asking you the questions is that we want the people of South Australia to understand what you have signed up to, not only on our behalf but also on behalf of our children.

My son will be dead of old age and this agreement will still be current. He is only seven today, and if he lives to be 107 this thing will still be going—just remember that. This is very important. I must say to the minister that the way in which this has been brought to the parliament and handled expedites swift passage of the matter, but it is not necessarily thorough.

The Hon. A. KOUTSANTONIS: I believe increased competition will make local companies more innovative, more efficient, and more competitive globally. Goran Roos, the Thinker in Residence who talked about manufacturing, said the best thing that the government could do rather than subsidising was to end all subsidies, push our local manufacturers even harder, give them harder tasks, innovate, set higher procurement levels, and make them reach for even higher standards—that way we will be more globally competitive. I think this Olympic Dam indenture expansion will push our local manufacturers, and I have confidence that South Australians will rise to the challenge.

I have never said that this bill is perfect; in fact, in my opening remarks I said that it is not perfect. I will say this: without wanting to offend my friends from BHP, they are not that good at negotiating. How did the merger with Rio go? Not very well. How did the potash deal go? Not very well. I would not be saying what great negotiators BHP are and, quite frankly, in my view—and I know this will set you off—the Hon. Kevin Foley did an excellent job of negotiating this contract. In my view, negotiating is knowing what you want, not seeing what you can get.

Mr Griffiths interjecting:

The Hon. A. KOUTSANTONIS: Fine. You may think that is a silly idea but that is how I have always operated. I know what I want and, when I know what I want and what I think is best, I negotiate for that. I do not turn to a negotiation hoping to see what I can get.

Ms Chapman interjecting:

The Hon. A. KOUTSANTONIS: Okay, yes, I am sure you would have done a much better job than everyone else, and I know that you are an expert in every field you ever comment on.

However, there is also the ICN, which I know the shadow minister and I are quite fond of because it does a lot of good work and there has been a lot of bipartisan support. It is already working with local companies and local suppliers to build capability and help potential suppliers to pool their resources to win work. But, if you are looking for a minister of the Crown to get up and say, 'I can guarantee that every single contract will be let to South Australian firms,' I cannot. I cannot do that at Prominent Hill, at Carrapateena, with Rex Minerals, at Moomba, with Beach Energy or with Santos. I cannot do it with any endeavour. I cannot compel any South Australian citizen to buy South Australian, yet you want to compel BHP. I think, quite frankly—

Mr Griffiths: I just want to ensure the opportunities.

The Hon. A. KOUTSANTONIS: Sure, absolutely, I know you do. So do we. I completely sympathise—especially for your community. Yorke Peninsula is a very hardworking community. It has been very loyal to the Liberal Party for the last 100 years, returning member after member. I think mining opportunities, agricultural opportunities and manufacturing opportunities will help that community thrive and prosper, and Rex Minerals and the Olympic Dam indenture will do lots to help those local manufacturers do well, but I cannot go to your community and guarantee them that every one of their tenderers will win—

Mr Griffiths: They don't expect that.

The Hon. A. KOUTSANTONIS: No, and they wouldn't want it.

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