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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
2013-05-15 Daily Xml
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DESALINATION PLANT

Mr WILLIAMS (MacKillop) (15:17): Yesterday in question time, the Premier was asked a question about the cost benefit analysis of the South Road Upgrade, compared with the cost benefit analysis on the Adelaide desalination plant. The Premier started his response thus:

Can I say, this is precisely the nonsense that is being spread around by the opposition about the desalination plant which has absolutely no substance.

He went on to say:

Let me explain. The reason why the desalination plant was not pitched to Infrastructure Australia—

He went on to make the case that Infrastructure Australia would only analyse the cost benefit of the desalination proposal on a very economic basis and would not, indeed, take into account that this was an important piece of infrastructure in the government's opinion, at least, to provide water security. He tried to make the point that Infrastructure Australia would not look at the social benefits of that particular project.

I raised the point during question time that the government did pitch their proposal at Infrastructure Australia and, as luck would have it, we have the benefit of a paper from the Australian National Audit Office titled 'Grants for the construction of the Adelaide desalination plant', a very damning paper on this government. It talks about the fact that back in October 2008 the South Australian government did, indeed, put an application to Infrastructure Australia and the project was included on the interim infrastructure priority list.

Having been given interim priority, Infrastructure Australia then went back to the government to seek further information. The reason they did that is that Infrastructure Australia concluded that the Adelaide desalination plant expansion proposal was not supported by a robust cost-benefit analysis. Indeed, it was not supported by very much at all according to this document from the federal Auditor-General.

Then, having got wind that they were in trouble with the project, the then premier—this Labor government—wrote directly to then prime minister Rudd. 'Let's do a mates deal behind closed doors,' was the import of that letter, I believe. The report goes on to say that, indeed, the May 2008 budget papers stated that funding should only be provided to public infrastructure projects that meet a minimum benchmark social rate of return.

The Premier stood here yesterday and tried to claim that the cost-benefit analysis was very economic, but the criteria used by the federal government talk about the social rate of return. How could the Premier stand up and say that they were not satisfied that they would get a fair hearing through Infrastructure Australia because this was about water security, when Infrastructure Australia's criteria specifically talk about a social rate of return?

I think the real reason is that the advice given to ministers about the proposal to fund the Adelaide desalination plant indicated that the proposal was not supported by a full business case, and the quality of the costings was low and the commonwealth's exposure to project risk was high. That is the real reason—not supported by a full business case—and the quality of the costings was low. The reality is that the government never really made a serious application, but when they realised that their application was about to fall, they pleaded to the then prime minister.

This is a very damning report on the process of awarding finance to double the size of the desal plant. It is damning on the process to award the first $100 million on the original project but even more damning on the awarding of a further $228 million to double the size of the project. The Premier yesterday went on to claim that part of the reason that they went about this process to secure funding was that, 'We wanted to save water for the River Murray.' This report also speaks of that. It says:

...in seeking funding, South Australia did not—

I repeat, did not—

offer to commit to provide any environmental benefits in return for Australian Government funding of the proposal.

'Did not'—so they were certainly not thinking about the River Murray at the time. Further, the Premier said yesterday that some advice that the government had suggested that we could run out of water in South Australia as soon as 2013. This document points out that the proposal to double the size was all about securing water security beyond 2025.

Time expired.

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