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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
2012-03-01 Daily Xml
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ROYAL ADELAIDE HOSPITAL

Mr HAMILTON-SMITH (Waite) (14:49): My question is to the Minister for Health. Has the consortia remediating the Royal Adelaide Hospital site for the government—

The Hon. P.F. Conlon interjecting:

The SPEAKER: Order!

Mr HAMILTON-SMITH: —and through them, the taxpayers of South Australia, been overcharged for the removal of high-level contaminated soil, and are financial arrangements in regard to the clean-up in accordance with both the contract and statutory requirements?

Public reports indicate that the contractors, ResourceCo, have been paid around $250 a tonne to remove high-level contaminated soil, which the company itself appears to have then reclassified, under secondary assessment, as low or intermediate waste, not requiring treatment.

The $250 figure provides for the expensive process of leeching leads and highly toxic metals from the soil before disposal. If the soil is somehow reclassified as clean fill, the contractor receives a windfall benefit because the expensive remediation processes would not need to be executed by the contractor. The 31,0000 tonnes might then be available for use as clean fill at building sites around Adelaide and country SA. The contractor would also, in this case, be able to sell the fill, receiving a windfall benefit.

The Hon. P.F. CONLON: Point of order, Madam Speaker: on two occasions, the member for Waite engages in comment arguing that the contractor will receive a 'windfall benefit'. I simply point out that the opposition cannot seem to ask an orderly question without argument.

The SPEAKER: Yes, I would ask—

Members interjecting:

The SPEAKER: The member for Waite took a long time to answer that question, and there were some issues in there that I have—I would ask him to be very careful in future about the wording of his question. Could you just—

Members interjecting:

The SPEAKER: Order! Can you just repeat the first little bit of the question?

Mr HAMILTON-SMITH: I note the minister is having trouble hearing, ma'am, so I wanted to explain the logic behind—

The SPEAKER: Thank you.

Mr HAMILTON-SMITH: —the question. Has the consortia remediating the RAH for the government and, through them, the taxpayers of South Australia, been overcharged for the removal of the high-level contaminated soil, as I explained.

The SPEAKER: Thank you. Minister for Health.

The Hon. J.D. HILL (Kaurna—Minister for Health and Ageing, Minister for Mental Health and Substance Abuse, Minister for the Arts) (14:52): Madam Speaker, the consortium, as part of its contract, has to clean up that site, and we have what you could call a fixed-price contract of $1.85 billion to design and construct the hospital. Part of that is that they have to clean that site up to the standard that is approved by the EPA; that is what they have to do.

There is a process that they can go through—and, in any fixed-price contract, as people would understand—if you build a house, if you do something which is at variance or outside the parameters of the contract, then the person for whom the building is being built (that is, the government), has some sort of way of being asked to pay for more.

The mechanism that we have is that, despite all the extensive drilling and investigation that we have done on the site, if there is something that is found there which was not anticipated, or was not part of the original audit, then there is a formula that is applied, which is an 80:20 formula; in other words, we pay for 80 per cent of anything additional, and the contractor has to pay for 20 per cent. The contractor has to pay for a little bit, so that they are incentivised to do things properly.

So, in order for that 80:20 rule to kick in, two things have to apply. First, the contractor (that is, the PPP partner) has to demonstrate there was something that was unforseen and, secondly, that there was a cost that was borne as a result of that. There might be something unforseen that did not cost them any extra money, so you don't pay for it in that case.

In relation to the issues the member raised, there is nothing—there might be lots of claims made, but there is no agreement by our side (the health department) that we are responsible for any additional—

Ms Chapman interjecting:

The SPEAKER: Order, member for Bragg!

The Hon. J.D. HILL: The question, I think, was: is the government liable for any additional costs, or words to that effect.

Mr HAMILTON-SMITH: Point of order, Madam Speaker.

The Hon. J.D. HILL: No, I don't need assistance—

Members interjecting:

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

Mr HAMILTON-SMITH: Relevance, Madam Speaker. The question specifically asked: was the consortia being overcharged by having to pay $250 a tonne to remove contaminated waste that subsequently was reclassified as clean fill.

The SPEAKER: Thank you. I would ask the member for Waite to bring me that question afterwards, too; I want to have another look at it.

The Hon. J.D. HILL: I think he also said, 'Is the taxpayer exposed in some way?' or words to that effect, and I was just making the point that the only circumstance under which we would be exposed is if those two criteria were met. If the consortia itself is overcharged by one of its subcontractors, well, that is something that they have to wear. If you were building a house and the builder hired a plumber who charged more than the plumber down the road, that is something the builder has to wear. That is part of a fixed-price contract—

Members interjecting:

The SPEAKER: Order!

The Hon. J.D. HILL: Be that as it may. That is the nature of the contract. We only have to pay if you can prove those two things occurred. We do not believe that has been the case, and in negotiations those things may take place over time. I think that is really the kind of completeness of the answer, but if the consortium has paid too much for it with their subcontract, I am sure they will work it out with the subcontractor.

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