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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
2013-09-24 Daily Xml
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Ministerial Statement

FUTURE FUND

The Hon. J.W. WEATHERILL (Cheltenham—Premier, Treasurer, Minister for State Development, Minister for the Public Sector, Minister for the Arts) (14:35): I seek leave to make a ministerial statement.

Leave granted.

The Hon. J.W. WEATHERILL: Yesterday, I announced the state government's plan for the development of a future fund for South Australia. A future fund will preserve the benefits of our state's mineral and energy resources—

Members interjecting:

The SPEAKER: The Premier will be seated. I call the member for Heysen, the member for Kavel and the member for Hammond to order. Premier.

The Hon. J.W. WEATHERILL: Thank you, sir. A future fund will preserve the benefits of our state's mineral and energy resources for future generations. South Australia is enjoying the benefits of growth in our mining and energy industries over the past decade. There were four major, approved or operating mines in 2002; today, there are 21.

Mineral and petroleum exports have increased from $1.39 billion in 2002-03 to $4.2 billion in 2012-13, and exploration expenditure has increased from $123 million in 2002-03 to $617 million in 2012-13—a massive 400 per cent increase. Mineral and petroleum production in 2011-12 reached $6.2 billion, up from $1.98 billion in 2002-03.

Royalties paid to the state over this time have grown from $82 million in 2002-03 to around $200 million this year, and are predicted to grow to $285 million in 2016-17. I am advised there are a further 20 potential new mines at various stages of development which could commence over the next 15 years, along with potential for expansion in oil and unconventional gas opportunities. BHP is also continuing to pursue an expansion of its Olympic Dam mine.

Deloitte Access Economics modelling has forecast that mining could add an extra $22.5 billion in gross state production between 2013 and 2032. However, we must also recognise the finite nature of South Australia's mineral and energy resources, which can only be taken from the ground once. South Australia's mineral and energy resources belong to all of us, and we all have an opportunity, as royalty revenue rises, to share the benefits with current and future generations.

Directing a portion of royalty revenues into a future fund means we can continue building South Australia today while also being prepared to take advantage of the opportunities to meet the challenges that will arise in the decades ahead. The fund will start building when the state budget is in an operating surplus position and will continue to build over time, until a minimum fund balance of $500 million is achieved, allowing payments to be made from the future fund.

South Australia returns to a substantial surplus in 2015-16 of $375 million, followed by $661 million the following year. That is more than enough to support payment into the future fund, as well as paying down debt. Payments to the fund will come from 7 per cent of royalty revenues and early royalties from new or significantly expanded mines, with further discretionary payments possible. Modelling suggests the fund could accrue a $500 million balance over a 15-year period on a low estimate, or more than $2.5 billion on a high estimate, from royalty payments alone.

The fund will allow future decision-makers, in consultation with South Australians, to invest in infrastructure that has significant and long-lasting economic benefit, and in programs that build the capacity of our children, the resilience of our families and the skills of our workforce.

One of the advantages we have in South Australia is that we can learn from the experience of places like Western Australia, which only introduced a future fund a year ago, a long way into its mining boom. Had they done so a lot earlier, they would now have a source of funds for much needed projects and a buffer against declining royalty revenues.

This is a policy that looks beyond today, just as we plan for our own futures as individuals, when we are planning for our state's future, both investing for today and saving some of the gains for tomorrow. This is a policy that will allow all South Australians to share in the proceeds of today's strong resources growth for many decades to come.

The SPEAKER: I call the members for Schubert and Morialta and the deputy leader to order and I warn the member for Heysen for the first time.

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