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House of Assembly - Fifty-Third Parliament, Second Session (53-2)
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Bills

Whyalla Steel Works (Environmental Authorisation) Amendment Bill

Referred to Select Committee

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (11:02): I bring up the report of the select committee, together with minutes of proceedings and evidence.

Report received.

The Hon. A. KOUTSANTONIS: I move:

That the report be noted.

Mr VAN HOLST PELLEKAAN (Stuart) (11:03): I support the recommendations of the report and put on the record the fact that the opposition will support the passage of the bill through both houses of parliament. As was said by everybody, I think, on both sides of this chamber who spoke during the second reading opportunity, this bill is very important. It is pretty straightforward and pretty simple but it is very important for the Arrium company and the OneSteel company (joined as they are), for the people of Whyalla (over 3,000 of whom are employed either as direct employees or are contracted by Arrium and OneSteel), for the Upper Spencer Gulf and, in fact, for our state as a whole.

The reason this indenture is being extended from 10 years to 20 years is essentially to give Arrium and OneSteel the very best possibility of success and survival, really, would not be putting too fine a point on it, Mr Speaker. These are extremely challenging times at the moment for the mining industry and also for the iron ore and steel industries and Arrium and OneSteel participate in all of those.

It is not solely because they are difficult times for these industries that this indenture is so important. That is certainly part of it, but the key thing for Arrium is that they need to be able to retain investment and they need to be able to attract new investment. The only way that the company and the people whom it employs will thrive into the future is if they can be bold, be innovative, be nimble and flexible, and find a way not only to survive but to thrive.

They need this certainty from parliament so that they have every opportunity to say to their investors, both existing and prospective, that there is no chance that the legislation under which they operate from an environmental perspective could put them at any risk. That is not the same thing as saying that they do not need to be responsible because of course they do, and they have a fantastic track record over the last decade of being environmentally responsible. I can say that both as a shadow minister and also as a member of parliament representing Port Augusta in a neighbouring electorate.

I have been for many years very well aware of the challenges for the Whyalla community and the challenges for this operation with regard to red dust, and I am well aware of how wonderfully well that has been dealt with over the last 10 years, so much so that, to be quite frank, Mr Speaker, it is from a public perspective not even an issue anymore; it is actually just not what is front and centre in people's minds in Whyalla and the surrounding district, but it certainly was before Arrium commenced and undertook its Project Magnet, and that is really what Whyalla was known for. The minute that anybody drove into the town it was apparent that the challenge is the red dust, and that is nearly all gone. This is not about giving Arrium or OneSteel a free ride. This is about allowing them to continue the very positive path that they have taken with regard to their environmental responsibilities.

We want to Arrium and OneSteel to have every chance to attract as much investment as possible so that they can move forward as well as possible. It is really important too, of course, to fully understand the support of the environmental agencies on that. The committee, while receiving very responsible and plausible representations from Arrium and OneSteel, also had representations from the EPA, and the EPA had absolutely no hesitation in saying to the committee that they would prefer if the indenture was not extended because they would like to go about their work in the way that they normally do and they would like to have that direct relationship, and that is quite natural. They also said that they did not object in any way to this indenture agreement being extended.

They went on to say that from an EPA perspective they have probably the best relationship with Arrium as they do with any company that they deal with in the state. They were certainly supportive of Arrium's past work from an environmental perspective. They also made it very clear that two things were important: one, they had no outstanding issues with Arrium that they were currently trying to deal with; and, two, they did not think for a second that, if they wanted to change any of the licence conditions or negotiate any other changes from an environmental perspective at all with the company, extending this indenture would impede doing so.

That testimony from the EPA certainly for me was incredibly important. I really did already understand, as I put on the record in this place before, and already supported Arrium's desire to have the indenture extended, but having the EPA say to us and to the public via Hansard and via the select committee process that they had absolutely no objection to this and that they were comfortable that everything that they would want to achieve in the future with Arrium could be achieved through the indenture agreement really did seal the deal essentially with regard to being able to provide full support to this bill.

I know that other colleagues of mine from the opposition want to speak, but before I wind up I would like to correct the record of the minister's second reading speech with regard to the time lines. The minister said—and I do not doubt him—that he was sharing information that he had been advised of, but I would like to correct the record and say that there is other information which clearly the minister, at that point in time, had not been advised of which, unfortunately, meant that we were delayed by a day last week.

I have a very detailed record of phone calls, including the Voice2Text messages on my phone, which outline exactly how things transpired last week. I am pleased that, fortunately, it has not slowed us down—the government fully supports Arrium, the opposition fully supports Arrium. The only unfortunate thing about this is that we are dealing with this at the last-possible minute.

There have been 10 years to get ready for this point in time, and I know that Arrium has been engaging with the government and the EPA for several months now, so it is a shame to be dealing with it in the parliament at the last possible minute. However, it is very positive that both sides of politics support what the government wants to do for Arrium, and what the opposition wants to do for Arrium, knowing that as the EPA tell us it will not impede their work at all.

Mr HUGHES (Giles) (11:11): I also rise to fully support this amendment, and I think it is an incredibly important amendment. When it was first moved back in 2005, it did assist to trigger major investment in the Whyalla community at the steelworks. It had a profound economic impact on Whyalla and it enabled us to address the longstanding and deeply contentious issue of fugitive dust emissions in the eastern part of town.

The history of environmental impacts in the steelworks goes back many years—in fact, almost since the inception of the steelworks in 1965, and we are celebrating the 50th year of the steelworks at the moment. One of the most deeply contentious elements of the steelworks development was the building of the pellet plant cheek by jowl with the residential community and what was the centre of Whyalla at the time. A lot of people came to see that in hindsight that was a mistake, and a profound mistake, to build a pellet plant in that location. That is not a reflection on the pellet plant or the technology as such; it is just that the location was a very inappropriate one.

There were people in the Whyalla community, even back in the lead-up to the commissioning of the pellet plant in 1968, who expressed their strong opposition. Unfortunately, that opposition was not listened to at the time, and we all went on to live with the consequences. In fact, opposition was even voiced by senior managers of the company at the time, with the daughter of one family never speaking to her dad again as a result of what was done.

I have lived in the vicinity of the pellet plant since 1991, so I know firsthand what the impact was, but my sympathy was for those people who had lived there prior to the commissioning of the pellet plant. When I moved into our little cottage on Delprat Terrace, just down from the pellet plant, we had a house-warming and, as with most house-warmings, we had a few beers and we had a good night. The following day, at 7.30 in the morning, one of the neighbours from just up the road knocked at my door. She had lived in that area all her life, and she was in tears due to the impact of the pellet plant on that immediate vicinity—and these were people who had worked for the company for all their lives.

When the initial changes were introduced with a spin-out from BHP, the company came onto the operation of the Environment Protection Act for the first time. I considered that—as did, I think, a lot of people—to be a big improvement, because those people who had taken the opportunity to read the 1958 steelwork indenture act knew that there was virtually a get out of gaol clause within that act for the company when it came to the impact that it had on the environment.

It is interesting, when you go back and have a look at the select committee that met in the 1950s, prior to the enactment of the 1958 steelwork indenture act—a committee that was chaired by Thomas Playford and the member for Whyalla at the time, Ron Loveday—they actually discussed some of these issues about environmental impacts at that stage, and even questioned the wisdom of having that get out of gaol free clause in the act, but it survived.

Having said that, I have to say that if it were not for the 1958 steelwork indenture act and the work that was done by our parliament at that stage—a very strong bipartisan support for an integrated steelworks in Whyalla—I would not be here today, speaking in this chamber, because my family would never have moved to Whyalla. Even though there were issues with the act, the act was overwhelmingly a good piece of work. It was very positive for Whyalla, for this state and for this country that we ended up with an integrated steelworks in Whyalla.

So, come 2000, with a spin-out, OneSteel (as it became) initially operated purely under the Environment Protection Act. The amendment in 2005 did generate some controversy. There was litigation going on at the time, as the activist group in Whyalla had taken OneSteel to court. There was a lot of antagonism, and, in some way, people saw the amendment as a gazumping of their rights. You could maybe argue the case, as there was a principle involved there, but I think we have to be pragmatic and practical about these things.

The upshot of the amendment in 2005 was to create that economic certainty so that OneSteel could invest. The investment was very significant: $400-plus million for Project Magnet and then also the subsequent investment in the expansion of the port; in total, it came close to a billion-dollar investment. While all that investment was occurring, Whyalla went through a golden period. For many years, Whyalla had double the state's unemployment level, on average. It was not an easy place to be in; there was generational unemployment.

With Project Magnet and subsequent investments, and with the expansion of mining in Whyalla, that all changed. We actually went below the state average unemployment level and in fact went under the national average. We got down to an unemployment level with a four in front of it, which, for a community like Whyalla, was a godsend. Of course, we are facing challenging times again, with the pressure on commodity prices, with iron ore mining, and the pressure on the steelworks with the massive overcapacity globally in steel production. As a community, we need to work through that, and as a state we need to work through that.

It often is a race between vulnerability and opportunity when it comes to a community that is so heavily dependent upon what is, in effect, two industries: the iron ore export industry and the value-adding through the steelworks. This amendment—the continuation of the 10-year extension—is an important piece of legislation because it does, at a very challenging period, create that investment certainty.

When it was introduced in 2005, it led to a very significant improvement in the environment in Whyalla, especially in the old part of town, and it was one of those rare examples where you actually had the activist group, the EPA and the company all coming together and all getting an incredibly worthwhile result.

It is worth acknowledging the role of the late Jim White, one of the driving forces behind Project Magnet, and it is also worth mentioning Mark Parry, who was the manager of the steelworks in Whyalla for a time. There was that shift away from the old BHP culture of denying the problem and denying any liability to a far more open approach and an approach that put a real value on engaging with the community about environmental and other issues, so it ended up being an incredible positive.

The activist group, as a result of what happened through Project Magnet, disbanded itself. There has been a little bit of negative criticism of this amendment in the media of late and I will just share some words from the person who chaired the activist group, Ted Kittel, who fought a very long battle with Rob Hannon to see the dust issue in Whyalla addressed. In response to some of these low-level negative criticisms that have appeared in the media of late, Ted said:

It is true that the 2005 Indenture caused the [Whyalla Red Dust Action Group] litigation to be null and void because the Indenture changed the law.

However, on behalf of [the Whyalla Red Dust Action Group], I continued to negotiate with OneSteel with the express desire to find a middle ground.

The negotiations over a period of time resulted in a win, win position for both Parties and launched the beginning of the new partnership between [the Whyalla Red Dust Action Group] and OneSteel/Arrium.

This partnership has flourished and is now strong and progressive.

I have observed throughout the 2005-2015 Indenture period that OneSteel/Arrium has conducted its operations in Whyalla in a most environmentally responsible way.

OneSteel/Arrium has shown good faith by engaging with community representatives…on all issues which relate to environmental impacts, and I have no doubt [that] this will continue for the duration of the 2015-2025 Indenture.

I will continue to further expand the good relationship I have with the Company by recognising and promoting the good environmental outcomes already enjoyed by the affected community as a result of the goodwill, and the good work we have done together.

He goes on to distance himself from any of the negative criticisms that have been made of late.

It is an incredibly positive story when you look at what has happened in Whyalla on both an economic level and an environmental level, and I have no doubt that that will continue into the future. So I recommend this amendment. I know we are going to get unanimous support. It is a very worthwhile extension to a very worthwhile amendment.

Ms CHAPMAN (Bragg—Deputy Leader of the Opposition) (11:23): I rise to speak on the Whyalla Steel Works (Environmental Authorisation) Amendment Bill 2015. I thank the shadow minister responsible for this bill, firstly, for his erudite contribution on this bill, his confirmation of the opposition's absolute commitment to Whyalla and the steel industry in South Australia and, in particular, OneSteel Manufacturing Proprietary Limited's enterprise at Whyalla steelworks and, secondly, for his work in ensuring, as promptly as possible, that this matter could be dealt with expeditiously, given the late notice, that had already been traversed in the parliament.

We are here to talk about a principal industry in the land of the pink sheep, as I have always known it. It is fair to say that Whyalla has had a few setbacks in recent years. For me saltbush-bred sheep, pink as they are, in the surrounds of Whyalla are a joy to see. They are some of the fattest and best bred sheep in the state, and it is always a surprise to me how well they do. They taste delicious, I should say, and I commend them, because I think it is important to remember that, whilst Whyalla is an important regional town and port supporting other industries, clearly manufacturing and its industrial history have been absolutely paramount for the survival and advancement of the town including its development of an enormously multicultural community.

Certainly in recent years it has had setbacks with the promises of rare earth by-product mining enterprises which were to take place; they did not. I remember being in Whyalla in recent years for the proposed development of Cavpower and other industry proposals which fell in a hole subsequent to the BHP expansion being delayed. So they have had optimism.

I think on one occasion when the former minister for planning, the Hon. Paul Holloway, could not attend for a property development opening launch, I was called as the shadow and very happy to drive up there and launch it—all optimistic about the opportunity for golf courses, major housing development and promise for that region. It did not transpire and that is regrettable, but the hardiness and resilience of the people of Whyalla stands out.

Obviously there has been a rich history of iron ore mining, commencing at Iron Knob, now down the range, and that continues to prosper, notwithstanding, of course, we have had some fairly significant dives in the commodity price. The OneSteel operation, the steelmaking, has been absolutely critical.

So we have looked at the Whyalla Steel Works Act 1958, and other members and the minister have reviewed the development since 1958. BHP was granted special privileges, which is what happens when you get the umbrella of a statute and parliamentary approval with a special set of rules recognising the significance of an enterprise. We came back here a number of times to amend this bill, and certainly in my time, in 2005, to grant a significant extension in respect of the environmental regulatory regime that was to sit with this indenture.

So for the reasons as have been explained by the shadow minister, the member for Stuart, we are, of course, back here again extending a regime which has demonstrated a reliable stability, in relation to which the hybrid bill committee has subsequently confirmed that, with the consent and request of both the operators—that is, Arrium, who are the owners of the wholly owned subsidiary, OneSteel Manufacturing Pty Ltd, and the EPA—the parliament can have some confidence in giving its approval for an extension for a further 10 years.

Two matters I wish to place on the record: one is that although the opposition—the Liberal Party in South Australia—has had a longstanding history of support for steelworks in South Australia, in particular the Whyalla operations, and has made that clear publicly, and it has been confirmed in a variety of forums, it is concerning to note that on the face of it the government would introduce a bill, or give notice of the introduction of a bill, with such disregard to the opposition, indeed to the shadow minister particularly, in not providing a copy of that bill, when clearly on the information that is before us—the circumstance of both the EPA approving it, and OneSteel asking for it—this has been known to the government since June—

Mr van Holst Pellekaan interjecting:

Ms CHAPMAN: 'May', the shadow minister says, but confirmed to us, at least in the urgent briefings that the shadow minister provided to us, as a clear conveying of that position to the government, and here we are in September being asked to deal with this matter expeditiously. We are willing to do that, a large degree due to the efforts of the shadow minister, who immediately requested information to be provided, briefings to be set up and attended to, questions to be answered and the committee process dealt with expeditiously.

It is not acceptable that the government, in the first two days of this week's parliament, is asking to deal with two bills, which need urgent attention, because of the imminent expiry of a time limit—this bill and the terrorism bill which is to follow later this morning or this afternoon. It is just sloppy government at best. Is it in any way designed to be some sort of ambush, on the basis of thinking that obviously nobody could object to this extension of time, that we will not have enough time to ask questions about whether five or 10 years or the like is enough, which I will be dealing with in the terrorism bill shortly?

We know they will not been able to criticise this because it is so important for South Australia, it is so important for Whyalla, so important for the continuation of jobs that we will just throw it in at the last minute. That is disrespectful to this parliament and is contemptuous of the process of the parliament, and the Treasurer should take heed of this type of conduct, which only reflects on his government as suggesting that it be so arrogant as to act in that manner. It is disgraceful and should not happen. It will happen again when we are being asked to deal with legislation later today. It is not acceptable.

I will make a point on one aspect and that is that, if we are to extend the EPA/Department of State Development regulatory regime of environmental protection, let us look at one other aspect of this act. I would ask the Treasurer, when he looks at bills to do things as we are today, that he also look at making sure that the contemporary language within certain legislation is updated. He should know, because he is a former minister for transport and infrastructure, that the provision set out in section 11 of the Whyalla Steel Works Act 1958 states:

Charges on Company's Tramways and jetties

Notwithstanding anything in any other Act or law the Company may charge for the carriage of passengers and goods on any of its tramways charges at rates not exceeding those charged from time to time by the South Australian Railways Commissioner for the same distances and, in the case of goods, for goods of a similar class, and may charge for the use of any of its jetties charges not exceeding those charges charged from time to time by The South Australian Harbors Board.

We no longer have a South Australian railways commission, we have a railways commissioner. I think still at the moment the Commissioner of Railways in South Australia is the head of the Department of Transport and Infrastructure. We do not have a South Australian harbors board anymore. It is hard to think of any tramways running around in Whyalla at the moment—I do not think I have noticed any (the member for Giles may correct me if there is one).

Clearly it is designed to deal with the provision of royalties, fees, levies, etc., with respect to the use of the public assets of rail and/or jetties. Time has moved on a bit since 1958, and I would suggest to the Treasurer that he may need to update that and consider doing so between the houses. Otherwise, I indicate obviously that I support the bill for all the reasons adeptly set out by the shadow minister.

Mr TARZIA (Hartley) (11:33): I also rise in favour of the amendment bill before us today. In such a challenging time (and we have heard the shadow minister for the area say this as well) we need to send a strong, positive message to the mining industry, the mining industry that represented in South Australia in 2014 an 11 per cent share of the Australian economy in mining. When you look at mining in South Australia in 2014, it represented about a 5 per cent share of the South Australian economy.

We on this side of the chamber support the passage of the bill. We support it for the people of Whyalla, for the area, business, shareholders and also employees. It is important that we provide certainty in a time where the mining industry has had many blows dealt it, some not for its own doing, its own fault. If you look at the global all products composite index, in terms of global carbon steel prices, at July 2014 the price was $US711 a tonne. When you look at May 2015, that price had dropped to $US554 a ton.

We need to send a strong message to the mining industry that we are with them in the peaks but we are also with them in the troughs, and at the moment we are in a trough. I am sure it will not be too long before prices do bump up again, and that is why we need to give the people at Arrium the opportunity to rectify whatever issues they can wherever we can, within reason, because the industry is experiencing extremely tough times at the moment.

It is about more than just an industry; it is also about the people of Whyalla and the surrounding areas, and it is about jobs. These people have mortgages, they have kids in secondary school, they have car repayments. We cannot just sit here and let only the market dictate what happens in such a huge situation. Of course we need to protect the environment, but we need to balance that against not only the commercial reality but also the reality of people. These are real people with real lives.

Arrium approached the government seeking an extension of such environmental authorisation and, recognising the difficult financial times—due to many factors but including iron ore and steel prices and their issues, as well as the need to provide more certainty to underpin the longevity of operations—the government has agreed to extend environmental authorisation for 10 years.

There are many rationales for this extension. First, it is to maintain Arrium's confidence in the state's regulatory regime as it faces many challenges, I am sure, in the coming years. We know, without a doubt, that a strong mining industry is essential for the future of our state, and I understand the company is undertaking a broad review of its business as a result of the negative factors it is experiencing. I commend it for that. I am sure it has also had to curtail some mining in the short term, and this will perhaps lead to some decrease in exports in the near term. However, as I said, we have to stand with the mining industry through peaks and through troughs. It is experiencing some tough times at the moment, but I have no doubt that when prices do rise they will be eternally grateful to us. The state will get royalties and export dollars back, so at the end of the day why would we not stand here and support them wherever we can?

Without repeating the points that have been made before me by the deputy and also by the shadow minister, obviously we do not want to get into the habit of doing this sort of thing, but every case is different. This is a very strong case that has been put to us by a company in dire need of assistance by the government. I commend the government for putting the motion forward and, as you have heard from our shadow minister, we will not stand in the way of this. I commend it to the house.

Mr PEDERICK (Hammond) (11:37): I rise to speak to the Whyalla Steel Works (Environmental Authorisation) Amendment Bill 2015. This bill was introduced earlier this month to extend by a further 10 years, to 20 years, the environmental authorisation that was provided to OneSteel Manufacturing Proprietary Limited, a wholly owned subsidiary of Arrium Limited, and the company operating the Whyalla steelworks.

It is a few decades ago now, but I had family in Whyalla for many years who were operating one of the service stations there. They were one of the beneficiaries of the wealth generated by the mining in the region and the steelworks, and formerly the ship building that went on at Whyalla. There have certainly been many millions of dollars generated in the area, and let us hope there are many more into the future.

The company is licensed under schedule 3 of the Environment Protection Act, and that is so that it can undertake particular activities of environmental significance. This goes back to when we had the Whyalla Steel Works Act 1958, which was formerly the Broken Hill Proprietary Company's (or BHP) Steel Works Indenture Act 1958, which ratified and approved an indenture between the state and OneSteel relating to the operation of its steelworks in Whyalla. The act of 1958 was previously amended in 2005, and that is why we are in the situation now where the authorisation is about to expire on 4 November 2015, which is obviously the 10th anniversary, and so what we are doing here today is talking about extending this licence by another 10 years.

Part of the arrangements under the earlier amendment was to provide the regulatory certainty for Arrium to invest about $400 million to undertake Project Magnet. This involved a lot of environmental work around the red dust issue, which has become synonymous with it in Whyalla over time. They have certainly had a lot of success in managing that dust, so the company Arrium has been given a lot more confidence to invest more than $1 billion to expand the capacity of the port of Whyalla and broaden its operations in South Australia, including the acquisition of Peculiar Knob.

What we are doing here today is trying to give some sanity in the world of mining in this state. We know we are working with current low iron ore prices and a highly competitive steel market. We have a lot of low prices for mining products right around the world, and mining is having a tough time. We have lost thousands of jobs in this state, and we will do anything we can to make sure that we support as much mining as we can, under the right environmental guidelines.

I have certainly had plenty of experience working with local mines like the sand mine up at Mindarie-Halidon and also the Strathalbyn lead and zinc mine. They all have their environmental challenges, and that takes extra investment from companies, but I think companies have matured over time in understanding that a whole lot of changes need to happen to make sure that we leave the place after mines close down in as good a state as anyone can.

This amendment will provide the 10-year extension and give Arrium a bit more confidence in this time of uncertainty over prices. Certainly, the company has shown a great improvement in its performance, in its environmental work. The Environment Protection Authority in 2010 awarded OneSteel an EPA sustainability licence to reflect its genuine commitment to reducing its impact on the environment through reduced reliance on the River Murray, and energy and carbon efficiency.

I know River Murray water is piped all the way to Ceduna, which almost seems absurd, but that is where it gets piped, and I think some of those people would get about 25 per cent of their water from the River Murray at Ceduna and connecting points in between. It is a vital source of water, and the significance of the River Murray to this state could not have been shown up more than in the previous drought of 2006-10. We certainly have not had huge flows in the last 12 months to give huge confidence, but I must say we are in a far better position at the moment than we were in 2006-10.

While I have the opportunity, I congratulate Senator Anne Ruston on her new role as the Assistant Minister for Agriculture and Water Resources. I think her position, and our ability to talk quite readily with Senator Ruston, will assist everyone at this end of the river. It is great to see that promotion so that we can have those active discussions with Senator Ruston, and also with Senator Barnaby Joyce as the new Minister for Water Resources. He was and is the Minister for Agriculture.

I, as well as other members, especially the member for Chaffey, acknowledge the River Murray for its worth and its usefulness, not just for agriculture but for critical human needs and for those environmental flows that we always need. I certainly believe that, as long as we have the appropriate environmental flows, we will have that water for irrigation as well as for critical human needs.

It has been mentioned before that Arrium is a major employer in South Australia, directly employing around 3,400 workers and subcontractors for its steelmaking and exporting of haematite. I note that this being a hybrid bill, the select committee met on 18 September (this month) and received evidence from Arrium, the EPA and the department (DSD) and the most important thing that came out of this was that the EPA confirmed that it would prefer to operate without an indenture agreement in place; it does not oppose the extension of the indenture and considers Arrium (OneSteel) an environmentally responsible company that has made very positive improvements in the environmental impacts of its operations over the last 10 years and does not believe that the indenture compromises the EPA's ability to do its work. Certainly the EPA believes that it could still effectively adjust any licence conditions as necessary if the indenture is extended.

It is interesting to note that overall Arrium has made very significant improvements in its environmental performance over the previous 10 years, as I have indicated, and this is strongly supported by the Environment Protection Authority and the local community. This is something that we always need to acknowledge, and we need to make sure that the local community is on board with it because, if we don't, that is when the trouble will start—with any situation. If we bring the community on board from the start and have a conversation on any issue, no matter what it is in this parliament—and I have a couple brewing out there—we would have far better results than just thinking, 'Under the legislation I can do this and I can do that'. Sometimes it is better to go that one step further and be on the front foot, making sure the community is on board.

I certainly commend the bill and I must say that I commend the Environment Protection Authority. Some people shake in fear when they hear those words, but the EPA is obviously very complimentary of the work that Arrium is doing. I commend Arrium for what it is doing and wish it the best success in the next 10 years.

Mr WHETSTONE (Chaffey) (11:48): I also rise to support the amendments and make a small contribution. This amendment is about jobs, it is about certainty and it is about support. I note that Arrium has been under pressure, particularly financial pressure with low commodity prices. It has also been under pressure with competition, but over many years, since 1958, it has been a stalwart for the Australian workforce.

I note that the 3,400 workers here in South Australia and the businesses that come away from Arrium are looking for some certainty. They are looking at just exactly where their business career will go. So I guess what we are looking for here is certainty. Arrium has approached the EPA for an extension to its environmental authorisation to continue improving its environmental impact, but also to be a good Samaritan and continue to improve.

Giving that 10-year extension provides not only certainty but also confidence to Arrium to remain in South Australia. We note that there have been many businesses here in South Australia that have seen a lack of support over the last 12, 14 or 15 years, particularly under this current government, and they have gone away, so this gives certainty to Whyalla.

Once upon a time, in the days of driving through Whyalla when it was a typical steel manufacturing town, an ore mining town, there were the red roads and all the vehicles always had that mist upon them; that is history, that is long gone. What we see today is a large business that is struggling with tough times. When I last met with Arrium, they said that the company was announcing that it was redesigning its mining business for the low iron ore price environment prevailing at this time.

It has targeted cost and capital expenditure reductions and expects to return to a cash generative position for the year 2016. Obviously, any business in today's world is always looking for cost efficiencies. I think this amendment will be supporting one of those cost efficiencies so that they can attract investment and that they can provide some certainty to those investment groups that are looking to invest in Arrium as an organisation.

The review is to find those efficiencies. This 10-year extension is just one of many efficiencies that Arrium is looking at. There is some other support that I think we should be looking at, and I think that this current government have walked away from their responsibilities. We hear, 'What about Holden's?' and, 'What about the subs?' It is all about jobs. It is all about supporting our workforce and supporting a skilled workforce.

When we look at infrastructure investment in South Australia, we look at the RAH, we look at the Southern Expressway, we look at the Adelaide Oval, we look at Nyrstar and we look at the north-south corridor. How much Australian and local steel was put into those jobs? How many of the criteria in government contracts were actually to use Australian steel—local Whyalla steel?

I look across this chamber. The minister should not be looking away: the minister should be listening. How much Australian steel was put into those jobs? I am sure that the local member knows, and he would be absolutely horrified that there was little. I know that, particularly at Nyrstar, I have met with the Australian steelworkers association. They are horrified. They are representing a huge workforce nationally but, just as importantly, today is about the workforce in Whyalla.

It is about supporting those people who support the industry. It is about those people who support an industry that supports South Australia's economy. It is about 14 per cent of our exports, but at the moment we have seen a huge reduction in metal ores and scrap, down about 18 per cent. We see metal down about 18 per cent and iron and steel down about 9.4 per cent, but the industry is worth about $1.6 billion in South Australia and 14 per cent of our exports.

Again, I say to the government and I say to every member in this chamber: what is this current government doing to support steelmaking in South Australia? I know for a fact that the superway had almost no local steel content. If we look at Nyrstar, there is almost no local steel component in that project. If we look at the Royal Adelaide Hospital, I cannot categorically say that there is little Australian steel, but I bet you every bottom dollar that it is predominately Chinese steel that has gone into that project.

We look at the Southern Expressway, which has a huge amount of structural steel. Steel is made at Whyalla, but it did not come from Whyalla: it came from China. The north-south corridor is a project that will be ongoing for at least the next 10, possibly 15 years. How much local steel is going into that project? Again, if we look at the criteria, when these contracts and tender processes come up how much local South Australian steel that is made around the corner goes into that project?

We hear the blurb about this government blaming the federal government for the subs. They blame the federal government for Holden, they blame the federal government for the economy, they blame the federal government for health and education. As to all those buildings that come around—education, health and all the infrastructure projects—how much local steel is in those projects? Not many people in here would understand that there is almost none; it all comes from China.

Why is that? Why haven't we got tender conditions that we use local or Australian product, just like Victoria, New South Wales and Western Australia? When they went to an election, they put up a policy that they would use 90 per cent local steel. Why isn't that happening here in South Australia? Not one local member over there is looking at me and acknowledging it, but let me tell you that there is no conscience when it comes to using Australian product. More importantly, it is about using a local product at Whyalla that is manufactured around the corner, using local jobs, local ore. It does cost more, yes.

The Hon. A. Koutsantonis: What car do you drive?

Mr WHETSTONE: Why aren't we?

The DEPUTY SPEAKER: Order!

The Hon. A. Koutsantonis: What car do you drive?

Mr WHETSTONE: You don't drive, you don't even drive.

The DEPUTY SPEAKER: Order! Sit down. I am on my feet. I remind members that it is unparliamentary to interject and to respond to interjections. All members are entitled to be heard in silence. I ask the member for Chaffey to continue, in silence from the rest of the chamber.

Mr WHETSTONE: Thank you, Deputy Speaker. The point I wanted to get across to every member in this place is that if we are going to support an industry, we need to use their product. Even if it does cost that small percentage point more, we have to balance it up. Are we going to balance up the jobs and the cost of steel, or are we just going to import all our steel and have no jobs? What I want to know is will this minister at least have the fortitude to get up and talk about just how much support his government is giving the steelworks here in South Australia? How much is his government going to put on tender processes? Are we going to put in policies on both sides of the fence so that we use local product, local steel, just like Victoria, New South Wales and Western Australia did before they went to the election.

Every South Australian needs to have a good hard look at themselves. When we are doing tender processes, when we are looking at supporting local workforce, local business and the South Australian economy, we need to support them. No wonder South Australia's economy is at the bottom of the heap, the bottom of the premiership table, and still heading south. There is no improvement on the horizon. I am passionate about using Australian product, whether it be steel—you cannot eat steel—whether it be food—yes, you can eat Australian food and, yes, you can eat drink Australian wine and beverage—but we have to support industries here in South Australia. We cannot just keep on closing our eyes, hiding behind a desk, closing the door when it comes to our economy.

For far too long we have seen governments walk away from their responsibilities of supporting their local workforce and looking at the longer term picture, looking at the big picture, supporting an economy that needs to be supported. Yes, the steel industry is going through tough times. Yes, we do have competitors that are producing a product at a cheaper price, but those products are far inferior—

Members interjecting:

Mr WHETSTONE: —when it comes to—

The DEPUTY SPEAKER: Order!

Mr WHETSTONE: —local product. Anyone will know that a lot of the imported product is made for a price. The standards are comparative to the price of that product. So, what is attached to the premium price for a local product? It is about the workforce, the communities that revolve around the workforce. It is not just about the dollar. It is about the football team, the shops, the schools, the hospitals. They create employment. It is about keeping South Australia alive. It is not about centralising South Australia so that every regional community that has a hiccup will close up shop and head to Adelaide because that is where the government is spending the money. That is where the government is focusing on winning its next election.

South Australia is a great state and historically South Australia supports South Australia. For too long—for the last 10 or 15 years—we have seen a government continue to look through rose-coloured glasses at how they will spend almost all of their money in metropolitan Adelaide, and I think it has gone on for long enough. I think we need to have a good look at supporting our local economies and supporting our local communities, businesses and workforce, and that is something that really has gone amiss.

As I said, the 3,400-strong workforce at Arrium is about Arrium showing confidence in our economy and our workforce. If this government is not going to support this amendment and if this government is not going to support its local workforce, local business and local content (and we are talking about steel here today) I think they should not see the light of day. I think the shadow minister for energy and resources has an amendment that should be supported and I look forward to hearing the minister's contribution.

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (12:00): I thank members for their contributions and I point out to members that there is a component of local contribution requiring tenders. I accept that I would like to see more South Australian steel used in projects, but there are other steel manufacturers in this country. I also point out that, if the New South Wales government retaliated after listening to those remarks, Arrium would be disadvantaged in getting their rebars into Victorian road projects and New South Wales road projects.

What we want is to be an exporting state. We want to be larger than our own borders. We do not want to grow just enough food for South Australia, we want to grow enough food to feed the world. We do not want to just make enough steel for South Australia, we want to export our steel. We do not want to just mine enough uranium, copper, gold, silver and iron ore for South Australia, we want to export it, and exporting jurisdictions and exporting nations believe in free trade. What I am hearing from members opposite is, 'Well, we want the opportunity to tender.'

Ms Chapman: Exactly.

The Hon. A. KOUTSANTONIS: Thank you. What I am hearing from members opposite is that they want a closed-in economy with tariff barriers and government procurement processes that inhibit. I have to say that there would be more credibility from the member for Chaffey in his remarks if he did not support a leader who said that government infrastructure spending is a false economy. Spending money on infrastructure is a 'false economy', but then they say we should be using more locally produced steel in that false economy spending. It is just a ridiculous argument.

Also, I want to thank the shadow minister for his support. I stand by the comments I made in the parliament about the time lines. I do not alter those and I will also say this debate, by and large, is being governed sensibly other than the few contributions near the end.

The truth is that Arrium needs and deserves bipartisan support because they are such an important part of our economy and they will transcend governments. They will last longer than governments. They will last longer than the people making speeches in this parliament and they will keep on employing South Australians, creating prosperity and jobs, jobs that will one day benefit a future Liberal government and one day benefit the export figures of a future Liberal government.

So we should be bipartisan in this and doing everything we can to encourage this type of endeavour. We are not in any way attempting to minimise the environmental requirements that Arrium is seeking to achieve or that the EPA would seek to impose. Indeed, the evidence we received from the EPA is that the conditions that are in place now are very much what they would have issued under a licence condition and I found that very encouraging.

What we are giving is we are adding value to Arrium by giving them a value around our regulatory processes. We are giving them the ability to go to the market and say, 'We have a partner in the South Australian government and the South Australian parliament,' and that regulatory approval has a value. It has a value to investors, it has a value to the market and, most importantly, has a value to Arrium's workforce, and that is why we are attempting to do this.

Throwaway cheap lines by the member opposite do not serve to promote the debate because, by and large, we are in agreement on this important indenture agreement. The committee resolved to unanimously support the recommendations and to call for a speedy passage in the other place. That is the spirit in which this bill should be debated, rather than the cheap shots about local procurement.

I think there would be more credibility from members opposite about local procurement through the whole aspect of their own procurement rather than pointing out some insufficiencies that they find in what the government is doing. Can we do more? Yes, we should. Can we try to do more through the Industry Capability Network? Yes, we should. Can the IPP advocate do more? Absolutely, and we want to encourage more of that.

I would like to see Arrium's iron ore and steel used in every infrastructure project around Australia. Indeed, through the work that we have done over the last 10 years with Arrium, we have seen the steelworks become vertically integrated into Arrium's business, that is, the feedstock from the pelletising plant here in Whyalla makes rebars in other jurisdictions that go into roadwork projects around the nation. That is good for South Australia and it is good for the nation. I am glad that we have the support of the parliament and I commend the committee's recommendations to the parliament.

Motion carried.

Third Reading

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (12:06): I move:

That this bill be now read a third time.

Bill read a third time and passed.

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