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House of Assembly - Fifty-Fourth Parliament, First Session (54-1)
2018-07-03 Daily Xml
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Bills

Infrastructure SA Bill

Second Reading

Adjourned debate on second reading (resumed on motion).

Mr HUGHES (Giles) (15:51): I will continue my remarks. Question time was interesting when it came to questions about infrastructure. Of course the contracts for the frigates and for the submarines and all other defence-related matters are warmly welcomed by this side of the house. In fact, it was the previous Labor government that took the risk—and it was a risk—when it came to investing, and investing very significantly, in Techport. Techport was one of the foundational projects that has enabled our state to capture what are going to be enormous benefits for many years to come.

Yes, you always get a bit of grief. I know there is always the argy-bargy and the rest of it but, come on, we all look forward to what is going to be delivered in South Australia when it comes to that massive build over a long period of time. As the Premier stated, it is not just for the benefit of Port Adelaide and Adelaide; it is a benefit for the whole of the state and for the nation. It is something that demonstrates the importance of making decisions that are going to bear fruit often well into the future. Anybody who was around at the periphery or at the core of that Techport decision knew that it was a bold decision, and it was a decision that carried a degree of risk, but it has paid off in a major way.

I want now to get onto some of the infrastructure projects in regional South Australia. It was good to see the commitment made by the previous Labor government to the Strzelecki Track; some money was put on the table for that and for the Joy Baluch Bridge. Also, at long last, the duplication of the road from Port Wakefield to Port Augusta was put on the agenda. I say 'put on the agenda'; I am not going to be around to see the ultimate delivery of that. That is something that will happen incrementally over an extended period of time, and of course it is something that does require, given that it is national Highway 1, the federal government also to decide that it will fit into the national priorities. It is something that generations to come can look forward to.

The member for Flinders spoke for some time about Eyre Peninsula and some of the infrastructure needs there that will benefit not just Eyre Peninsula but the whole of the state. One of the perennial issues has been a port with, preferably, the capacity to handle all sorts of third-party use. There has been a whole range of proposals over a period of time. There was the Port Bonython proposal by Flinders Ports for a direct cape-loading port. There was Arrium, or OneSteel as it was before that, and their desire to use the Whyalla port to export iron ore. I have to say that senior management at OneSteel at the time were always incredibly sceptical about the commercial viability of the proposal at Port Bonython.

Going farther down the coast, there is the Lucky Bay proposal, which seems to be coming to the fore. In fact, they are going to be having a dirt-turning ceremony on Friday for that particular proposal. The people behind it seem serious. There seem to be the investment dollars there, and they seem to be making some progress. Of course, there was the port mentioned by the member for Flinders at Cape Hardy. Cape Hardy has that advantage of being relatively close to deep water, which is an advantage if you are talking about a cape-capable port.

It will be interesting to see how that all pans out. Looking at Whyalla, the member for Flinders, the Deputy Speaker, alluded to the nature of the channel at Whyalla and the relatively shallow water. I have had the benefit of picking the brains of people over an extended period of time, including senior managers at OneSteel who were involved in Project Magnet at the time, a number of whom were obviously still there with Arrium. I have also had the opportunity to speak to people who are currently in place with GFG when it comes to Whyalla. We have just seen a recent changeover in the stevedoring contract. There will be some investment around that changeover, which will enable some third-party use of that particular port.

Going back to Project Magnet days, before the decision was made to do trans-shipping—something that had higher recurring costs but much lower capital costs—there were plans and options looked at in order to create a cape-capable port at Whyalla. That would be a very expensive proposition and would require significant tonnages to underwrite a commercial undertaking of that nature. It will be interesting to see what GFG does because they have consistently talked about a world-class multi-user facility at Whyalla. Theoretically, that is possible. Technically, that is possible. The question will be: if you are going to maximise that, if you are going to talk about a cape-capable port, are the commercial docks going to line up?

It will be interesting to compare what is going to evolve at Whyalla, and it can evolve because there are a number of steps well before you get a cape-capable port at Whyalla, which might not happen. There are a number of other steps that can serve to generate other opportunities for that port. It is going to be interesting to see the evolution of the thinking there and what is going to happen at Cape Hardy, given the other proposal, by Centrex, further down the coast near Lipson Cove at Sheep Hill, is dead and buried.

It is interesting to see how these things come and go. Cape Hardy is dependent upon a multibillion-dollar iron ore project getting off the ground, and I have a lot of confidence in the long-term promise and opportunities that will come from developing and exploiting our magnetite resources in South Australia, given that we have something in the order of over 11 billion tonnes of magnetite reserve.

A lot of things about magnetite suggest that it is a very good long-term option when it comes to iron and steelmaking, when it comes to export markets and, indeed, when it comes to exploiting that particular mineral product here in South Australia. Additional value is also added to our magnetite resources at the Whyalla steelworks, a steelworks that currently uses magnetite as its feedstock for producing iron.

It will be interesting to watch what is going to happen when it comes to a port. When the mining commodity boom occurred, part 1 and part 2, there was a fair amount of feverish activity and talk about ports in South Australia not just on our side of the gulf—I am talking here about me and the member for Flinders and our side of the gulf—but also on the other side of the gulf. Of course, it is always interesting to look at these commodity booms. A lot of commentators indicated that the commodity boom we experienced, largely through Chinese demand, was unprecedented. However, it was just a longer cycle, and eventually iron ore prices came down to reflect the longer term averages.

If anyone had built a port in that period of time—a serious port with serious debt—they might well have ended up with a white elephant. It is always tricky, as there are always a lot of variables and it is always dynamic. We can have a productivity commission, but it is going to face the same challenges. I suspect that it is going to be a combination of a new port or building on a current port in South Australia and a combination of public and private investment.

As the previous government, we went to the election indicating that we would establish a port authority. Part of the reason we did that was that we thought there had been a market failure in this particular area. We could unpick that in a lot of ways and argue the toss about whether it was a genuine market failure, but clearly one of the things that was going on was that there were a lot of small companies and wannabe miners around the place, and we did not have a big company or a couple of big companies that were able to come in, consolidate and make the investment to secure some longer term opportunities.

Hopefully, that is something that GFG might be able to deliver on, with their vision for their operations here in South Australia, but there is still water to go under the bridge. It is all very promising but, when you have been around for a long time, you like to wait to see financial closure. For some of us from some communities, we actually wait to see the physical work commence that reflects the investment.

There are a range of other issues on Eyre Peninsula as well. The member for Flinders, the Deputy Speaker, mentioned the history of desalination and the look at desalination in his electorate. There was a big desalination proposal as part of the BHP Billiton expansion, and that initial global-scale desalination plant was looked at for the Point Lowly peninsula. It was interesting that SA Water and the state government at the time were looking to piggyback off that particular facility.

Before BHP Billiton decided not to go ahead with the big project, SA Water and the state government moved themselves away from piggybacking. What was done instead was to extend the pipeline to link Eyre Peninsula to water from the River Murray. That was somewhat controversial at the time, and I think that the former member for Flinders was very unhappy about it and had a little bit to say about it. When you look at it from a purely commercial, purely economic perspective, it did make some sense.

I have no doubt that on Eyre Peninsula and in other communities in South Australia, as costs come down for desalination, as we have abundant renewable energy resources, we will see the growth of desalination on Eyre Peninsula. Indeed, at the steelworks in Whyalla a desalination plant was built in conjunction with Project Magnet to provide water for the slurry pipeline from the Middlebacks instead of doing that additional, very marginal, draw on the River Murray. There is no doubt that you could scale that up still further.

In question time today, the Minister for Energy and Mining mentioned the interconnector. That is something else with a long history in this state, a long history going all the way back to the privatisation of the assets. In order to protect the sale process, we were left with an enormous concentration of generator ownership in this state, which was not to the long-term advantage of this state. It is fair to indicate that a previous Labor government was also attracted to an interconnector with the Eastern States.

Mr Pederick: Tom is not attracted anymore.

Mr HUGHES: Well, positions always evolve. Indeed, a big body of work was done, once again on Eyre Peninsula: the Green Grid study during the Rann period looking at 10,000 megawatts worth of potential wind energy on Eyre Peninsula, with a focus on exploiting 2,000 megawatts of that wind energy, wind energy that is of a global quality and cheek by jowl with global quality solar. Part of that proposal was an interconnector with the Eastern States, given the massive abundance of the renewable energy resource in that area. As a state, there is a lot to do when it comes to infrastructure but, please, have the grace to acknowledge that you are building on a fantastic legacy.

Debate adjourned on motion of Mr Pederick.

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