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House of Assembly - Fifty-Fifth Parliament, First Session (55-1)
2023-10-17 Daily Xml
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Bills

Hydrogen and Renewable Energy Bill

Second Reading

Adjourned debate on second reading (resumed on motion).

The Hon. A. KOUTSANTONIS (West Torrens—Minister for Infrastructure and Transport, Minister for Energy and Mining) (15:39): In my concluding remarks, I thank the house for their contributions. I thank the shadow minister for his work. I look forward to a consultative and productive committee portion of the bill, and I look forward to its speedy passage.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

Mr PATTERSON: How will this act recognise the long-established rights of landowners and pastoral lessees, and is there sufficient balance between the rights of landowners and pastoral lessees and the rights of the proposed renewable energy licensees?

The Hon. A. KOUTSANTONIS: While I am getting some further advice I will just give you a quick personal view. I have been thinking long and hard about how we engage with pastoral leaseholders on this because it is a complicated area.

I am a passionate believer in multiple land use frameworks. Pastoral leases are issued on the basis of a certain activity being undertaken on a pastoral lease. It was never envisaged when pastoral leases were first implemented that a pastoral leaseholder would run also a generation facility on their lease. It has evolved. It was not what this parliament intended.

Governments of both persuasions have looked at what are state strategic issues when it comes to freehold land and lease land, whether it be through compulsory acquisition or through allowable access. I think that this act quite cleverly creates a framework that allows pastoral leaseholders who are operating a pastoral lease to continue to do so with other activity that will be occurring on their lease property. Ultimately, they are not the landowners; the Crown is, and that should never be forgotten.

The question then becomes: if we are the landowners collectively—and I say the Crown, us, the government on behalf of the people of South Australia—who owns the sun and wind rights? Is it the pastoral leaseholder? Are they paying a separate fee for that in their pastoral lease? No, they are not. They have a pastoral lease to run activities like cattle or sheep, not renewable resources.

The question then becomes: if we want gigawatt-scale generation on vast tracts of land that currently have pastoral leases over it, there are a couple of options a government could have. You could end the pastoral lease and say, 'We don't want that anymore,' or we could say, 'Hang on, we've already got existing applications where there are multiple land use frameworks in place.' There are mines in pastoral leases. There have been mines in pastoral leases. Where that has impacted on the pastoral leaseholder's activity, they are compensated for it. I think this legislation gets the right balance.

I am hoping in this first round of questions that the Chair can be a bit more liberal with the allocation of questions to the shadow minister, because I think it is an important issue that we would like to flesh out. I would really appreciate bipartisan support on this bill because I think it is important for long-term investor certainty in parts of the state that members opposite overwhelmingly represent. I say that with regard to the member for Giles, who covers large parts of South Australia, but Eyre Peninsula is going to be a key part of this and I know that the member for Flinders has a keen interest in this as well.

We are talking about billions of dollars worth of investment over decades, so there needs to be investor certainty here. If we are going to get foreign capital to invest billions of dollars in South Australia to build gigawatt-scale generation to produce hydrogen or ammonia or toluene or some other form of energy and export it, or if we are to beneficiate our magnetite to create green iron and export that, at our steelworks with our massive magnetite resources, there needs to be a social acceptance in this parliament in a bipartisan way.

I am prepared to listen to a lot of the concerns members opposite have, but also: think long term, because there are two things that could go on here while we have this debate. There is going to be the short-term political imperative of making sure that the opposition looks after its base—and I get that—and the long-term thinking of: we may not always be in government and it should not matter who is in government. Governments should lay down an investment framework that can outlast any government, and that is what I am attempting to do.

I am attempting to introduce a piece of legislation that will lay down an investment framework that is not about this government; it is about the state and the state's long-term interests, a lot like the indenture that Roger Goldsworthy negotiated with Olympic Dam to get that mine up. One of my party's great shames in this parliament is opposing the expansion of that mine, and it was done, I think, for short-term political interest rather than long-term economic investment in the state's history. So I want to try to avoid that.

I am not accusing the shadow minister of being small-minded or having short-term thinking. I understand that there are issues that members in this house will advocate for on behalf of pastoralists and farmers who own land freehold in areas that are suitable for renewable energy. But what I am trying to do is balance between the interests of the pastoral leaseholder—which is pastoral lease activities—freehold landowners and the state's interests to use renewable resources to reindustrialise and use our God-given commodities that are sitting there that are the best in the world. We have over a billion tonnes of magnetite resource sitting there in the Middleback Ranges, let alone what potentially is available on Eyre Peninsula—which is not as economic today, but it may become economic later.

Do I have the framework right? I think so. Some of the issues that were raised by pastoralists during the first stage of consultation were that they were supportive of the introduction of an orderly competitive process to determine access to pastoral land—and this is not a criticism of the previous government, because there was not a process in place. The process in place was that people made an application to do a bilateral agreement with a pastoral leaseholder, that was then sent to the Minister for Environment and Water or the Minister for Primary Industries, and they would sign an agreement and that would be it.

There was not an orderly process of identifying land that should be put out to the market. People would come in, bid on it and identify it as a good solar or wind resource. Lessees reported that the current system of liaising with multiple developers was costly and time intensive, and they welcomed a streamlined process. They indicated that they would like to have a prescribed consultation process in place to determine the release areas and granting of licences. Lessees have sought to ensure their existing rights are not compromised through the development of large-scale renewable energy and hydrogen projects and that the land is protected throughout the process.

We had a series of workshops in June of this year in Port Augusta for pastoral and farming communities. There were over 30 representatives at these, including well-known pastoralists and representatives from Livestock SA, the Arid Lands Landscape Board, the Pastoral Board, Rural Business Support and government. Attendees attended a number of Q&A sessions. I think, by and large, we have got that level of consultation right.

When it comes to freehold landowners, there is an existing regime in place for development of renewable energy. There is no compulsory acquisition in this act as there is in the Electricity Act or other acts, so the level of consultation has been slightly different because we are not compulsorily acquiring people's land. With pastoral leases, I say this again: it is no different from a mine operation. If a mine operation impacts a certain type of land that could be used productively for pastoral uses, they are compensated for that through a bilateral arrangement with the mining company, which we oversee. This would be no different.

Ultimately, Crown land is not owned by pastoral leaseholders. It is not: it is a lease. It is owned by the Crown. It is owned by the people of South Australia collectively and held in trust by us, and it is our responsibility to develop that land to the best economic use of that land. I think we can walk and chew gum at the same time. I think we can have this land still be productive pastoral lease land—and get good outcomes for the people of South Australia and those families who care for that pastoral lease for us on our behalf—and develop billion-dollar investments in gigawatt-scale renewable energy. I think we have it right, but I look forward to hearing where you think the gaps are and seeing if we can help bridge those gaps.

Mr PATTERSON: Thank you for that answer. You made the point around pastoral land, that a lot of the renewable energy resources in terms of sun and wind, the most prospective and coincident areas of the two, are on pastoral land. Certainly, you are right; I think there is bipartisan understanding of that resource and unlocking pastoral land.

Working with the pastoralists is important, but I think it is also acknowledged on both sides of the house that ultimately the Crown is the owner and it leases it to pastoralists, who, I think both of us will acknowledge, since European settlement have been very good custodians, developing the pastoral areas and also being their custodians in terms of maintaining them. As we go through the questions with that in mind, you are right; we will be collaborative to a large extent.

In terms of freehold land, we acknowledge that the main intention of the bill was to look at unlocking that Crown and pastoral land for these renewable energy projects. Maybe you could provide some commentary as to why the bill then went further and looked also to address freehold land and the considerations that you gave around that. I will pick it up a bit further after that.

The Hon. A. KOUTSANTONIS: I am not sure if you heard the planning minister's remarks to the parliament, because I thought they were pertinent. I want this to be a start-to-finish piece of legislation that covers the entire state, and that is why freehold land is included. There can be disorderly investments made on private property that could interfere with the stability of the South Australian electricity grid or could be being done for the benefit of another jurisdiction rather than us, our jurisdiction. All development, no matter what it is, should not be unregulated.

My view is that as we are looking at this as a state government, if you take the 30,000-feet view of the state, you look around the state and you think to yourself, 'Where do we want to maximise our investments?' It could very well be strategically important to have freehold land in the mix in powers in this legislation to make sure that investors are aware of where we think the opportunities are.

The legislation maintains freehold landowners' existing rights to negotiate and agree terms with renewable energy developers regarding access to their land. These processes have been occurring for the last 15 or 20 years. If you drive up the Augusta Highway, you will see the developments of wind farms that have been done on a bilateral, negotiated process with freehold landowners. It is happening now. That is unchanged and the bill does not seek to alter that arrangement.

But let's be frank: there could be some developments that meet a very high threshold that could require access to freehold land. The north-south corridor is one. We have sat here and bipartisanly supported bills to compulsorily acquire people's homes to build a piece of state infrastructure. We apply the Road Traffic Act over freehold land; of course we do that, because it is in the state's strategic interest. So, technically, every house in South Australia is subject to that ability for compulsory acquisition if we want to build a road or a hospital. Indeed, this parliament at any time can legislate any head of power to do almost anything, so it is important that we have a comprehensive piece of legislation.

It does not change what freehold landowners' rights and processes will be, but it allows an orderly regulatory process to lay over the top of it that is consistent for investors, whether it is freehold land or pastoral lease land. I will give you an example. A freehold landowner, the farmer, could ask to be part of a special enterprise zone auction and say, 'I've got exceptional resources. I would like the government to manage this as part of an auction,' but they will still be negotiating bilaterally with them and, because it is freehold land, they will receive the economic benefit.

I think it makes sense to have one process to govern all of this, not two. The whole idea is to simplify investment—to make it easier and simpler to invest in the state—which is why it is important that there is now one minister in charge of this entire process rather than five. That is the argument. The advice I have received is that providing one consistent framework across the state provides investors certainty, economies of scale, efficient development and regulation of a growing sector. Those points that I have just been handed show what the government's thinking here is.

I hope that answers the shadow minister's question. If he is ever one day energy minister, the ability to regulate an entire sector with one rule book is very efficient. Having two different rule books is inefficient. The energy minister should have a say about every single energy development in the state, not just ones on Crown land. Every other development has a planning minister have a say on it. Why should not the energy minister, if it is a generator or a wind farm or a solar array or a solar thermal plant or a pumped hydro facility? I think it is a consistent framework to give investors certainty and give our constituents certainty about what the process is, but fundamentally the rights of freehand landowners are unchanged.

Mr PATTERSON: In regard to the hydrogen generation component of it, could the minister explain the different types of hydrogen, the generation methods to produce hydrogen, that this act would regulate?

The Hon. A. KOUTSANTONIS: It would regulate the production of renewable energy. It would regulate the connections to distribution and transmission lines. It would regulate the building of ammonia plants and electrolysers. This is a good point: importantly, we are not picking a technology; we are agnostic. We are not picking a winner. We are not saying everyone is going to be a PEM electrolyser. We are agnostic to the technology.

The legislation enables the market to determine the commercially viable, hydrogen projects-based developments and technology that is available to them, including green hydrogen—for electrolysis of water we use renewable energy—and blue hydrogen from the reformation of methane combined with carbon capture and storage.

All types of hydrogen generation will contribute to building necessary infrastructure required in the transition to the future clean hydrogen industry, and the role of other legislation is to determine how the state and country more broadly meet our decarbonisation goals. We are not here saying, 'This is the type of technology you will use to make hydrogen.' We let the market decide that. We are not picking and choosing here.

Mr PATTERSON: In terms of the amount of hydrogen that will be produced, has the department done some modelling around how much hydrogen would be expected to be produced over the coming decade and the types of hydrogen and specifically, I suppose, the amounts of green hydrogen, how much solar and wind farms will commensurately be built to generate that amount of hydrogen?

The Hon. A. KOUTSANTONIS: It is a good question and it is difficult to answer. What that gets to is: what is the scale here? If you have 20 gigawatts of renewable energy, how much hydrogen do you produce? It is a chicken and egg question for us. For example, we will be relying with our electrolyser of 250 megawatts on the oversupply of South Australia's renewable production. What this act contemplates to regulate is the development of behind-the-meter renewable technologies, taking advantage of amazing wind and solar resources through an auction process, like a mining lease if you will, for a broader example.

I know the shadow knows this already, so I am not trying to preach to him like he does not know what it is. Basically, we identify an area, we go out to the market, people bid for that renewable energy zone and we look at their work plans and their capabilities and we make a decision based on what our thinking is of their ability to meet their work plan, which we can hold them to account to, like a mining lease or a petroleum licence.

They might say they want to build 300 megawatts and have a 10-megawatt electrolyser as a demonstrator. Remember, to the best of my knowledge, the largest electrolyser in the Southern Hemisphere is still the one at Tonsley, which is just over a megawatt. The next largest in the world would be the South Australian one in Whyalla, which is in competition with the one in Utah, which is 220 megawatts. So you have a race going on.

The question for the private capital that is coming into the state is: how big is their appetite for renewable resources, and how will that be staged? They might do 300 megawatts first, growing to 600 megawatts, growing to a gigawatt, growing to 1½ gigawatts, growing to two gigawatts, and exponentially growing, and then growing hydrogen production, so I cannot give the member a number.

If you look at the magnetite resources in the region—over a billion tonnes of known available resource—and you think to yourself that governments around the world, including our government and the former government, are in a race to see whether we can export hydrogen to places like Japan, South Korea, China or even Europe, the embedded inefficiency in doing that makes it very challenging. I am not saying it is impossible, but it makes it very challenging.

I think the world is looking at this and asking: is it better to use the hydrogen where it is made because we save all those transportation costs and inefficiencies? There is no future in the world where steel is not going to be a key component of building infrastructure over the next 100, 200, 300 years that I know of. Depending on who you believe, steel equates to between 9 per cent and 15 per cent of the world's carbon emissions, so that needs to be decarbonised.

I believe the reason we chose Whyalla for the site of our electrolyser is that it is alongside the world's best magnetite resources, next to an existing steel mill, next to an existing port and next to an existing workforce where, if the export of hydrogen took longer, ultimately as a first step we could add complexity to our economy and beneficiate our iron ore to green iron and export that to Nippon, to POSCO, to Krupp.

The European and Asian economies have a developed steel industry. I think that they ultimately know that if they import their hydrogen, because they cannot make it at the cost that we can without massive government subsidies—and, remember, we are doing this without government subsidy; this is what we are incentivising—if we can crack that magic $2 per kilogram mark, it may be cheaper to upgrade and build steelworks here than it is to export the hydrogen to them.

Exporting iron pellet or briquette is an established form of transport. It is easy, it is well known, it is not difficult. Then, all of a sudden, you have arriving at European harbours or Asian harbours—whether there are carbon borders or abatement measures in place—a decarbonised iron product. The benefit is that we get the royalties for the iron ore out of the ground, we get the jobs for the value-add, we get the investment in renewable energy, we get the electric arc furnaces being built, we get the DRI plants being built and we start adding value rather than just exporting ore. That is the government's vision and plan for Whyalla and Eyre Peninsula on the basis of renewable energy.

The process started by the previous government at Port Bonython was, to be fair, a land sale and then there was an opportunity to think, 'Well, can we actually generate some investment in a hydrogen hub here?' The commonwealth government put $70 million in, we put $30 million in—that is what the previous government had committed to—with a $40 million push from proponents for a tender process to get onto that land, and they are all looking at the ability of whether or not they can export hydrogen either from ammonia, toluene, or even freezing hydrogen to minus 253º, turning it into a liquefied state and sending it off.

That may occur, but my instincts are that what is more likely to occur is that we can decarbonise our iron ore here, and then that takes a big amount of emissions out in Korea, in Japan, in Germany and in the United States. That is the thinking that we have in place.

Mr TELFER: I have a follow-on to what the minister talked about with the pastoral lands in particular and the government needing to be involved in the bilateral agreement process with the pastoral leaseholder proponents and the government—I guess you would probably call it a trilateral. There is obviously the footprint of the generators themselves but, with the distance with the pastoral leases, there are going to be significant transmission lines and the like.

The impact of the footprint of the generators themselves is one thing for the pastoral leaseholders, but then there is the footprint of the transmission line. How does the minister envision that process looking as far as impact on existing business in a pastoral area like that, the additional movement of vehicles and that sort of thing that will need to be facilitated and the potential impact on existing business?

The Hon. A. KOUTSANTONIS: This might be cold comfort for some regional areas, but it is no different from a mine. So, if there is an area of mining that is occurring, a certain area for lack of a better word is sterilised for use of the mine. The farmer will say, 'I generated X amount from that per year,' or, 'The extra roads that you need yielded crops,' or, 'There is an extra maintenance fee on me now for looking after those roads.' So it will be a bilateral discussion about compensation and rent that will be negotiated with the pastoral leaseholder and the successful proponent of the auction process about that, and all of that will remain in place, no different than it would be on freehold land.

If you go to a mine anywhere that is on freehold land, the landowner, if they keep their land, will negotiate a rent on the basis of loss of income on what would have been farmed, it might be linked to crop prices, it might be linked to cattle or sheep prices. If there were extra roads and extra disturbance made, that is compensated for. It is no different. We would expect all these works to go underway as part of an agreement made between the pastoral leaseholder and the proponent, and the government would be involved as well.

But the difference between a freehold landowner and a pastoral leaseholder is that the freehold landowner would have in effect probably a higher ability to attract rent because they own the land. The pastoral leaseholder has a lease from the government to conduct certain activities and, as far as those activities are disturbed, that is what they will be compensated for. It is no different from any other process.

I do not want to mislead the member. The pastoral leaseholders will not get the same level of actual income from a proposal because they do not own the land. The beneficiary is the state and the broader economic benefits. There are statutory funds like the Pastoral Land Management Fund, which obviously we would expect proponents to pay into to manage pastoral lease land. We would expect there to be no loss for a pastoral leaseholder. We would expect there to be some benefits, but for a freehold landowner those benefits are vastly different because they own the land freehold.

If we are compulsorily acquiring a house that is rented, we do not give the renter the capital value of the property, we give it to the owner. We compensate for what their loss is. So that is how it is going to work. I think it is a pretty well-established, well worked-out process that occurs. The difference here is that the government is laying out an orderly process with the work plans.

My biggest fear—and I will not name any companies. When we entered office, there were some European investment funds that had signed up agreements with pastoral leaseholders for vast tracts of South Australia that were approved by the previous government, and it is not a criticism. It is just that that was what was done in the hope that there would be an investment. There was no work plan, no guaranteed investment, no relinquishment if any work is not done.

We have land masses out there the size of some European countries that have remarkable wind and solar resources that are very close to excellent magnetite resources, excellent transmission lines that have been upgraded recently with existing infrastructure in place, close to ports that could be sat on. We cannot have that. Tyre kickers need not apply. That is what we are after.

I bet you as a former mayor and the current member, how many farmers have you met who have had someone knock on their door and say, 'You are sitting on a goldmine of iron ore. This is going to be developed,' and a decade and a half later nothing has happened? I am trying to avoid that. What I am trying to do is put a layer over the top, a regulated process, which has work plans in place, where the government can vet who is coming in and signing these agreements.

It is not just a bilateral arrangement that is done in isolation from the government, where we are at the end of the process just ticking off an agreement that has already been signed between a pastoral leaseholder and a proponent where there is no guarantee of any work being done—not because the former government did not want there to be work to be done, but there was no regulatory framework for them to do it. There was no ability for them to say, 'Yes, we will agree to this program if you do X, Y and Z.' There just was not the process there. So what this is doing is putting that process in place.

We can hold these massive billion-dollar capital investment funds that are coming to Australia and attempting to lock up unbelievable resources, but look at what is going on in Victoria and New South Wales now about transmission line disputes and access to land for renewable technologies. Look at Europe, at the massive social upheaval because they cannot build renewable technologies. We have land with social permission, social licence, and unbelievable solar and wind resources coincident, and the government is not involved in the process. It is unsatisfactory and cannot continue.

We need to have an orderly, transparent, legislated, regulated process that people can look at, they can know what their rights are, they can know what their obligations are, they can know what their compensation is, and they can interact in a transparent way. I bet that there have been arrangements made between pastoral leaseholders and capital investment funds for exclusivity on pastoral leases that have been approved by the previous government, where that pastoral leaseholder may have, and the previous government may have, locked away some of the best wind and solar resources in the world, and that pastoral leaseholder is getting a fraction of what the state could expect in return if it were through a competitive process.

Let's face it, if you are running cattle or sheep on your pastoral lease, running your pastoral activities, and someone knocks on your door and says, 'I'll give you $200,000 for exclusive rights to build a solar farm, maybe in 20 years' time, on this vast piece of property,' you will sign and say yes. The minister agrees, and it is locked up and it has gone. We cannot have that anymore.

We need to have a regulated process where investors can have certainty, landowners can have certainty, pastoral leaseholders can have certainty, and the government can make sure that it is orderly and that we are actually saying, 'Alright, you want to build 300 megawatts. What's your time frame? How much are you spending each and every year? If you walk away, we want the IP. We want to know what the solar resource is and we want to know what the wind resource is after you have done that work.'

It is no different from a miner who drills a hole and then is required to give those cores to the core library so that we can keep them. It is no different from anyone, under the Petroleum and Geothermal Energy Act, who does any exploratory work and is required to make that available to the government so that we can commercialise it later if they walk away. None of that is in place. It is not a criticism; it is just that this was not envisaged.

This is like a new industry that we need to now start thinking about. It is not just about replacing our fixed generators but about re-industrialisation and behind-the-meter investments in large-scale renewable energy for a single purpose—not to input it into the grid, but if you want to build a 500-megawatt electrolyser you are going to need a two-gigawatt solar and wind array alongside it.

That needs to be regulated, it needs to be legislated, and there needs to be a core data process over the top of it, and if it impacts on pastoral leaseholders or freehold landowners they need to be able to know that there is a prescriptive policy and process that they can go through that gives them comfort and security.

Mr TEAGUE: I would like the opportunity to come back to this more specifically at the appropriate time. I have heard, sort of trailed in through the process, a couple of different propositions that might be contradictory. One is that you have a whole bunch of pastoral leaseholders out there, and maybe some freehold landowners, who are so unsophisticated that they are vulnerable to this sort of knock on the door and then are okay for the land to be handed over for a peppercorn, and the government is going to come to the rescue and make sure that not only are we going to rescue the possibility for investment—global or otherwise, billions or otherwise—but we are going to secure this to maximise the value.

Then, as a contradictory proposition, I have heard the minister say, 'The holder of a pastoral lease holds only a very limited bundle of rights, and what I am going to do is ensure that, so far as compensation is concerned or entitlement for some sort of receipts, the pastoral leaseholder, perhaps the Crown perpetual leaseholder and perhaps even the freeholder get a look-in, mining style, to the extent that someone is coming along and occupying the roadway or the sterilised section and so on.

It seems to be a pretty clear indication that we are moving to a situation, and quite deliberately, if I hear the minister correctly, where the best that pastoral leaseholders can really expect under this new regime is a reference to how much actual land is going to be taken by what is otherwise going to be basically compulsorily applied to them with the promise that we are going to somehow ensure that we achieve—and I say 'we'; the minister has been saying 'we' quite a lot of time meaning 'the government'—a benefit.

I presume on that analysis that the minister will not be willing to say that he can give a guarantee that no pastoralist will be worse off as a result of all this. What does the minister have to say, if anything, about the proposition that this is the imposition of a retrospective change on the terms of existing pastoral leases in circumstances where the minister has adverted to the fact that there has been the practice in place—and the minister might say without comprehensive government oversight and a process surrounding it—of individual pastoral leaseholders seeking the minister's permission, getting the minister's permission and making arrangements that suit what becomes then part of the mixture of what keeps a pastoral lease viable?

If I might add one further question, it is whether or not the government has given any consideration in those circumstances to saying, if you are going to apply this regime and you are going to do something short of compulsory acquisition—because we all concede that the parliament can do pretty much anything including the compulsory acquisition side, although it is not being marketed along those lines—what consideration, if any, has the government given to applying this only to those pastoral leases upon renewal and not coming and superimposing this new regime on existing leases?

The Hon. A. KOUTSANTONIS: I will answer the last question first. That would mean there would be no mining on any pastoral lease, given what the shadow attorney-general has just said. I assume that is not going to be a policy of yours?

Mr TEAGUE: I am asking the question.

The Hon. A. KOUTSANTONIS: You are asking the questions now. I will assume it is going to be a policy of yours, given that you have advocated now for this. I would imagine you might apply it to the Mining Act.

Mr Patterson interjecting:

The Hon. A. KOUTSANTONIS: Exactly. The shadow minister for mining knows how crazy that is.

Mr Patterson interjecting:

The Hon. A. KOUTSANTONIS: You do all the time.

Mr TEAGUE: These are questions—

The Hon. A. KOUTSANTONIS: Yes, thank you for your wise input.

Mr TEAGUE: Come on, just answer the question.

The Hon. A. KOUTSANTONIS: Just sit quietly and let me answer the question.

Mr Teague interjecting:

The Hon. A. KOUTSANTONIS: Are you finished?

Mr TEAGUE: Maybe. I have a few more questions to ask.

The Hon. A. KOUTSANTONIS: Have you? Have you read the bill?

Mr TEAGUE: Yes.

The Hon. A. KOUTSANTONIS: You have read the bill?

Mr TEAGUE: Yes.

The Hon. A. KOUTSANTONIS: He has, has he? Yes, sure he has. The bill prescribes only what an access agreement must contain at a minimum, which includes—

Mr Teague interjecting:

The CHAIR: The minister will finish answering the question and members on my left will give the minister the opportunity to answer.

The Hon. A. KOUTSANTONIS: The bill prescribes only what an access agreement must contain at a minimum, including compensation and access by both parties to the area. The bill does not limit what can be agreed and pastoralists are free to negotiate with licensees on other matters as required to facilitate access. To be clear, no activities can commence until an access agreement is in place.

I have never said anything disparaging about pastoral leaseholders, as was implied by the shadow attorney-general. I have never said anything that implies they are not capable of negotiating these outcomes. That is me being verballed by the shadow attorney-general.

I would expect that in practice any access agreement discussions will encompass matters like, but not be limited to, stock movements, how will they impact on their stock movements, important events in the seasonal and stock cycles, such as breeding, lambing, calving, marking, shearing, protection of water sources, fencing, use, installation and maintenance, how this is managed and remedied, access to roads, construction, maintenance and any regenerative practices and biosecurity measures that are required.

What the government basically is doing is choosing a proponent and then negotiating an access agreement with the pastoral leaseholder, which is pretty clear in the bill. We are not in any way being disparaging about pastoral leaseholders at all. In fact, we are trying to get them another benefit. We are trying actually to diversify their businesses, which could get an improvement for everyone.

It is like wind farms on freehold land in South Australia have droughtproofed a lot of families because of the revenue that those wind farms bring. There are some examples that I have seen where freehold landowning farmers are receiving up to $15,000 to $20,000 per turbine. If you have multiple turbines on your freehold land your farm and your family are now droughtproof. You are resilient to variations in stock prices and commodity prices.

It is not perfect but it is something, and there has been a benefit but there has to be broader community benefit as well. So the government is attempting to make sure that there is an orderly process here, which I think suits everyone and benefits everyone, rather than just having a deregulated approach where we just allow proponents to make out their own negotiations with landowners.

We are going to be having access arrangements agreed by the pastoral lessees and their proponents, and nothing can commence until that is agreed. So they have got to agree to all this. There are processes, a lot like mining. You need to agree access arrangements. You need to agree. It has got to be collaborative. It can break down sometimes but there are rules and procedures in place that allow people who follow a well-trodden, regulated path to be able to sort out these problems. Currently there is nothing—nothing.

A very large European capital investment fund signs an arrangement with a pastoral leaseholder. It is ratified by the minister. That is it. There are no requirements, no legal obligations on the proponent—nothing. What we are trying to do is give pastoral leaseholders, freehold landowners, a regulatory process, a legislative process they can follow and the benefit that we get is the investment. We get the investment. Gigawatt-scale renewable energy is billions of dollars. It is not cheap. It is cheaper than coal and gas but it is still very, very expensive.

I am not sure that answers the member's question because I think that the member's question was more political than it was information seeking but I will stand to be corrected. I think that the shadow minister has flagged a number of amendments that we have been looking at, and some we can agree to and some we cannot. We can have that dialogue between the houses as well, but by and large what I want from the end of this process is a piece of legislation that can withstand the test of time, that can actually see broad benefits brought to regional South Australia where most of this investment will be made.

This investment will not be made in the seat of West Torrens. This investment will be made in the seats of Flinders, Giles and Stuart and the large regional areas which are along transmission lines that have excellent resources and which are close also to commodities like iron ore, and obviously Flinders and Giles are the hotspot of this area.

If we did nothing here, if we walked out of this space, you would have the planning minister be the approver of renewable resources and you would have hydrogen facilities going through multiple different paths so that any proponent would have to go through a whole series of different avenues through government to get their proposal up, and after they have locked up these resources—if they do indeed lock up these resources on the promise of a development—the government has no ability to force that proponent's hand or move them on. So this is a way of offering that certainty. I think it is a very good piece of legislation that will stand the test of time.

Mr TEAGUE: Despite an emotive opening, the minister sort of got there a little bit, albeit by reference to the wind farms on freehold property and the sort of income that can droughtproof those properties, as happens. I listened carefully. I think the minister did not refer to such assets being applied as they currently are on pastoral leases, and I do not think I got an answer to the question of whether or not the government can provide a promise to those pastoral leases and Crown perpetual leaseholders that they will be no worse off under this scheme.

Perhaps put it this way: if the government was embarking upon this A to Z all-encompassing approach with a view to it being an incentiviser for industry that is going to maximise value, then how is it that pastoral leaseholders, Crown perpetual leaseholders and others who might find these assets being applied to their land are not the ones beating down the government's door to say, 'Can you please implement this just as soon as possible, because we're embarking on this process, we're familiar with what's going on in the whole global investment environment and we would love it if you just applied all of this as quickly as you could because that would achieve better outcomes for us'?

We do not seem to be hearing that. I am glad if the minister will correct me. I just want to indicate that I certainly do not impute any intent on behalf of the minister to imply anything about the capacity of pastoral leaseholders. So I guess I repeat the question: will the minister provide an undertaking that those pastoral leaseholders and Crown perpetual leaseholders will be no worse off under the arrangements, and perhaps can the minister put into some context reasons why those landholders in particular might not be knocking down the government's door to try to get this done just as quickly as possible?

For those who are following along—because we have been on clause 1 for a little while—there might be quite a bit more to say about this by the time we get to part 4 of the bill, which deals in a number of divisions with the licensing process, including parties to it, access and so on and so forth.

The Hon. A. KOUTSANTONIS: Clause 79 of the bill—which we are not on yet, but for the purpose of the committee—provides, and this is for pastoral leases:

(3) The amount of compensation may include an additional component to cover reasonable costs reasonably incurred by an owner of land in connection with any negotiation or dispute related to—

(a) the licensee gaining access to the land; or

(b) the operations to be undertaken on the land; or

(c) the compensation to be paid under subsection (1).

Subclause (2) provides:

(a) any damage caused to the land by the person undertaking the authorised operations;

(b) any loss of productivity or profits as a result of the authorised operations;

(c) any other relevant matters.

Mr Teague: Is that it?

The Hon. A. KOUTSANTONIS: Subclause (3) then provides: 'The amount of compensation may include an additional component to cover reasonable costs reasonably incurred,' and so on. If a pastoral leaseholder does not want any solar or mining activity or wind farm on their pastoral lease, if they—

Mr Teague interjecting:

The Hon. A. KOUTSANTONIS: I am not saying you asked that question. I am saying in terms of loss of their applications we have codified it in the bill so they know exactly what they will be compensated for. If someone refuses to allow this activity to occur because they do not want any other activity to occur on their pastoral lease, then that person may well feel as if they are worse off.

I do not think you can be worse off with those protections in the act, so I am comfortable in saying that they will not be worse off, but this is subjective. What I might think is not worse off—I do not think landowners will be worse off. That is my view. It is certainly the way the bill has been structured. Whether I can convince my colleagues opposite is another matter.

The advice I have is that landowners' rights have been enhanced under the bill to ensure the sustainable coexistence of industries into the future. The bill provides improved dispute resolution mechanisms, landowner support through the expansion of landowner information services and various access arrangements that will facilitate negotiation and conversation regarding collaborative uses of the land. The release area process has been specifically designed to facilitate early engagement with landowners to identify areas.

As I said earlier, before any activity can begin, licensees need to enter into access arrangements with affected pastoralists. Access arrangements are structured to provide support to pastoralists when negotiating for access to their leases. Legislated time frames and ministerial mediation has been provided to attempt to assist in negotiations between landowners and developers.

DEM is also expanding the services of the Landowner Information Service's renewable energy activities. This is a service we have now that is available to people with access who have mining companies coming onto their properties. It is a free service. It is factual and it is impartial. It is information for landowners, farmers and community members who have inquiries. It takes technical information about the often complex technical and legal processes involved in gaining access and makes it easier to understand.

Ultimately, one of the amendments that the opposition is putting up is about access to legal fees. I might be wrong about this, but you are prescribing an amount of $10,000 in your amendment. That could be larger. We do not want it capped. I think, absolutely, landowners should get access to legal services, and it should be negotiated through access agreements. We do not want anyone to be worse off, but it is a subjective question I cannot give a straight answer to.

I have seen it with farmers. Even though I can demonstrate that financially they are no worse off, they do not want anyone else on their land. Subjectively, they are worse off. They are not happy. It has impacted their way of life. Shake your head all you like; I am just saying that has been the experience that I have had. But in terms of, 'Are they financially worse off as an impact of this activity?' the answer is no, and it is in the bill.

Mr TEAGUE: It is good to have that on the record. Just to be clear, I completely take on board that there are plenty of important subjective views that are non-financial in relation to properties: pastoral leases, Crown perpetual leases, freehold farming land. We know that.

My question—and it might have been put in too general terms; I thought it was pretty clear—focused on the financial comparison between the current what might be described as an evolving ad hoc process and what now is going to be rolled out as described as this all-encompassing regime. It is good to have what the minister has just described on the record. There is no attempt here at a gotcha moment. I am just trying to understand clearly.

I heard the minister say, in terms of an opening overview, 'Well, hang on, your pastoral leases and Crown perpetual leaseholders and so on actually only hold a really limited bundle of rights.' What might have been interpreted from the minister's earlier answer is that these landholders, these leaseholders, to the extent that they are benefiting at the moment from arrangements that they are not entitled to—but what I have heard the minister say just now is that financially—and I accept that is what we are talking about, albeit with the possibility of being under some sort of obligation to participate in a program—financially the minister's expectation is they will not be any worse off and will be better off.

If that is the case, then truly the government will have achieved something in terms of promoting a win-win-win in all directions and benefits for the state and all the rest of it. In terms of the way that has been characterised by reference to clause 79—if the minister is going to go to clause 79 as a reference; we are not there, obviously—if it is by reference to those heads of compensation the subject of clause 79 only, then I would just say it is very well that there is what we have heard from the minister on the record now for pastoralists and Crown perpetual leaseholders to hang onto, to have some sort of assurance that what is otherwise something that we are told we are going to have to hear about in the regulations is going to be a regime under which they are no worse off. I give the opportunity to the minister if he has anything further to add, but that is otherwise useful to have on the record.

The Hon. A. KOUTSANTONIS: Currently, under the pastoral act the minister sets the amounts that pastoralists are entitled to. Under this bill, pastoralists get to negotiate it with the proponents for an access arrangement. That is the fundamental difference.

I also point out that when the previous government changed the compulsory acquisition rules for homes along the north-south corridor, that legislation did not prescribe the value that each person would be compensated for the taking of their home. That was done through a regulation afterwards, as it has to be. We set out principles in legislation and we want pastoralists to negotiate, and they are free to negotiate as much as they like. The current system is that the environment minister sets what they are entitled to and what they get through these arrangements. I think this is a better outcome, but we will see.

The thing about this legislation is that if it is not working, if we are not getting the investment and we are losing productivity, we change it. There is no benefit to the government to bring in a piece of legislation that finds pastoralists at war with developers who are wanting to develop renewable assets on their pastoral leases. It is of no benefit to me at all; I do not need that.

Same with mining—I need happy farmers and happy miners. When it does not work, it causes a lot of social unrest and it impacts the state's credibility to go out and sell its resources to other people, hence my decision on Bird in Hand. My view on this piece of legislation is that what we are doing is attempting to strengthen the rights of lease and landowners while at the same time giving certainty to investors that there is a prescribed process in place.

As to the subjective test about whether people will be better off on this, I have met farmers whose personal net worth is four or five or even 10 times bigger than the exploration company knocking on their door wanting to drill a hole. No level of agreement or access or financial compensation for loss of use on that farm—

Mr Teague interjecting:

The Hon. A. KOUTSANTONIS: I know the member is saying it is not what he asked; I am just making a point. Things can be misinterpreted. When I say no-one is worse off, I mean financially for their current land use, because I thought I made it pretty clear in my opening remarks. But, subjectively, I have been in people's dining rooms where they do not want anyone else to have access to their land, regardless of the deposit they are sitting on. No level of financial compensation is going to make it better. If you ask them, 'Are you better or worse off?' they will say, 'We are worse off,' hence my hesitance. I do not want to be misunderstood.

In terms of their activities and their financial exposure, they cannot be worse off, otherwise this will not work. The government is never going to bring a piece of legislation to the parliament that makes a business deliberately worse off at the expense of someone else.

Clause passed.

Clause 2.

Mr PATTERSON: Just following on from the discussions in the opening, there were comments made around the ability for the renewable energy infrastructure. The example given was wind turbines to help droughtproof freehold landowners and provide an ancillary income that smooths things out. Similarly, there is also the opportunity for this to happen—

The CHAIR: I am happy to be flexible, but we have to be somewhere close to the clause we are discussing—even the vicinity would be good.

Mr PATTERSON: This will be framed around talking about regulations and what timing they will come in with the commencement of the act.

The CHAIR: We will see how we go.

Mr PATTERSON: Just so that you do not get too concerned and pull me into line if need be. Certainly, the point being that the pastoralists do see opportunities from having renewable energy on their land, I think, overwhelmingly, but you are right, there might be some who do not want anything at all. They are just making sure, as the member for Heysen was saying, that they are no worse off.

In the consultation process (you have seen these pastoral workshops) they have raised their concerns. In the briefings I had with the department—which I thank the department for; they were very fulsome—a lot of the way those concerns will be addressed will be in the regulations as opposed to the legislation. That is the contemporary way of legislating so you are not too prescriptive—I understand that—but I suppose some of their concerns they feel are so great that they want to have them explicitly in the bill. To give them comfort either way, as you noted, I flagged some amendments.

Could you maybe explain, in terms of the commencement of the bill, where that will fall in terms of when you expect that to be, but also in terms of regulations what the process will be in developing those regulations, the consultation process, to give some comfort specifically to, I suppose, landowners but also renewable energy companies as well, because they will be affected by these regulations.

The Hon. A. KOUTSANTONIS: It is very hard to know how this bill will end up once it has been through both houses. Development of regs is very difficult until the bill is finalised, but we will have a six-week consultation period when we will provide information sheets to members of the public. We will do this consultation over a six-week period, and I want the bill to be operational in 2024.

That will depend entirely on what comes back from the upper house. I have no idea what our friends the Greens have planned for this legislation. I have no idea what will occur to this bill when it goes up there. I hope it is seen as an important piece of legislation that can maintain its integrity through both houses of parliament. Once that is completed, we will go out for a six-week period of consultation, we will draft the regs, go out and consult, and then we will obviously commence some time in 2024.

I undertake to keep the shadow minister completely informed in the process of this, not only once it has left the parliament and been assented to, but to make sure that he is one of the key people we are consulting with because my key ambition is that this legislation is so important to the state's future that it needs bipartisan support and certainty. The opposition's input into this is going to be very important. It is not something I am just going to try to crunch through, which is why I have been deliberating with my advisers about what amendments we accept and do not accept, because I think it is vitally important that this be a collective piece of work.

I suspect if we had not been successful at the last election, this legislation, or a form of this, would be here now anyway. This is how important I think this legislation is. That is the process. I know it is a more contemporary way of doing it and it does not ease people's concerns when they do not know what is being passed and there are heads of powers being given to regulations, and it makes it very difficult for people to know what is coming next, but we are trying to smooth that out as far as we can.

Mr PATTERSON: Thank you. That certainly I think would give some comfort. Just to recap and then finish off with a question, you are right: they are taking a bit on trust that they will be consulted. Can I confirm that consultation process: will there be consultation first before draft regulations are put in and then further consultation post that? Also, will it be done all at once or will you do tranches of the regulations?

The Hon. A. KOUTSANTONIS: All at once, before the regs are drafted. The regs will be drafted and then we consult again on the regs after the draft. There will be consultation at the beginning, drafting and then consultation again; so there will be two rounds of consultation. The information sheet will be put out, we will get feedback, draft the regs, then go out and consult again on the final regs because we go out to consultation on them for a six-week period.

Mr TELFER: On that consultation, obviously it is easy to target pastoral leaseholders; it is a pretty known quantum. What is the process that is envisaged of consultation with freehold landowners? Are there going to be targeted representative groups? Are they going to be travelling roadshows, for want of a better term? It is that engagement with freehold landowners. As you were saying, there are more obvious places for projects in certain parts of the state. What is that process going to look like in particular for freehold landowners?

The Hon. A. KOUTSANTONIS: All the professional representative bodies that incorporate regional communities, including the livestock association, Pastoral Board, pastoralists, local councils. It will be on the YourSAy website as well; I imagine we will be going out publicly there. This is a pretty comprehensive piece of consultation leading up to this. I expect it will be identical and the same bodies will be consulted again. Obviously, we cannot knock on everyone's door, but bodies that represent regional communities and farmers will be consulted, including might I add their ultimate representatives: the people in this chamber.

Mr TELFER: On the commencement aspect, minister, you talked about existing arrangements in place, existing agreements with pastoral leaseholders. Will the commencement of this bill make null and void those arrangements that are already in place between proponents and pastoral leaseholders in particular?

The Hon. A. KOUTSANTONIS: If you have already commenced work, you have progressed and things are being built, you stay under the existing framework. If nothing has occurred, those agreements are null and void.

Mr TELFER: For further clarity, who is going to be making the judgements on whether a project has commenced or not? It is easy when there is physical construction happening on the ground, there could be proponents who have initial scoping works.

The Hon. A. KOUTSANTONIS: If you have applied under the development act and you have been given approval, that is deemed to have commenced.

Clause passed.

Clause 3.

Mr PATTERSON: In regard to the objects that spell out what the objects of the act are, I think wholeheartedly all the stakeholders I consulted with have endorsed clause 3(d), which provides:

(d) to enable engagement with Aboriginal people to ensure the regulatory framework in this Act maximises beneficial economic, environmental and social impacts and minimises adverse cultural and heritage impacts on Aboriginal people;

One of the points made by stakeholders with interest in land is that they feel the objects would benefit from a similar objective being placed in the bill that takes into account the broader rural and regional communities. As you have said, you will not see these big developments happening in West Torrens, you will not be seeing them in Morphett, but where you will be seeing them of course is in those regional communities.

We talked about all those social licence issues that we are seeing in Victoria and New South Wales, principally on pretty prime agricultural land, so to get that social licence it is important that the rural and regional communities are made to feel that this is of benefit to them and it is not all about just providing energy to industry and metropolitan Adelaide. So, in terms of that, if you have some comments around trying to bring in regional and rural communities.

The Hon. A. KOUTSANTONIS: I know you are not speaking to your amendment, but I think you make a valid point. I think you make a valid point. The government is prepared to accept some amendments. We want to amend your amendment and we will file our own amendments, but by and large I agree. I do not want to see contagions spread from what is going on in New South Wales and Victoria. I think by and large that social licence question has been settled here. There are obviously pockets where it pops up and we need to deal with it. The Adelaide Hills is one prime example of that.

Yes, I agree with the opposition. I think there needs to be some work on this, so we are accepting a version of your amendment, which I would like to talk to you about. I am not sure if you want to do it tonight or if you want to do it tomorrow. It is up to you. It will give me some time to explain it to you and then the opposition can make a decision about whether they want to support it or not. But I agree—there have to be beneficial economic, environmental and social outcomes, and people have to be consulted appropriately, so I accept what the shadow minister is saying.

Mr PATTERSON: Just further, I think it is very important that with hydrogen the act does consider strongly public safety and managing those risks. Maybe the minister could explain what the department has advised are potentially those risks and how this bill will seek to regulate them.

The Hon. A. Koutsantonis interjecting:

Mr PATTERSON: I have forgotten. These will not be the exact words, but it was along these lines. You will see clause 3 paragraph (g) talking about managing risks. Of course, with hydrogen and then also with renewable energy projects in general, maybe the minister could explain what those risks potentially are relating to the hydrogen and how this bill seeks to regulate them.

The Hon. A. KOUTSANTONIS: Quite appropriately, the government wants to apply world best practice and standards for safety regulations around hydrogen. Hydrogen is a volatile, very light molecule that can escape easily and can combust, so we have to make sure it is appropriately regulated. Again, this is my point: we know that this industry is coming and we know that it is being incentivised by governments around the world. There are now proponents here in South Australia who have already received their own home country's subsidies to be here and develop hydrogen. We need to regulate it and make sure it is safe.

What are the concerns around? Is it storage, moving it in pipelines, making sure that the appropriate technology and suppression matters are put in place to make sure that there are no explosions and that things do not go bang when they should not? There are the usual protections we put in place, in the same way that we regulate LPG and regulate petroleum production at Cooper Basin and Moomba. It is no different.

Mr TELFER: Electricity management goes back a long way, and the bill that was formed at the time when the ETSA sale went through has basically formed the framework for the situation we are in now—and it is very different as far as generation goes. The scenario we are in now is changing the framework for what we are dealing with.

Minister, you well know the operation of the Electricity Corporations (Restructuring and Disposal) Act 1999. Through that bill, the owners of the land used for electricity generation in South Australia are paying significantly lower council rates compared with other businesses and residential ratepayers, as I am sure you would know. Is that something that the minister agrees with and has a perspective on?

The Hon. A. KOUTSANTONIS: The official government policy is that we do not support it because it would be applied to people's power bills. Privately, I see the benefit in it. I do. I see the benefit in it because I think a lot of these small councils, like the one the member for Flinders used to be the mayor of, do not have the rates base to do the work that they need to do. I have driven on some of those roads, and they are exceptionally well maintained with a very small rates base.

But things come along that are important, like jetties and like other pieces of community infrastructure, things that ratepayers would expect. There are people who are building renewable infrastructure that is on regional roads. They are using those community assets that everyone else is paying for and they are not contributing to the local council. So I do see a benefit in it. I think it makes comparative sense.

The question is: who is the first government to move to allow this to occur? I think this is an opportunity for us, potentially, where some regional councils could have a rates base on this, but we are going to have to work through that through the budget process—

An honourable member: Or the outback areas.

The Hon. A. KOUTSANTONIS: —or the outback areas, or whoever it might be. From reading the Auditor-General's Report today, there are a lot of unsealed roads that need maintaining, and a lot of sealed roads that need maintaining, in the regional areas. It is an asset base of over $40 billion in replacement cost, and the unfunded backlog continues to grow, and those councils are no different.

I think it is a very good suggestion. Governments need a rates base, they need a revenue base, and local communities know how to spend it best. I have no real personal opposition to it. My perspective is that this was something that should have been done through the asset sale, but I suspect it was not put in, either through oversight or to maximise the sale price. Either way, I think it would be a good outcome, but it is a budget process.

Mr TELFER: To continue on from that, I am sure it probably was not envisioned because there were very few different footprints of electricity generation at that time. The footprint of electricity generation is widespread now across the state.

I am wondering, minister, if you received any advice from your department on the impact on rates revenue on South Australian councils that could occur as a result of this bill? By that, I mean that, if the aims of the Hydrogen and Renewable Energy Bill are achieved and there is a significant increase in land that is used for electricity generation in South Australia and as a result councils cannot then raise rates on that land because it is exempt because it is under electricity generation based on its capital value, has the minister received advice as to what that estimated cost to South Australian councils might be of those rates forgone?

The Hon. A. KOUTSANTONIS: I imagine it would depend on whatever the council rate rate is because council rates are a very elegant form of taxation. Councils work out their expenditure for the year. They know what their rate base is, and they calculate the tax to collect it, so technically they should never be in deficit or surplus. Depending on the value of the rate—and there are billions of dollars' worth of investments going on in regional areas—it would be considerable millions of dollars that councils would be missing out on. I do not have a policy of rate capping. Do you expect council rates to then decrease or is this an increase in rates coming into councils? What would be done with these extra rates?

Personally, I would like to see them spent on community assets and infrastructure, the paying down of debt for local communities and local councils and providing services and amenities that they want. Others may want a reduction in rates. These are the debates and discussions we have to have because ultimately the people paying for all this will be Adelaide metropolitan people who might see their power bills increase.

Mr TELFER: To unpack it a little bit more and so the house understands—the nuances of the council rating system may interest some people, but the impacts actually interest most people around—if the Hydrogen and Renewable Energy Bill's motivation, which is to encourage ongoing and further expanded investment into renewable energy installation in South Australia, means that the land it is now going onto is unable to be rated by councils, that will mean that the rate base, which councils have to have rise, is now from a smaller value so the cost of a potential loss of a rate base will then have to be spread onto the rest of the council ratepayers. Does the minister have any advice through his department on the estimated increase in council rates on existing ratepayers on the rest of the rate base if there are significant increases in energy generation projects that take the rate base down?

The Hon. A. KOUTSANTONIS: The part of the bill we are debating does not actually relate to council rates. I do not accept the premise that it will decrease the ratings base and therefore it will be a larger core per person. The argument I think the member should be making is that, if this is behind the meter technology and this is not connected to distribution lines for people to use at their homes, why should it not be rated? I think that is the more elegant argument that local communities should be making.

If you are building a gigawatt of renewable energy that is not connected to the NEM, which is all behind the meter going directly to an electrolyser and it is rated, the people who will pay those rates are the customers of the hydrogen or the customers of the iron ore, not other ratepayers or electricity consumers in South Australia.

Then the question is: well, why should they not be rated? I think the answer to that, which the member for Flinders and I would have if it was a Telfer-Koutsantonis government, would be that we would probably charge rates, but that is not how parliamentary democracy and representative government work. There is a cabinet process to go through and a parliamentary process to go through, but the behind-the-meter stuff is, I think, the most opportunistic opportunity for local government to be able to apply a rate because it will not impact on any other customers other than the end customers of the hydrogen, but be careful what you wish for.

I have seen councils in history give away their rates base on things like the steelworks, on large pieces of infrastructure, like in Pirie, and they have lived to regret it later. You can never re-impose it afterwards. I think this is an opportunity that we will work through.

Mr PATTERSON: I have a final question. I think in the discussions you did point out that the legislation is around providing a framework to exploit renewable energy resources and the potential for hydrogen as well. You are right: both governments—your government and the previous government—saw that as an opportunity for economic growth.

I sort of concur with what you are saying. Obviously this government won the election, but had the former government continued on there probably would have been a similar sort of piece of legislation around trying to exploit those. Having said that, we did talk a bit about modelling around what was expected in terms of hydrogen generation, and maybe I did not take the opportunity then but it is worth taking the opportunity now in terms of the objects.

Has the government done any modelling around the amount of percentage of energy projects that may be constructed on freehold land and the scale of those compared with what is expected on designated land? Principally, the main thrust of this legislation is around trying to develop that designated land, but can you give some insight to the committee about where you see it going?

The Hon. A. KOUTSANTONIS: No, we have not done any modelling like that, but you are right, and the main reason is that we will be going out on designated pastoral leases, on Crown land first. We are talking about upper South Australia and the renewable resources to the west of Port Augusta on Eyre Peninsula. That could take 20 to 30 years to develop at the gigawatt scale.

I know that the previous government was fond of saying that there were $20 billion worth of renewable projects ready to go when Project EnergyConnect connects to New South Wales. Well, where are they? These things take a long, long time. My instincts are there will be probably half gigawatt developments—500 megawatts—with associated electrolysers. First things first: they probably will connect to the grid and then they will work plays to try to build infrastructure, to build their electrolysers and the like.

The interesting thing will be when salt caverns are properly discovered in South Australia. In Utah, for example, there is a project that has a 220-megawatt electrolyser operating on it, which is storing the hydrogen in salt caverns directly alongside it, providing vast amounts of hydrogen storage. South Australia is geologically very likely to have similar salt caverns. You could imagine a REZ being conducted in an area that could be quite useful for salt caverns.

We would have electrolyser generation on Eyre Peninsula somewhere connecting, and then you would have a form of a closed loop, as it were, of generation all behind the meter. I cannot give you numbers for scales. Our ambitions are massive, but this all requires the same amount of capital that everyone is chasing. The IRA in the United States is offering vast amounts of government subsidy for investment in hydrogen. The Canadians have responded with their own subsidy. We have Hydrogen Headstart, which is a $2 billion fund, I think. You have the Japanese, the South Koreans and the Chinese with all their investments.

What we are offering people is something quite unique. We are not offering them subsidy, but what we are offering them are world-class resources that, with an ordinary investment, probably will produce hydrogen at a lower cost than you would somewhere else under a subsidy. That is the market we are targeting.

I cannot give you a number on how much will be built by when, but the possibilities are limitless: a billion tonnes of iron ore that we know of now, let alone what is undercover, let alone what has not been developed. If border abatement comes into play in Europe as it is meant to, and it will in Japan and South Korea, coking coal and traditional furnaces will not be able to be used in some of these jurisdictions, they will need to import a decarbonised green iron.

I am hoping and I am planning that it comes from South Australia. Our magnetite is best suited for DRI and electric arc furnaces. Arrium, acquired by GFG, has the largest scrap business in the country. There are a lot of things lining up for us, but it all starts with renewable energy, so I cannot give you a number. We have not done the modelling. What we have been working on is a regulatory framework and the legislation. How long is a piece of string? I cannot give you an accurate answer, sorry.

Mr TEAGUE: This might be nuts and bolts. I think paragraph (h) talks about facilitating appropriate consultation, and so that is going forward. I wonder, and the minister might need to take it on notice, is it convenient to provide to the committee some sort of succinct ready reckoner about the consultation that has taken place already, locations and attendees?

I do not know that there was some sort of sign-in sheet that would permit it, but the number of owners as defined in clause 79, so pastoral leaseholders, etc., to give an indication as to—I understand there were steps along the way through the Mid North and then around, and there is some anecdotal indication as to who went to where and all that sort of thing, if there is a comprehensive ready reckoner, is that possible to provide?

The ACTING CHAIR (Mr Brown): Minister, I will just draw your attention to the fact that it is not actually possible for ministers to take questions on notice during the committee stage of a bill, but you could give an undertaking that you will return to the house with an answer later.

The Hon. A. KOUTSANTONIS: You are a fount of wisdom, sir. Thank you for your helpful unsolicited interjection.

The ACTING CHAIR (Mr Brown): I aim to please.

The Hon. A. KOUTSANTONIS: That is one word for it.

Members interjecting:

The Hon. A. KOUTSANTONIS: He is outstanding. I have known him since he was a boy. There is a detailed record of the consultation that we have done which has been quite intensive, especially with First Nations people, pastoral leaseholders, and associated professional bodies and councils. We have a consultation report on the website that you can go to and have a look at, but I think you are asking us for the lists of names of everyone who attended?

Mr Teague: Not necessarily.

The Hon. A. KOUTSANTONIS: Not necessarily, okay. I suspect that there is a comprehensive report on the website that you can access. Between the houses, I am more than happy to give an undertaking that I will get you the information that you are seeking. But I have to say I think the consultation we have done on this bill is pretty much unprecedented. It has been very, very intense consultation, going back two, three, four times, talking to groups of people about this bill, so I can provide that if there is not everything you need on the departmental website.

Mr TEAGUE: I realise we are not talking yet about the amendment, (da), but perhaps just to address those objects, the minister might agree that it is somewhat of a notable absence, is it not, that you go down the list of objects of the bill and you have to get to paragraph (e) before you start hearing about facilitating economic prosperity and benefits for the state through the development of the industry.

Not that there is any magic in the order, but we get to paragraph (e) and we see that objective. We clearly do not see that there is an objective of the bill, adjacent that or anywhere else, that is to facilitate the economic prosperity of the owners, as defined for the purposes of clause 79 of the bill and so on, or the local region or anything else that might be particularly affected. That is what it is. The amendment might come in due course, but I just wonder: is there anything that might indicate why we get to paragraph (e) before we see that we are facilitating even the economic developments for the state? Is it an inadvertent omission to have not included some overt objective in terms of the interests of those owners and local areas?

The Hon. A. KOUTSANTONIS: I do not think it was an error, but like I said earlier, I think the shadow minister makes sense with his amendment. I have an amendment that I am going to file in a moment to propose to amend the amendment, which I think can give the government and the opposition some comfort, but I think the answer, in your own words, is that there is no magic ordering in the objects. We want local communities to benefit; of course, we do. I am happy to spell that out in our amendment, which I will show the shadow minister if we want to deal with it tonight or deal with it tomorrow.

It might be easier for us to have this all ready for tomorrow. That way, we can just go through it and get it done. I said there are some amendments that the shadow minister proposes that I will be supporting, so perhaps after the house rises at six the shadow minister and I can have a discussion about what amendments we like and do not like and have a discussion about those. The ones we do not like, we can work on between the houses. The ones we do like, we might wish to make some amendments to and discuss those with the shadow minister. But there is no magic order in these. We do want local communities to benefit. We do want them to prosper as a result of it. That is why we are doing it.

The ACTING CHAIR (Mr Brown): Do you wish to move your amendment now, member for Morphett?

Mr PATTERSON: I might seek some wisdom from the Chair, given the big crescendo of support there from the minister.

The ACTING CHAIR (Mr Brown): Perhaps we will let you make one further contribution.

Mr PATTERSON: Through you, Chair, to the minister, I obviously want to move the amendment. To look to do it between the houses might delay further progression in the committee, and I do not want to do that. If we move this amendment now, how do we reconcile the fact that there is the potential for the minister to have an amendment? You would file it, and then we would have to discuss potentially—

The ACTING CHAIR (Mr Brown): I have advice that may assist the house. There are options. The member may move the amendment and then have his amendment potentially amended by the minister, or the minister can just move his amendment instead. Perhaps the two members may wish to very briefly discuss the issue.

Mr Patterson interjecting:

The ACTING CHAIR (Mr Brown): Well, you can do that, member for Morphett, but an alternative is the minister can just move his version if you wish.

Mr PATTERSON: I am okay; I will move it, thank you. I move:

Amendment No 1 [Patterson–1]—

Page 7, after line 20—Insert:

(da) to enable engagement with rural and regional communities in relation to hydrogen and renewable energy projects to facilitate benefits to those communities;

Maybe if I preamble it by one of the questions I asked previously. The aim of this is, of course, that I think overwhelmingly the stakeholders involved, both the renewable energy companies and especially those with interest in the land, supported the objects there relating to:

(d) to enable engagement with Aboriginal people to ensure the regulatory framework in this act maximises beneficial economic, environmental and social impacts and minimises adverse cultural and heritage impacts on Aboriginal people;

Certainly, they support that. At the same time, they did query that if all this infrastructure is going to be in regional and rural communities, it would make those communities feel like they were going to be prioritised to a somewhat equal level with Aboriginal people—that was not their sole aim—to know that, in terms of considerations when we go through all these other clauses that we will go through and when the bill is enacted, they would be front and centre in terms of being recognised.

Of course, the intent would be for them to benefit broadly from the uplift that these massive investments could have in their communities, but at the same time they would also be protected from this. The reason, as we have alluded to before, is that we have seen the troubles in other states trying to get social licence from these regional communities, where they feel that the benefits are going off into other areas. I think this will really crystallise this amendment, that those regional and rural communities are front and centre in terms of consideration in this bill.

The amendment inserts into those objects a paragraph (da) to sit underneath the one I previously quoted, which would enable engagement with rural and regional communities in relation to hydrogen and renewable energy projects to facilitate benefits to those communities.

The ACTING CHAIR (Mr Brown): Thank you, member for Morphett. Minister, I understand—

The Hon. A. KOUTSANTONIS: The precedent set by the Acting Deputy Chair—precedence was given to the mover of the amendment rather than the mover of the bill. That is okay; it is a precedent now set. We will call it the Brown manoeuvre.

The ACTING CHAIR (Mr Brown): To assist the house, the Chair gave precedence to the member for Morphett because his amendment had already been filed but, in fact, erroneously, the minister should have been given precedence because he is the minister with carriage of the bill.

The Hon. A. KOUTSANTONIS: It does not matter.

The ACTING CHAIR (Mr Brown): Minister, you seek to move an amendment?

The Hon. A. KOUTSANTONIS: I move an amendment to the amendment lodged by the shadow minister. I move:

to delete 'to facilitate benefits to those communities' and substitute 'for beneficial economic, environmental and social outcomes for those communities;'

I commend it to the house.

The ACTING CHAIR (Mr Brown): Does anyone wish to speak to either of the amendments currently before the Chair?

Members interjecting:

The Hon. A. KOUTSANTONIS: The amendment will read:

(da) to enable engagement with rural and regional communities in relation to hydrogen and renewable energy projects for beneficial economic, environmental and social outcomes for those communities;

So you are deleting 'to facilitate benefits to those communities' and inserting 'for beneficial economic, environmental and social outcomes for those communities'. That is it.

Mr TEAGUE: On the amendment, to understand it, the virtue of the amendment to the amendment is that it is then lining up (da) with the same objects of (d). So in respect to those rural and regional communities, you are achieving the same range of object benefits as you are for engagement with Aboriginal people in (d)?

The Hon. A. KOUTSANTONIS: Yes.

Amendment to amendment carried; amendment as amended carried; clause as amended passed.

Progress reported; committee to sit again.

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