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House of Assembly - Fifty-Fifth Parliament, First Session (55-1)
2023-11-14 Daily Xml
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Auditor-General's Report

Auditor-General's Report

In committee.

(Continued from 2 November 2023.)

The CHAIR: I declare the examination of the Report of the Auditor-General 2022-23 open. I remind members that the committee is in normal session. Any questions must be asked by members who are on their feet. All questions must be directly referenced to the Auditor-General's Report 2022-23 and Agency Statements for the year 2022-23, as published on the Auditor-General's website. I welcome the Minister for Local Government and the member for Flinders. Are we ready to go? Member for Flinders, the floor is yours.

Mr TELFER: Minister, can you start by outlining the dollar figure that you are responsible for as the minister?

The Hon. G.G. BROCK: Could I ask the member for Flinders what section of the Auditor-General's Report he is referring to for that question, if he does not mind?

Mr TELFER: I am trying to ascertain the total dollar figure that you as minister have decision-making capacity over. Obviously, this Auditor-General's Report looks at all expenditure of government.

The CHAIR: Member for Flinders, can I suggest you try to find one of the expenditures that you can reference, or rephrase your question.

Mr TELFER: Sure. If that number is not known, I can move on. I will perhaps then look to the reference in Part A: Executive Summary, page 57. There is commentary, minister, around the CWMS review by the Auditor-General, referencing Berri Barmera and Yorke Peninsula, with the conclusion that:

…fundamental areas of the Berri Barmera Council's management of its CWMS network were not operating effectively. Consequently, the Berri Barmera Council is not able to demonstrate that its CWMS network is being managed in a way that is financially sustainable over its useful life. This increases the risk of its CWMS network failing to provide a safe and reliable level of service in the medium to long term.

We concluded that some key areas of the Yorke Peninsula Council's management of its CWMS network were not operating effectively.

Minister, what action is the Office of Local Government taking in response to these findings from the Auditor-General on council CWMS systems?

The Hon. G.G. BROCK: Thank you, member for Flinders, for the question. I am advised that, on 30 May 2023, the Auditor-General tabled a report on his review of the CWMS services provided by the Berri Barmera Council and the Yorke Peninsula Council under the Public Finance and Audit Act 1987.

The Auditor-General's review, which covered the period from July 2018 to November 2022, assessed whether the councils managed their CWMS networks effectively in a way that demonstrated that a safe and reliable service was provided, and financial sustainability over the network's life. The Auditor-General concluded that the council successfully removed and treated wastewater collected from properties to their CWMS networks, and some fundamental areas of the council's management and their CWMS networks were not operating effectively.

The Auditor-General has also identified areas that were operating effectively within each council. The Auditor-General has made a range of recommendations to the Berri Barmera Council and also to the Yorke Peninsula Council. I have also been advised that the councils have indicated they will implement all of these recommendations.

Mr TELFER: Is there any action that the Office of Local Government is taking in conjunction with what you have set out—actions from the council?

The Hon. G.G. BROCK: I have been advised that the councils have indicated to the Auditor-General that they will implement all the recommendations that have been provided and suggested by the Auditor-General's Report. Bearing in mind that they are independent of all of us here, but certainly from my information I have been advised that the councils will implement all of those, and they have advised the Auditor-General of such.

Mr TELFER: So, to clarify, there is no role for the Office of Local Government?

The Hon. G.G. BROCK: As we all know, councils are independent, and also it is the responsibility of the councils to implement management of the CWMS systems across there, and they have indicated that all the recommendations and suggestions made by the Auditor-General will be implemented by both councils.

Mr TELFER: Part C: Agency Audit Reports, pages 510 and 511 refer to the Local Government Infrastructure Partnership Program. The reference says:

The program was fully subscribed, with $106.9 million in grants approved for 57 projects across 58 local councils…

As at 30 June 2023:

six projects were completed

three projects were terminated by councils

33 projects were in progress, with grant deeds for three projects yet to be finalised.

What role does the Office of Local Government play in the Local Government Infrastructure Partnership Program?

The Hon. G.G. BROCK: I have been advised that, while the Auditor-General's Report notes that the Office of Local Government participated in the assessment of the projects submitted by councils for funding under this program, the delivery of the program is undertaken through the Department of Treasury and Finance as their then treasurer was responsible for the program itself. If I can, through the Chair, I would suggest that any questions about this program be directed to the Department of Treasury and Finance.

Mr TELFER: So you are saying the Office of Local Government has no role in the Local Government Partnership Program?

The Hon. G.G. BROCK: Through the Chair, can I just repeat the answer I gave: whilst the Auditor-General's Report notes that the Office of Local Government participated in the assessment of the project submitted by councils for funding under the program, the delivery of the program is undertaken by the Department of Treasury and Finance, as the then Treasurer was responsible for these programs and things like that. Again, I reinforce that I have been advised that any questions for that should go through the Department of Treasury and Finance because they processed the whole lot from then on.

Mr TELFER: So the minister is not aware of the outstanding amount of over $60 million in total payments from what was allocated? There is no awareness from the minister about what is happening with those local government grants?

The Hon. G.G. BROCK: I have to reinforce that I have been advised that any questions about this program, including finances, should be directed to the Department of Treasury and Finance, who handle the lot after the assessments.

Mr TELFER: The Agency Audit Reports, Outback Communities Authority: let's see whether we can find something that the minister is responsible for here. Regarding the budget figures there for the Outback Communities Authority, on page 3, there is a $700,000 increase in revenue from the South Australian government. Can you explain that increase, minister?

The Hon. G.G. BROCK: Through the Chair, can I just ask the member exactly where in the report or what page number and things like that, if you don't mind?

Mr TELFER: As I said, page 3 of the Outback Communities Authority audit report.

The Hon. G.G. BROCK: Can I ask the member again: you say page 3, but what section? Is it A, B, C, or a page and a relevant area?

The CHAIR: I understand it is the Agency Statement online.

Mr TELFER: Sir, thank you. In the Outback Communities Authority agency statement on the second line down, there is a line that says 'Revenue from SA Government.' In 2022 it is $1.6 million; in 2023 it is $2.3 million.

The Hon. G.G. BROCK: Through the Chair, I will need to take that question on notice and get back to the member.

Mr TELFER: There is another line there, minister, that talks about grants and subsidies. There is a $1.25 million increase in grants and subsidies. Can you explain that?

The Hon. G.G. BROCK: Through the Chair, I will have to take that on notice, member for Flinders. We do not have that here with us at the moment.

Mr TELFER: Minister, is the additional budget allocation to the Outback Communities Authority a recognition of the department's inability to progress future service and governance arrangements for outback communities by not implementing anything substantial from the Outback Futures Report?

The CHAIR: I remind the member for Flinders that a question is a question, without the commentary embedded in the question.

Mr Telfer interjecting:

The CHAIR: No, there is commentary embedded in that question, so I ask that you just ask the questions.

The Hon. G.G. BROCK: Through the Chair, thank you to the member. I have been advised that in this budget, this government has tripled the funding to the Outback Communities Authority—the OCA—so that they can provide extra resources and facilities for people, not only for the outback but also for the visitors up there. We are very proud of that. From the Outback Futures Report we have been able to do that without putting any levies on the outback communities, and that will be the case in the term of this government.

Mr TELFER: What further resources have been given to the Outback Communities Authority, in reference to the answer?

The Hon. G.G. BROCK: I have been advised that the budget has been increased from $600,000 to $1.8 million, which is the recommendation of the Outback Futures Report that came in, and this is to provide for services and facilities for people in the outback areas. Again, I reinforce that the recommendation previously, from my information, was to put a levy on the outback people, but we have been able to do this without any levy. As I say, there will be no levy on the outback peoples through the OCA in the term of this government.

Mr TELFER: What additional services and facilities have been delivered with that $1.25 million?

The Hon. G.G. BROCK: I have been advised that the $1.8 million, that extra funding, is to provide better community services across all of the outback areas—things like toilets, rubbish bins, open spaces, and towards airstrips. The thing is, the OCA are currently looking at all the opportunities that we can improve on and provide extra money for in the budget. I am happy to liaise with the member once I get all the totals of the projects and the number of projects.

Mr TELFER: I appreciate you taking that part of it on notice. The OCA report on page 13 sets out employee remuneration. There was an employee within the band of $180,000 to $200,000 in 2022. In 2023, that single employee goes from that band up to the $320,000 to $340,000 band. Can you give an explanation as to why, minister?

The Hon. G.G. BROCK: I thank the member for that question. I have been advised that there is no position in the OCA that carries a remuneration of the $340,000 that you have indicated there. However—

Mr Telfer interjecting:

The Hon. G.G. BROCK: If I can finish, what we will do is get more information on that and take that on notice. To my information, I have been advised that there is no one single position in there that has a remuneration of $340,000. Again, to the member, I will take that on notice and get it back to him as soon as I can.

Mr TELFER: For your reference, that is on page 13 of that Agency Statement, the band between $320,000 and $340,000. On page 10 there is a reference to the federal government's Local Roads and Community Infrastructure grant funding, which councils from all around the country got. There was $2.85 million allocated for the OCA. Can you, minister, let me know what the grant money of $2.85 million was spent on?

The Hon. G.G. BROCK: That $2.85 million was for a range of projects across there, including some roads and also outback facilities as I indicated earlier. The OCA are working through a lot of those issues, but we will certainly get a detailed project-by-project for you and bring that back to you as soon as we can.

Also, I want to reinforce that the amount of money we have been able to give the OCA in the last budget is triple what it was before. We have been able to get that money without having to put any levies on any of the outback communities out there. I want to reinforce that. We are proud of that and proud of the fact that we are not going to have any levies in the term of this government.

Mr PEDERICK: I refer to the Independent Auditors Report, Outback Communities Authority, page 8, 1.2 Objective and programs, dot point 5. Are outback roads being managed to an appropriate standard?

The Hon. G.G. BROCK: If I may, because we are just changing advisers, if you don't mind, can the member for Hammond please repeat that question?

Mr PEDERICK: Are outback roads being managed to an appropriate standard?

The Hon. G.G. BROCK: Can you repeat the page number, thanks, member?

Mr PEDERICK: Yes, okay: page 8, 1.2 Objective and programs, dot point 5.

The Hon. G.G. BROCK: I have been advised that the funding that is in there for outback roads has been consistent with previous years, previous budgets. Also, I have been advised that, we all know, in that period of time there has been a lot of unusual weather, wet weather and things like that. But to answer your question 100 per cent: outback roads are being maintained to the best condition they can under the circumstances with the prevailing weather and all that. Certainly, if you want any more information, if you want more detail, I can get some more detailed information and get it back to the member.

Mr PEDERICK: Have the outback road maintenance gangs been reduced from 10 to three?

The Hon. G.G. BROCK: Whereabouts in the Auditor-General's Report is that mentioned?

Mr PEDERICK: Page 8, 1.2 Objectives and programs, dot point 5 of the Outback Communities Authority report.

The Hon. G.G. BROCK: I have been advised that the permanent crews now have been reduced from four to seven.

Mr Pederick interjecting:

The Hon. G.G. BROCK: Sorry, I apologise—from seven to four. That was a decision on the commercial basis of the maintenance contractor themselves, but they are doing a lot of subcontracting work to subcontractors. So, even though it has gone from seven to four, they are using a lot of subcontractors to carry out other works up there.

Mr PEDERICK: Has money from the outback road maintenance program been transferred elsewhere in the state?

The Hon. G.G. BROCK: I have been advised that there has been a reallocation of $1 million for money from outback roads to other areas of regional South Australia on to regional roads, and that is for more pressing projects from other areas; but it has been transferred for that. It is only for this year; it is in this Auditor-General's Report. Certainly, it is a reallocation but it is going from outback roads into regional roads across other parts of the regions.

Mr PEDERICK: So, minister, what is your opinion on not just losing three road gangs but also the reallocation of money throughout the rest of the state? It is obviously starving part of your electorate.

The CHAIR: Member for Hammond, you are asking for an opinion there rather than a factual answer, so could you rephrase the question please.

Mr PEDERICK: Has the minister lobbied to get those four road gangs back up to seven and also get that million dollars back into that vital outback road funding?

The Hon. G.G. BROCK: Roads represent one of the largest groups in the state government's assets. As we all know, it is a massive area. The government of South Australia manages a range of road-related assets, including 13,000 kilometres of sealed roads, 10,000 kilometres of unsealed roads—

Mr PEDERICK: Did you lobby for this money to go back into outback?

The CHAIR: Member for Hammond, the minister is getting to the core of the question.

The Hon. G.G. BROCK: The total road maintenance expenditure for 2022-23 was $176.9 million. This includes expenditure of approximately $98 million in 2022-23 for routine road maintenance such as regular inspections of the network, pothole repairs, rubbish collection, maintaining signs and so on. Over half of the South Australian road maintenance budget is spent in regional and remote areas. To answer your question, yes, I have lobbied and I will continue to lobby to get more money and also for the reinstatement of those road gangs.

Mr PEDERICK: I refer to regional roads, Annual report, Part C: Agency Audit Reports—I will make sure I get the right page—page 293, 'Capital works in progress'. Did the minister have any involvement in the decision to scrap the planned overtaking lane on Victor Harbor Road at Hindmarsh Valley, which was part of the South Australian Rural Roads Safety Package?

The Hon. G.G. BROCK: I think that was a question you asked the Minister for Infrastructure today in question time. At the end of the day, it is an infrastructure question that you asked and Minister Koutsantonis, the Minister for Infrastructure, gave an answer in the parliament today.

Mr Pederick interjecting:

The Hon. G.G. BROCK: I am just saying the question was asked today in parliament. It is an infrastructure project and the Minister for Infrastructure has given an answer today. I will get more information for you if you want me to take it any further. But certainly, the Minister for Infrastructure, who is responsible for that sort of work, answered the question in parliament today.

Mr PEDERICK: I go to regional roads, Annual report, Part C: Agency Audit Reports, page 296, 'Road maintenance backlog'. In 2022-23, the road maintenance budget was roughly $160 million while the asset renewal depreciation was $405 million. The Auditor-General notes:

Ideally, asset renewal depreciation is matched yearly with maintenance expenditure…to ensure that optimal asset life and service levels are achieved.

Does the minister concede that the current state government has failed to adequately invest in our road network?

The Hon. G.G. BROCK: I am advised that total road maintenance expenditure for 2022-23 was $176.9 million. This includes expenditure of approximately $98 million in 2022-23 for routine road maintenance, such as regular inspections of the network, etc. Over half of South Australia's road maintenance budget is spent in regional and remote areas. Failure to intervene in road pavement surface issues at critical times results in damage that becomes more extensive, that is it increases the road asset backlog while maintenance costs to remediate road assets increase tremendously.

The backlog keeps increasing because annual deterioration across the network exceeds the rate of renewal. The road maintenance budget has not kept pace with the growth in road assets. I understand that over the past two years there has been around a 23 per cent increase in the construction price index, impacting the quantity of maintenance works that can be delivered. I am advised also that since 2022, the department has treated 453 kilometres of roads and also a pavement backlog. Between 2017 and 2022, the road pavement backlog grew from $723 million to $1.9 billion.

I can recall the previous Minister for Transport saying in 2021 that that government at the time had inherited a $750 million backlog in maintenance works from the former Labor government, saying that they were continuing to chip away at this backlog. Far from chipping away at that backlog, the previous government were instead walking away from it, outsourcing the government's road maintenance contract from late 2020. The result is that between 2020 and 2022, that $750 million grew by almost three times. You are right: this government inherited the $750 million. When they came in, we asked for an audit, and it was over $1.96 billion.

The CHAIR: The time allocated for the examination of this section of the Auditor-General's Report has expired. I call on the Minister for Human Services.

Mr TELFER: I am going to first look at the South Australian Housing Trust items in Part C, pages 392 to 410. Minister, what was the total expenditure on South Australian Housing Authority maintenance in the 2023 financial year?

The Hon. N.F. COOK: Per page 402, the expenditure is listed as $97 million, but that does not include capital maintenance.

Mr TELFER: Sorry, that does not include—

The Hon. N.F. COOK: That does not include capital maintenance.

Mr TELFER: Last financial year, I believe that $97 million was $107 million. Why is there a reduction in that number?

The Hon. N.F. COOK: I think it is important to provide you with just a small amount of context in regard to how the maintenance contracts are undertaken and maintenance services are delivered for people in public housing.

As you know, our stock is owned by the public but split into both community and public housing. We are responsible for the ongoing maintenance of our public housing stock, and the numbers are around about 36,000 properties, or thereabouts.

The way maintenance is undertaken and has been undertaken since, I guess we can say, Jesus played fullback for Jerusalem, is with private contractors in the community, private tradies in the community, picking up jobs. But what has changed over time is the movement to a head or lead contracting model, which has happened over the last decade.

I understand that happened in about 2013. Yes, it was 1 October 2013, and that contract continued for a number of years. However, over time, as you would be aware, contracts date and age and need to be reviewed and updated. I understand that under the previous government that process was commenced, but the program review and amendments were not completed.

The contracts were extended on 1 February 2020, and they were extended again—I understand because the work had not been done to get those contracts ready for procurement—on 1 July 2021. Those head contracts were given an end date of 31 December 2022.

On coming into government we were briefed, as you are, in the first weeks and informed that the procurement process for the new model of the multitrade contract was in the very late stages. There had been a lot of work undertaken by all of the contractors, and we spent time considering whether it would be feasible to make significant changes to that process or that model, I guess it is fair to say.

However, given all the hundreds of thousands of dollars that had been invested by contractors to put in submissions to lead a new model with different zones and different areas of control of this maintenance contract, we decided to get an independent review done on the contract itself, the model, to make sure that the procurement was going to be the best deal we could possibly get given that process for the South Australian taxpayer and, importantly, for the tenants themselves.

That review was undertaken very early in the piece—I think in May of last year, or thereabouts, would be an approximate time—and we were in receipt of that report around the middle of the year to say that there were no major red flags, that there was some confidence that that was in fact an appropriate model moving forward, and we then proceeded to the final assessment phase of the contracts, which were awarded in the latter half of last year.

A phase-in approach was then required because we went from five contractors over three areas down to three contractors. Basically, there was a change in the actual people who would be leading the contract and also the areas at which some of the people who remained providing the service would then be delivering.

We now have one contractor delivering for the entire metropolitan area, and the rest of regional South Australia is divided into two sections delivered by two different contractors. In some of those regional areas—not specifically yours, although your area as you know has a different head contractor now—the head contractors swapped areas, so we have allowed quite a lot of support and leeway to occur in terms of the communication between the department and the contractors to get this underway.

The date for transition, being the end of 2022 to 1 January 2023, has happened, and we would attest that the reasoning around the lower expenditure during this financial year as compared to recent years would be absolutely in the main because of the onboarding of new head contractors to areas. Also, within the head contractors, we would attest that there has been obviously the need to onboard subcontractors to the new head contractors. So there has been a range of challenges in the first six months particularly. I understand the Auditor-General covers across both the old and the new contract.

It is also fair to say it was not just a challenge for a new head contractor and a new set of subbies, but it was a challenge as well for the previous head contractors knowing that they were leaving the delivery of that service to maintain their subbies to deliver the work in the previous areas. I hope I am explaining that simply enough. I am happy to take more time with you on another occasion, but there have been significant challenges for head contractors and subcontractors with the onboarding and the capacity for them to build those relationships, and in a highly competitive market.

One thing that we know has been reported to us from the head contractors or the multi-trade contract leads is the overheated market. This has obviously been related to a number of pressures, none less than the federal government's stimulus program that injected millions and millions of dollars into providing funding for new homes but private homes, and also for funding upgraded bathrooms.

Mr TELFER: Chair, we have done nine minutes of an opening statement but we only have half an hour to actually look at a few of these items.

The Hon. N.F. COOK: I can wrap up where I was—

Mr TELFER: The question was: can you give an explanation as to why in 2023 the maintenance expenditure was $97 million, in 2022 it was $107 million and in 2021 it was $122 million? So it is down by $25 million from 2021. The question was as to why.

The Hon. N.F. COOK: I will wrap that up quickly for you. There is a range of pressures, there is an overheated market, there is difficulty just for Joe Blow in the street to get a tradie to do a job. It is even more challenging for head contractors to onboard a whole bunch of trades to meet certain needs especially in regional areas, as you well know.

In terms of what is happening this year, we actually expect the expenditure this year to be much bigger because obviously things will improve, but excluding the Public Housing Improvement Program in which we were investing originally about $135 million for new homes and maintenance upgrades—and that has been increased due to budget investment of about $55 million and the federal investment as well, which is currently $136 million or thereabouts, plus the HAF—we expect to spend around $127 million.

What you will see over time is the money being spent on all forms of maintenance, which is broken down into a whole range of programmed and other types of maintenance. It is very hard to answer a simple block question of what money is going to be spent on what, but we are going to increase—

Mr TELFER: It is a simple question: why is it down by $10 million?

The Hon. N.F. COOK: I gave you a pretty simple answer, I thought, in regard to that. We had the maintenance contract that the previous government extended twice. Then we did the review of it and we put it in place at the end of the year. They had trouble in getting trades to stick with them while they were finishing off their contract to 31 December 2022. Regarding the new contractors, some of them had to start cold, and we had to onboard a whole range of tradies from 1 January 2023. I think that is probably the nub of it. I think you will be very pleased with the new numbers as the momentum gathers.

Mr TELFER: Thank you. I will wait for the momentum of the next Auditor-General's Report. On page 397 it talks about managing the underperforming HCMS (Head Contractors for Maintenance Services). What actions is your agency actually taking to rectify the underperformance of your contracts?

The Hon. N.F. COOK: As the member knows, I do try as much as I can to communicate openly and directly, not just with tenants but with members such as yourself, and with many others on both sides and all sides of parliament. There is no difference when it comes to the work that our team is doing with such a massive amount of public money that is being invested into public housing.

I cannot find anyone who can tell me whether or not the minister has sat down with all the head contractors before—and I have done that. I have made it really clear to them that we are absolutely committed to making sure that we do the best we can for tenants, who need the best support all of the time and who rely on their houses to be running and operating safely and with dignity. I have met with all of them to ask them to consider the rights of the tenant and put the person at the centre of everything they do in terms of the work that they do.

For the first six months of the contract—under the establishment of the onboarding of their subcontractors, and of course their own staff, to manage these contracts that are huge—of course we and our leadership team worked really closely with all those contractors to make sure that they were providing the reports that they needed to and were communicating directly.

The key to these contracts—which was something that attracted me to supporting the contracts—is that there are incentives and some penalties built into the contract. So, if you underperform or you do not deliver in the prescribed times or do not meet the KPIs, there are penalties (otherwise known as abatements) that are put against the contracts, which means the head contractor, who is obligated to pay their trades' quoted amounts as a minimum, which is also built into the contract, is penalised so that they lose money. The incentive is to perform at the optimum, and the benefit of doing that is that you are also incentivised positively if you achieve things.

The public housing leadership team closely monitors the performance. They have worked on refining the reporting dashboard so that we are able to monitor closely and validate their performance against all the measures to make sure that what we are being told is actually happening and we can see trends in their performance. There is enforcement of the performance management framework abatements. After the end of the grace period—I can get you the exact date, but it is around the nine-month mark—there are process reviews and changes to the procedures to make sure that the efficiencies can be achieved.

The head contractors, with guidance and support, have been onboarding additional subcontractors, and also doing internal reviews of their staffing structures with the guidance of our team to make sure that they can actually fulfil the requirements by recruiting additional resources—at their own cost, not at our cost. It is at their cost, they put the contract in and they need to manage it. There has been an IT system change to expedite processing and claims, so that is the charges that they are putting to us, and to also improve the reporting.

There have been additional training sessions held, I believe, on processes and on policies, and also on procedural awareness. So how the contractors engage with tenants is very important. There is commitment to collaborative contracting, and changes to the work order portal for subcontractor reporting in order to improve accuracy of commencement and completion dates. There is the authority approval to schedule rate price increases. So that responds to inflationary pressures to some degree because when the contracts were done, it is a different world now.

There is a head contractor service delivery shift from use of subcontractors to self delivery. We have had direct hire of trades as well to address subcontractor capacity concerns. So the head contractors have directly employed some trades themselves to be able to respond, I think, to maintenance priorities, particularly in regional areas. Sorry, it is six months.

Mr TELFER: You are talking about the abatement period, the grace period, which is what you are about to hop up on again. At the bottom of page 397, it states that the contracts are no longer in the abatement grace period which ended on 30 June.

The Hon. N.F. COOK: Correct.

Mr TELFER: Has your agency applied any abatements to underperforming HCMS?

The CHAIR: Is this for the period to 30 June 2023?

The Hon. N.F. COOK: Yes. There is a sentence in there. I am happy to respond to it, it is important, but I cannot and I will not respond with actual amounts. But, needless to say, we are following the contract. We've been very forgiving in that contract to make sure people are getting the best possible opportunity to deliver this service, this big machine that is required across tens of thousands of homes. But there are now processes in place. Since the grace period, which I understand was at the end of June-ish, there is now a process in place just to work around.

Again, I think the member would understand, we want this to work. We want this to work for the tenants, the head contractor and the subbies, so it is important that any abatement process is well communicated and supported by our team to make sure that this is a sustainable process going forward.

Mr TELFER: The Auditor-General notes that there are a high number of overdue tasks for urgent high priority work. Can you confirm that this includes tasks which, according to the agency's definition, are immediately dangerous and may affect someone's health and safety such as exposed electricity wires? What is the maximum number of outstanding Priority 1 tasks at any one point?

The Hon. N.F. COOK: I am happy to provide an answer on notice in regard to numbers. Of course, these numbers bounce around. Over what time frame? So what was the maximum number of P1s?

Mr TELFER: Yes.

The Hon. N.F. COOK: In terms of the P1s, obviously we take it really seriously. Sometimes additional support with the contractors and additional communication does need to happen in order to provide some support around the understanding of some of the consequences to the tenant. That comes as well with some of this education around the policy, the procedure and also the face-to-face contact with the executive teams of the head contractors, and I have made it really clear we need to get those jobs attended to.

Mr TELFER: Minister, what are the requirements for either Housing SA or the HCMS to keep tenants informed about the status of their work requests and/or work orders?

The Hon. N.F. COOK: Again, it is a general response, but certainly built within the contracts are expectations related to appropriate, effective communication with tenants to let them know if there will be any interruption to any of their services, whether or not they need to be off the site in order for work to be done, any of those sorts of occ health and safety issues and comfort issues that need to be done. There are certainly expectations built into the contracts.

I do not have all the contracts in front of me and, as you can imagine, some of these matters would be in confidence, but there are absolutely expectations in terms of the tenants being kept informed and understanding of the work going on. That is our expectation and we spell that out. If a tenant comes to us with any issues, or comes to their housing officer with any issues around this or the maintenance team, that is fed back to the contractors. We spell out very clearly what our expectations are, and if they are not being met, then again we would advise that that is the case.

Mr TELFER: Referring to page 404, minister, there is a statement from the Auditor-General:

Other movements in total income for 2023 included:

a net gain from disposal of assets of $30 million ($28 million). Proceeds from selling properties support the SAHT's financial viability strategy…

You have previously talked about the fact that your government is not selling more SAHT properties, but the Auditor-General Report says otherwise. Can you explain it?

The Hon. N.F. COOK: We refer to the 30 houses as the Marshall-Lensink sales plan. They were sales that were already baked in and well underway. We stopped 580 of them over four years. We went to the election with a commitment of $135 million to build the 400 homes, to bring 350 vacant homes up to standard—some of those empty for the whole of the last government—and 3,000 small maintenance jobs to increase the amenity and the affordability of the homes. We are well underway and we are well on track with that. However, as you would know, a big animal like this, a business, is like a Mack truck, and you just have to put the brakes on a little bit and slow it down gradually—

Mr Telfer: I wouldn't drive a Mack truck. I would drive something a bit better than a Mack.

The Hon. N.F. COOK: What sort of truck do you drive?

Mr Telfer: I will talk to you about that afterwards.

The Hon. N.F. COOK: Show me pictures. I like a truck. So the big truck comes to a quick stop and it jackknifes and causes chaos, and the chickens fly everywhere and there is rubbish all over the road and people die. It is terrible. So we brought the big truck to a gradual stop and that stop was much gentler.

There were 30 homes that were sold in that first little period in the Marshall-Lensink viability plan, but I am very pleased to report that we do not have to sell homes to maintain the viability of the trust. We have also, as I have explained a number of times, put that $136 million, plus another $55 million in the budget, now we have $136 million from the feds—sorry, the total is $177 million. About $135 million is on houses and the rest is maintenance and stuff. There is hundreds of millions of dollars of new money into the account.

This is not funny money. If you wish, you might want to have a look back into history and see the funny money where the so-called generous Treasurer with ice in his veins brought the money forward from a few years in advance and pretended—and they all pretended—that there was extra money, but there was not. It was funny money; it was money on paper brought forward so that they had this supposed pipeline to deliver.

They went to the election with 80 words, which in summary was, 'We'll keep doing the same sort of stuff.' That did not include increasing the numbers of public housing; it did not include increasing the quality of the public housing. We went with a comprehensive plan, we are now delivering it, and we do not need to have viability sales at all in terms of the trust.

I have been very careful to not say, 'We won't sell public houses,' because sometimes there is public housing in spots that is not appropriate: it is not going to work for the future of the South Australian Housing Authority, it is not in a spot where families can take their kids and go to school, it is not in a spot where people can access the shops without having to spend bucketloads on cabs and other transport. We have changed how we are doing it. We are not going to have viability sales. There were 30 that happened; that is the 30. It is the Marshall-Lensink sales plan.

Mr TELFER: I was going to go to some disability questions in the last couple of minutes, but perhaps I will continue on with housing. I will save those others for question time. Page 404 talks about the utilisation of tenanted properties, and there is a worrying number about the underutilised three and four-bedroom properties. What is the government doing about these underutilised properties? Does the government have a strategy on better utilising these?

The Hon. N.F. COOK: Yes, people are ageing in their homes. There is quite a number of single, older tenants; in fact, you would be aware of those in your own backyard. These people need probably small, two-bedroom properties with virtually no backyard. Then we have a bunch of vulnerable families who are on our waiting list that need to get into good-sized homes with plenty of bedrooms.

We have switched up our mix of what housing stock we are building. We are focusing on building a lot of two-bedroom homes with the hope that people might find that attractive and want to move into them—much easier to maintain. We are focusing as well on building fours, so there is a combination of twos and fours.

Mr TELFER: That is the only strategy you have for addressing the underutilisation?

The Hon. N.F. COOK: No, but that is the only time I have left, sorry.

The CHAIR: The time allocated for the examination of that part of the Auditor-General's Report has expired. We call the Minister for Small and Family Business, and I assume the member for Heysen is next.

Mr TEAGUE: I indicate at the outset appreciation for the presence of those here in the chamber accompanying the minister in the context of this analysis of the Auditor-General's annual report. Perhaps a question at the outset about the structural rearrangements that have occurred within the Attorney-General's Department consequent on the minister establishing those separate areas of ministerial responsibility. I am at page 14 of the annual report Part C: Agency Audit Reports.

In relation to the establishment of the office with agency responsibility for small and family business, the separating of CBS and the definition of the minister's office, is it the case that CBS is continuing to operate under AGD and therefore does not get a mention at page 14? Is there anything the minister can indicate to the committee in relation to the establishment of the Office of Small and Family Business that might be relevant to what the Auditor-General is addressing as key points there at page 14?

The Hon. A. MICHAELS: Consumer and Business Services remains within AGD, so there is no change in that to what there was prior. The Office of Small and Family Business is a small team within the Department for Industry, Innovation and Science. Adam Reid is my CE in respect of the Office of Small and Family Business. It did have creative industries. That has now moved over into DPC, so DPC now has arts and creative industries together; that is a recent change. CBS remains where it was and that is in AGD. My ministerial office and my connections are through to Caroline Mealor as CE of AGD, but I obviously have Damien as the DPC CE and Adam Reid and Caroline Mealor.

Mr TEAGUE: Thanks, and I had not gone to Arts but Arts is shrouded in a similarly—within a DPC frame, it perhaps might be described as an unusually below the radar combination of portfolios that are comprised therefore partly of the DPC side and partly within AGD. Perhaps to underscore that—and I am at page 1 now—I wonder in terms of the Auditor-General's reference to agencies not included in this report, the Auditor-General has given the usual expression in terms of discretion to exclude some agencies. Is there anything in respect of particularly small and family business which I understand not to be the subject of the Auditor-General's annual report that is addressed or that the minister anticipates is going to find its way into any current or subsequent assessment by the Auditor-General? When are we going to hear financial reporting in that respect in particular?

The Hon. A. MICHAELS: So the entire Department for Industry, Innovation and Science is not referred to in here. As a small agency, DPC as an entirety is, AGD as an entirety is, DIIS is left out in terms of this. It does have financial statements on the Auditor-General's website, I believe, from memory, so that is available but not included in this. All of Department for Industry, Innovation and Science is excluded. My bit is the Office of Small and Family Business; the Deputy Premier has the rest of it.

Mr TEAGUE: I had a bit of a look in that direction as well. So that is then the context within which we are here. I am at page 16 of Part C: Agency Audit Reports. On the CBS side, the Auditor-General has addressed the Residential Tenancies Fund and makes observation that bonds lodged as at 30 June total $284 million. You might get there quicker than I do. I think there has been some growth, I think if we go to about point 7 on the page, there is an observation:

CBS implemented actions throughout the year to manage and reduce the balance of unclaimed bonds. Even with these actions, the unclaimed bonds liability for bonds greater than 12-months old increased by $1.5 million from the previous year.

Can the minister explain the actions that have been taken and whether or not there is then the prospect of turning that trajectory around?

The Hon. A. MICHAELS: In terms of the actions that have been taken, some were commenced under the former government in terms of an unclaimed bonds portal. That is part of the CBS website where you can go and put your address in and see if you have an unclaimed bond. That had a soft launch in January 2022 and communications have been sent since. I think March 2022 was the first lot of proactive communication to get people aware of that bonds portal.

The second phase involves an update of the CBS bonds management system. That allows CBS to contact individuals where they have either a mobile phone number or an email, so they are communicating by text or email. If you have an unclaimed bond for seven days or more, there is some proactive reaching out to those tenants to try to get them to claim through that process. That was started in May 2022. That is much more proactive than what CBS has been in the past. Of course, if people do not have an up-to-date email address or a mobile phone number with CBS that causes difficulties.

The last phase that is underway is contacting those with historical bonds, so they may be many years old. Again, we are looking for mobile phone numbers or emails and CBS is proactively contacting those people where they have that information on file to get them to claim those historical bonds.

We have done a marketing campaign to promote the ability to go and search for your bonds and encourage people to go and make claims on their bonds. There is a software digital solution OneCBS, which is in progress to be implemented to manage unclaimed bonds. There is also some work being done in the bill that is before the house at the moment in relation to bonds to try to get the information that we need to be more proactive. I will not talk about that because it is before the house, but that is being done.

In terms of the increase, I would say it is a combination of factors. One is that rents are increasing and therefore a bond amount that you pay is four weeks of your rent, which is a higher amount. That is causing an increase.

Mr TEAGUE: I wonder then just for the record is it to hand what the amount of bonds lodged was as at 30 June 2022?

The Hon. A. MICHAELS: Total bonds lodged is the $284 million referred to on page 16.

Mr TEAGUE: That was 2023.

The Hon. A. MICHAELS: No, that is a total figure. What was lodged in that financial year?

Mr TEAGUE: No, what was the figure as at 30 June 2022?

The Hon. A. MICHAELS: It was $248 million at 30 June 2022.

Mr TEAGUE: While we are proceeding on the increase, we have gone from $248 million to $284 million, and that is contributed to by those factors; I appreciate that. Just to flesh it out in terms of those actions, firstly, the minister has indicated a particular focus on those historical bonds. Is there an identified number of such tenants who have been contacted, or attempted to be contacted, and is there a sense of the proportion of the total? How successful has been the process of contacting historical bonds depositors?

The Hon. A. MICHAELS: I do not have figures as to how many people have been contacted. I am not even sure we can get that information. I can give you some figures of unclaimed bonds over 12 months, just to give you a comparison figure. For 30 June 2022, it was $14.3 million in unclaimed bonds over 12 months old. At 30 June 2023, it was $15.7 million in unclaimed bonds over 12 months old.

Mr TEAGUE: Again, perhaps pushing a point or seeking to understand, if there has been an effort to focus on those historical bonds, there might not be a number available in terms of the number of people contacted, but what sort of methodology has been applied to try to zero in on that particular subset?

The Hon. A. MICHAELS: I can come back to that. I will just give you some further information in terms of the total bond applications that have been made. As at 27 October 2023, in the 21 months prior, there were 15,990 applications, of which 84 per cent have been paid out and the rest are being finalised, with issues around validation or requiring further information. So in terms of numbers of applications, it is almost 16,000 for that 21-month period. In terms of what we are doing for those historical bonds, it is what I said earlier, which is if we have a mobile phone number, there is a text; if we have an email, we will email. Otherwise, it is the proactive marketing and our social media campaign to try to get people to engage and make their bond claims.

Mr TEAGUE: Apart from the dollar figure outstanding on a time basis, there is really no other more particular way of measuring the success. The real measure is: what is the dollar figure for that particular age of outstanding unpaid bonds?

The Hon. A. MICHAELS: Coming back to that 21-month figure up until 27 October—since we have started this unclaimed bonds project, which is about three years, we have returned $19.1 million.

Mr TEAGUE: I think the minister has referred to it, and I notice it is also there at the fourth dot point at about point 9 on the page, still at page 16: the marketing campaign to promote unclaimed bonds. Is there a cost to the marketing campaign, and what sort of form has it taken?

The Hon. A. MICHAELS: Social media on the CBS website, Facebook—I assume it is largely Facebook—and Twitter/X. I have done media on it, a press release. The commissioner has done separate media on it. So that is social media and traditional media.

Mr TEAGUE: Yes, but not TV advertising, radio advertising—a marketing campaign in that sense?

The Hon. A. MICHAELS: No.

Mr TEAGUE: I have asked about cost. I mean, it is possible to have paid advertising on social media, or to boost posts and that sort of thing. Has there been actually any money spent on marketing as such?

The Hon. A. MICHAELS: We don't think so, but we will take that on notice and if there is an amount we can provide that to you.

Mr TEAGUE: I think mention has already been made of OneCBS, the digital solution, and I note that the Auditor-General refers to the planned implementation of OneCBS by 30 June 2024. Is that on track to commence on time?

The Hon. A. MICHAELS: Yes, that is on track to commence by 30 June 2024.

Mr TEAGUE: Is there an indication as to the cost of preparation and implementation, and is it running so far in line or in excess of budget?

The Hon. A. MICHAELS: I might take that on notice. I am not actually sure I can answer that not being in the 2022-23 year, but I defer to the Chair on that.

The CHAIR: Which year are you referring to?

Mr TEAGUE: Sorry, chair. I was at page 16, point nine on the page and directing my question to the progress towards implementation of OneCBS digital solution. The minister has indicated that is on track to commence on 30 June 2024. My question relates to costs, and I might say costs incurred in the relevant year if that is helpful. I would perhaps submit that it is a reference in the report to being on track.

The Hon. A. MICHAELS: The advice I have been provided is to 30 June 2023. That is the relevant period, and I am happy to do that. Also, the OneCBS project is beyond bonds: it is an entire CBS digital solution as well.

Mr TEAGUE: Yes, so that we are clear about that. We look forward to seeing all of that in all its glory. There will therefore be an opportunity to analyse the cost of all of that process in due course, but I appreciate the indications as to the end of the 2023 year for the time being.

I would just like to address some questions to the administration of gaming machines, and I refer to page 24 of Part C, and time permitting I will go to the Residential Tenancies Fund just in the same couple of pages. That is where I am for the balance of the time permitting.

I notice that the Auditor-General indicates that in the case of what we will call aged machines there is a requirement to return winnings not less than 85 per cent, and that is ticked up to 87.5 per cent in the case of machines installed after that. Is there an indication of the number of such aged machines pre 2021 and the more recent captured by that slight increase?

The Hon. A. MICHAELS: I will have to provide that information to you. I do not have it with me at the moment, but we can provide that on notice.

Mr TEAGUE: Apart from a breakdown of the machines we see, I think, set out in the table on the next page the relevant figures in total in terms of turnover and amount won. It might be mathematically possible to determine the breakdown by reference to those figures—I am not going to attempt to do it on my feet—but, if that comes in at about 86 per cent or something, then one would know fairly quickly what the breakdown on the numbers is. I might just ask the minister to confirm that what we see in the table on page 25, in the row described as 'Amount won', is the relevant 85 per cent or 87.5 per cent?

The Hon. A. MICHAELS: Yes. As a total of all machines, that is correct; that amount won showing through 2020 to 2023.

Mr TEAGUE: Going to the top of page 25, we know that under the trading system the purchase price of a gaming machine entitlement is not fixed. Is there an indication, perhaps call it a 2023 year indication, of the going price for a machine and has that fluctuated greatly over the course of the year?

The Hon. A. MICHAELS: For the latest trading round, which happened to be in November 2023—slightly outside of the Auditor-General's Report—I can give you that figure of a purchase price of $48,333.33 and a seller price of $36,250. That was slightly higher than the last trading round, which was November 2022, which was $40,000 as a purchase price and $30,000 as a seller price. For 2023, that involved 33 being sold; in the November 2022 one there were 76 sold. Nine were cancelled in 2022, eight were cancelled in 2023, so that is the one in four that comes out as part of the trading scheme.

Mr TEAGUE: In the table immediately below on page 25, the number of machines installed has remained relatively steady. I note that there is a material decrease from 2021 to 2022 and a similarly material increase in 2022 to 2023. Is there a way to understand that in the context of the cancellations the minister has just referred to?

The Hon. A. MICHAELS: It is hard to say for what reasons the market wants to buy in at different points in time. I suspect some of that has to do with coming out of COVID and the increases there. I am not sure I can give you much more information as to why those numbers have jumped around other than that. We are currently looking at some trading round reforms on GME tradings. There was a public discussion paper. Consultation has now closed—I think on 3 November—and the commissioner is looking at that to make recommendations to get down to the statutory number that is legislated.

Mr TEAGUE: To round out references that I will make to the table, I look at the row just below the row headed 'Turnover'. We have seen a really quite material increase in turnover from 2020 to 2023, more particularly a material increase from 2022 to 2023. Is there any particular reason for that 2022 to 2023 increase?

The Hon. A. MICHAELS: I have been advised that the increase in activity from 2020 through to 2023 follows an unusual period of time. As we are aware, there were COVID pandemic impacts and also a substantial stimulus of cash being put into the economy by governments through that pandemic period. That obviously had an effect on people's behaviour in terms of gambling and people not being able to travel overseas for an extended period of time, who may have instead spent that money on travel within Australia and on other forms of entertainment, including gambling.

In the first quarter of 2023-24 (again outside of the Auditor-General's Report) there has been a slight decline of 1½ per cent in revenue, compared with the same quarter in 2022-23. It has gone from $246.7 million down to $242.8 million in those comparison quarters.

Mr TEAGUE: I turn to the Residential Tenancies Fund. I note that the fund is administered by the Commissioner for Consumer Affairs, among a small number of other things that are going on. We have addressed the security bonds. Regarding other amounts paid to the Residential Tenancies Fund, is there an indication of any other material funds that are paid, as referred to by the Auditor-General? It is in the first paragraph under the heading.

The Hon. A. MICHAELS: Sorry, was the question about amounts?

Mr TEAGUE: All other amounts—are there any other significant contributors?

The Hon. A. MICHAELS: Just the bonds and the interest and earnings on that money.

Mr TEAGUE: We see reference to income from investment. I would come back to that question about other amounts paid into the RTF. The Auditor-General seems to be drawing a distinction between that and income derived from investment. I would ask that you might revisit that question. I will go on to ask: are the costs of administering and enforcing the Residential Tenancies Act—as well as the costs of educating the stakeholders, landlords and tenants and other functions—less than the income derived from investing the funds? Is it operating at a net increase? If so, is that possibly an explanation for the other amounts that are received by the fund?

The Hon. A. MICHAELS: I can give you some information on that. In terms of recouping from the fund for administering the Residential Tenancies Act, CBS recouped $2.4 million in the 2022-23 year. There was some additional recoupment for SACAT to fund that part of SACAT's work. That was $3.3 million recouped from the fund by SACAT, based on the number of matters received relating to proceedings under the Residential Tenancies Act and also under the Residential Parks Act and the Retirement Villages Act. So that is recouped from the Residential Tenancies Fund.

In comparison, we have investment income recognised by the fund. For 2022-23, we had interest and investment income which amounted to $8.5 million, which is substantially higher than 2021-22 which was $4.3 million. I suspect that might be some interest rate increases as well as other things. We had a net loss on the revaluation of investments of $4.2 million, again for 2022-23, compared with $4.4 million of that net loss and revaluation for 2021-22. So certainly more income in terms of $8.5 million versus $5.7 million total recruitment out of the fund.

The CHAIR: The time allocated for the examination of this part of the Auditor-General's Report has expired. I call on the Minister for Trade and Investment and the member for Chaffey.

Mr WHETSTONE: Thank you to the minister and staff. I will start off with the Department for Trade and Investment, machinery of government changes, Report 8, Part C, page 489. Minister, how has the transfer and functions from the Attorney-General's Department impacted on Trade and Investment's operational efficiency and budget?

The Hon. N.D. CHAMPION: Essentially what is happening is that Planning and Land Use Services come into Trade and Investment. They are a single department but, if you like, there are two different sections. Planning and Land Use Services has not changed dramatically in its size and composition. Trade and Investment has changed a little but I can run you through the exact figures, if you like. Do you want me to do that?

Mr WHETSTONE: Are they in the report?

The Hon. N.D. CHAMPION: Yes.

Mr WHETSTONE: Thank you, minister. Will the additional functions divert any resources away from Trade and Investment's core business?

The Hon. N.D. CHAMPION: No.

Mr WHETSTONE: What performance metrics are being used to assess the impact of the services on South Australia's Trade and Investment? Obviously Planning has come in through the Attorney-General's Department. What metrics are used to assess the merge?

The Hon. N.D. CHAMPION: In terms of the machinery of government changes, there has been no impact on Trade and Investment and no impact on Planning either. Essentially, what is happening is that with Trade and Investment, we have obviously invested in Invest SA. We have made some extensions to the overseas offices. We are still running all of the services that we did beforehand. We have the South Australian wine ambassadors and a whole range of services, and Planning continues to run all of their services as well. In terms of the machinery of government changes, I do not think the public, business, consumers or anybody else has really noticed that there has been much change. It is an administrative change to run a department.

Mr WHETSTONE: Minister, moving on to functional responsibility. Page 490 states Trade and Investment's 'functions include facilitating economic growth in South Australia by helping to attract local investment…' Can you tell me how much investment in the last 12 months has been attracted into South Australia?

The Hon. N.D. CHAMPION: I think we had a press release out saying over a billion dollars. That was done through Invest SA and I am happy to send you a copy of that. Obviously, we want to maintain investment in South Australia. It is really important. We have a growing economy. We have added growth in exports as well, and the lowest unemployment on record. In terms of trade and investment, I think we are doing well and the department is providing all the services that it did beforehand.

Mr WHETSTONE: Minister, it says 'enhancing export opportunities'. Is that nurturing new exporters, or is that assisting existing exporters to grow, or all of the above? Can you give me an understanding of what 'enhancing export opportunities' means?

The Hon. N.D. CHAMPION: It is all of the above. Obviously, what you want the department and the trade and investment arm of it to do is if someone wants to export, you want them to nurture that and give expertise and advice. Likewise, when we have investment coming in—and that is why we have created Invest SA. We want to have officials from Trade and Investment—Chris Wood, who I think you or one of the other members of the opposition asked me about last year. We have recruited Chris Wood to run Invest SA, and the reason why we did that is because we think he is well qualified to court investment from around the world.

Mr WHETSTONE: That same paragraph there states 'creating employment opportunities'. Are you able to tell me whether there is a number of employment opportunities that have been created? More so with new exporters or opportunities, what evaluation do you put on existing businesses or new businesses that travel on trade delegations? Are there criteria that you put on an invitation to a trade expo or a trade delegation to trading countries?

The Hon. N.D. CHAMPION: Obviously, it depends. There are a number of trade and investment opportunities such as conferences, whether they be on wine, hydrogen, renewable energy, tech or defence. There are a number of them around the world. What we do is we invite companies that we think are best qualified and best ready to make the biggest impact on behalf of South Australia. So they apply, the department does an assessment and then assists them to go to event X or conference X or industry event X in the country. Of course, we have overseas offices which assist companies as well when they are there.

Mr WHETSTONE: Finally, on the trade side, obviously you must have a brief or a list of exporters or traders out of South Australia that go with your trade delegations. Is there a list that is an ongoing invitation, or is there a new evaluation, on an annual basis or on an ad hoc basis, to ask businesses to travel with you?

The Hon. N.D. CHAMPION: There is no set list because, for instance, with BIO USA there are only a select number of companies that might be interested in doing that. I think we had a record number of companies this year go to BIO USA. It was a very successful conference for us. We will invite the industry and then we will best select who might be best able to make an impact there. But obviously, we are here to assist South Australian business and we do our best to do that. We are not in the business of playing favourites; it is done on whoever is going to make the biggest impact for South Australia in terms of exports, investment and economic activity.

Mr WHETSTONE: If I can, I would like to move into Planning. I refer to the ePlanning system in Part C, page 491. Can you elaborate on the vendor performance monitoring weakness in the ePlanning system?

The Hon. N.D. CHAMPION: You have given me a technical question. I might take that element on notice. Essentially, there were 14 audit findings. There were no high-risk findings; there were some medium-risk ones and some low-risk ones. As part of running an ePlanning system—I might add, we are the only state in Australia that has an ePlanning system. We have a very good planning system, judged by the Business Council of Australia to be basically the best in the country. But obviously, if you have an ePlanning system that means you have to be pretty aware of cybersecurity. There is a team within PLUS who attend to those. Obviously, we have taken note of the Auditor-General's Report and will act on those findings.

Mr WHETSTONE: I have asked you about the vendor performance monitoring and you have said that this is an overall type of monitoring system. What about job monitoring or the patch management weakness within the system?

The Hon. N.D. CHAMPION: Basically, that is a software—something that IT people understand. Essentially, you want to test something before you go live with it. Within PLUS they test before they go live. They are rigorous. It is an ongoing process, because the nature of cyber threats is that you have to constantly update systems. That is the process that they undergo. Obviously, we are happy to take the Auditor-General's findings and act on them, but there is already a pretty comprehensive set of work that goes on.

We are up to nearly 500 changes in the ePlanning system from its inception to now, and obviously it has gone over previous governments. It was conceived of in one government, enacted in another, and it is now ongoing, so it is the product of the good work of the parliament and the good government here in South Australia. It is a system that is constantly updated and refined, and that is the only way you can protect yourself against cyber threats.

Mr WHETSTONE: Are you able to give me an understanding of how often the planning system is patched? Is that the 500 number?

The Hon. N.D. CHAMPION: The 500 is enhancements to the system. Sometimes it is just updating and making things more user-friendly. I think when we launched the Greater Adelaide regional paper, you had to go through a few links to get to it and an enhancement was to make that more straightforward. As to the remainder, I think probably the best thing to do, given it is cybersecurity, is to offer you a briefing on that and also to take the question on notice.

Mr WHETSTONE: Minister, am I covering it when I ask: is there any process weakness in dealing with disaster recovery or backup restoration through that process?

The Hon. N.D. CHAMPION: We have a robust system with some pretty comprehensive contingency plans, but it has been running for three years and—touch wood—it has not had a failing yet. Obviously, cybersecurity is an ongoing challenge. It is an ongoing challenge for every government department, for every system in every jurisdiction across the world and so PLUS has been rigorous. They have a rigorous approach to making sure that the system is robust and secure.

Mr WHETSTONE: Minister, with the Auditor-General's Report this year he has stated that you have not identified the weaknesses in last year's report and they have not been addressed. Will they or when will they?

The Hon. N.D. CHAMPION: The work to date includes two medium-risk items related to disaster recovery testing across two systems, and one medium-risk item with regard to software updates, which are patches, and one low-risk item with regard to change management. Basically, we are working through those findings and they are expected to be completed by March 2024.

Mr WHETSTONE: Are you aware of any breaches regarding the system to date, any actual breaches?

The Hon. N.D. CHAMPION: No.

Mr WHETSTONE: If we can move to page 492 and the financial performance table, as the department's expenses exceeded its income in 2023, what measures will you put in place to ensure that better budget management and financial stability does not watch this continue?

The Hon. N.D. CHAMPION: What that relates to is at the moment the fees that we raise for running the planning system are not equal to the costs of the planning system, so obviously that is an imbalance. At the moment that is borne by the government. There is only one other way of doing that, which is to charge users more.

Mr WHETSTONE: Obviously, you have spoken a lot about savings measures, especially in estimates. Given the income increase of $135 million from 2022, how were these additional funds utilised?

The Hon. N.D. CHAMPION: So that is just an appropriation coming in for the MoG, basically.

Mr WHETSTONE: I will move on to urban renewal, if I may. Page 514, Part C, how many of the developments that have a component of affordable housing will require federal funding to make them financially viable?

The Hon. N.D. CHAMPION: The 15 per cent, which is already in the planning system, there is a requirement on private developers to do 15 per cent affordable and it is also a requirement on Renewal SA, so that is not something that is contingent on funding from the federal government. What the HAF funding will mainly do is to back in projects where we might partner with a community housing provider. Essentially, it will be about driving higher levels of affordability. There are two types of affordability: affordable sales and affordable rental.

The state has been doing a lot of affordable sales. It has been a component of the system for some time now. Affordable rental is being done a little bit but that needs to be a growing category and obviously that is what the federal government funding will facilitate.

Mr WHETSTONE: Are any of the projects that we talking about here not viable without federal funding?

The Hon. N.D. CHAMPION: No. What the federal funding will allow us to do is to drive greater levels of affordability. Obviously the HAF has currently passed the Senate. It is currently in its construction in terms of regulations and the actual facility, but what that will do is allow us, particularly in future projects as well, to drive greater levels of affordability and, like I said, expand the affordable rental category, which is the element that, if you like, is a missing part of the puzzle of the housing market at the moment.

Affordable sales are no good if people cannot afford to save a deposit. If you are in a rental market that has low vacancy and high rent, then that obviously prevents some people from getting enough money in their bank account for a deposit. That is what it will allow us to do.

Mr WHETSTONE: I will move to page 518, Part C. Of the land projects held by URA, do any have a negative net realisable value?

The Hon. N.D. CHAMPION: No, post the last valuation.

Mr WHETSTONE: Are you prepared to table the net realisable value of each project? Or, can you list the sites that are the most commercially valuable?

The Hon. N.D. CHAMPION: I would not want to do that because I do not think it serves the interests of the state. The reason being is that we enter into commercial arrangements on many of these projects and the release of information might affect our ability to get the best possible deal for the taxpayer and also the best possible outcome. Obviously, I am happy to talk to the opposition about that and provide briefings and the like, but I think one must be cautious about these sorts of valuations, particularly as we are going out into the private market.

Mr WHETSTONE: Why has the government approved the decision to nearly double URA's debt ceiling?

The Hon. N.D. CHAMPION: The answer is: we are in a housing crisis and the housing crisis touches every area in South Australia, including the member's electorate where we are doing a project.

Mr WHETSTONE: Not enough.

The Hon. N.D. CHAMPION: You would say, 'Not enough.' I am sure then you will back a bigger debt facility for Renewal. The reality is we are making land acquisitions, and along with land acquisitions obviously you have to have investments to get the development on those land acquisitions. You have to do civil works, you have to engage with builders and a whole range of things, and it varies from site to site. Obviously, regional South Australia has particular needs. So does outer suburban South Australia and the city.

We are seeing a great arc of projects, from Bowden, which we are finishing off, right the way through to the West End Brewery. You will be able to go right round the city to Keswick. That is a massive undertaking. It is being done in response to the housing crisis because we have to drive a number of things. We have to drive the overall market because there is a greater demand for housing because of falling household formation rates.

We have a growing economy. We have positive population growth. We have a falling household formation rate. They are all big drivers, so we need to have a big drive into the market. We have to drive particular segments of it. Obviously, we have to cauterise the great losses that have occurred in public housing and grow public housing. We also have to grow affordable rental in the city, the suburbs and the regions. We also have to drive affordable sales along with driving an overall market outcome.

The West End Brewery will not just be an affordable housing project: it will be a market project, and it will be a great place to live. It will be like one of those premium places to live because it will be a community that will have everything from KCs to cleaners, which is a good thing. That is the heart of Australia. We want to live in mixed communities with mixed incomes, with great urban design, with life in them, good amenities, in mixed-use communities. I think that when we complete these projects, they will be seen to be very wise investments.

Mr WHETSTONE: You mentioned the West End Brewery. Where does the West End Brewery sit in the order of realisable value compared to other projects, like the Franklin Street bus station and others? I could name a number, but I will not. Let's stick with the West End Brewery. Where does that sit in the order?

The CHAIR: The West End Brewery is in the audit report, is it?

The Hon. N.D. CHAMPION: Along with Franklin Street and a range of other projects, obviously we get independent market valuations, then we master plan these sites and we bring them to market. There is a bit of talk around the place about, 'Why Renewal SA?' I would argue an urban renewal authority has to do urban renewal. Franklin Street is our first project in the city in the history of the urban renewal authority. We cannot just be out there planning outer suburban communities: we have to play a role in the city. We have to play a role particularly at the edge of our city, and the West End Brewery site is a critical component.

You can see, like I said before, that arc from Bowden right round the edge. Port Road has had public transport on it and has had rezoning now for five years, and nothing has happened on that road. That is not good enough. There is not a better boulevard in South Australia. It is sensational. It is a real opportunity, and I want to see private investment pour in there. It is a catalyst site. We think it will be a great investment for South Australia, but these investments are not just financial investments. It is not just about numbers. It is about the nature of the city, it is about urban renewal and it is about great civic spaces with life and ultimately great urban communities.

Mr WHETSTONE: Minister, would it be practice for you to meet with developers prior to the sale of any of these sites that the government have purchased?

The Hon. N.D. CHAMPION: It would not be. Obviously, being planning and renewal minister you do meet with developers, but all those meetings are in my diary which I think you have FOI'd, so you would be aware of them. Obviously, I seek probity advice from the urban renewal authority, from Mr Menz and others, prior to meeting with anybody. If the probity advice is that I should not meet with them I do not.

Mr WHETSTONE: Moving on to the Regional Key Worker Housing Scheme on page 526 of Part C, why is the government focusing only on government employees with some of these regional housing schemes or the housing scheme? It appears that the government are focusing only on government employees. What is the government doing for industries that also require housing, agriculture and related supply services? Currently, education, health and the like are a priority for the government to supply regional housing.

The Hon. N.D. CHAMPION: The government has taken a number of actions to assist regional communities. I grew up in a regional community so I think I know something about regional South Australia. The answer is we have done a huge amount of change. In planning, we have changed regulations regarding workers' housing and made that easier to access. We did some changes for Viterra, which triggered off some requests from the council up at Goyder, so we have made some changes there.

In terms of the Office for Regional Housing, we are doing two things. We are doing 35 houses in a range of areas, including the member's own electorate, which are focused on government employees, to build a model that we might expand. This has not been done in some time. The policy cupboard was bare when I got there, so I had to engage with Renewal to create this office, and obviously we have had to create this model. It is the first time we have done it in some time.

So we are building that model to expand it. The second thing we are doing is we are talking to councils, because they also have not been doing much on housing—thinking about housing or undertaking housing. Many of them have pretty good balance sheets or landholdings of their own, but they are unaware of how to bring those to market. There are some vulnerabilities for councils if they get that engagement wrong and so they are often reluctant to do it.

One of the secondary things we have been doing is engaging with councils and giving them advice, discussing with them about particular pieces of land that they might have in their inventory, or Crown land that might be in the towns, and just running that all through an assessment process through the Office for Regional Housing.

Bordertown gives you an example of a project where we have merged, if you like, the government employee aspect of it, because we are putting in a contribution and getting five allotments out of it. Those five allotments kick off the first 15—and there is a great deal of interest from the employers big and small out in Bordertown to provide that 10—and that 10 might kick off a development of 60, which is a block in the middle of the town.

That was done because we engaged with Tatiara council. It was probably one of the first things I did as minister when I went down to country cabinet in Mount Gambier. The member for MacKillop, who at that time was I think the opposition spokesman on regional affairs, wanted me to see some of the challenges facing regional South Australia in his area. I went out with him, we engaged with the council a year later or so, and the outcome is the Bordertown announcement which we did with Tatiara council two weeks ago.

The CHAIR: The time available for the examination of this section has expired. The committee has completed its examination of the 2022-23 Auditor-General's Report.

Sitting suspended from 17:59 to 19:30.

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