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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2008-11-11 Daily Xml
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DESALINATION PLANT

The Hon. M. PARNELL (15:34): I seek leave to make a brief explanation before asking the Minister for Urban Development and Planning a question about the Port Stanvac desalination plant.

Leave granted.

The Hon. M. PARNELL: Today the government released the environmental impact statement for the Port Stanvac desalination plant. Recently, under freedom of information, I received a copy of the form 'Request for expressions of interest (or the EOI) to design, build, operate and maintain (or DBOM) the proposed Adelaide desalination project'. Under the section entitled 'Payment mechanism', in relation to operating and maintaining the plant, the document states: 'SA Water is proposing a monthly operate and maintain service payment to the operator that may include the following components', and one of the inclusions is, 'shutdown charge based on the period of plant shutdown (e.g. short, medium and long term) as requested by SA Water'.

These types of clauses are often described as 'take or pay' clauses, and they are usual inclusions in public-private partnership or DBOM desalination contracts. For example, the DBOM contract between the New South Wales government and the private operator of the Kurnell desalination plant includes a take or pay clause that requires the government to pay millions of dollars in holding costs even if the water is not needed.

In Victoria, similar questions have been asked about take or pay clauses in that state's desalination contract. For example, the business writer for The Age, Kenneth Davidson, made the comment that no bank would lend $3.1 billion to build a plant capable of supplying 40 per cent of Melbourne's water at a price five to six times the cost of present supply without a watertight contract guaranteeing the repayment of the principal and interest on the loan.

I understand that the Sydney DBOM contract also contains a clause allowing the operator of the desalination plant to operate full-time for the first two years of the plant, regardless of whether or not the water is required. My questions of the minister are:

1. Will the government rule out a take or pay clause in the final contract with the Port Stanvac desalination plant operator?

2. If, once the desalination plant is up and running, water is spilling over the Happy Valley reservoir, will SA Water be able to ask the operator to stop producing more water without being charged prohibitive fees?

3. Will the government rule out any guarantees of purchasing a minimum amount of water from the desalination plant in the initial period of the plant's operation?

4. If there are no take or pay clauses in the final contract, how will the contractor guarantee the income stream required to fund its investment in the plant and ongoing staffing and other costs?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (15:37): I would have thought that the last part of the question answers the member's question. If the government was not going through a PPP and had to fund this plant, it would have to pay—someone has to pay for the plant. I think it was interesting that, when the EIS was announced today, the Hon. Mark Parnell was down there to voice his opposition to it before it had even been released. But I guess we would expect that.

These operational issues are really matters for my colleague the Minister for Water Security, and I will refer the question to her for an answer. My role as the Minister for Urban Development and Planning is to ensure that the major development process is undertaken properly. The EIS is part of the major projects process.

The environmental impact statement was released today, and it is up for public consultation for six weeks. That period runs until Wednesday 24 December, with submissions to be lodged with Planning SA. In addition, a public meeting to be organised by Planning SA will be held on Monday 17 November at 7.30pm at the Hallett Cove Baptist Community Centre. I understand that the EIS is now up on the major developments section of the Planning SA website, and I would invite anyone with an interest in this matter to have a look at it.

The question that the honourable member asked was not so much about the environmental impact statement but about funding. That is clearly a matter for my colleague the Minister for Water Security, and I will refer it to her. However, I think we all understand that, if we are to have water security, we need an alternative supply of water and it has to be paid for by consumers. There is really no other way in which we can achieve that objective.

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