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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-10-14 Daily Xml
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DESALINATION PLANT

The Hon. R.I. LUCAS (14:34): I seek leave to make a brief explanation before asking the Leader of the Government and, for some aspects of the question, the minister representing the Minister for Water Security a question about the Adelaide desalination plant.

Leave granted.

The Hon. R.I. LUCAS: I recently met with a group of concerned small business people, representatives of the Water Industry Alliance and the Civil Contractors Federation, who raised a series of concerns with me in relation to the share and dollar value of contracts going to local South Australian businesses for some of the major infrastructure projects in this state, including a number related to transport projects but, in particular, the Adelaide desalination plant.

In relation to the Adelaide desal plant, the group informed me that minister Maywald had, at an ICNSA local industry forum, publicly stated that 70 per cent of the value of the Adelaide desal project could go to local South Australian businesses, and that this claim had been repeated by both the minister and the government representatives to industry people over a period of time. However, this group informs me that at a recent meeting it was told by a representative of SA Water that it was not really going to be 70 per cent of the value of the contract but 70 per cent of the total number of contract packages that were to be let.

As these business people outlined to me, if for example a contract package for $10,000 for local security is to be given the same weighting as a $500 million construction contract, they had very serious concerns about the position as outlined to them by SA Water. They indicated that 70 per cent of the total number of contracts could be a minority of the total value of the contracts.

I was also given detail of one very successful South Australian company's dealings with bidding in the consortium, and I will try to outline its concerns as an example of the number of concerns other businesses had. Company representatives attended a debriefing session on 14 August and were told that they were one of two final companies to come through the procurement process for a particular contract, and that it was basically a 50/50 decision. Ultimately they were advised that the successful company was not a South Australian company but a Tasmanian-based company. They asked why they were not awarded the package and whether it was price. AdelaideAqua responded, 'No, the commercial attributes were very satisfactory.'

They asked whether it was experience, and AdelaideAqua responded, 'Of course not: you know we're aware of your company's background and that some of AdelaideAqua's staff has actually been involved with your company on other projects in the past.' The company then asked, 'If we meet the commercial and technical requirements, why were we not awarded the contract?' AdelaideAqua would not respond and replied that at the end of the day it could have gone either way and that they were only two men on a board of 11.

The company then goes on in correspondence with me to outline its very significant concerns about the local input policy, and whether it was operating as the government ministers and others had been indicating. There is a whole package of correspondence, which I do not have time to summarise in a question, but in amongst it was an email from this company to minister Holloway, as the Minister for Small Business, dated 12 August. The managing director of the company was urgently seeking a meeting with the Minister for Small Business, and similarly had been seeking a meeting with the Minister for Water Security on the issue. I quote in part:

I again request a meeting so I can discuss my concerns with you and highlight the impacts this project is having on local small businesses. I would appreciate your earliest appointment. I am requesting to meet with you to discuss the tender process being adopted by the consortium AdelaideAqua and our concerns of the impact to local business. We have been heavily damaged by a tender system that contradicts itself, and we are now extremely frustrated.

My questions to the minister are:

1. Why has the Rann government so far refused to meet with SA businesses that want to raise their concerns that South Australian businesses are not getting the promised fair deal in terms of work on the Adelaide desal project? Will the minister, minister Maywald or some other minister now meet with the businesses to at least listen to their concerns?

2. Is it correct that the Rann government is now saying that only 70 per cent of the total number of contracts will be from local South Australian businesses rather than the original claim that 70 per cent of the total value of the project would go to local businesses?

3. Is there any contractual requirement on the successful consortium by the government in relation to the 70 per cent issue and, if not, why not?

4. Will the minister (I assume the Minister for Water Security) give an assurance that there is no conflict of interest in the position of the company Orecon, which acts for SA Water and is affiliated with the engineering services company acting for the consortium AdelaideAqua?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (14:40): I meet with companies all the time in relation to matters that come within my portfolio but, quite clearly, there is not much point in my meeting personally with companies in relation to a tender about which I have had no dealings or—

The Hon. B.V. Finnigan interjecting:

The Hon. P. HOLLOWAY: Well, indeed; I was going to come to that issue. As I have said, even today members will be debating issues about ICACs. In relation to tenderers and so on, there are certain protocols that need to be undertaken. In a tender process where there is more than one tenderer, there will always be an unhappy tenderer, but whether or not they have justification is another matter. Clearly, the letting of tenders is at arm's length from the government and there are proper processes to be gone through. It would be totally inappropriate for a minister of the government to interfere or try to achieve an outcome towards one particular tenderer over another, and I think it is worth pointing that out.

As I have said, I meet all the time with businesses that raise concerns within my portfolio areas, where I have some jurisdiction and, indeed, some knowledge of the issues involved but, clearly, this is a matter for those responsible for the tenderer. I will certainly take up the matter with my colleague the Minister for Water Security. Obviously, she would have the information about what is happening in relation to the letting of contracts. However, in relation to desalination plants, that technology is something that does not exist within this state, let alone, I think, within this country. So, obviously, much of that equipment will inevitably be imported from overseas, where, of course—

The Hon. R.I. Lucas interjecting:

The Hon. P. HOLLOWAY: Well, I am not claiming anything. I am not the minister for it, but I am just saying that it is common sense. I do know that, with things such as a desalination plant, where the technology is clearly not native to this country, that sort of equipment would have a high component of overseas content. However, I will refer the question to the minister in another place and bring back a reply.

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