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Legislative Council - Fifty-Second Parliament, First Session (52-1)
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ROXBY DOWNS (INDENTURE RATIFICATION) (AMENDMENT OF INDENTURE) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 10 November 2011.)

The Hon. D.W. RIDGWAY (Leader of the Opposition) (11:04): I rise as one of many speakers from the opposition to speak to the Roxby Downs (Indenture Ratification) (Amendment of Indenture) Amendment Bill 2011.

I will start my contribution by saying that I think that people should picture what may have happened in the meeting room in Melbourne when premier Rann, minister Foley and minister Koutsantonis flew to Melbourne to sign the deal before 20 October and before the premier and minister Foley left. We know that this negotiation had been going on for some six years or longer and that it is a project that has been around for some 40-plus years. But in the end, this particular arrangement had a deadline, which had been imposed by two members of the government—in fact, a deadline imposed by a union movement that had decided that the premier had to go. So, we arrived at 20 October.

Just picture what you think happened in that meeting when the agreement was signed: the premier, the former treasurer and minister for the expansion of the mine, and the mineral resources minister signed the deal and, I presume, they shook hands—I am sure it was a cordial sort of meeting—and then they left.

What do you think the BHP executives did? Did they sit there with their heads in their hands saying, 'Gee whizz, we've just been done over by the state government. How on earth are we ever going to face the board? How are we going to sell this to our shareholders? This government has got the best deal of the century'? Or, as the door closed behind premier Rann, ministers Foley and Koutsantonis and as they left, what do you think Marius Kloppers and his mates did? I am sure they would have jumped for joy and said, 'Yes, we have got the deal of the century.'

It is from that position that the Liberal Party already in the House of Assembly has agreed to support the amendments to the indenture, but it is our view that, once you put a deadline on a negotiation, you then forfeit a whole range of leverages that you might be able to get out of that particular negotiation. From that point of view, the opposition supports the bill, but we assert we would have been able to get a better deal than the one the government claims it has got.

The Olympic Dam expansion will define the future of our state. A project of this size always requires strong leadership, and I think history will show that that strong leadership really has only ever been provided consistently in this state by the Liberal Party. They are not the hallmarks of this Labor government which, over the last decade, unfortunately, has shown no sign of strong leadership at all, especially under the new Premier, Hon. Jay Weatherill.

I think we should look at the record, and I will spend a little bit of time this morning going over some historical facts. I have had the library provide me with some Hansard from the original indenture and it is interesting to look at that to see how the debate has moved and changed; and, in some ways, nothing really changes at all. For the record, the state Liberals have a proud history of supporting resources development in South Australia, and we have long been a consistent advocate for investment and mining in our state. When I was the minerals shadow minister, the department provided me with some chronological posters of the development of this industry, and I am proud to say the Liberal Party has always been a strong advocate for the resources sector.

It was the Tonkin government that ensured the Olympic Dam became a reality in 1982, and we have to remember they did this against the backdrop of strong opposition from Labor and, in particular, Mike Rann as an adviser. In relation to the Labor record and the indenture bill of 1982, in a press release issued by John Bannon in 1982, he said:

Our attitude to the bill will be determined in the light of our policy of opposition to uranium development and the nuclear fuel cycle, unless it is proved safe.

Of course, we know, and I will talk a little bit about this further in my contribution, that in June 1982 the Labor MLC Norm Foster resigned from the Labor Party and crossed the floor in this place to support the Tonkin government's bill.

I will talk about the Rann years. For years, Mike Rann has been an antinuclear campaigner. He campaigned against French nuclear testing in the Pacific Ocean and, during the 1980s, was tasked as a member of Labor's anti-uranium nuclear hazards committee and famously said the Olympic Dam project would be a mirage in the desert. It is really only in recent times that Mike Rann—it is almost with hypocrisy—has jumped on board the support of the Olympic Dam project. He did all he could to undermine it in its early days, despite the huge opportunities it has created for this state. It is interesting to note that the GST, which gives this state significant streams of revenue, was also opposed by Mike Rann.

Mike Rann, the former premier, is a bit of a Johnny-come-lately in supporting Olympic Dam. Despite being an anti-uranium campaigner, he credits himself with being the one who successfully overturned Labor's no new mines policy. I think the record really shows it was Martin Ferguson who publicly advocated for that change.

It has been put to me that that policy almost shut down exploration in South Australia, and minerals experts will tell you that you are likely to find uranium pretty much anywhere in northern South Australia. There was no capacity to mine it, so the exploration sector was reluctant to come, look and really explore here in South Australia because of that concern that, if we discovered something that is rich in uranium, then, of course, we had no capacity to mine it.

We often talk about not being as advanced in our minerals sector as Western Australia and Queensland. Sure, they have resources that are perhaps a little easier to access, but I wonder whether that three mines policy has not actually set South Australia back, probably some 20 or 30 years.

Before I get into more detail on the particular indenture, I point out that mining under Labor has been something that this government has bragged about, yet I think we just need to look at some facts. There has actually been a fall in South Australia's mining investment. We are yet to see the economic benefits that have been seen in Western Australia and Queensland. South Australia only has 8,500 mining jobs, compared with 91,000 in Western Australia and 67,000 in Queensland.

In fact, there are fewer jobs in mining here today than there were in 1985. The number of South Australian mining jobs has dropped 32 per cent in the last four years. If we exclude Roxby Downs and what we are talking about today, South Australia has only 0.2 per cent of national mining projects, worth about $0.4 billion, compared to $173 billion. Mining only represents 3.8 per cent of the state's economy, compared to 11.6 per cent for manufacturing.

In the last year of the former Liberal government, 2000-01, mining represented—wait for it, Mr President—3.8 per cent of the state's economy. So, a decade on, and after a decade of Labor saying they have been the superstars of the mining sector and have delivered all of these wonderful benefits, it still only represents the same percentage of our economy as it did over a decade ago.

It is interesting to look at some of the comments in Hansard. In light of where we are at today, I will just spend a couple of moments quoting the former premier, the Hon. David Tonkin. He said:

This measure is one of the most important ever to...come before the South Australian Parliament. It represents a very real opportunity to South Australia to substantially broaden its economic base while at the same time providing direct assistance to existing industries. With the possible exception of Japan, most Western industrial economies are at present experiencing severe contraction. No-one is suggesting for a moment that South Australia can avoid the impact of this world-wide trend, which has been caused by [various] factors outside the control or influence of any State Government—rising inflation, rising interest rates, and declining international markets. The O.E.C.D, in its latest forecast, points out that the Australian economy will feel the effects of these international difficulties throughout 1982. But it does give two specific areas of encouragement: a reasonably healthy consumer market, and continuing investment in resource development.

These are two areas in which South Australia can and must benefit. Our key manufacturing industries, particularly motor vehicles and white goods, must work aggressively in the local, interstate and overseas market place to maintain their existing...viability. These industries have already undergone major rationalisation, in South Australia in particular, making them more efficient and [more] competitive. The rich petroleum and mineral wealth which we have in the North of the State must be developed, processed and marketed responsibly.

With the [kind of] assistance of the hundreds of millions of dollars which resource development will ensure is spent in South Australia in the immediate future, the State can and will survive the current economic difficulties better than most others. Already the advantages of the massive growth in exploration and development which has taken place in the past 30 months are now beginning to reflect in South Australia's improved economic situation. Major economic indicators show clearly that South Australia is bearing the brunt of current difficulties better than are most States, and that that situation is improving.

Some 30-odd years on not much has changed. Okay, we have world decline in economic activity, we have a concern about our state's economy (in fact, our state debt is climbing), unemployment is climbing, and we all see, 30 years on, that this expansion as proposed at Olympic Dam will again be something that we all need to support and hope that it will deliver the economic benefits that we are promised it will.

In recent times, people have thought that this resource has become much bigger and better defined, but, just looking back to what the Hon. Roger Goldsworthy (who was minister for mines and energy at the time) said:

Members will be aware at the last election the Government undertook to 'encourage a full-scale development of the copper/uranium deposits at Roxby Downs'. This was in the context of a well recognised need for a major new project to be encouraged in order to provide the necessary diversity for South Australia's economy to grow and develop, thus ensuring that South Australia shared in the benefits of economic growth taking place elsewhere in Australia.

Again, I think that nothing much has changed over the last 30 years. Just to put this in context, later in his contribution he then goes on to say:

Over the past two years the exploration activity has been intense. A total of 300 diamond drill holes have been drilled to outline the mineralised zone elongated north west-south east, with dimensions of 7 km by 4 km, at depths below the surface between 350 metres and 1,100 metres. Thus, the deposit ranks among the world's largest concentrations of both copper and uranium with grades likely to average about 1.5 per cent of copper and .05 per cent uranium oxide. However, there are significant zones of higher grades of these metals.

This is a remarkable deposit in the terms of size of contained metals and mineralogy, and it appears to be unique, genetically—it is quite unlike any known ore body.

That is some of the debate that the government has spoken about here in recent times in the last few years—that is, about the magnitude of it. The magnitude was well known some 30 years ago, and yet the government, I guess, has been wanting to reinvent history. I am just highlighting the fact that it was apparent to the Liberal government 30 years ago that this sensible project that, for the future of our state, we needed to develop and also that it was a massive project back then—and nothing much has changed.

I think it is interesting in the context of some of the comments that the opposition leader (the Hon. John Bannon) made in relation to the project that was proposed by the Tonkin government. He said:

In the 2½ years since coming to office, this Government has chosen to create completely unrealistic expectations about the extent and the timing of possible benefits from the resources project at Roxby Downs. We have seen a barrage of grossly inflated claims, and a crazy auction of predictions, particularly about employment and possible royalty income.

This Government has encouraged the fiction that the commencement of the project was beyond doubt and only a year or two away. It has abused anyone who has questioned the wisdom of South Australia locking itself into the nuclear fuel industry, and for 2½ years it has tried to divide the community on the question of uranium mining, simply because it believed that to do so would give it some electoral advantage.

Certainly, there are some similarities between the comments that the Hon. John Bannon had made about the Tonkin government and some of the over-spruiking that has happened in the mining sector under this government for the last 10 years. Of particular interest—and I think it is something that former premier Rann made a whole range of noises about—are the potential jobs, and I refer again to the comments made by the Hon. John Bannon. He said:

I refer now to jobs. On the question of the possible employment arising with this project, this Government has been most cynical and most dishonest. While still in Opposition, the present Premier claimed that 20,000 jobs would be directly created. Immediately after the election, he increased it to 'about 50,000', both directly and indirectly. Meanwhile, the Minister of Industrial Affairs had entered the lists with a prediction of 10,000 new jobs immediately and a potential for 30,000 or 40,000 [more jobs]. All of these predictions were wrong. All of them were hopelessly exaggerated. All of them point up the way in which this project has been used by the government in totally cynical and dishonest terms. We are now talking about 2,000 to 3,000 jobs. We are now talking about an employment level which would not even erase the increase in jobless since this government came to office, even assuming that these jobs could somehow be created now and not, as is more likely, by the most optimistic predictions, in the next decade.

Surrounding all this rhetoric, all these exaggerated boasts about the project, we have the spectre created by the government of a 'Mount Isa of the South'. The government has tried to associate this project with the Mount Isa mine and township in Queensland.

In closing this quotation, he goes on to say:

Anyone looking for immediate economic salvation and comfort from this comparison (and we have immediate and major problems in this state which must be tackled and solved) should remember that the Mount Isa ore body was discovered in 1923 and the town reached a population of 7,000 in 1956, the year in which Mount Isa Mines paid its first dividend. It took a further 25 years to reach its present population of 26,000.

There has been a whole range of speculation about employment and this project for 30 years. It is interesting that the Hon. John Bannon talked about the increased employment that may have been coming from the project back then, and that it might not erase the joblessness. I am aware that the latest statistics show that we have lost 4,500 full-time jobs in South Australia so, while what is proposed at Olympic Dam is significantly more than that, if the trend continues it may well be our salvation but they may not be additional jobs; they may just be jobs that have been replaced.

While we are touching on a fraction of history, the library has provided me with some clippings of the era and I think that, for the record and because this is now able to be searched electronically, it might be useful to put a couple of these points in Hansard. One that jumped out at me concerns former Labor senator the Hon. Nick Bolkus and an anti-uranium mining rally at Elder Park:

About 2,000 people marched from Victoria Square on Saturday to hear speakers at the rally. Senator Bolkus said there was no sign of the Olympic Dam site being mined. 'The economics of Roxby are too risky,' he said. Senator Bolkus said the SA Liberal government was pinning its hopes on the 'Roxby Horror Show'.

He went on to say:

The Minister for Mines and Energy, Mr Goldsworthy, 'the minister for mining, milling and mutations' was making uranium lobbyists look like amateurs.

It is interesting to note, 30 years on, that on the lobbyists' register of interests the company Bespoke Approach that Mr Bolkus represents is a lobbyist for a number of firms, including Marathon Resources, which of course has been attempting to mine uranium at the Arkaroola site.

It is interesting how nearly everyone in this debate on the Labor side of politics has changed their spots. In fact, former senator Chris Schacht, when he was ALP secretary, was on the nuclear hazards committee with Mike Rann in 1982 when the Play It Safe pamphlet was written. We also know that Mr Schacht is on the board of Marathon Resources. So there has been quite a significant shift in time, and I wonder whether, back in those days, they were really opposed to uranium mining or whether it was just a political convenience that saw the former bill delayed for quite some time in this place. In fact, it was defeated until Normie Foster crossed the floor and supported it.

I may not have brought the right clipping down with me, which is a little disappointing. Nonetheless, there is a time line that I might provide to the Hon. Stephen Wade about when Norm Foster resigned and when the press conferences were held on the steps of parliament in the middle of the night. It really was quite an interesting time in South Australian politics, so I will provide that to my colleague the Hon. Stephen Wade to perhaps look at. It is now appropriate that I do address my comments to the bill we are here debating today rather than just going over history.

The Hon. G.E. Gago: Hear, hear!

The Hon. D.W. RIDGWAY: The minister interjects, 'Hear, hear!' but I think this is one of the most significant pieces of legislation we will deal with in her lifetime—and in the very short little bit of her political lifetime she has left—and in my political lifetime. It was 30 years ago; it has been a very important part of our state and I am sure it will go on to be a very significant part of the future of South Australia.

The Olympic Dam operation is subject to an indenture, signed by the governor in 1992, ratified by the Roxby Downs (Indenture Ratification) Act 1992. The proposed expansion of mining at Olympic Dam and the establishment of an open-cut mine and eventual cessation of the existing underground mine has been the subject of a lengthy process of approvals, which culminated in the completion of an EIS project under the Development Act and the signing of the variation agreement between the government and BHP Billiton to vary the original indenture. The bill, as presented, amends the original ratification act and ratifies the indenture as varied.

The bill introduces new definitions and updates to the act and further minor amendments. Amendments are made to section 9, which covers the application of the Aboriginal Heritage Act and substitutes section 12, which relates to the operation of the Local Government Act and inserts new parts 4, 5 and 6. New part 4 provides for the protection and construction and operation of a desalination plant and associated infrastructure. It also authorises the minister to acquire land as an authority under the Land Acquisition Act. It also clarifies project approvals and the varied indenture declaration made under the Development Act of 21 August 2008. New part 5 allows the appointment of authorised officers and establishes their powers. New part 6 clarifies matters concerning the charging for water and electricity within the town.

Clause 11 provides for the variation of ratifications and variations to the indenture. Clause 12 allows for the variation of special mining lease, as per clause 4 of the variation deed, and clause 13 provides for a variation date, being the date on which BHP Billiton notifies the minister that they have approved the project and an action which triggers the variation to the indenture. It must occur within 12 months of the date of this act coming into operation. It also provides for an extension period by agreement between the company and the minister and, as such, an extension being disallowable by either house within five sitting days. Schedule 1 to the bill is the variation deed and the indenture as is varied.

There has been a significant amount of debate in the House of Assembly in relation to this. I would like to work through some of the issues in relation to the indenture. The public debate has not been so much of a technical nature, but more about the aspects of the main community concerns, that is, issues about greenhouse gas, groundwater usage, radiation, the tailings storage system, the long-term security of that storage and also the environment in and around the mine. One of the issues of particular interest has been the desalination plant, its location and maybe its impact on the marine environment.

As members on this side of the chamber—and probably most in this place—know, I am a connoisseur of South Australian Spencer Gulf prawns, and I note they have just received a Marine Stewardship Council award for one of the best managed fisheries of its type in the world. So, understandably, the prawn industry has been quite concerned about this particular development. Also of interest is any other aquaculture in that marine environment and the landing facility at Port Augusta. The honourable—well, he is not honourable yet—Dan van Holst Pellekaan, the member for Stuart, had some constituents who have been quite concerned about the impact.

The PRESIDENT: He is going to be honourable?

The Hon. D.W. RIDGWAY: I am sure that at some point in his career Dan van Holst Pellekaan will be honourable. His constituents have been quite concerned with some of the impacts of that landing facility.

I was given an opportunity by the government, along with others within the opposition, to look at some of these documents prior to them being tabled in the parliament. I thank the government for that opportunity. At that time, I made a number of notes and raised a few questions. I think the best way for me to deal with this is to work through those notes and put any questions that I have on the record for the minister to answer. So, I will start with the variation deed, at point 2—Initial Obligations of the State and the Minister, which provides:

The Minister shall cause the Government of the State, as soon as practicable after the execution of this Deed, to introduce into and sponsor in the Parliament of the State a Bill, in the form initialled by or on behalf of the parties, for an Act to be entitled the 'Roxby Downs (Indenture Ratification) (Amendment of Indenture) Amendment Act 2011' which will, among other things, approve and ratify the amendment of the Indenture and SML1 as specified in this Deed. The Minister will endeavour to secure the passage of the Bill through the Parliament and have it come into operation as an Act on or before 20 December 2011 (or such later date as may be agreed by the Minister and ODC)...

That, of course, is a sunset date. It is a little unusual. I know we often see bills that the government of the day would like to see come into operation, but I think it is a little unusual that we have, if you like, a gun held to our head, that we have to have this through so that it can come into effect by 20 December. I am wondering why that date was chosen. This was the last scheduled week of sitting of the parliament. Why did it have to be 20 December? Why was it not 1 December? Why was it not 10 December? Why was it not the middle of next week? It seems strange to be the date of 20 December. I would like the minister to give a little background as to why that date was chosen. Did it reflect 60 days from the date that the former premier signed the agreement? The deed continues:

If the Bill referred to in clause 2, or a Bill on other terms agreed in writing by ODC and the Minister (and failure to agree is not arbitrable), is not passed by the Parliament of the State and does not come into operation as an Act on or before the Sunset Date, this Deed will thereupon cease and determine and none of the parties will have any claim against any other of them with respect to any matter or thing arising out of, done, performed or omitted to be done or performed pursuant to this Deed.

So, again, it states that we have a deadline, but then if we do not reach that deadline it does not matter anyway. I am a little surprised as to why on earth that was put in to the variation deed. It goes on to 5—Variation Date, and states:

5.1 Latest time for Variation Date

...must not be later than 12 months after the Ratification Date.

So, we know that BHP has 12 months to get board approval and commence the project. It continues:

The period between the Ratification Date and the Variation Date may be extended, in accordance with the following procedure:

(a) ODC may give notice in writing to the Minister (by delivering the notice to the Minister's office at the time in Adelaide with a copy delivered to the Crown Solicitor's Office at the time in Adelaide) requesting an extension of the period as a result of an unforeseen change of economic, physical or other circumstances which ODC (in its discretion) decides will be materially adverse to the Project;

(b) the Minister may thereupon determine (in his discretion), by instrument under the Ratification Act signed by the Minister, to extend the period for whatever extra time the Minister determines (in his discretion) is warranted by the circumstances;

I was a little intrigued. We had a sunset date by which it had to be done. We then had a clause that said there would be no penalty if we did not pass the bill, yet, we were told that we had to pass it. Then, of course, we have the unforeseen circumstances. We all know that, at the end of the day, the BHP board will do what it believes is in the best interests of its shareholders at the time. There is an expectation that once this bill is passed (this week, or next week, whenever we finish the debate in this chamber) there will be green lights and it will go ahead.

We note that all over the world there are some significant economic concerns. We certainly hope that it goes ahead but, clearly, we can see that there are a number of outs within the variation deed which really do not bind BHP to start the project in the time frame stated. It really allows BHP to make an assessment and a judgement which best serves the company, which it is very much entitled to do, but I think it also flies in the face of the rhetoric from this government to say that it has to happen and that, if it does not happen now, we put the whole project at risk. BHP will make a decision based on what suits it, and it alone, regardless of what the former premier and the former treasurer and the now Minister for Mineral Resources Development say.

I now turn to the indenture itself and to some questions I would like to ask the minister in relation to point V in the recitals, I think. It states:

The company has proposed the development of an open pit mine and processing facilities at Olympic Dam and supporting infrastructure. The company has obtained development authorisation under the Development Act 1993 for the following major components—

(a) an open pit mine producing up to 72,000,000 tonnes per annum of ore—

we all know that, but then at point (c)—

(c) new concentrator and hydrometallurgical plants to process additional ore;

I ask the minister: how much additional ore? I note that BHP and departmental people are at the back of the room, so I am sure they are probably taking a couple of notes. I was unable to get to one of the final briefings and question-and-answer sessions with them, so I may well have asked those questions then. I am just interested to know how much additional ore? We are all aware that there will be a certain amount of capacity. Point (b) provides:

(b) the expansion of the existing on-site smelter from around 400,000 tonnes of copper concentrate per annum to approximately 800,000 tonnes of copper concentrate per annum.

But then they want additional capacity. I just wonder whether at some point in the future, if the economics or the technology is such, more and more of the concentrate can be processed in Australia, and particularly in South Australia, and we can have more of the add-on value-adding, if you like, to that particular product. Point (d) goes on, 'to build a 280 megalitres a day desalination plant in the Upper Spencer Gulf', which is one of the recitals, and I will come back to that later.

One area that has not been covered is the new accommodation village for workers located between Roxby Downs and Andamooka; I think it is the Hiltaba Village. Since becoming a member of parliament, I have had some three or four visits to the township of Andamooka. I know that BHP Billiton does not want anything to do with Andamooka. I guess this is probably also a question to the minister handling this, the Hon. Gail Gago, who is the Minister for Regional Development.

This will have a significant impact on the township of Andamooka. The last time there was an expansion or a refit or a refurbishment at Roxby Downs, at Olympic Dam, the township of Andamooka underwent some additional pressures, with extra people living there, some unsavoury elements, prostitution, drugs and a whole range of things. Bikies moved into Andamooka. I know that we have an increased police presence planned. I just want to know what the government's response is to making sure we do not have this sort of lawless community on the outskirts of Hiltaba. As I said, I understand fully that BHP does not want anything to do with it because it is going to be an awkward thing to manage. But I think that the South Australian government has a responsibility to look after that community because, potentially, it will be an issue that will have to be managed.

My understanding from the discussions I have had with the expansion group and BHP is that this project will be staged. The company will provide the minister with a project notice in relation to stage 1 of the project as soon as practicable after the board of directors approves that project. Our understanding is that that will be somewhere in the first or second quarter of next year. I have heard March and April as roughly the time, but I would like the minister, if she is able, to give this chamber some idea of when the government expects the board will come together to make that decision, because it is their decision, and we accept that other economic factors will also potentially play out in that decision. It goes on to say:

If the Company decides to proceed with a Project, it shall, subject to the terms of this Indenture, notify the Minister of its decision with respect to proceeding with the Project and, within two months after that notice, shall provide to the Minister details in respect of all matters covered by the notice...

including matters covered by that notice. That is for stage 1, I assume, because that is what it says in the indenture. In relation to stages 2, 3, and 4, from my understanding from the briefings, this project will be staged over a long period of time. In fact, the only way in which the project team really has been able to get it to a point where the board may consider it is to take it off in small bites. My question to the minister is: will subsequent stages have to go through a notification process, or will they just roll on as being part of the initial stage 1 and it just flows on from there?

The environment is certainly an issue that will need to be monitored. It will be a huge project, with a range of potential areas of concern, the desalination plant being one, the landing facility will be another, and then the mine operation itself. I notice that it states that, if there is a problem the minister may:

require the Company, and if required, the Company shall, within such a time as is reasonable in the circumstances, submit to the Minister a plan to manage or mitigate the adverse environmental impact or detriment and, where applicable, for a return to compliance with the EMP [the environmental management plan] (including, where appropriate, timeframes, monitoring and reporting)('Mitigation Plan').

I am wondering why that would not be available for public notification—that is, if the minister has instructed the company to develop a mitigation plan, why we would not see that being publicly notified to the community so that the community know what is going on. I suspect that it is more from a comfort point of view, rather than to be alarmist, although the Hon. Mark Parnell occasionally has raised some concerns in this chamber in relation to mining operations and, I think, some even at Roxby Downs.

Under the environmental management program, it also goes on to talk about the audit—and this is for the auditor, as follows. If there has been a mitigation plan failure, or if there has been a breach of that, it provides:

(12) If the Minister believes on reasonable grounds either that—

(a) a statement in a report under Clause 11(8) as to the achievement or likely achievement of an outcome specified in an EMP [the environmental management plan];

(b) a statement in a report provided in accordance with the Approved Mitigation Plan as to the achievement or likely achievement of an outcome or an action required under the Approved Mitigation Plan

is incorrect...

If the minister believes that it is incorrect:

The Minister may give the Company notice requiring an independent audit of the relevant outcome reported, and the Company shall engage at its own cost an independent expert approved by the Minister to conduct the audit and the Company shall submit a copy of the audit to the Minister within two months (or any longer period reasonably required...)

after that date. The question I would ask is: in regard to the independent expert approved by the minister, I assume that the EPA, or the department of mineral resources, or PIRSA, whichever one it is, makes a recommendation. The minister appoints somebody but I would like to know where he gets that person. Is there a panel, is it an overseas expert or a local expert? This will be a mine like we have not seen before in the world. Perhaps the ones in Chile and other parts of the world could be of a similar magnitude, but I suspect they may not have the environmental controls that we have in Australia.

I have one other quick point in relation to greenhouse gas and the energy management plan. The company agrees that the environmental management plan for the Olympic Dam project will incorporate a greenhouse gas and energy management plan which the company is required to develop and have in place under the conditions and development authorisation for the project. I think I read that the greenhouse management plan was to come back within 60 per cent of 1990 levels but I am not quite sure if there are any penalties if that is not achieved.

Former premier Rann spoke about how this was going to operate. There would be a little spike in the greenhouse gas emissions while the project was under construction but then it would come back under. It is all very well to have these aspirational goals. The former premier was full of aspirational goals and targets he would have liked to achieve, but I am not sure he has actually ever achieved any of them, whether they be environmental, economic or social targets. The reporting of that greenhouse gas plan is a question I would like the minister to take on notice.

I think one of the areas where most people in South Australia have been excited—and some also have been concerned—is the use of local professional services, labour and materials. It is interesting to note in clause (12), use of local professional services, labour and materials, that subclause (2) states that the state continues to support the availability of analytical process and research development and other scientific and technical services in South Australia. It is interesting to note that there has been a significant contraction in metallurgy and mining-based courses offered in our tertiary institutions since this government came to office, so I am not sure when it says the state continues to support these services that it actually puts much of its money where its mouth is.

Workforce participation is an area in which I have a personal interest. We have this project that we hope will be there for a century or more, but I think we need to make sure that after a century we do not have the world's biggest hole and that is all, and this community and state has not benefited. It is not just about royalties. I know there have been some discussions about royalties and I suspect we will see amendments from some of the crossbenchers in relation to royalties, but it is about the flow-on effects.

The former Liberal government of David Tonkin was talking about Mount Isa and the Hon. John Bannon was poo-pooing that it would ever be a Mount Isa, and I suspect that most people now accept that out in the desert at Olympic Dam or Roxby we will not see a great big city. I think we really need to make sure that we capture as much of the wealth as we possibly can in South Australia. I think it is about workplace participation. We really need to be ever vigilant that it is not just written in here, as subsection (7) states:

The Company or the Minister may make the Industry and Workforce Participation Plan or annual report publicly available, subject to the excision of any material the Company has identified as confidential.

The biggest key, I think, to this whole project is making sure more and more South Australians live and work in our state. We know that they are constructing a very big airport to fly people in and out, but let us hope they can fly in and out from Adelaide, Port Augusta, Mount Gambier—maybe even the Riverland might be a place where people might like to live but then work up in Roxby Downs or at the Olympic Dam mine.

One of the issues that I know myself and Mitch Williams, the shadow minister in the House of Assembly, were having some debate about was the words 'may' make it public or 'shall' make it public. There was some debate over that, and I just really think that this is an area where the community, the government, the opposition and probably even everybody in the parliament say that we need to leverage the most benefit for the state—it has got to be in employment and giving South Australians and, hopefully, young South Australians and families an opportunity to have jobs and grow some wealth. So, I would like the minister to explain why it is not mandatory that they shall make the plan publicly available.

I know that, in the discussions at some of the meetings we had, people from the Olympic Dam task force and from BHP said, 'Oh well, of course if it's good news the minister will naturally be proud of the performance and naturally make it publicly available,' but if it is not good news I think it should be publicly available. There is a very good chance that it may not be a Labor minister who is delivering that information. It may well be a Liberal minister at some point in the future, so it is really not about politics: it is about saying, 'If we're not delivering the outcomes that we all expected to get from this, what do we need to do to make sure we have a greater industry participation in the work at Olympic Dam?'

I think it is beyond party politics. It is really about making sure we are constantly monitoring what is going on, not leaving it up to the minister of the day to say, 'This is a bit of bad news. We won't release this because we have fewer people employed there now. We will keep it under covers.' I really think, and I think the opposition thinks, that this is something that should be out there and available to everybody to peruse at all times. This section also goes on to say:

It is the intention of the Company that it will use all reasonable endeavours to implement the Industry and Workforce Participation Plan. However, a failure to implement [this]...Workforce Participation Plan shall not be a breach of this Indenture.

Again, I certainly would not want this indenture to be in breach of industry participation and workforce participation and that the plan agreed on is not achieved, but again, it does not seem to have enough teeth to really make both the government and the company sit down and make this happen.

I know BHP has told us that it is in their best interest to employ South Australians. I suspect there will be a whole range of skills that we do not have and they cannot employ South Australians, but maybe the company and the government of the day will be obliged to try to project forward to make sure we have the certain training and skills development in place so that, if there are periods of time when there are skills that we do not have here in South Australia, they are only temporary skills shortages and not something where people say, 'Look, that's just the way it is. We fly in those particular experts and we'll just leave it the way it is. We won't bother to train those people in South Australia.' Subsection (9) continues:

Subject to the Company and the Minister agreeing that a meeting or all future meetings are not necessary, the Company shall, at least by-annually, meet with the Chairperson of the State's Economic Development Board and [the] relevant Chief Executives of [the] State Government Departments, to discuss, and provide advice and updates on, current outcomes or issues in relation to the implementation of the Industry and Workforce Participation Plan.

Now this is it:

Subject to the Company and the Minister agreeing that a meeting or all future meetings are not necessary...

It then says that they should meet at least biennially with the economic development board. What if that board does not exist? Maybe a future government might change the structure of governance or might not have an economic development board. Again, I expect this will not be seen as a breach of the indenture, but it seems to me to be perhaps—I would not go as far as saying 'weasel words'—a whole bunch of words that may not be as strongly worded as they could be to deliver the best possible employment outcome in South Australia.

I refer to 12A—Availability of diesel fuel. It provides:

(1) If the Minister requests, the Company shall, within 60 days of the Minister's request, give the Minister a written statement of its estimated usage, by month, of diesel fuel in its operations under this Indenture during the period of 12 months starting on the first day of the month following the month during which the statement is given...

I am not quite sure what the amount of diesel fuel the company uses has to do with the minister, but I would be interested to know why that particular diesel fuel clause is in the indenture. It may well just be to do with fuel security for the rest of the users in South Australia, but I am just a little intrigued as to why we have diesel fuel in the indenture.

I would like to make a couple of points in relation to water supply, and in particular, in relation to some of the statements that have been made. There is quite a large section on water, and I know Mitch Williams discussed this in some detail, and I am sure the Hon. Mark Parnell and the Hon. Michelle Lensink (as the environment spokesperson for the opposition), will speak to this in more detail. I refer to clause 13—The company's water requirements, and subsection (9), which provides for the:

...search for new or additional underground water sources with a view to restoring or ensuring the full quantity of the mine water requirements...

We are building a desalination plant, so why would we need to search for extra underground water resources? One of the bones of contention with this project has certainly been access to the Great Artesian Basin, and I think it has been done sustainably so far. I do not expect that that refers to looking for extra water out of the Great Artesian Basin; it is probably some other water, but I just wonder, given the huge investment with the desalination plan, why there would be a necessity to look for extra water within the mine site.

One area that I found a bit interesting related to the desalination plant and its location. I have asked this question—I have actually asked it of a couple of government ministers over a cup of coffee—and that refers to clause 17C:

(b) If the Company or an associated company acquires the Desal Site in accordance with Clause 13(17C)(a) and an operational seawater desalination plant is not constructed on the Desal Site within 30 years after the Variation Date, the State shall have an option, exercisable by written notice given to the Company within six months of expiry of the 30 year period, to buy the Desal Site from the Company, or relevant associated company, at market value, as agreed by the Minister and the Company, or in default of agreement, as determined by an independent property valuer...

I am intrigued. The desal plant has been, I think, the area that the company has probably spent the most money on relation to the monitoring and modelling of the outflow. It has been the area that most public discussion has been about, and I suspect that, in the future, it will still be one that causes significant concern, so I am a bit surprised that there is potential that, after 30 years, we might not have built it.

While it is certainly not required in the initial digging of the open pit, additional water is required as the operation starts to expand. I was of the assumption that this would be built not at the same time, but in a time frame that would give them first water at an appropriate time so that it could be used as they expand their operations. So I am very intrigued as to why there would be a clause in this indenture that provides that if they have not built it in 30 years they have to sell it back, or the government may buy it back.

I would have thought that maybe they should only be given freehold title when a plant is constructed, that it is not freehold title until a plant is constructed, so that the state is not required to buy it back. I also wonder what the market value of a site is in 30 years' time. I would like the minister to explain, in some detail, why we would see the site that has been chosen for the desalination plant potentially offered backup; built into this indenture agreement there appears to be a risk that it will not be built.

As I said earlier, I am a great fan of the consumption of prawns, and in the briefings we had with the government, the task force, government officers and BHP, I was interested that we talked about all the things around that—the outfall, the extra work they are doing there, and of course the king prawns, oyster, snapper, mulloway. There is certainly a rich marine environment. They claimed that there is only a dodge tide occasionally and that the EPA will have the right to shut it down if the conditions are such that the dilution is not taking place. We are given these assurances that all will be well, but my question to the minister is: in the event that all is not well, is there a contingency plan in 20 or 30 years' time, if the site has not been developed?

The mine is clearly there today using water from the Great Artesian Basin, and if they have been able to find additional water resources in the area, as it says earlier on in the water section, they may well be able to get sufficient water to have some expansion, perhaps not build this desalination plant and then look to build it somewhere else. That is why the time line of some 30 years has been put into this particular indenture. My understanding is that the open-cut mine will replace the underground mine so, when the pit is dug and they have accessed the first ore, they will basically close the underground mine and have the open-cut mine—which may well be at the same production level, initially. That is in five or six years, and then there is a ramp-up from that point.

That is stage 1; then there are stages 2, 3 and 4, and probably 5, as I spoke of earlier. I am just wondering whether there are some links between the stages, water consumption, and this 30-year time frame for the site; that is, if they can find other suitable water, or quantities of other water, within the mine site—it may be saline water, it may not be potable water—it means that the company does not need to pursue the desalination plant option. I think that is the one that people in the community are most concerned about when it comes to environmental concerns. I would certainly like the minister to clarify that, if she is able to; of course, sadly, she might not be able to.

I have noticed some of the other infrastructure to be built, and I note that in respect of roads, clause 14(5) of the schedule provides:

The Company shall not be or be deemed to be liable for the maintenance or repair of any road except private roads, which the Company has an obligation to maintain pursuant to Clause 14(1)(a)...

It then goes on about liability and compensation to the state and provides:

...will not limit any liability the Company may have at law to pay compensation to the State for damage or injury caused to any portion of a road.

I am concerned with the road from Port Augusta up from the landing facility. My understanding is that the state will build that but then be reimbursed by the company, so that will be a public road and it will certainly be a key piece of infrastructure. The clause says that they will be deemed not liable for any maintenance or repair except for private roads. That road will have massive vehicles and trucks on it and quite heavy vehicles, and if there is any damage to the roads that is one that is likely to be damaged. I wonder who will be responsible for that road.

The airstrip and related facilities, which would be better described as an airport than an airstrip, the airstrips I am familiar with in that part of the world are the gravel ones that the Hon. Graham Gunn would take us to on some of the trips around the north of the state. I know that third-party access has been a concern and was raised in the other chamber by a number of contributors to the debate. My understanding of third-party access of any facilities that BHP Billiton own themselves are such that there will not be any automatic right of third-party access.

Can the minister clarify that, if a proposal is put to the company and there is capacity in that bit of infrastructure and it does not put their operations at risk, would they would be prepared to enter into commercial negotiations with other people who might want to access those facilities? That is my recollection of it. There is a railway line, the port landing facilities and potentially the airstrip. They are the ones that are bits of infrastructure that will be deemed to be company owned and not subject to any third-party access regime promoted by the government, but would they be prepared to enter into commercial arrangements?

I am interested in the power supply: a 600 megawatt power station needs to be built. I assume it will be built by a third party. Does this indenture or the agreement limit that third party to building just a 600 megawatt power plant for the needs of the particular proposal or does the capacity exist for that provider of power to build a bigger power plant if they choose to and to provide additional off-takes from that plant, notwithstanding the fact that any new company may need to build its own transmission lines, but is there a potential capacity for a power plant to be bigger than the 600 megawatts?

I refer also to the gas pipeline. That will probably come from Moomba to Olympic Dam. Who will own that pipeline and is it being put in by the company, BHP Billiton, or potentially being installed by a gas company or somebody who is perhaps tied up with the provision of the power plant? It may be connected in a contractual arrangement with the provider of the power and therefore there may well be third-party access opportunities for other people to tap into that pipeline. I would be interested to hear the minister's views on that as well. I am getting close to finishing—

The Hon. J.M. Gazzola: Hear, hear!

The Hon. D.W. RIDGWAY: And the Hon. John Gazzola says, 'Hear, hear!' This is a very important part of our state. In some of the discussions in relation to extra infrastructure, some figures have been figures quoted. I think Dr Heithersay from the department quoted these figures, but I would like the minister to put them on the record in relation to other infrastructure costs. It was stated:

Subject to Clause 22(4), the State shall pay all costs of the provision of the following...infrastructure:

We know that some has been provided, a school etc., but we are now looking at a significant expansion. I will read these out, and I would like to minister to be able to provide some costs and also some time frames. I am sure Treasury has done some work on these particular points. The first one is:

(a) allotment development costs in respect of allotments within the townsite required for public and civic facilities and for housing referred to in Clause 22(2)(b);

(b) all housing accommodation within the townsite for married and single personnel connected with the operation and maintenance of the infrastructure and facilities referred to in Clause 21(2) (other than accommodation for construction purposes);

(c) police station, lock-up and court house within the townsite;

I know that a police station has recently been built because I was there when the foundations were poured. I am not certain whether the courthouse has been completed. It continues:

(d) necessary air conditioned child care centres within the townsite;

(e) necessary air conditioned kindergartens and pre schools within the townsite;

(f) necessary air conditioned primary schools within the townsite, including adequate teaching spaces, administration block, shaded or covered play areas, amenities block, tuck shop and staff facilities;

(g) necessary air conditioned secondary schools within the townsite, including library, administration block, staff facilities and senior centre lecture theatre;

(h) a ten bed acute facility providing facilities for accident and emergency, minor surgical services, community health services and private dental services and such other additional health facilities as the Minister, with the agreement of the Minister for Health, on request from the Company from time to time or otherwise, reasonably considers to be required for the township of Roxby Downs, after taking into consideration its location and demographic factors and other relevant factors for the provision of health facilities at that time;

That sounds a bit like the country health plan: let us talk to the minister and then make up a whole heap of factors that mean that we do not provide the health services. It continues:

(j) local authority offices within the townsite, including municipal offices, meeting room, public toilets, library, civic auditorium, works depot and workshop;

(k) swimming pool complex within the townsite, including 50m unheated pool, wading pool, gardens, change rooms and car parks;

(l) necessary sporting facilities and playing fields within the townsite, together with appropriate changeroom facilities;

(m) premises and facilities within the townsite for creative, performing and visual arts;

(n) fire services within the townsite, including a two bay fire station equipped with a fire tender and an additional pump and trailer unit;

(o) State Government offices within the townsite;

(p) 50% of the cost of the upgrading or construction of the Pimba Road;

(q) ambulance centre and equipment within the townsite, including vehicle;

(r) parks and gardens within the townsite;

(s) garbage disposal facilities for the town; and

(t) plant and equipment (including vehicles) necessary for the provision within the townsite of State and Local Authority services and facilities.

I am aware that a lot of those facilities have been provided. I have seen the pool and the civic arts centre. I am interested to know what additional facilities and expenditure will be required over the next 10 to 15 years that the state will be responsible for. I would request that the minister get that from Treasury, because I am sure they would have done some work on it.

My final point, before I make some closing remarks, is on the rehabilitation bond. I think that is a very sensible way forward for this project. It provides an opportunity for there to be some financial mechanism to start rehabilitation work in relation to, I suspect, initially the tailings area, once some of those cells become full, and that will provide some money to address some of those concerns.

My understanding, from some of the meetings and briefings I have had with officials, is that the rehabilitation bond is quite a new concept and may well be a template for future mine development. History has shown, around the world, that mining is great but it is the legacy that is left once the ore body has been depleted. We have a rehabilitation fund within our extractive industries for small quarries, sandpits and the like, and I think it is a very sensible way forward for the government and the company to come to the understanding that there will be a rehabilitation bond.

As I said at the start, the opposition supports this particular piece of legislation. We have supported this particular project for 30-odd years, and probably longer. It is something that has been of immense benefit to our state. I remember the Hon. Caroline Schafer, when she was here—formerly from Kimba on the West Coast, Eyre Peninsula—talking about some tough farming times and how the farming community were able to drive up to Olympic Dam and get some work. Whether it was regular work in the mine or when some refurbishments were being undertaken, it gave them an opportunity to sustain themselves on their farming properties.

Members would know that I originally grew up in Bordertown. I am aware of at least one car load, if not two car loads, of farmers—I think a couple of them may have sold their properties now—men of about my age (or a bit older) who are employees up there today. Again, they saw this as a way of maintaining their lifestyle in a country town and perhaps sustaining their farming operations during more difficult times—droughts and low commodity prices—and being able to use this opportunity for employment to subsidise or provide some assistance to keep their farms going.

It has been a project 30 or 40 years in the making, and it has a long way to go. I am very proud to be a Liberal and to be able to say that we were the party that started the ball rolling 30 years ago, and we are very happy to make sure that the ball keeps rolling as we enter this next 100-year phase of the mine. However, we need to make sure that we are ever vigilant about making sure that we capture the most benefits for the South Australian community, regardless of which party is in power. Our goal should always be to maximise the economic benefits for not just this generation but for the many generations to come. With those words, I commend the bill to the council.

The Hon. J.A. DARLEY (12:16): I rise very briefly to indicate my support for the second reading of the Roxby Downs (Indenture Ratification) (Amendment of Indenture) Amendment Bill. As members are aware, this bill will allow for expanded project components that were not envisaged under the original agreement between the state government and BHP Billiton. The project is expected to contribute some $45.7 billion in net present value to South Australia's gross state product over a 30-year time frame, as well as considerable employment and development opportunities, particularly in regional areas of the state. This is a once-in-a-lifetime opportunity for South Australia and for its future generations.

My main concern with the project is that South Australian businesses be given the first bite of the cherry with respect to the tendering process for various stages of the project. I have already spoken to a number of South Australian businesses that share this concern. Many of them are excited and enthusiastic about the prospects that the expansion presents but, at the same time, they are concerned that they will miss out on the opportunity for economic growth.

As I said before, this is a unique opportunity for South Australia, and it is only reasonable that some home-grown companies that contribute to the state through employment and other means be given an every chance to share in the many benefits that this project will bring. We should not only support but also encourage, as far as possible, their involvement in the expansion.

I note that this issue is addressed in the bill under the banner of the use of professional local services, labour and materials; however, I would ask the minister to provide this chamber with details about how this process may be further facilitated. It is my view that the minister should also encourage the government to further consider value adding in terms of enrichment of uranium and other similar processes.

Lastly, I note that the Greens will be moving a number of amendments to this bill, which we are yet to receive. I am mindful of their concerns and will deal with these when and as they arise. With that, I support the second reading of the bill.

The Hon. D.G.E. HOOD (12:19): I think it is probably true of most members in this chamber, but I am certainly a proud South Australian. I think my friends, my colleagues and my family, etc., would have said about me over the years that I am somebody who always, at every opportunity, takes the time, where possible, to talk up our state, if I can put it that way.

A number of members in this place would be aware that I used to work for a company called Johnson & Johnson. My job was based in Sydney, even though I had the privilege, if you like, of living in Adelaide. So that meant I had to get on a plane every Monday morning and fly off to Sydney and to all other parts of the country—indeed, right around the world quite often. One thing that stood out when I was doing all that travelling is that, for whatever reason—and, I think, entirely for the wrong reasons—it is true that sometimes South Australia can cop the bad end of comments from people living in other states in Australia, particularly in New South Wales but it is true in other states as well, and I think that is grossly unfair. That is the reason I am very, very pleased to endorse the bill that is before this chamber today.

I think this indenture bill will go a long way, at least to some extent, in terms of our mining industry putting South Australia firmly on the map. It is good for many, many reasons, and I will outline some of the specifics in a moment. At the very least, it is good from the point of view of showing our interstate rivals, or counterparts perhaps, that South Australia really can deliver outstanding results and very, very substantial projects. We have done well in a number of areas. In relation to the submarine projects and the air warfare destroyer projects, etc., we have performed extremely well.

This is a genuinely huge project; it is one that puts our great state firmly on the map. I think that, as South Australians, it will go part of the way to ensuring that we can have confidence with our interstate colleagues in saying that there is lots to be proud of in this state. It is not that we are necessarily proud of a hole in the ground; we are proud of the fact that we can deliver something very substantial for the benefit of others, and, indeed, we can be proud of the fact that the product that is being produced here will benefit people right around the world.

The other thing I would like to say before going into the specifics of the bill is that one thing that has really pleased me personally about the early phases of the debate on this bill, both in the media and, indeed, in the lower house and now in our chamber, is that it is the first time I remember seeing such very clear-cut bipartisan cooperation between the major parties, and I take this opportunity to commend them for that. I think that is what politics should be, where possible; it is not always possible, obviously. Ultimately, politics is a clash of ideas, and people will disagree deeply at times. However, I think that this has been an example of all of us—certainly the major parties—being at our best, and I take this opportunity to put that firmly on the record.

Perhaps the one thing worthy of mention on the downside of the lead-up to this bill is that, given the fact that the opposition has decided to support what is obviously a government bill, to some extent, votes from the crossbenches in terms of providing passage of this bill are not as significant as they are when the government and the opposition are in disagreement. Because the government and the opposition are in agreement in this bill, I do feel that the crossbenches have missed out in terms of the speed of consultation and perhaps the deliberate attempt to provide quality consultation—and that is not a criticism of the government necessarily. I do not think that it is necessarily the government's doing, but it has been the result of what has happened, and I put that on the record for further consideration.

This indenture bill amends the current Roxby Downs (Indenture Ratification) Act 1982 to provide for the unprecedented proposed changes to the expansion of the Olympic Dam mine at Roxby Downs. Olympic Dam is the world's fourth largest copper resource, the fourth largest gold resource and by far the largest known uranium resource. The bill before us today represents a significant change to the face of South Australia and has the potential to attract other large-scale international operations by signalling, through our deal with BHP, that South Australia is a state with which an excellent commercial relationship can be fostered.

The bill also represents a significant change in the way in which BHP Billiton does business with the South Australian government and, indeed, its people. The Olympic Dam expansion is, without doubt, a phenomenal step forward of unprecedented measure in Australia, and it has the capacity to change the landscape of the South Australian economy. As we have heard, this expansion will triple the capacity of what the mine currently produces, and it is estimated that over a 30-year period this mine will contribute around $45.7 billion to the South Australian gross state product. It is estimated that there will be 6,000 new jobs in construction, 4,000 full-time positions at the expanded pit mine and about 15,000 new indirect jobs from this expansion.

Additionally, South Australia will see royalty payments of 3.5 per cent for refined mineral products, such as copper and gold, and 5 per cent for uranium oxide and uranium-bearing copper concentrates. Indeed, some people have taken to saying that, as a result of this project, South Australia has the potential to be to uranium what Saudi Arabia is to oil. Any one of these factors alone would foster a change for the South Australian economy and have the potential for a broadscale benefit for all South Australians.

The government has also indicated that there will be increased changes to South Australian regional community areas, and places like Roxby Downs, Andamooka, Woomera, the Upper Spencer Gulf and the Eyre Peninsula will see the benefits of the Olympic Dam expansion through regional development and all the associated benefits.

Family First has long supported regional development and will continue to support any measures that would see a beneficial change to our regional areas, in particular. We welcome, as I am sure we all do in this place, any proposal that allows for an increase in employment and social development and a bolstering of our economic conditions, particularly in the regions, where we have a relatively small population compared to other major regional centres nationally.

Family First supports this indenture. However, we have some questions and some issues that we would like to have responded to by the government in the summing up. I would say, though, just to be absolutely clear, that Family First certainly supports this bill. We believe it is a tremendous step in the right direction for our state.

Under the proposed bill, however, BHP is required to use the services, skills and workforce of South Australians as far as is reasonably and economically practicable before employing people from other states or nations. I commend this provision in the bill, and there obviously would be a great injustice to having such a wonderful economic structure such as the Olympic Dam mine within the state only to have a minimal South Australian workforce sourced from our own backyard. I am pleased to hear this will not be the case.

The steps the government has taken within the indenture go some way to providing jobs for South Australians. However, we do have questions about the specifics of how this will happen. I understand it is the intention that predominantly South Australians will be hired. Our questions are about how it will actually take place. What steps have been taken, and how is it clearly delineated to the extent that some South Australians may still have the opportunity to be employed in this project? Let me explain this point a little further.

According to the provisions that are written into the indenture bill before us, the company, BHP, does not have a minimum employment quota to meet from the South Australian workforce. The company is only required to meet a standard that is measured by what is 'reasonably and economically practicable'. I understand that economics fuels all of these sorts of decisions, and I am certainly no critic of that, and that this provision has been drafted to give business efficacy to the contract, otherwise the purpose for which the indenture was made would be defeated and circumstances would be somewhat difficult for the organisation. However, I do wonder how effective these provisions will be in ensuring that South Australian workers—whether they be miners, manufacturers, tradespeople, suppliers, or other professionals—are actually employed.

On a very strict reading of these provisions, one could argue—and I note that it will be very unlikely for this to occur, but not impossible—that the entire workforce in fact could be made up of interstate or international workers. Again, I understand this is not BHP's intention nor, obviously, the South Australian government's intention, but there is no minimum requirement of the number of South Australian workers that should be hired, nor is there any strict requirement that South Australians should actually be hired.

What we have, on the face of it, are several clauses that could reasonably be argued to be an agreement by BHP to act in good faith towards South Australian workers in the recruitment process. I should add that I have no doubt that BHP has every intention of acting in good faith and, again, I do not suggest they do not; but the provisions give the impression that BHP is concerned about the wellbeing of South Australians and that the government has diligently done what it can in order to ensure that this is, in fact, the outcome. This may well be the case, and I am not saying it is or it is not, but it is clear that the intention is that South Australian workers are at least considered for a position within the ambit of this indenture agreement. The notion that as many South Australians as possible should benefit from this project I think is something that would be important to all of us and we would hold dear.

I want to draw attention to the fact that, should better qualified workers present for the job, according to the wording of this provision, BHP would be entitled to hire other workers over South Australian workers. To clarify that, I understand that it would be contrary to the best business practices for BHP to negotiate anything other than a general clause acknowledging that they would at least consider South Australian workers. The reason I make this point is that we have been told on countless occasions that there will be approximately 6,000 new jobs in construction, with 4,000 full-time positions available at the expanded pit mine and something in the vicinity of 15,000 new indirect jobs.

This brings me to the real crux of the situation. What is the government doing now to ensure that we have an adequate number of qualified tradespeople and miners, qualified now, so that, when the jobs actually do become available, South Australians are employed and, therefore, can benefit from this unprecedented employment opportunity?

I just make it clear that I have no doubt at all that the company will act in good faith and employ as many South Australians as they can. The point I am making is they are not bound by the wording of this particular provision. It does encourage them to, and it is an agreement that they have entered into. We can only take that take on good faith. I have no reason to doubt that. I just place firmly on record that I urge the company to pursue that in the spirit that it is intended and, indeed, even beyond that, if it is possible.

For example, during construction, there will be demand for project managers, engineers, geologists and a whole lot of other people with various qualifications. Truck drivers and machine operators will be needed in the operation phase and the question has to be asked: do we currently have people trained or, indeed, training for these positions? What preparation are we making as a state to ensure we have enough people to satisfy the demand as it comes online?

South Australia's current unemployment rate for the month of October is 5.3 per cent. It will be a tragedy should the implementation of these colossal changes not improve our unemployment rate, especially if, through a lack of planning, we do not appropriately skill the people now who can take these jobs as they become available.

I compliment the government for its $194 million investment into the Skills for All program, which will run from 2011 to 2014. However, what is not clear is how much of that funding will go specifically towards training workers for the available jobs at Olympic Dam and training for other regional-specific trades to avoid skilled workers being poached from the non-mining sectors. It is also unclear what specific targeted approach has been given so that people are trained and able to work immediately upon this indenture being passed by parliament and at the commencement of the actual work at Olympic Dam.

It is one thing to tout the benefits of this agreement for South Australians and to mention the job numbers that are potentially available. However, the fact remains that, if South Australians are not qualified for these positions by that time the jobs become available, the jobs will, by necessity, have to go elsewhere. That is not the fault of the company; that is the fault of the systems we have in place to train people to be ready when the company is ready.

I say we need to be ready. I formally put the question on notice to the government: other than the program I have just announced, which is a good program, what are we doing to train people in these specific areas?

This parliament has a responsibility to act in the best interests of the state, that we do our utmost to ensure the best possible outcome for all South Australians and that that is, in fact, achieved. We need to proactively ensure that there are enough qualified people for the soon to be available jobs—and very well-paid jobs, I might add—that this state will enjoy.

If well managed, this could be—as I have heard the term used in the media by some people—a so-called game changer for the state. I concur with that. If well managed, this has the potential to be something that our children and grandchildren look back on as a turning point.

BHP reported that, during the consultation process, a major concern of South Australians was the effect of the mine on surrounding rural towns and, ultimately, the businesses, as workers were enticed towards jobs in the mining sector. This is a genuine issue. According to recent articles in The Advertiser back on 14 October, reports have already started coming in of workers in the non-mining sector being lured into the mining sector.

There is nothing wrong with that. People will go where they can do the same work and be paid more. I am not critical of that, but whilst there will naturally be some movement between the industries to accommodate the expansion to the Olympic Dam mine as people search for better pay and working conditions, we must ensure that there are enough qualified workers so that the newly-created jobs at Olympic Dam do not come to the detriment of the other regional centres.

For instance, we have all seen the media reports of people working in service towns around large mining ventures in other states, and the service facilities (the shops, the pizza shops, and the like) physically cannot get people to work there. We want to do everything we can to avoid that as this mine comes online.

Whyalla is South Australia's second largest regional city after Mount Gambier, and it is a major industrial city and exporter and a significant contributor to the state's economy through steel production. Whyalla's industry is now expanding, with new global industries being targeted, including aquaculture, sustainable development, and renewable technologies.

Similarly, last year, the combined income to the food and agricultural industry in regional South Australia was quite a significant $12.4 billion; should either of these industries be irretrievably hurt (for want of a better word) or impacted by the mining sector through the loss of workers and the inability to function properly, it goes without saying that the South Australian economy would also be affected.

We do not want the threat of viable businesses closing, families having to relocate and having to learn new job skills because their employment has been swallowed up in what will be the huge Olympic Dam expansion. We should be actively ensuring that workers are sufficiently qualified to avoid workers being stripped from the non-mining industries. The planning phase for the introduction of this huge development and huge mining venture is really the most significant one in the coming years.

Under this bill, the company is required to submit an industry and workforce participation plan to the minister. The intention of the participation plan is, of course, to create opportunities for young people, Aboriginal people, local suppliers, research and development, and regional development, to name just a few. According to the Variation Deed, the company is required to use reasonable endeavours to implement the industry and workforce participation plan; should the company fail to do this, then the failure would not breach the indenture.

So, the question naturally arises: what guarantee do we have for the development of the industries and people at whom the industry and workforce participation plan would be aimed, should the company fail to implement the plan? In the light of the agreement with BHP, the government needs a separate contingency plan for regional development. There is no doubt that the state will profit from the royalties received from the mine, and much of these royalties can go towards the development of regions.

Members would be aware that Family First has tabled an amendment on that issue, and I will allow my colleague the Hon. Robert Brokenshire to explain it more fully. It is a very simple amendment, simply diverting funds once acquired from a company (that is, after the company has paid their royalties) to the regional sector—or a portion of those funds, I should say. Family First is especially interested in regional development and how the government plans to use the wealth created from the Olympic Dam expansion to benefit our regional communities—hence, the amendment.

A report released in July 2011 by Infrastructure Australia to COAG shows the need for reform in the financing of major infrastructure projects across Australia. Admittedly, this is an Australia-wide report on infrastructure, but the principles will hold true for South Australia. We currently have before us the opportunity to turn South Australia into a thriving state, to develop regions which have been overlooked for far too long.

In a media release from the Australian government, the chairman of Infrastructure Australia (Sir Rod Eddington) acknowledged that the report found that government reforms to infrastructure planning and delivery were frustratingly slow, which meant time lost in travel, delays at ports, and lost production, which all resulted in a slowing of Australia's productivity. An appropriate spending on regional development has several natural flow-on effects: areas are developed and provided with need-specific infrastructure, which improves the quality of life for those within the region through economic prosperity, and the development of rural and regional communities through industry growth and job creation.

Regional growth is something that South Australia must continue to take seriously and, indeed, take to the next level. We cannot ignore the wider needs of rural South Australia and expect that our valuable industries will continue to flourish. Regional development also proves to have a major impact on the productivity of South Australian industries in trade intrastate, interstate, and internationally. Without the appropriate regional development and support for businesses, these industries will not continue to grow but will decline and potentially take a large amount of the state economy with it. We simply cannot allow this to occur. Indeed, it is incumbent on us—and particularly the government—to ensure this does not occur.

Better infrastructure leads to reduced costs and, as we are well aware, increases in costs will always be borne to some degree by the end user of any product; therefore, anything the government does to reduce the cost burden on industries by supporting regional development and encouraging growth within the industries will mean that each industry becomes more competitive. Reducing the cost burden to increase competition is particularly important in relation to the bill before us. The indenture provides:

The Company shall, for the purposes of this Indenture, as far as it is reasonable and economically practicable...

(d) give proper consideration and, where possible, preference, to South Australian suppliers, manufacturers and contractors when letting contracts or placing orders for works, materials, plant, equipment and supplies, where price, quality, delivery and service are equal to or better than that obtainable elsewhere.

Mr President, I draw your attention to that last part, where it says 'where price, quality, delivery and service are equal to or better than that obtainable elsewhere'. A question has to be: if that were the case, why would BHP not do it anyway? Do they want a supplier where the price is more, where the quality is lower and where the delivery and service are actually worse than what is available? Of course not. I find those sorts of comments in the bill to be almost superfluous to what a company would do in the first place. Companies go for lower prices, they go for better quality, and they want better delivery and service from their suppliers. If BHP was not doing that successfully it would not be the single biggest company in Australia. I think they have already worked that out, if I can put it in those simple terms.

The sheer volume and capacity of minerals that BHP requires to implement and maintain their mine means—by virtue of common sense—that many South Australian suppliers, manufacturers and the like will actually find it difficult to be the sole supplier, although they can, perhaps, enjoy some of the economic benefits of being at least a supplier of BHP. We welcome that; indeed, we encourage it.

To be competitive in this market you must first have a system that enables price and delivery to be competitive. For example, the excess cost for transport travelling via Yorkeys Crossing would mean the refusal of a tender, because the inbuilt cost to the company of those transport costs means that an interstate or international tenderer is more financially viable. To further elaborate, Yorkeys Crossing forms part of the Perth-Adelaide corridor, which is of significant importance to South Australia, obviously, as it links some of Australia's richest mining and agricultural areas to international markets. The corridor shares the road and rail network between Adelaide, Port Augusta, Tarcoola, Darwin, Eyre Peninsula, the Far North, the Northern Territory and the eastern and western states.

In 2007 the Perth-Adelaide corridor strategy report said that a short-term priority was to upgrade and seal Yorkeys Crossing. Four years on and there is still no change. In fact, we now face threats of the road closing because the Port Augusta council cannot afford to maintain the 23 kilometres of unsealed road. The road is estimated to have up to 125 trucks daily, hauling not insignificant loads such as mining equipment, dangerous goods at times, portable houses, and other sorts of dangerous goods, which all support our state's economy.

The Hon. J.S.L. Dawkins: The minister refused to go and have a look at it, if you remember.

The Hon. D.G.E. HOOD: I was aware of that, yes.

The PRESIDENT: Order!

The Hon. D.G.E. HOOD: Despite the additional increased transport costs being for increased travel time and operation costs for the vehicles forced to take this route, users face additional challenges in wet conditions. This is a very serious issue that needs remedying. Yorkeys Crossing becomes dangerous to negotiate in even just minimal rain, and it has been reported to restrict the passage of oversize loads for a minimum of at least one day in wet conditions. This is simply not good enough and must be addressed.

When one considers the sheer extent of use on this road, and for such important purposes as mining and agriculture, it is incomprehensible that it has not been upgraded. An upgrade of Yorkeys Crossing is in the best interests of the state economy, especially in light of the materials that will need to get to Roxby Downs until such time as the train line is complete. This is something that the government cannot ignore any longer, and Family First calls on it to address this issue urgently.

With the royalties that the state will be receiving from Olympic Dam, we will be seeking confirmation from the government regarding how much money it intends to place back into regional development in order to develop and maintain networks, to allow the improvement of transport for industry and agriculture throughout rural South Australia and to other parts of the nation. Indeed, as I said, Family First intends to move an amendment to that effect.

The South Australian government stands to make a substantial windfall from the mining royalties that are associated with the Olympic Dam indenture. It is therefore incumbent upon the government to use the money it accumulates for the benefit of the state, both in conjunction with and separately to BHP. I am not suggesting that this is not the government's intention, but I think that areas like Yorkeys Crossing, for example, really point out priorities that need addressing in the short term.

Family First recognises the need for the desalination plant in light of the massive changes that have been proposed at the Olympic Dam site. We are not opposed to the desalination plant; however, we are aware of concerns that have been raised with respect to potential harm to the environment. Let me explain. I do not accept that that is necessarily the case, but I believe it is important that these questions are answered. Of course, it is a major concern regarding desalination plants in general that the effects of releasing waste discharge water, and particularly the brine it includes, can have a detrimental effect on marine life and the aesthetics of the bay.

I was fortunate enough to have a discussion this morning with the BHP Billiton Vice-President for External Affairs, Mr Kym Winter-Dewhirst. He certainly satisfied my initial concerns about this issue and gave me quite a detailed response on the extent that the company had gone to to ensure this would not be the case. I believe I am quoting him correctly—forgive me if I am not: he claimed that within 100 metres of the outlet points of the brine being released into the gulf there was in fact no discernable difference with normal sea water. If that is in fact the case, then I am certainly very encouraged by that.

There are many variables in the desalination process, which I will not endeavour to explain in this brief contribution. Family First's concern is that the salinity of the brine being discharged back into the sea may actually end up being higher than has been projected. As with many endeavours such as this one, you never know exactly what the outcome will be until you are several years into the process and see the hard evidence of what is occurring. We know some credible studies have been conducted on the effects of desalination on marine ecology. In 2010 the University of New South Wales published a report which stated that in some instances discharges had led to substantial increases in salinity and temperature and the accumulation of hydrocarbons and toxic anti-fouling components in the water.

Family First recognises the science behind these issues and the fact that, with the desalination plant, in reality a good deal of effort, it appears to me, from the company has been put in to ensure this will not be the case with this particular development. We are relying on the information presented to us. We do not have any other information available to us. Again, I am not suggesting that BHP will in any way mislead us on that; I am simply saying that that is the only information we have. We are, however, hopeful that this turns out to be the case, and we look forward to ongoing monitoring with respect to BHP providing those figures. Again, Mr Winter-Dewhirst assured me this morning that those figures would be publically available on the ongoing monitoring of brine releases into the gulf as they go, in real time, live on the internet was my understanding. That is about as highly scrutinised as we could possibly expect of them or any other organisation with respect to this issue.

I think the brine issue is a genuine issue. I understand conservationists and others have concern about it. I travelled to Israel and had a personalised tour of the largest desalination plant in the world, at Ashkelon in Southern Israel near the Gaza strip border. They informed me that within 100 metres of their openings the brine levels were neutral compared with normal sea water. I have heard the same claim from BHP this morning, so if that proves to be the case, then frankly I think that is satisfactory and should be regarded as very good practice. The fact that they can get it down to zero within only 100 metres of the opening is quite commendable. Let us hope that turns out to be the case in reality.

In winding up, I will put a few questions on the record for the minister to respond to in summing up, and I accept that they may not be able to be answered by the government in minute detail. Some of these are very difficult to answer, but if the government can give us the best feel it has we would be appreciative, and the first one is a fairly simple but very important one:

1. How many South Australians are projected to actually be employed from this mine directly and indirectly?

2. Secondly, how many South Australian workers are currently trained to a level suitable for work once this mine is underway and as it progresses?

3. What efforts has the government made in relation to training South Australians to ensure we have an adequate workforce to meet the employment requirements of the mine and to maximise the number of South Australians employed?

4. How many South Australian manufacturers and companies are to get work or contracts under this indenture?

5. What percentage of profit does the government propose to spend per annum on regional development within South Australia, and on what basis will the government determine how to spend this money on regional development? This is a very important question. I had the privilege of travelling through the West Coast last week and I can assure you that our regions are thriving, but they need help. They need infrastructure. The tenacity of the individuals and people in towns never ceases to amaze me, but in many cases they need infrastructure spending.

6. What specific regional development does the state have planned for Whyalla, Port Pirie and Port Augusta in light of the changes that the Olympic Dam indenture will bring to these areas? Specifically, how is the government planning to redevelop Yorkeys Crossing to enable transport of the materials needed for the construction of the plant at Roxby?

7. According to the select committee report that was laid on the table in the House of Assembly on 18 October, the indenture is estimated to contribute $45.7 billion to the state economy over 30 years. We have heard that royalties are not expected for another nine to 10 years. What is the estimated benefit to the state in the first five years and then the next five to 10-year period and ongoing?

8. The sale of uranium, should the current ALP federal government lift the sale ban, as has been proposed, has been estimated to net some $17.4 billion per annum. This would have obvious flow-on benefits for the Olympic Dam indenture. What would be the net benefit to the state of South Australia if we did in fact decide in this country to export uranium to India?

9. What is the estimated impact of fly-in/fly-out workers on both the expansion of the Roxby Downs community and the sustainability of Roxby Downs as a municipality?

10. Much criticism has been made of the effect of the desalination plant on the giant Australian cuttlefish, and I addressed that in my contribution. What are the reasons the government has identified for the decrease in the cuttlefish population in South Australia if it is not through these sort of activities?

11. What recorded effects have similar desalination plants had on their surrounding environments?

12. What is the percentage of permeate water that will be produced from the desalination plant?

13. What is the estimated salinity of the brine waste and what is the estimated variation of water salinity in the ocean once the brine has been dumped? We have the figures from BHP. I am not querying those. I am really just asking: does the government agree with them, and, if so, will they confirm them?

That is essentially my contribution on this bill. I would just say, in summing up, that Family First welcomes this legislation. This is a great thing for our state. It comes with risk, as all great projects do. We cannot ignore that. However, we need to confront them and deal with them as best as we can. This is an exciting time for our state and this one thing alone will add so much to our state pride. It will be something that we can take some genuine pride in. I am sure that other states are looking at us quite enviously, which is a nice change.

The Hon. M. PARNELL (12:53): A number of members of parliament, here and in the other place, have said recently that this is probably the most important bill they will consider in their parliamentary careers. I think those people are right. The decisions that we make in this parliament now will have ramifications well beyond the life of this parliament, in fact well beyond the lifetimes of every single person in this parliament, and potentially well beyond the end of the century.

When it comes to the biggest industrial project in South Australia's history, we have one chance to get this right and that chance is now. There is no point in coming back in 10 or 15 years' time and saying, 'We wish we had not made so many commitments. We wish we had not given up so much for so little.' There is no point coming back saying, 'We wish we had been more thorough and given this project more scrutiny.' There is no point coming back and saying, 'I wish we hadn't got caught up in all the hype. I wish we had focused more on what was in the state's long-term interests', because by then it will be too late. We will have passed into law a deal which locks in future generations and locks in low standards and high public subsidy.

We have to recognise at the outset that there is an enormous power imbalance at play here. There has been a totally predictable and rather depressing game taking place between one party, who we are told has all the cards—BHP Billiton, the world's largest and richest diversified resource company—and the other party, who we are told has very little bargaining power—the government of the state of South Australia. However, BHP Billiton does not hold all the cards. In fact, we hold the ace, and that is the ultimate ability to determine how, when and by whom our non-renewable resources are exploited.

Ultimately, the approval is up to us. However, once that approval has been given, the train essentially leaves the station with BHP Billiton in the driving seat and the rest of us, including the government, sitting back in third class watching as the scenery flashes past out of our control. So, that is the choice we have before us today. We have these two players: we have BHP Billiton and we have the executive arm of the South Australian government, which has signed a contract. However, this contract is only a piece of paper until it is ratified by the parliament, and that is the purpose of this bill.

The contract before us even includes a clause saying that, if the parliament does not sign it, all bets are off. Yet what the government and the world's richest resource company have been discussing, and what the contract determines, is the future of our collective asset. These resources belong to the people of South Australia. They do not belong to BHP Billiton, they do not belong to the executive; they belong to the people of this state, and that includes people yet to be born. That fact well and truly brings each and every one of us in this parliament—the formal elected representatives of the people of South Australia—into a pivotal role. We have to decide what we want to happen to our communal resources.

I want to speak briefly about the process of this bill and the indenture and the role that the parliament has to play in it. The mining minister in another place and various other ministers have said that this parliament has no role in tinkering with the indenture. We are told that we can only say yes or no. I disagree utterly with that notion. Just because the executive arm of government has negotiated a deal, I do not accept that that means the parliament has no role and must meekly roll over and accept the deal no matter what the contract says, no matter what rights have been given away and no matter how poor the deal actually is. Certainly a yes or no outcome is the final result, but I think parliament has an important role; I think it is our responsibility to go through this contract in some detail. In fact, it would be a gross dereliction of our duty as representatives of the people of this state if we were not to do so.

If we as a parliament do not think that this is the best possible deal for the use of our non-renewable resources, then I believe we are duty bound to try to improve the deal. If we cannot improve it, we need to reject it, but, at the very least, the parties—being the executive and BHP Billiton—need the guidance of parliament as to what is and what is not acceptable so that they can renegotiate a better deal that is in the interests of all South Australians. As I say, these are non-renewable resources; it is not a magic pudding. We can only use these resources once. If we as a society want to be responsible, we are bound to maximise the benefit for the one time that these resources can be used.

The government has been spinning the line that if one single sentence or one single word of the indenture is altered in this contract, BHP will walk away. The truth is that that is rubbish. The government knows that that is rubbish and BHP Billiton knows that that is rubbish. I am afraid that I have been around long enough to see a veritable conga line of corporations threatening to take their bat and ball and go home if they do not get everything their own way, but, guess what? They cannot take our resources with them. Those resources are staying here in South Australia and they are not going anywhere until we have settled on the arrangements for their extraction and their exploitation.

I also challenge the notion that parliament, by scrutinising this legislation and proposing changes to it, is somehow creating a problem of sovereign risk. The argument goes that, if the executive goes away and negotiates a contract which the government then votes to change, somehow this presents an unacceptable risk to our reputation and that business will no longer to seek to invest in our state. Of course, that is absolute rubbish as well. The only real uncertainty is which favoured corporate players will get to write their own laws and which companies will have to comply with the general law of South Australia. That is the only uncertainty at play here. Sovereign risk may exist in Angola or Zimbabwe, but it certainly does not exist in a modern, effective and educated democracy such as Australia. Companies can cry wolf, but we should focus on the facts and we should not focus on scare campaigns. So, parliament can and should be able to change the rules as it sees fit.

Corporations, on the other hand, never talk about sovereign windfall when the parliament lowers their corporate tax rate or changes the planning rules in their favour. You never hear sovereign windfall discussed; it is only ever sovereign risk. But we should name it for what it is. It is just risk—it is not sovereign risk—and corporations, especially ones that operate on a global stage, deal with risk every single day. For example, they have to work with daily fluctuations in exchange rates and even unforeseen weather events. Corporations use the term sovereign risk to try to bully governments into giving into their demands. I seek leave to continue my remarks.

Leave granted; debate adjourned.


[Sitting suspended from 13:01 to 14.19]


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