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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

Committee Stage

In committee.

Clause 1.

The Hon. D.W. RIDGWAY: Something I omitted to do in my second reading speech was to put on the record that I do have some shares in BHP, although only a relatively small number, and I thought that I should put that on the record. I forgot to do it the last time we debated this bill, but I expect that everybody who has a superannuation policy would have an interest in BHP.

The Hon. G.E. GAGO: I have some answers to questions that were posed during the second reading debate. In answer to a question asked by the Hon. Dennis Hood in relation to how many South Australian workers are currently trained to a level suitable for work once the mine is underway, I have been advised that in 2009-10 there were 36,800 South Australians employed in occupations related to the mining sector, including construction and engineering related to mining, and, based on recent trends, approximately 7,000 South Australians are forecast to complete qualifications in these jobs over the next five years.

The Hon. Rob Lucas asked the following questions in relation to the former premier's indicating the state's investment: what does the government believe will need to be put in the forward estimates for the period 2014-18; what does the Treasurer believe will be required in terms of public investment for the period 2018 onwards; what is the horizon for the new schools, childcare facilities and roads, etc. He also asked: what are the time lines in terms of the Treasury outlay of hundreds of millions of dollars that is going to be provided to the taxpayer for these particular services?

I have been advised that a preliminary estimate of $200 million over a period of 10 years, approximately, for state government infrastructure has been provided by the government previously, but the final cost is expected to be less. In addition, the state is responsible for the provision of certain civic and community facilities and infrastructure, with preliminary estimated costs of somewhere between $35 million and $50 million.

I have also been advised that the impact of the expansion on the provision of the government services to Roxby Downs is described in BHP Billiton's EIS. Treasury and the Olympic Dam task force, in conjunction with agencies providing services to Roxby Downs, are now planning to review previous work done on service models and associated financial impacts. I have also been advised that the time frames will depend on the confirmation of BHP Billiton's workforce projections.

In answer to the opposition's request for access to the CRU report commissioned by the state government to look at the financial viability of the project, I have been advised that the government is happy to brief the honourable member. However, the CRU report will not be made public at this stage as it contains material that is commercial in confidence.

In answer to the honourable member's question what is the budget impact on projected increases in royalty payments, I have been advised that the increased royalty revenue from ODX will have implications also for our share of the GST revenues. The Commonwealth Grants Commission's assessments will take into account the increase in our revenue-raising capacity which will reduce our share of the GST grants.

Effectively, their net effect should be that the budget benefit is equivalent to our population share of the increased royalty revenue. The net gain to the state could be anywhere between $10 million to $50 million per annum, depending on the scale of the expansion and the mix of products as between those subject to a 3.5 per cent royalty rate and those subject to a 5 per cent royalty rate. Increased royalty revenues will not commence until after the initial five to six-year open-pit construction phase.

In response to the question what is the total cost to taxpayers for negotiating the package and the cost of consultants, etc., I have been advised that the total budget provided for the Olympic Dam Task Force 2006-07 to 2011-12 is $7.5 million. This budget has funded all expenditure on matters associated with the indenture negotiation, including costs relating to ODTF salaries, Bruce Carter consultancy, other consultancies including that conducted by CRU, external legal advice and in-house public servants. Other agencies involved in the indenture negotiation process have not been provided with additional budget funds.

The Hon. M. PARNELL: I thank the honourable minister for the answers to those questions which did, in fact, have the intended purpose of at least removing the first question from my list because the minister has answered it. She said that the sum of $7.5 million has been spent on the Olympic Dam Task Force and related tasks.

Before I ask my first question in relation to clause 1, I thought I might just briefly outline the way I envisage this fairly lengthy, I imagine, committee stage might progress. Mr Chairman, I do not in any way mean any disrespect to your good self, sir; you will conduct the proceedings as you always do—fairly and giving all members the opportunity to have their say—but just so that members understand where I am coming from, I have a range of questions on clause 1.

Clearly, the bill that is before us has only 13 or so clauses, and the first 13 pages effectively are those clauses, but the remainder of this document, which goes to some 176 pages, is the actual indenture itself. I am hopeful that the approach that we will take in going through this bill is that we will go through the indenture clause by clause and I will try to confine my questions to the appropriate clause.

I have also placed on file a number of amendments in relation to this bill. Whilst there has been some interest in the media about the number of those amendments—and certainly I did, at one stage, mention the figure of 100—members will note that there are, in fact, 28 amendments that are tabled. The vast bulk of these amendments are effectively what I propose as changes to the indenture itself. These are all blocked in together in, I think, amendment No. 27. It will be my intention to test the will of the chamber, when we get to it, on that amendment as a block, so I think that is the way to proceed.

However, what I hope to do, with your guidance, Mr Chairman, as we go through the indenture, is to foreshadow, as we get to each clause, the amendments that I will be moving and why I think they are appropriate, but they will not actually be moved at that point. For example, if the committee is discussing clause 11 of the indenture and if I have changes to that clause, I will foreshadow what they are but, certainly, it is not my expectation that we will be separating my omnibus amendment into its 114 or so component parts. I will spare the council from the need to do that.

I say that with all respect, Mr Chairman; you will conduct these proceedings, but that is how I envisage the proceedings might be most efficiently disposed of. They are just some remarks that I put at the outset. In relation to clause 1, I have a number of general questions that do not conveniently fit anywhere else within the bill or the indenture itself. My first question relates to the timing of negotiations over this indenture. As members would be aware, there has been a great deal of commentary in the media in relation to the fact that outgoing premier Rann had declared that on the top of his list of things to achieve before he left office on 20 October was the successful negotiation of the indenture.

Certainly, there has been speculation in the media, and I will invite the government to tell us whether or not that speculation was accurate. Some of the speculation was that two outstanding issues were unresolved between the announcement of the premier's departure in July and the premier's actual departure on 20 October, those issues being the rate of royalty and the level of local processing of ore that would be required, and that they were two state requirements that were yet to be agreed on when it was announced that the premier would be retiring.

My question of the minister is: which particular issues—is it those two or is it other issues—were still the subject of significant negotiation between the time former premier Rann announced that he would be leaving back in July and when the contract was finally signed? That is the question.

The Hon. G.E. Gago interjecting:

The Hon. M. PARNELL: Sorry—the unresolved issues between July and October.

The Hon. G.E. GAGO: I have been advised that the outstanding issues included the level and timing of the royalties and also the rehabilitation bond.

The Hon. M. PARNELL: In relation to royalties, what I understand from my discussions with the Olympic Dam task force—and I appreciate the time they have provided in their briefing—was that the main issue in relation to royalties was whether or not this expansion of an existing mine was entitled to the new mine royalty holiday, if you like, the lower concessional rate that applies to new mines. Was that the only royalty issue that was in dispute?

The Hon. G.E. GAGO: I have been advised that BHP was seeking a 2 per cent royalty rate over 10 years and we said no, that the prevailing rates would apply.

The Hon. M. PARNELL: In relation to the rehabilitation requirements, was the main issue in dispute the amount of the bond, the rehabilitation bond, or were there other post-closure issues that were unresolved?

The Hon. G.E. GAGO: I have been advised that the issues were around the structure of the bond, rather than the rate.

The Hon. M. PARNELL: I would now like to ask some questions about the overall economic benefit of this project. For the benefit of honourable members, as I mentioned in my second reading speech, we did take the opportunity to send a large number of questions on notice to the Olympic Dam task force, and a large number of written answers were received back. It is not my intention for either me or for the minister to need to read all of those onto the record. Of course, the minister may well want to get some of those on the record, and that is her prerogative, but it is not my intention to read them all in.

I do want to refer to one question that I asked about the overall economic benefit. My question of the government was: how does the return to the state (which was estimated at $2.5 billion to $3.4 billion over the 30-year modelling period) compare in percentage terms with other mining projects in Australia and overseas? That question was in light of the fact that the estimated size of the resource at Olympic Dam was valued at $1 trillion.

The response that I got back from the government pointed out the overall economic benefits as they saw it; there is information about jobs, the general flow-on effect to gross state product, and there is a range of other benefits that were quantified. In relation to the component of my question that looked for comparison, a chart was provided comparing the value of this mine to the Jacinth-Ambrosia mine, the Prominent Hill mine, and the small Kanmantoo mine.

The other comment that came back in the answer to my question—because I had referred to this $1 trillion resource—was:

The $1 trillion resource refers to an imaginary figure of the in-ground value of a mineral deposit. Such figures are now severely frowned on by the Australian Stock Exchange.

The reason I want to raise that issue is that, if we refer to the ministerial statement made by premier Mike Rann just before he left office, on Tuesday 18 October, it has the following line in it: 'The ore body is valued at more than $1 trillion.'

That, it seems, is problematic if the view of the government is that this is an imaginary figure, and the use of such imaginary figures is frowned on by the Stock Exchange. So my question of the minister is: was former premier Rann talking about an imaginary figure when he gave his ministerial statement, and why is that the Olympic Dam task force is trying to talk down the overall value of the deposit, and yet the premier, in parliament, is talking it up?

The Hon. G.E. GAGO: The figure of $1 trillion is a rough indicative figure of the value. It is important to be able to express to the general public and interested parties that this is a very large, rich deposit. However, it is also important that we are able to talk about the 350 metres of cover over the top of that extremely rich deposit, and that means there is a considerable cost to extract it. The trillion dollars is a rough indicative figure. The real figure obviously includes all the costs of mine development and processing.

The Hon. M. PARNELL: I thank the minister for her answer. However, given the Stock Exchange apparently frowns on the use of these types of figures, has the government taken note of that warning and will the government now stop using imaginary figures, such as 'a trillion-dollar resource', and confine itself to figures that are more easily justifiable by the exploration activities that have been undertaken?

The Hon. G.E. GAGO: No, not at all. I think I have explained to you the importance of the government being able to explain the different values of the resource. It is important, when we do use those figures, that we use them in a qualified way so that people are able to gain a realistic figure. It is important that this government can describe the enormous potential wealth of the resource, but in a qualified way, as I have outlined.

The Hon. M. PARNELL: The part of the answer that I did not get back when I wrote to the Olympic Dam task force last week was any comparison of the share of economic return compared to equivalent projects overseas, like the Escondida mine in Chile. Does the government have any such analysis? I think the importance of that question is that we are debating whether this is a good deal for the people of South Australia or not. It would seem to me that a fairly basic test is to benchmark the returns we will be getting from equivalent-size projects overseas. As interesting as it might be to compare this with the Kanmantoo mine, I think it is probably more appropriate to compare it overseas. Does the minister have any of these international comparisons?

The Hon. G.E. GAGO: I have been advised that, no, we do not have detailed figures that would enable us to make a meaningful comparison with these other types of projects, because they are occurring in different countries with different sets of royalty rates and tax regimes, which makes it extremely difficult to compare apples with apples.

The Hon. M. PARNELL: I accept the minister's answer that she does not have that analysis. I will just make the point that many of the variables are certainly within our control: things like royalty rates, levels of local processing and other factors.

I will move on now to talk about the overall economic return from this project. The minister has already answered a question in relation to the royalties, that the additional royalties will not start flowing, obviously, until the ore body has been reached and the ore is being extracted and sold. However, we do need to make sure that we take into account both money in and money out. When it comes to the history of the Olympic Dam mine, my understanding is that, if we look at the first 10, 12 or so years of that project, the infrastructure costs to government exceeded royalties by some $10 million.

In other words, on that basis—and I accept that it is not the only basis on which to judge the economic performance of the project—but on that basis alone, we subsidised the Olympic Dam mine up until at least the end of the 1995-96 financial year. My question of the minister is: has an assessment been done, a cash flow-type assessment, that compares public subsidy with return to the state in royalties? Bear in mind the minister said that the fiscal balancing arrangements between the states mean that we only get our population's share of any royalties.

The Hon. G.E. GAGO: I think I have provided all the information that we have in respect of this already. As I have indicated, I have been advised that there is a preliminary estimate of $200 million over a period of 10 years for the state government infrastructure; however, as I have indicated, we expect that the final cost will be less than that. The state is also responsible for a provision of civic and community infrastructure at the cost of $35 million to $50 million. The return is about $350 million over 10 years.

The Hon. M. PARNELL: I thank the minister for that answer. Just on my rough calculations, it looks like 250 out and 350 back. Presumably the returns back to the state are weighted to the end of the 10-year period, presumably when the hole has been dug and when royalties start to be paid.

I would like to move now to the issue of the nature of the bill that is before us. Clearly, it is a bill that is targeted at one company, at one operation. Such bills were more common in Tom Playford's era than they have been more recently but, as I mentioned in my second reading contribution, a number of small businesspeople have contacted me upset that the world's richest resource company is getting a special deal and wondering what you need to do to get a special deal. My question of the minister is: is there a threshold? Is there any element of government policy that dictates which projects get their own special legislation and which ones do not? Certainly, we are legislating for this project as the parliament did back in 1982. The parliament has also legislated in relation to the Whyalla steelworks. My question is: what are the criteria?

The Hon. G.E. GAGO: I have been advised that it is basically assessed on a case-by-case basis, but generally the underlying principle is those very large projects that require a degree of certainty for investment purposes.

The Hon. M. PARNELL: I thank the minister for her answer. Before I move on to the next topic, which is the topic of domestic processing, I have reminded myself that my quick mathematics before completely missed the commonwealth diesel subsidy which presumably would be even higher in the first 10 years. My expectation is that for a decade at least we will be paying out, rather than having funds paid in. I will leave that there for now and I will come back to some of those subsidies later.

In terms of domestic processing, the question that I sent to the task force was: what evidence or modelling was used to justify the South Australian government forgoing the economic and employment advantages to South Australia of on-site copper processing? The government's response reminded us that the off-site production of refined copper product from concentrate was part of the description of the expanded project and, therefore, all the economic assessment has been undertaken on that basis. Of course, on-site processing of copper was also part of the process.

The response from the government indicated that of the 2.4 million tonnes of copper concentrate that would be produced at Olympic Dam, one-third would be smelted and refined on site to produce 47 per cent of the total contained copper output and 90 per cent of the uranium oxide concentration will be produced on site. So, clearly, the environmental impact statement had both on-site and off-site processing.

The company has made certain assurances, I do not know whether you would call them promises, but it has made certain statements about its intention to process minerals onshore. The question that I have is: can the minister point me to anything in the bill, anything in the indenture, that actually requires BHP Billiton to undertake the level of on-site processing that it has said it is going to do? Is there any obligation on it? If not, what assurance does the government have that the level of on-site processing suggested by the company will in fact occur?

The Hon. G.E. GAGO: I have been advised that BHP Billiton must substantially comply with the EIS, which has approved the doubling of processing.

The Hon. M. PARNELL: I thank the minister. I am not entirely satisfied with that answer because the EIS, if we go right back to the very start and look at the guidelines for the production of the EIS, one of the things that they were obliged to do was to document a range of alternatives that were considered in coming up with their preferred project.

I think the words in the guidelines are 'alternatives are to be discussed in sufficient detail to enable an understanding of the reasons for preferring certain options and rejecting others'. The minister's answer basically says, 'Well, they've said they're going to do it and therefore they have to do it.' Perhaps we are going back a step, but where have they identified where that amount was chosen, why the amount of local processing was not zero per cent and why was it not 100 per cent?

The Hon. G.E. GAGO: I have been advised that the commercial considerations of the company to mine in an optimal way is in effect the responsibility of the company itself. It is not appropriate that the government dictate how much processing it would do, as that is a matter for commercial consideration of the company itself. The project has had several starts that have failed in the past and this one has been deemed to be economically feasible.

The Hon. M. PARNELL: Again I thank the minister for her answer, but it does not really satisfy me because she has in fact said two things that are inconsistent. In answer to my first question she said, 'Well, they've promised to do all this extra processing.' The information I got back from the task force implied that there would be an increase in 200,000 tonnes per annum processed on site. She said the reason we know they will do it is because they said it in their EIS (these are not her words, these are mine), and a condition of approval is that you have to comply with your EIS. Then she said, 'Well, however much processing they do it will be up to them on economic grounds.'

I invite the minister to revisit my question: can she point me to any section that guarantees that that level of additional local processing will occur? I will throw in a supplementary while I am at it: if BHP Billiton, for example, because of the economic considerations, which as the minister has said are entirely their own business, decide not to process either any or as much ore as they have promised, what can the government or anyone else do about that?

The Hon. G.E. GAGO: I am advised that they are required to come back to the government to seek a variation.

The Hon. M. PARNELL: I want to explore that a bit further because this is fundamentally important. Is the minister's answer that this indenture effectively obliges the company to produce on site the amount of copper, smelted as metal, that they have said they are going to do and, if they do not, they will have to come back for a variation? To tie this right down, when does that need for a variation occur? Is it the very first year where they do not produce the additional amount it promised? Do they get 10 or 20 years? Over what time frame, and what is the formal trigger for a variation of the indenture on the basis of insufficient copper metal being produced?

The Hon. G.E. GAGO: I have been advised that we are not talking about the indenture here; we are talking about the EIS. As I have indicated, any substantial change to the EIS triggers the need for the company to come back to the government to seek a variation. In terms of the parameters around the timing of that, I do not have that detailed information here, but we can see whether we can find that level of detail and bring back that for the honourable member.

The Hon. M. PARNELL: I will take the minister up on her offer. I will just make an observation. The minister says that it is in the EIS, and presumably she means in the development approval rather than in the indenture itself. Well, it is in the Recitals to the indenture. It says:

Decisions relating to progressing the establishment of an open pit mine and the particular configuration of the mine and supporting infrastructure—

and the smelting is obviously supporting infrastructure—

will depend on factors including commercial considerations and other assessments undertaken by the Company.

I note that the current Premier, in The Advertiser just last week, claimed 'the mine will see a doubling of processing on the Olympic Dam site'.

I think the amount of processing is fundamental to this indenture. My invitation to the minister is that, perhaps later on in the debate, she can come back and point me to the trigger that says that this deal has to be renegotiated if a certain quantity of local processing is not achieved, because I certainly have not been able to find that section. I ask her again to take on notice which clause of the indenture allows the government to walk away from the contract if the company's commitments to local processing are not achieved. I would like to know exactly which clause of the indenture allows the government to do that because I certainly have not been able to find it.

Can the minister also take on notice the question: what if the government of the day decides that it is happy for 100 per cent of ore to be sent to China? If the government of the day is happy with zero processing, what are the implications of that type of government decision? Is there anything this parliament can do—is there anything anyone can do—to actually go back and renegotiate a deal that provides for local processing, which, of course, is a euphemism for local jobs because that is where the bulk of the jobs are?

The Premier, last week in The Advertiser, in relation to my questions about why there was not a greater commitment to local processing, said:

Logistically it would be extremely difficult to process all the concentrate at one location and it would require a massive capital cost to do so.

My first question to the minister is: what is that massive capital cost? Is it documented anywhere as to how much it would have cost to do all the processing locally? Secondly, why would the Premier have described it as a massive capital cost rather than a massive capital investment in job creation? If the government does not have figures in relation to what it would have cost to process locally, how can it say that the cost was massive?

The Hon. G.E. GAGO: I have been advised that the cost of a new smelter is approximately $3 billion.

The Hon. M. PARNELL: Is the minister saying that that $3 billion is the cost of a new smelter that would be required to process 100 per cent of the ore from the Olympic Dam task force? What does that $3 billion actually relate to? They have already said they are going to upgrade the existing smelter and its capacity: what is the $3 billion?

The Hon. G.E. GAGO: What is your question exactly about?

The Hon. M. PARNELL: What I am trying to work out is that the company is effectively saying—and the government has accepted this—that it will be massively expensive to process more ore here in South Australia. The minister has come back saying that the cost of a new smelter will be $3 billion. What I want to know is: a new smelter to do what—a new smelter to process all the ore, half the ore, a third of the ore? What do you get for $3 billion in smelting?

The Hon. G.E. GAGO: The advice is that we believe that it would cover processing of all the ore based on the current expansion.

The Hon. M. PARNELL: If that is the capital cost of building a smelter, what analysis has been done to show how that would compare with the higher value of copper metal? Clearly, it is a more valuable product than copper ore. Does that analysis exist anywhere? It was not in the EIS or the supplementary EIS; it was not referred to in the assessment report. Is there any analysis that the government has done or is that $3 billion figure simply something that BHP Billiton has provided you with?

The Hon. G.E. GAGO: I have been advised that this is based on the figures given to us by BHP Billiton.

The Hon. M. PARNELL: What essentially has changed in the government's thinking about this project since 2007 when former premier Rann said that BHP Billiton's China option was not South Australia's option and that the government would resist any attempt by BHP Billiton to export the bulk of the ore overseas? What has changed in those four years?

The Hon. G.E. GAGO: What has changed is the project configuration, which now makes this a viable project, whereas previously the project configurations were not.

The Hon. M. PARNELL: Did the government do any analysis of its own to substantiate the claim by BHP Billiton that local processing was not viable? In other words, did the government rely entirely on the analysis done by BHP Billiton or was any independent analysis done?

The Hon. G.E. GAGO: I have been advised no.

The Hon. M. PARNELL: I thank the minister for her answer, because it is pretty much as I expected: the company has said that it does not want to process locally. The government has not asked it to justify it; it has simply accepted that most of this ore will be going to China, along with most of the jobs. Was consideration given to approving an expansion of the Olympic Dam mine as a copper, silver and gold mine only, without the uranium processing?

The Hon. G.E. GAGO: I have been advised no.

The Hon. M. PARNELL: The reason I have asked that question is that the assessment report states that it is considered that it would not be possible to mine the copper alone, as uranium is intrinsically associated with the copper mineralisation and will be processed along with the copper. I would like to know if that statement in the assessment report, that it is not possible to mine the copper alone, is the assessment of the company, or the assessment of government? I would also add that I know full well that all these minerals are mixed in together; it is not as if you get a layer of copper, a layer of gold and a layer of uranium. The words in the assessment report that 'it would not be possible': is that the government's assessment or the company's?

The Hon. G.E. GAGO: I have been advised that it is a matter of physical reality, that is, that these substances are mixed together under the ground. It is simply a matter of physical reality.

The CHAIR: I think Mr Parnell has moved on from clause 1.

The Hon. M. PARNELL: Oh no, I am still on clause 1; we're getting there. Thank you, Mr Chairman. Just in response to the minister's answers, I think the minister and other members would be aware that the work that was commissioned by the Greens in relation to the mining engineering showed that it was certainly possible to let all of the uranium stream through to the tailings and that that would actually result in significant other environmental benefits in relation to energy and water, as well, of course, as having the effect of extracting South Australia from a nuclear cycle.

I did mention in my second reading contribution that I believed, on the basis of evidence provided to the commonwealth parliamentary joint standing committee on treaties, that South Australian uranium from Olympic Dam was in all the reactors at Fukushima and having been in all the reactors is now being spread over the Japanese countryside and in their marine environment. My question of the minister is: does she have any additional information? Can she confirm that it is uranium from Olympic Dam that was involved in the nuclear disaster at Fukushima and does she have any other information about the quantity, for example, of South Australian uranium that was involved in the world's worst nuclear disaster?

The Hon. G.E. GAGO: I have been advised no.

The Hon. M. PARNELL: Does that no mean that the government knows nothing or nothing more?

The Hon. R.I. Lucas: No means no.

The Hon. M. PARNELL: Thank you. I want to now just ask about the issue of where this product will end up. I do not mean spread over the Japanese countryside. I want to ask particularly about China. I know in asking this question that the government will say that where Australian uranium ends up is nothing to do with the state government, but certainly in terms of the overall economic viability of the project, clearly the company has identified China, and the government has told us that it has been analysing this process and project itself. My question of the minister is: does she accept that sending South Australian uranium over to China in a copper concentrate form is a novel process and, in fact, not currently sanctioned by any of Australia's bilateral uranium sales agreements?

The Hon. G.E. GAGO: I have been advised that those discussions are still occurring and they have not been finalised at this point.

The Hon. M. PARNELL: The indenture agreement places certain obligations on South Australia to bat for the company, if you like—to negotiate on their behalf—in relation to a range of matters that would help progress this project. Is the government making representations? Are they batting for BHP Billiton in order to change the commonwealth's treaty arrangements so that the export of South Australian uranium infused in copper to China is possible?

The Hon. G.E. GAGO: I have been advised that, to the best of our knowledge, there has only been a meeting between then minister Foley and minister Ferguson to discuss issues around the export of copper concentrate to China, but that is all that we are aware of at this point in time.

The Hon. M. PARNELL: I thank the minister for her answer; so, she is aware of discussions between a South Australian minister and a federal minister that relate to export in a way that is not currently envisaged in Australia's treaty arrangements. My follow-on question from that is that, since there is clearly an element of risk involved, what if Australia's treaty arrangements are not altered to enable this form of uranium export to occur? What does that mean for the project, and what does it mean for the indenture?

Would the failure of a new treaty trigger, for example, mean the ending of the indenture and the obligations of the party under it? Clearly, one of the most—probably the most—important aspects of the whole project is who you can sell your product to, and if that is not yet resolved what backup plan does the government have if such a treaty is not negotiated?

The Hon. G.E. GAGO: I have been advised that, if it failed to meet the treaty obligations, Australia and South Australia simply could not export its copper concentrate to China. The indenture is not reliant on the settlement of markets, so that would have no impact on the indenture, and it would simply mean that other markets would need to be explored.

The Hon. M. PARNELL: I accept what the minister is saying, that the indenture itself (the legislation) does not oblige or require the product to go to any particular market. I am making the point that if the business case for this project depends entirely for its success on something that is yet to be resolved—and currently it would be illegal to do what the company is proposing to do, illegal to export uranium-infused copper overseas—the minister's answers to me seem to be, 'That's not your problem,' and that, if that market falls over and the entire viability of the project falls over, it has nothing to do with South Australia.

It seems to me that if, in the meantime, we have invested vast sums in public infrastructure (the $250 million, I think, that the minister referred to before), is that not a risk that South Australia somehow needs to manage?

The Hon. G.E. GAGO: It is a risk, I have been advised, that the company needs to manage. As I have said, it is separate to the indenture. Other market options would need to be explored.

The Hon. M. PARNELL: I certainly understand that it is the company's risk, but it is going to be our $250 million that could be wasted if this project does not come to pass. I will move on.

The issue of uranium sales to India has certainly been in the media lately. Members would be aware that it featured prominently in the WikiLeaks document disclosure from some little while ago. It included various communications from the United States Consul General back to head office, if you like. One of those emails that was leaked said, 'India represents a potentially massive market for the mine'—meaning the Olympic Dam mine—'but the Rudd government will not sell uranium to India until it signs off on the non-proliferation treaty.' The minister disclosed before that minister Foley has had discussions with his counterpart at the federal level on—

The Hon. D.W. Ridgway: Former minister Foley.

The Hon. M. PARNELL: —former minister Foley, I am reminded by the Hon. David Ridgway—discussions in relation to China. Were such discussions undertaken in relation to India?

The Hon. G.E. GAGO: I will answer that question. To the best of our knowledge, no. However, I have to say that these matters are really moving right outside the indenture bill that is before us. I think we have shown a great deal of leeway and tolerance in trying to show good faith and a willingness to answer as best we can, but we are moving outside those matters that are in the indenture bill before us. We have not moved off clause 1 and we have been at this for well over an hour. Honourable members had plenty of opportunity during second reading debates and briefing sessions to pursue questioning there. I believe that it is time now that we move on and address only those matters in the indenture bill before us.

The Hon. M. PARNELL: I note the minister's answer and her forbearance. I do remind all members that the House of Assembly I think took 12½—it might have even been 13—hours going through this, and we have been one hour into it. They were my questions in relation to the impact of overseas relations, which I acknowledged up-front are not part of this government's responsibility. The bit that is part of our responsibility is if we are going to sign off and invest public money in a project that is uncertain because the markets are as yet uncertain and in two cases currently illegal. I think that does go to the heart of this entire indenture.

My next question relates to the fact that this multimetal mine is clearly focusing on copper first and foremost. We know there is gold, silver and uranium. We also know that there is iron ore and rare earths. My question of the minister is what is the government's estimate of the size of the rare earths and the iron ore deposit, and is there anything in the indenture that either allows or prohibits those other minerals to be exploited?

The Hon. G.E. GAGO: I have been advised that at this point in time we do not have an estimate of the size of rare earth or iron ore deposits. However, on advice received from BHP Billiton, their view is that it is not economically feasible at this point in time to mine those elements.

The Hon. M. PARNELL: I thank the minister for that answer. It is consistent, certainly, with what the task force told us, which was that the technology to extract the additional minerals economically at Olympic Dam is not available at the current time.

The second part of my question was: if such technologies do become available, bearing in mind that we are talking about a very long-term project, is there any impediment or additional requirements that BHP would have to go through? Is there anything that stops them exploiting those minerals if they work out a way to do it cheaply enough?

The Hon. G.E. GAGO: The simple answer to the question is no. Obviously, given the information I gave about seeking a variation in respect of the EIS, that would need to occur but there is no actual impediment to prevent that from occurring.

The Hon. M. PARNELL: Moving on, at the Australian Uranium Conference in Fremantle in July this year, mining minister Tom Koutsantonis said the following, 'I received a briefing recently that indicated that Olympic Dam will be so large after the expansion that it will change weather patterns over the area.' Can the minister answer the question: how will the expansion change the weather?

The Hon. G.E. GAGO: Obviously I cannot speak for what was in the mind of minister Koutsantonis when he made those comments. The Hon. Mark Parnell would need to ask the minister.

The Hon. M. PARNELL: In fact, it is one of the difficulties we have, and I acknowledge that the minister is not the lead minister in relation to this bill. Rather than my seeking out the mining minister, if the minister was able to find out some information about proposed change to South Australian weather, I am sure there is a range of farmers and others who would appreciate that inside knowledge.

One question I asked the task force in relation to the progress of setting conditions for this mine was in relation to what conditions in the assessment report and the development approval were more stringent than the conditions that BHP Billiton had already committed to in their EIS and their supplementary EIS. The response I got back from the government was that there were a range of conditions, that two thirds of them were considered to be new conditions that were imposed by various agencies, the other third were basically commitments that were made by BHP Billiton already. The shorthand, I guess, is that one-third were things that the company promised to do and two-thirds were imposed.

Is the minister able to clarify in any more detail the types of conditions that were stricter than the company had intended to comply with? Which ones were simply a restating of the company's existing commitments?

The Hon. G.E. GAGO: Again, this is a question that pertains to the EIS, not to the indenture. However, some examples of conditions that were made stricter include additional ecotoxicity testing around the desal plant and also additional hydrodynamic modelling.

The Hon. M. PARNELL: I thank the minister for her answer. I am getting very close to the end of my questions on clause 1. I am interested in an idea that has been recently flagged in the media, for example, the InDaily online newspaper from Thursday 17 November talked about how this project could be used to leverage a whole lot of other benefits for South Australia. My question of the minister is: what other benefits to South Australia were discussed and committed to by BHP Billiton as a result of this indenture? I do not need the minister to explain flow-on effects and indirect jobs and things like that, I am talking specifically about corporate sponsorships, sporting, cultural, academia, chairs at universities, art galleries, you name it. Have any of those aspects of our social infrastructure been tied to this project? Did the government ask for anything and did BHP Billiton promise anything?

The Hon. G.E. GAGO: I have been advised that BHP Billiton already has a very good track record of being a good corporate citizen. It already participates in a wide range of civic and social initiatives and, as I said, has a longstanding track record of being a good corporate citizen and we would expect that it would continue those sorts of contributions. The leveraging benefits for South Australia are enormous, particularly with job opportunities and development for various industries and such like. They have been placed on the record before, so I am not going to go through them again but they are extensive.

The Hon. M. PARNELL: Just to clarify the minister's answer, there have been no new initiatives in sporting, cultural or academic areas. The government's expectation is that BHP Billiton will continue to support those areas. Does the government have any indication of whether it would continue to support them at a level commensurate with the increased size of its mine, or does the government have no information at all about the company's intentions?

The Hon. G.E. GAGO: The government is confident that BHP Billiton will continue to be a good corporate citizen.

The Hon. R.I. LUCAS: The minister responded to some questions that I put in my second reading contribution and I want to address a couple of those. In relation to the forward estimate cost that Treasury has put into the forward estimates for infrastructure, the minister responded that there had been provision made for $200 million over 10 years. Can the minister clarify what 10-year period we are talking about? Are we talking about from this year onwards, or from 2014? What is the start date of the 10-year period the minister is referring to?

The Hon. G.E. GAGO: I have been advised from 2011.

The Hon. R.I. LUCAS: The specific answer to the specific question I put—I am particularly interested in the period from 2011 through to 2014 and the forward estimate period from 2014 to 2018. We are essentially talking about seven of those 10 years. Will the minister indicate what provisioning the government has made already of that $200 million in the seven-year period: first, for the period between now and the end of the current forward estimates period, which is 2014-15?

What provisioning of the $200 million has been allocated by the government? Treasury clearly, given that it is in the current forward estimates, would have provisioned probably somewhere in the Treasurer's contingency, I accept, a lump of money. How much of the $200 million has been allocated in that period and what is the government's view as to the level of the $200 million, which would not currently be in the forward estimates but would be some idea Treasury would have as to the level of expenditure required by whoever is elected as the next government between 2014-18?

As I indicated in the second reading, these are reasonable questions. There will be an election in 2014. This government may be re-elected, it might not be, and whoever is in the position of governing from 2014 to 2018 will inherit whatever provisions the government has made in the forward estimates. These are reasonable questions and clearly Treasury should, at the very least, have responses in relation to those two specific questions.

The Hon. G.E. GAGO: I have been advised that those details are still being worked through with Treasury and are yet to be mapped out.

The Hon. R.I. LUCAS: I am not sure how long this debate will go on—potentially it may last beyond today and into Tuesday of next week.

The Hon. M. Parnell: We're back next week.

The Hon. R.I. LUCAS: I know we're back next week. So, I will leave the question with the minister before this bill is concluded. Clearly Treasury has an estimate of $200 million over the next 10 years. Treasury has to have allocated something over the current forward estimates period. Where that is parked, whether it is a Treasurer's contingency or in the various government departments and agencies, is essentially up to the government and I am not particularly fussed about that. But what is the current provisioning? I do not accept that these issues are still being worked out.

Treasury has obviously come up with the $200 million figure, together with Mines and Energy. I accept the fact that that number—I think the minister said—may well become a lower figure and that might have been the previous estimate, but whatever was the previous estimate someone within Treasury, Mines and Energy, Health, Education and Transport has sat down and put together an indicative figure over the 10-year period from 2011 to 2021, and for the forward estimate purposes Treasury will have made some provision for the current four-year period.

I do not believe it is acceptable to this committee to be fobbed off with the 'this is still being worked on' line, because I do not believe that that is an accurate reflection of the current situation. Certainly the further one gets out into the never never, beyond the current forward estimates period, one could grudgingly accept that sort of explanation, but it certainly should not be the situation—and I am sure it is not the situation—in relation to the current forward estimates period.

I accept that the minister probably does not have a Treasury officer here at the moment, but given that the debate will continue for certainly the rest of today and possibly into early next week, will she take on notice and seek further advice from the Treasurer as to what the current provisions are, in aggregate, within the forward estimate period?

The Hon. G.E. GAGO: I am happy to do that.

The Hon. R.I. LUCAS: Can the minister also indicate, from 2011-14 and 2014-18, what sort of infrastructure projects are we talking about? I am assuming, for example, that we are not talking about the need to build a new hospital or health facility within that time frame. Is that the minister's advice?

The Hon. G.E. GAGO: I am advised yes.

The Hon. R.I. LUCAS: Can I also ask the question in relation to school facilities: is the minister's advice that, within that period, from 2011 through to 2018, there is no requirement to build any new government school facilities in the area?

The Hon. G.E. GAGO: I do not have the answer to that question, but we can take that on notice and bring back a response if it is available.

The Hon. R.I. LUCAS: If the minister is prepared to take that on notice, I would appreciate it. The minister also said, in response to my question, that there was some figure of $35 million to $50 million, in addition to this $200 million, for civic and community facilities, I think was the phrase—and this is taxpayer-funded infrastructure. Can I ask, in broad terms, what the minister is talking about there? Are we talking about libraries, for example, or are they included within the $200 million figure? If we are not talking about libraries, what sort of civic and community facilities, in the broad, is the minister referring to?

The Hon. G.E. GAGO: I have been advised that it will involve general community facilities and amenities, things such as sporting facilities, swimming pool, libraries and such like.

The Hon. R.I. LUCAS: So, it does include libraries, together with sporting and recreational facilities. In relation to that $35 million to $50 million, over what time frame are we talking there? Is that also within the time frame of 10 years, between 2011 and 2021?

The Hon. G.E. GAGO: I have been advised that it would be over a period of 10 years.

The Hon. R.I. LUCAS: Can I ask also, then, whether the minister will take that on notice as well; that is, what component of that $35 million to $50 million which is over that period from 2011 to 2020 would be included within the forward estimates period, which is the same question as to what component of the $200 million, and what component would be included in the period between 2014 and 2018?

The Hon. G.E. GAGO: I am happy to take that on notice.

The Hon. R.I. LUCAS: The minister was exploring with the Hon. Mr Parnell money in, money out. I had asked questions about royalties and, essentially, as I understand the minister's reply—and I think this is consistent with the advice we have—within the immediate time frame we are talking about of the period up to 2018, we are not really going to have worry about royalty inflows. Sometime after that, the government is estimating that the net gain from royalties will be somewhere between $10 million and $50 million a year, depending on how much ore is mined, etc. One understands all of that.

However, at the end of the discussion with the Hon. Mr Parnell, who was doing his calculations about how much money had been spent and what money was coming in, the minister said, and I wrote it down at the time, '$350 million over 10 years'; this was in terms of revenue coming in, or royalties. Can the minister explain what her advice is in relation to $350 million over 10 years? I have certainly heard of the number that at its peak it might be worth in gross $350 million per year, but I must admit that I am not aware of this $350 million over 10-year figure the minister has referred to.

The Hon. G.E. GAGO: I have been advised that the estimated amount will vary between $10 million to $50 million per annum, which, as a rough estimate, over a period of 10 years could be around $350 million.

The Hon. R.I. LUCAS: I will clarify that: the minister says that at some stage after the mine is up and going the net gain is $10 million to $50 million a year—that is, the net gain being the gross amount of royalties we receive netted off against the GST revenues that we lose—and the minister has said, 'Well, in net terms we might be $10 million to $50 million a year better off.' So is the minister saying, from whatever that period is—and I would ask the minister when that period is, but I am assuming we are talking certainly after 2018, so potentially 2020 to 2030—that $350 million over 10 years is the estimate for, say, the period between 2020 and 2030, as to what the net gain to the state budget will be having netted off any GST losses against whatever royalties we might receive?

The Hon. G.E. GAGO: I have been advised that, yes, that is correct.

The Hon. R.I. LUCAS: And it is just happenstance that that number of $350 million is also the same as the potential gross royalty figure at its peak? Is it correct that that $350 million is being used or am I incorrect in relation to that figure?

The Hon. G.E. GAGO: I have been advised that that is the total royalty take.

The Hon. R.I. LUCAS: Per year?

The Hon. G.E. GAGO: Yes, per year.

The Hon. R.I. LUCAS: So it is just happenstance that there are two $350 million figures and that at its peak—which will be, obviously, sometime way down the track—we will, in gross terms, collect possibly up to $350 million in royalties per year but then we will lose a significant amount though GST and we have the net benefit of $10 million to $50 million. Thank you.

The last two areas, just to clarify from my second reading: the minister indicated that the total budget for the task force was $7.5 million. I want to clarify two things in relation to that. First, what were the names of the external legal firms employed by the government to provide legal advice to it on the indenture and, I assume, related issues?

The Hon. G.E. GAGO: I have been advised that the lawyer was a man by the name of Mr Glenn Davis. We do not have the name of his firm here at the moment but we can find out what it is.

The Hon. R.I. LUCAS: If the minister can take that on notice. I am assuming that, in terms of the payments to public servants, they are calculated as part of the $7.5 million and they would specifically be those public servants on the task force itself. I am assuming that, as part of the normal workload within PIRSA, the environment department and various others, there are clearly a range of other public servants who would not have been formally on the task force but, nevertheless, would have been undertaking work in relation to advising on the indenture and related issues and that the Public Service salaries that have been included are only those small number of people actually on the task force itself.

The Hon. G.E. GAGO: I have been advised that, yes, that is correct.

The Hon. R.I. LUCAS: Finally, in relation to the CRU report, I am happy to make arrangements with the task force or whoever it is to receive a briefing on that report. I must admit that I am disappointed that the government will not provide at least something on the CRU report. My understanding is that some members of the opposition were provided with an executive summary of that report, and I would have thought, at the very least, those members in the parliament who have a close interest in this particular issue should have been afforded the same privilege. I am disappointed to hear that the government is refusing to provide that option.

My questions in relation to the CRU report are: will the minister indicate the purpose of the government in commissioning the CRU report, and, secondly, the nature of the advice that the CRU report provided to the government in terms of assisting it in making whatever decisions it has ultimately made?

The Hon. G.E. GAGO: I have been advised that the reason the CRU report was commissioned was to assist us to create an independent model for the Olympic Dam, so that we could actually test the assumptions that BHP provided, and also to provide us with advice on royalties internationally, in terms of how they applied internationally, and future metal markets. The advice that we received from the CRU report went to those matters.

The Hon. R.I. LUCAS: Did the CRU report advise the government that this project was a marginal project and that it would be problematic as to whether or not BHP would decide to go ahead with the project?

The Hon. G.E. GAGO: I have been advised that the advice showed there was a very small net present value relative to their EIS configuration.

The Hon. R.I. LUCAS: Is the minister indicating that the CRU report did not come to the conclusion that this particular project was a no-brainer in financial terms for BHP Billiton, in terms of it being hugely profitable for the company, and that there be no doubt about it going ahead?

The Hon. G.E. GAGO: The advice we received was that on a conventional analysis this project would be difficult for the board to approve.

The Hon. R.I. LUCAS: Was the CRU consultancy asked to advise on their knowledge of the sequencing of projects for the BHP Billiton board? We have heard and read through the financial media that one of the issues for the South Australian government, parliament and BHP Billiton is that they have a significant number of worldwide projects and if we miss the window of opportunity for this project, the BHP Billiton board can gobble up any number of other worldwide projects to fill its spot. Was the CRU consultancy asked to provide advice on the validity or not of those particular claims being made by BHP Billiton?

The Hon. G.E. GAGO: I have been advised that the answer to the question is no. The CRU was not asked explicitly to advise us on that particular matter. However, it is well established on public record that BHP Billiton does have a number of significant operations and interests in other parts of this country and internationally. So, it is an assumption that any prudent person could make, that clearly there is a window of opportunity and one that we should be attempting to maximise for South Australia.

The Hon. R.I. LUCAS: So, Mr Chairman, is it also fair to say that CRU did not provide advice to the government in relation to the timing of the BHP Billiton board's decision, and the validity of the window of opportunity for the decision to be taken?

The Hon. G.E. GAGO: I have been advised that is correct.

The Hon. R.I. LUCAS: In relation to the CRU report, the minister indicated that it was providing modelling to second-guess, or check, the modelling of the project that I assume BHP Billiton was providing to the government. Did the modelling from CRU validate and agree with the modelling that BHP Billiton had provided to the government, or did it disagree significantly with the modelling?

The Hon. G.E. GAGO: I have been advised that it was broadly consistent.

The Hon. R.I. LUCAS: In relation to the advice that was sought from CRU on royalties, did CRU advise that the royalty regime that was being proposed by the state government was broadly reasonable in relation to the royalty regimes that apply to projects world-wide?

The Hon. G.E. GAGO: I have been advised the answer is yes.

The Hon. R.I. LUCAS: Mr Chairman, there has been some public debate—and I think the Hon. Mr Parnell and other members have referred to some articles in the financial media which were critical of the royalty regime that we, the state parliament, are contemplating. I think there has been acknowledgment that the current indenture has—I am not sure what the correct description is and, having tried to read and understand the provisions in the indenture as it applies—in essence, what I would summarise as a super profits tax, or a super royalty tax. If I was wanting to delay the proceedings of the parliament, I would ask the minister and her advisers, during the committee stages, to actually go through the detail of how that particular provision was meant to operate, but I am not wanting to delay the proceedings—

The Hon. G.E. Gago interjecting:

The Hon. R.I. LUCAS: I am not wanting to delay the proceedings of the parliament, but it looks to be an extraordinarily complicated provision. But I have a series of questions. The first is: was the CRU consultancy asked to provide advice to the government on the appropriateness of maintaining the existing super profits—if I can call it that—regime, or some equivalent super profit regime in the new environment, and, clearly, we have federal issues now, with federal mining taxes as well. Was CRU asked to provide advice to the government on the issues of super profits royalty regimes?

The Hon. G.E. GAGO: I have been advised that profit-based royalties was one of the issues that was discussed.

The Hon. R.I. LUCAS: Given that was the case, what advice did CRU give to the government? Did CRU advise the government to seek to implement a profit-based or super profit royalty regime, or did it advise the government not to proceed down that path?

The Hon. G.E. GAGO: I am advised that CRU did not provide a conclusion; it left that up to the government.

The Hon. R.I. LUCAS: How much did we pay CRU? Was it $400,000?

The Hon. G.E. GAGO: It was about $400,000.

The Hon. R.I. LUCAS: If taxpayers are paying CRU $400,000 and one of their tasks was to actually provide advice on royalty regimes and what is fair and reasonable—and I am comforted to hear that, in terms of our base royalty regime, it is not out of kilter with the Australian experience and the international experience, which is good—why on earth would the government not ask for advice from its consultants on the issue of what is already an existing indenture here in South Australia, which has clearly been raised in the financial media and the resources industry? It is the subject of national debate at the moment. Why would the government not actually seek advice and recommendations from a consultant it is paying $400,000 for on what is an important issue in relation to the indenture arrangements?

The Hon. G.E. GAGO: I have been advised that we did in fact seek advice from CRU in relation to these matters and that options were given. They chose not to single out a particular recommendation but, rather, gave us a number of options.

The Hon. R.I. LUCAS: When I get my briefing I will be delighted to hopefully get some information on what those options were. If a range of options were given, which clearly would include some version of a profits tax or a super profits tax, why did the government then choose not to go ahead with that advice in terms of possible options from its consultant? Did it take advice from any other consultant, or was it ultimately a decision of government to decide not to go ahead with a super profit or super royalty regime?

The Hon. G.E. GAGO: I have been advised that it was a decision of government that involved discussions and considerations by Treasury, PIRSA and the task force, and this was the outcome that was believed to be in our best interest.

The Hon. R.I. LUCAS: Did the CRU report provide any advice on the current super profit arrangement in relation to the existing indenture?

The Hon. G.E. GAGO: I have been advised no, because the current clause expired in 2005.

The Hon. R.I. LUCAS: Is it correct that it was the government's view, or the view of its advisers, that the provision that was in the existing indenture was, in essence unattainable, unachievable, unworkable? Pick whichever one of those words best describes it. Is that essentially as complicated as that provision is? To read it these days, someone obviously had fun at the time drafting it. With the benefit of hindsight, was it the government's collective view that that particular provision in the existing indenture was, as I said, unworkable or unattainable?

The Hon. G.E. GAGO: I have been advised that that is correct.

The Hon. R.I. LUCAS: In relation to the modelling that CRU undertook, did they undertake modelling in relation to the job benefits? A number of members have raised questions about the direct jobs when the mine is up and operational and the indirect or flow-on jobs. Was the CRU consultancy asked to second-guess and provide estimates of the flow-on benefits of jobs, direct and indirect, that were being claimed for the project by the proponents?

The Hon. G.E. GAGO: I have been advised that, no, we did not ask CRU for that information in particular, but the model derived actually does contain that information.

The Hon. R.I. LUCAS: If CRU consultants, who we are told were commissioned to do the modelling on the project, did not actually model the job benefits, I am frankly surprised that the government would spend $400,000 of our taxpayers' money and not model the job benefits. Can the minister indicate if we did not receive advice from CRU in relation to that (perhaps that is not their area of expertise), what advice did the government receive and from whom to do the government's best estimates of what the direct and indirect job benefits will be from the mine once it is up and operational?

The Hon. G.E. GAGO: I have been advised that we relied mainly on advice from BHP Billiton.

The Hon. R.I. LUCAS: One can understand in relation to the direct jobs that that is obviously an issue of the direct knowledge of the proponents of the mine. That is, if they say they are going to employ 4,000 persons during a particular operation of the mine, they are the ones in the best position to do that. But the flow-on benefits or indirect benefit jobs that are created is an issue of considerable controversy in economic circles in terms of what the appropriate multipliers might be in terms of indirect job benefits.

The government, as I indicated in my contribution, with the 2006 election and the 2010 election, was talking about 23,000 jobs. The number we seem to be looking at now appears to be 4,000 direct and 15,000 indirect, which is obviously 19,000, which is less than the 23,000. If the minister is saying the number of 15,000 is BHP's number, why didn't the government actually commission its own advice in relation to whether or not it accepts the particular multiplier that BHP has used is appropriate and gives an accurate reflection of the number of indirect jobs that will flow from the project?

The Hon. G.E. GAGO: I have been advised that government reps went to Melbourne to validate some of the assumptions in the Monash model which led to those estimations around the indirect job benefits.

The Hon. R.I. LUCAS: So could I clarify that the government commissioned Monash to run its model and to second-guess the estimates that BHP Billiton had given?

The Hon. G.E. GAGO: I have been advised that it was BHP Billiton that funded the applying of the model. However, government reps were there to ensure and assess that the inputs and assumptions that went into the model were in fact correct and legitimate.

The Hon. R.I. LUCAS: As I understand that, BHP have commissioned Monash and the government had representatives there to assess that they were reasonable assumptions that were being fed into the sausage machine. Can the government indicate which department sent reps? Were they from Treasury or PIRSA? Which department sent representatives for that particular exercise?

The Hon. G.E. GAGO: I have been advised both Treasury and PIRSA.

Clause passed.

Clause 2.

The Hon. M. PARNELL: I have a brief question on clause 2, but before I ask that, having heard that the Hon. Rob Lucas has been offered a briefing on the CRU consultant's report, could I ask the minister whether the Greens could have a briefing as well?

The Hon. G.E. Gago: Yes.

The Hon. M. PARNELL: The minister has acknowledged that we can. Thank you for that.

The Hon. R.I. Lucas: Can we do it separately?

The Hon. M. PARNELL: For the record, I am happy to have a separate briefing or a joint briefing with the Hon. Rob Lucas. In relation to clause 2, when does the government expect the variation date to be? The variation date is the date on which the amendments set out in part 2 of the bill come into operation.

The Hon. G.E. GAGO: I have been advised that it will depend on when the board makes its final decision next year.

The Hon. M. PARNELL: I knew as much and I thank the minister for her answer. What is the latest estimate that the government has on when BHP Billiton will be making its decision next year? We have heard various estimates: the first quarter, the first half of next year. What is the minister's latest and best information?

The Hon. G.E. GAGO: I have been advised that we are expecting around mid year.

The Hon. M. PARNELL: The indenture itself is in part 3 of the bill. Under clause 2, the commencement clause, the act comes into operation on a day to be fixed by proclamation, part 2 comes into operation on the variation date, so presumably part 3 comes into operation on a date fixed by proclamation as well. Can the minister confirm that? I understand that within the indenture itself there are various other trigger dates, but from a legislative point of view does part 3 come into operation on a day to be fixed by proclamation and is it expected to be the same proclamation date as part 1?

The Hon. G.E. GAGO: I have been advised that, yes, parts 1 and 3 will come into place on the same date.

Clause passed.

Progress reported; committee to sit again.


[Sitting suspended from 12:58 to 14:19]


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