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Legislative Council - Fifty-Fourth Parliament, Second Session (54-2)
2020-06-02 Daily Xml
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Whyalla Steelworks

The Hon. F. PANGALLO (15:02): I seek leave to make a brief explanation before asking the Treasurer a question related to the Whyalla Steelworks.

Leave granted.

The Hon. F. PANGALLO: The Whyalla Steelworks have been in significant financial difficulty for years. It was given a potentially lifesaving lifeline in 2017, when British billionaire Sanjeev Gupta bought the steelworks and unveiled a multimillion-dollar redevelopment, much of which is still to happen.

As part of his purchase Mr Gupta's company, GFG Alliance, secured a $50 million funding commitment from the previous Labor government, a commitment the current Treasurer, Rob Lucas, said he would honour, with certain conditions. The ABC is reporting today that freedom of information documents reveal GFG last year approached the state government for further financing. The request, the ABC says, caught the government by surprise.

In the meantime, Mr Gupta's companies have been actively making multibillion-dollar acquisitions of distressed steel and aluminium plants across the globe, making him one of the world's largest steel producers. All of this is occurring in an environment where GFG OneSteel continues to fail to pay some suppliers in Whyalla on time. Many are owed many hundreds of thousands of dollars —one over $1 million—and some payments are more than 90 days overdue through a rather unorthodox arrangement which at one stage also included creditors being asked to shave 8 to 10 per cent off the original debt if they wanted their payment on time.

Promised deadlines for partial payments are regularly being missed, leaving some on the brink of collapse. One has already closed its doors. Others are fearful and are afraid to speak out because of the alarm it might cause in the still jittery community, which is totally reliant on the steelworks. Myself and My Centre Alliance colleague Senator Rex Patrick have been aware of these issues for some time. We have also had meetings with some of the creditors and Mr Gupta and his executive team, where these legitimate concerns were raised.

I have also seen correspondence from an insurance company to one of its clients seeking trade credit cover in the event of a default. The advice was that no new cover was being given on OneSteel. The supplier was advised to reduce their exposure to the group and that trade credit insurers are reducing their exposure after meetings in Australia and the UK. This was in late 2018. However, I am told that advice still applies.

My questions to the Treasurer are:

1. Has Mr Gupta, GFG OneSteel or any of his other associated companies approached the state government requesting further funding above the $50 million committed?

2. Why is there a delay in finalising the initial $50 million funding commitment?

3. Should the government be concerned over the financial viability and long-term future of the Whyalla Steelworks?

4. Has the government had discussions with GFG OneSteel and any of its suppliers over its continued late payment of invoices?

The PRESIDENT: Before I call you, Treasurer, the Hon. Mr Pangallo, that was hardly a brief explanation. You really do need to tighten them up, otherwise we are probably not going to be able to indulge you. Treasurer.

The Hon. R.I. LUCAS (Treasurer) (15:06): Thank you, Mr President. There might have even been the occasional rhetorical flourish, as has previously been referred to by the honourable member. Mr President, I will do my very best to remember the myriad questions that the honourable member has put, but if my failing memory in my advanced years fails me, I will take on notice anything I might miss out.

In relation to the issue of payment of accounts, that is an issue of the public record. The Small Business Commissioner in South Australia became involved sometime last year, I believe, and I think at one stage the federal small business commissioner, Kate Carnell, involved herself in discussions, public debate and media debate through 2019, I believe, in terms of the payment of accounts. At the end of those discussions, there was some resolution in relation to, at that particular time, the payment of accounts.

I am not aware of the timing of the particular accounts to which the honourable member has referred. To that end, I can indicate that because of COVID-19, which may or may not overlap some of the ongoing issues at Whyalla, I don't know, the government has, in relation to a series of loans the former Labor government issued to small businesses, most of whom I suspect were suppliers to GFG, entered into commitments to extend the repayment options on behalf of taxpayers for a range of those small business operators. That's of great comfort and great assistance to some of those small business operators in the Whyalla area.

I was lobbied by members of parliament, I think from all sides, in relation to whether or not I would be prepared, on behalf of the government, to provide some at least deferred payment relief to those particular operators and on behalf of the taxpayers of South Australia, the government did so. As I said, the issues that relate to those particular loans may or may not have been influenced in some cases by COVID-19 and other issues perhaps in relation to accounts in Whyalla.

In relation to the former government's commitment, which I think goes back to perhaps as early as 2016, 2017, it's that long ago, the $50 million commitment to the process, I think it was actually made prior to the actual bidding process that was entered into; that is, the details of the loan I believe might have been included in the data room when the various bidders were considering whether or not they would make the offer; that is, the former government made this offer of $50 million. It was heavily contingent on it being, in essence, part of a viable—these are my words of summary—long-term Whyalla transformation plan. That is, something that would see an ongoing viable future for the steelworks at Whyalla and it was on that basis that the former government made that particular commitment.

The incoming Marshall Liberal government indicated publicly, and we have done so privately, that we are prepared to honour that particular commitment. That is, we are prepared to meet those particular conditions, provide $50 million as part of some sort of capital investment, which leads to or is part of a transformation plan which leads to a viable long-term future for the steelworks at Whyalla. They were the conditions of the former government; they are the conditions of the new government. We are simpatico with those particular conditions that were outlined. So there has been no major change there.

In relation to the member's very kind invitation for me to speculate publicly about the ongoing viability or otherwise of a business operation in South Australia or Australia, I politely decline to do so. They will be issues ultimately for individual companies, in particular one that is of great interest to the honourable member. All I can say is we have been recently briefed (we being state government officers) by representatives of GFG in relation to their latest version of a transformation plan. In that particular plan, they have outlined their respective requests of governments generally—that is, state and federal, possibly local was well; I am not sure—and we will continue to engage with the company in the interests of trying to see a viable long-term future for the steelworks at Whyalla.

It is in this government's interest, it is in the Whyalla community's interest, it is in the workers' interest, and it is in the nation's interest for there to be a viable long-term future for the steelworks at Whyalla, but the prime responsibility for that rests with the people who have taken it over. They went through a complex bidding process, as I understand it, under the former government. The former government ministers will be much more aware of that process than I am.

A decision was arrived at at that particular time. We will continue to work with the operators in the interests of trying to see a viable long-term future for the steelworks at Whyalla. That is a commitment from the Premier, it is a commitment from the state government, it is a commitment from, I know, the Minister for Energy and Mines, who has been actively engaged, and it is a commitment that I give on behalf of the taxpayers of South Australia as well.

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