Appropriate (Budget) Bill 2018 | SPEECH


The Hon. D.C. VAN HOLST PELLEKAAN (Stuart—Minister for Energy and Mining) (12:31): It is my pleasure to rise on behalf of the people of Stuart to discuss the budget. I am incredibly pleased with the fact that in our budget we did exactly what we said we would do back in opposition. Back in opposition, we made election commitments. We said to the entire state that if we were elected to govern we would do these things, and this budget has funded all the things we said we would do. That is a very important foundation because not only is it a foundation of our budget it is also a foundation of our principles and of how our government intends to operate moving forward.

We all accept, that in budgets there are people who go away happier and people who go away less happy. We all understand that it is impossible for any government, Liberal or Labor, to provide all the funding for all the programs and services, the capital spends, that all the people in the state would like. We know that; everybody in this chamber knows that. We have decided that what we will do is start by funding our election commitments, and we have done exactly that. I think that is very important.

I will not go through all of them, but as well as infrastructure and capital spending, as well as program spending, as well as cost-of-living reductions—emergency services levy, NRM levies, council rate capping—all those sorts of things that we have taken to the election, we have tried to deliver through the budget or through legislation or they are still to come. We are setting a platform of reliability.

I understand that part of reliability, unfortunately, is that it can sometimes be clear that you are not going to be able to deliver something people would like to have delivered. However, at least people will know that we will deliver the things we said we will deliver and the budget cuts—for lack of a better word—will be in the other areas. From my perspective, that is a very important principle.

In my portfolio as Minister for Energy and Mining, we took a lot of energy commitments to the election and they have all been funded in this budget. We have $100 million set aside for the home battery scheme that we launched about a week and a half ago, which will be very beneficial for the people who directly participate.

More importantly, it will be beneficial for those people who cannot participate because that program has been crafted very deliberately to be there not only for the people who invest in the panels and the batteries but very deliberately so that when those people, when 40,000 of them have invested in the panels and the batteries, there will be a positive impact on the rest of the electricity market. It will push prices down and improve reliability in the rest of the electricity market so that all other South Australian electricity consumers benefit.

The $50 million grid-scale storage fund is in the budget. We will announce more details about that in the not too distant future, but let me say again that is about investing taxpayers’ money to create benefits for taxpayers. In government, we know it is not our money: it belongs to all South Australians. We need to invest that money in ways that all South Australians will benefit. Our grid-scale storage program may well include pumped hydro, solar thermal, big batteries like the one at Hornsdale in my electorate of Stuart, potentially biomass, potentially hydrogen. A whole range of different things could be involved. It is about storage as opposed to necessarily being about a battery that will also improve reliability and push down the price of electricity.

We have allocated $30 million to a range of programs. We will invest that money to prove up demand response, demand aggregation, supply integration programs. Let me say right here, very openly, that ‘prove up’ may well mean funding a trial and finding that that trial does not work. That will not be as good as if we find that a trial does work, but that will still be beneficial because we will know not to push down that path anymore. This is very clearly money that is set aside with partners, with universities, with industry and with other bodies to trial ways of managing demand, giving consumers voluntary ways to manage demand for their benefit and also for the benefit of the grid, and as well as for individual consumers, demand aggregation and supply integration as well, which is very important.

In the lead-up to the election, we committed $200 million towards an interconnector fund. We always hoped that the interconnector would be able to get up as a regulated asset. It is looking very positive. We will not know until the middle of the 2019 year, but it is looking positive. We put forward the proposal of an interconnector between South Australia and New South Wales for very clear reasons because we know that we need to be able to match supply and demand in as many states as possible and to connect supply and demand as well as possible to gain efficiencies.

We need to connect with New South Wales. We are already connected with Victoria, and we are very glad to be, but we are at the end of the line. We need to connect with New South Wales as well so that we become part of the loop, as opposed to being at the end of the line. We need to broaden the opportunities for South Australia not only to import electricity when we need it but, probably more importantly, to export our often overabundant renewable energy when we have it to two states instead of one.

Importantly, New South Wales has different weather from South Australia than Victoria does compared with South Australia. Weather has always gone directly to affecting demand, but these days, with renewable energy from wind and sun, it also goes directly to the supply of electricity. To get the benefits of being able to swap both supply and demand, essentially, or of being able to help each other with supply and demand, you need to be connected to a state that has different weather patterns from yours. We are pushing very hard into that. We know that there will be savings for consumers.

The ElectraNet draft RIT-T report and others that have come out, including AEMO’s Integrated System Plan, have all pointed to the fact that this is a good plan. On the strength of that, we have $14 million in the budget to commit towards the underwriting and/or up-front loans for early works to bring that interconnector forward, to have that interconnector built and operational as quickly as possible.

If, by chance, the interconnector does not get up as a regulated asset then we will have put that money at risk, but it will not be wasted, because we will still pursue that work through a different pathway. The early work on route selection and engagement with landholders, with environmental clearances and others, will not be wasted. It just means that we will have paid for it up-front. The other $186 million of the $200 million is currently sitting in the Treasurer’s contingency, as opposed to being a line item, because we do not expect it to be needed in that way, but if it is, it will be brought back from Treasurer’s contingency into a line item specifically for this work.

We are determined to get the price of electricity back to an affordable level, to stop the increases that we have had over the last decade or so under the previous government, to make electricity more reliable from the supply side and, importantly, to continue to make sure that it is green and clean and environmentally responsible.

The previous government pushed enormously hard into additional renewable energy. Renewable energy, on the face of it, is fantastic, but they forgot about how to manage that energy. They forgot about how to harness that energy. They forgot about the fact that consumers were being punished with higher prices and more blackouts. We will correct those problems. We will show how renewable energy can be harnessed and how it can be managed, for the benefit of consumers as well as the environment. By consumers, I mean all consumers, from the smallest household through to the largest corporate employers in the nation.

We have committed money to the Joy Baluch Bridge duplication, something we said that we would do before the election. This is a very important commitment, requested by many organisations and many people, not the least of whom are the people of Port Augusta. This is a local, a statewide and a national project. This bridge carries road freight between Sydney and Darwin, Adelaide and Perth. It was the South Australian Chamber of Mines and Energy’s highest infrastructure request before the election. We delivered on that with a commitment before the election and also with money, partnering with the federal government, in the budget just released.

We also committed to the Strzelecki Track sealing before the election, but that commitment was very clearly and very publicly with the proviso that, if the then state government had money in its budget for it, its budget going towards the election, we would match it. Unfortunately, the previous Labor government did not have that money in its pre-election budget or in its election costings, so we were not able to deliver on that, but the commitment was very clearly made subject to the previous Labor government having it in their budget. Unfortunately, it did not.

As I mentioned before, there are always, unfortunately, cuts in budgets as well. We have had savings tasks across entire government. A percentage target in a small department has the same impact on that workplace and on the productivity of that organisation as the same percentage in a large department. We have all battled with the same obligations to make savings on behalf of taxpayers. In my department, the Department for Energy and Mining, one of the most prominent areas of savings was a cut to the PACE program. There is no more funding at the moment to PACE, the plan for accelerating exploration, either in the minerals or the petroleum side.

PACE is a very good program, but PACE is a program that is government taxpayer-funded support for exploration in the downtimes in the resources price cycle. We have been going through those, and the previous government, to its credit, had PACE funding throughout that downtime, but we are now coming out of that downtime. We are coming out of it. This is not the time when PACE funding is needed. Yes, it would be nice, but it is not needed. Now is the time to build on the benefits of the previous PACE funding that was done, and that is exactly what this government will do.

Another important area of savings is the removal of the concession on royalties for new mines. That is a program that has been very helpful for mining and resources projects through the downtime so that if a new mine got up it would be eligible to apply for a 60 per cent reduction in the mining royalty that it would otherwise have paid in the early years of that mine. It is a lovely program, terrific, but again, very clearly, it is a program that you deliver when you are in the bottom of the mining cycle and it is hard to get projects up.

Just like PACE, you need extra support for exploration, and on the mining side you need extra support to actually get mines up and running. We are now coming out of that cycle and we are on an upturn, so that extra support is not necessary. Mr Speaker, let me also share with you and the house the fact that mines have got up in South Australia for decades and decades without this mining royalty reduction being on offer.

In fact, even over the last several years, while the mining royalty reduction for new mines has been in place, nine new projects have got up that did not actually receive the royalty reduction. So this removal of the royalty reduction for new mines is not expected in any way to slow down the development of new mines. Mines have got up in previous years without that support. Mines have got up in recent years while that support was in place, but those mines did not qualify for that support because they might have been too small or had too short a time line for the mines, but they got up and got running and started producing anyway.

Very importantly, the timing in the budget for the removal of the royalty reduction for new mines is such that any project that gets its application in before 30 June 2020 would still be eligible for consideration. If the application were successful, based on the same criteria that have been in place for the last several years, those new mines would still qualify. So it is quite conceivable that a new mine could get their application in for the mining royalty reduction before 30 June 2020 but might not actually be operating for one, two or three years, maybe longer, after the application date, yet could still be eligible for the reduction in royalties. It is very important for people to understand that.

Of course, while it is unfortunate that this has had to be a cut in our budget, I think it will have absolutely minimal impact on any new mine that may or may not get up. In fact, the advice to me is that, while the reduction in royalties is very welcomed by industry and greatly appreciated by industry, it is not actually the thing that has made the difference between mines getting up or not getting up. I accept that any new mine, or any company starting up a new mine, would of course like to have it rather than not to have it but, as I said, we do need to get the budget back in balance after 16 years of Labor’s financial mismanagement.

Our government supports the resources industry incredibly strongly. We are very in tune with the fact that it is one of our most important industries in South Australia. It contributes enormously to our economy, and it contributes enormously to our economy in regional areas. We understand that exploration and mining must be done with strong majority local host community support. We want to work with local communities, the agriculture sector and other sectors that operate in regional areas, because of course agriculture is not the only one that does that, as well as with the resources sector, to find ways that local communities can have a strong majority of people welcoming in new mining projects.

Whether they be petroleum projects in the South-East or the far north-east or whether they be minerals projects in other parts of the state, we are also very focused on ensuring that we bring in a much tighter, much stronger and much higher compliance regime. We want resources companies, whether they be in exploration or mining, to be completely committed to high operational standards with regard to what they do on site with both people’s safety and environmental safety and other high priorities.

We want to be a government that is not ashamed at all to wield a fairly large stick to ensure that the operational standards that are expected and agreed upon up-front are adhered to and delivered for the benefit of not only local communities but also those operations. They cannot continue if they do not operate properly.

There has been much said in this place and others about the potential for offshore petroleum in the Bight. We have had BP come along and say that they were going to undertake deepwater offshore exploration and then change their mind. We have had Chevron come along and say that they were going to do the same, and then they have changed their mind as well. Equinor from Norway are now saying that they are going to undertake deepwater offshore petroleum exploration in the Great Australian Bight. I hope that they do continue to do that. It is no accident that I make these comments immediately after talking about high compliance standards and high compliance expectations from the government with regard to the way that Equinor would go about that.

We will only approve exploration in the Great Australian Bight if meets the highest compliance standards possible; otherwise, we will not have a bar of it. But if Equinor can put together a program that will meet those standards, that can be safe with regard to people and the environment, then we will be strong supporters of them proceeding with that because there are thousands and thousands of jobs in this state that are likely to benefit from it, but that will only be acceptable if they do no harm to people and the environment. We have communities and people at the front of our mind all the time, but we want industries to have opportunities to succeed with the support of our state.