Parliamentary Debates - Parliament of Western Australia · Parliamentary Debates (HANSARD)...

Parliamentary Debates (HANSARD)

THIRTY-EIGHTH PARLIAMENT FIRST SESSION

2012

LEGISLATIVE ASSEMBLY

Wednesday, 26 September 2012

Legislative Assembly

Wednesday, 26 September 2012

THE SPEAKER (Mr G.A. Woodhams) took the chair at 12 noon, and read prayers.

DANGEROUS DOG BREEDS Petition

MR J.N. HYDE (Perth) [12.02 pm]: I present a petition couched in the following terms —

To the Honourable the Speaker and Members of the Legislative Assembly of the Parliament of Western Australia in Parliament assembled. We, the undersigned, respectfully oppose any Breed Specific Regulations or Legislation in the West Australian Dog Act. We, the undersigned, believe all dog breeds should be managed under one complete dog law, in WA.

We, the undersigned, ask the Legislative Assembly to abolish any Dog Breed restrictions current and proposed for WA Dog Laws; to introduce mandatory training, socialisation, and ownership regulations for all domesticated dog breeds; and introduce an accurate system to deem individual dogs “dangerous” where by the behaviour and actions of the dog is the result of the judgement “dangerous”, and not the breeding of the animal. Your petitioners therefore humbly pray that you will give this matter earnest consideration and your petitioners, as in duty bound, will ever pray.

The petition conforms to the standing orders of the Legislative Assembly and contains 86 signatures.

[See petition 644.]

COST-OF-LIVING INCREASES Petition

MR C.J. TALLENTIRE (Gosnells) [12.03 pm]: I have a further petition regarding the rise in government fees and charges. It reads —

To the Honourable the Speaker and Members of the Legislative Assembly of the Parliament of Western Australia in Parliament assembled.

We, the undersigned, say I The State Government’s recent increases in fees and charges to householders are

disproportionate and unfair. 2 Many people are struggling to get by and these increased charges are causing unnecessary

hardship.

Now we ask the Legislative Assembly 3 To voice the case of householders aggrieved by these increases in fees and charges.

4 To give relief for WA householders trying to balance the household budget.

The petition has been signed by 23 petitioners and is certified as conforming to the standing orders of the Legislative Assembly.

[See petition 645.]

PAPERS TABLED Papers were tabled and ordered to lie upon the table of the house.

STANDING COMMITTEE ON PROCEDURE AND PRIVILEGES — NINTH REPORT — AMENDMENT TO QUESTION TIME PROCEDURES

Removal of Notice — Statement by Speaker THE SPEAKER (Mr G.A. Woodhams): Members, I advise that private members’ business notice of motion 2, “Adoption of Procedure and Privileges Committee Recommendations”, notice of which was given on 28 March 2012, has not been debated and will not appear on the next notice paper unless written notification is provided to the Clerk requiring the notice to be continued.

6542 [ASSEMBLY — Wednesday, 26 September 2012]

SWAN VALLEY LAND USE AND MANAGEMENT DISCUSSION PAPER Statement by Minister for Planning

MR J.H.D. DAY (Kalamunda — Minister for Planning) [12.06 pm]: I am pleased today to table the “Swan Valley Land Use and Management Discussion Paper”. The discussion paper is the result of a comprehensive study of current land use and management issues affecting the Swan Valley, undertaken by the Department of Planning in conjunction with the City of Swan and the Swan Valley Planning Committee. The study was prompted by community concerns regarding the future of the Swan Valley and perceived threats to the rural and agricultural nature of the area. The study has been an investigation of the broad policy and regulatory framework in order to produce a discussion paper for public comment. It has not involved a review of the Swan Valley Planning Act 1995. The act was previously reviewed between 2000 and 2004, with amendments to the act made in 2006. The study found that the Swan Valley has a strong local economy, based on agribusiness and agritourism, with its total value being approximately $200 million a year. Since the introduction of the Swan Valley Planning Act, the number of wineries in the area has doubled, with over 40 wineries currently in operation. Tourism and day trips to the Swan Valley are also growing, with up to 600 000 visits to the valley a year. The area’s rural character and landscape setting are the foundation of its tourism appeal; however, the growth in tourism, hospitality and retail development is creating some land use conflicts and amenity impacts. The study found a need for greater protection and support for agricultural production, particularly viticulture, and more effective management of tourism-related development. Local planning policies for landscape character protection and development design guidelines may also prove useful. The potential for increased subdivision is not a primary focus of the discussion paper. The establishment of the act in 1995 and the review from 2000 to 2004 found a strong public demand for the retention of agricultural production and the rural character of the Swan Valley. There are also considerable constraints to urban development in the area. The public will have the opportunity to make submissions on the discussion paper until 31 December 2012. Following the findings of public consultation, further consideration will be given to the need to amend the Swan Valley Planning Act and the local planning framework. [See paper 5343.]

PERTH ZOO — BREEDING PROGRAMS Statement by Minister for Environment

MR W.R. MARMION (Nedlands — Minister for Environment) [12.08 pm]: I would like to update the house on the breeding programs at Perth Zoo. Perth Zoo, which attracted 640 642 visitors in 2011–12—the highest attendance figure in its 114 year history—is an important conservation agency not only in Western Australia but also in the Australasian region and globally, working with threatened exotic and native species. Its work includes the award-winning native species breed-for-release program for our most threatened Western Australian fauna. In 2011–12, Perth Zoo supported 40 local, regional and international animal species management conservation programs, with Perth Zoo staff coordinating 11 of these programs, including the global program for the critically endangered Javan gibbon, and programs for African painted dog, ring-tailed lemur, western swamp tortoise and short-beaked echidna. In addition to these roles, Perth Zoo is amongst the most significant breeding institutions for a number of species, including Sumatran orangutan, red panda, short-beaked echidna and black-winged stilt. Most recently, the Australasian breeding program for the Asian small-clawed otter—the smallest of the otter species— was boosted with the birth of two litters at Perth Zoo. This is the first time in 18 years that Perth Zoo has bred otters. This breeding success follows the arrival in Perth last year of four new breeding otters from overseas zoos to provide new bloodlines for the regional breeding program. The four pups in the first litter, born on 19 June, have just started to venture out of their nest box and explore their exhibit. The youngsters are now becoming active and adventurous, so they will be increasingly visible to visitors in coming weeks. The second litter of four pups, born on 7 July, are housed in the zoo’s off-display breeding facility, with plans for this otter family to be transferred to Adelaide Zoo early next year as part of the Australasian breeding program. Found in parts of India, southern China, Malaysia and Indonesia, the Asian small-clawed otter, like all the world’s 13 otter species, is threatened by the destruction of aquatic habitats. They are also hunted for their fur, meat and body parts. I congratulate Perth Zoo on its breeding success and significant ongoing contribution to regional and international species management programs.

2011–12 ANNUAL REPORT ON STATE FINANCES Statement by Treasurer

MR T.R. BUSWELL (Vasse — Treasurer) [12.11 pm]: I am pleased to advise the house of the state’s whole-of-government financial outcomes for the year ended 30 June 2012. I do so by tabling the 2011–12 Annual Report on State Finances. [See paper 5344.]

[ASSEMBLY — Wednesday, 26 September 2012] 6543

Mr T.R. BUSWELL: Western Australia’s economic performance is the envy of the rest of Australia, but this is placing a significant burden on the state government in terms of key public services and demand for infrastructure. The domestic economy, as measured by state final demand, grew by a very strong 14.7 per cent in 2011–12, more than double the growth rate forecast at budget time. However, the 2011–12 Annual Report on State Finances shows that the state’s total revenue grew by only 5.5 per cent in 2011–12. Nevertheless, a general government sector operating surplus of $649 million was reported for 2011–12. This result was boosted by earlier than expected receipt of commonwealth national partnership funding, totalling $306 million, relative to the recent May 2012 budget. Despite this, general government revenue was virtually unchanged from the original budget estimate, with lower GST grants, down $164 million, and lower royalty income, down $451 million, offsetting the bring forward of commonwealth national partnership grants and stronger payroll tax collections. Of particular note, general government sector expenses were $220 million lower than forecast in the May 2011 budget. A range of budgeted new spending initiatives came into force in 2011–12 and also contributed to expense growth, including an increase in electricity subsidies as part of the government’s response for easing pressure on the cost of living, and a substantial $604 million four-year funding boost for the not-for-profit sector. Other key financial outcomes for 2011–12 include expenditure on the asset investment program of $6.8 billion; a total public sector net debt outcome of $14.5 billion at 30 June 2012; and a total non-financial public sector net financial-liabilities-to-revenue ratio of 64 per cent. Notwithstanding these very sound results for 2011–12, it is clear that recent volatility in the iron ore price and the persistently high Australian dollar will place very significant strains on the state’s finances this year. That is why the government has this week approved an immediate reduction in the general government sector full-time equivalent cap, directed agencies to manage leave liabilities to cap growth in employee costs, and sought to reduce procurement costs for the remainder of this year. If we do not target these sorts of savings now, the Western Australian public sector will ultimately face more severe measures such as those we have seen in the commonwealth government, in Queensland and in New South Wales. I commend the 2011–12 Annual Report on State Finances to the house.

BUSINESS OF THE HOUSE — PRECEDENCE OF PRIVATE MEMBERS’ BUSINESS Standing Orders Suspension — Motion

On motion by Dr K.D. Hames (Leader of the House), resolved —

That so much of standing orders be suspended as is necessary to enable private members’ business to have priority from 4.00 pm to 8.00 pm on Wednesday, 26 September 2012.

BUSINESS OF THE HOUSE — DINNER SUSPENSION Statement by Speaker

THE SPEAKER (Mr G.A. Woodhams): Members, in accordance with the motion just passed, I instruct that there will be a dinner break this evening between 6.00 pm and 7.00 pm, and we will resume at the ringing of bells at 7.00 pm.

CRIMINAL CODE AMENDMENT (DOMESTIC VIOLENCE) BILL 2012 Introduction and First Reading

Bill introduced, on motion by Mrs M.H. Roberts on behalf of Mr M. McGowan (Leader of the Opposition), and read a first time. Explanatory memorandum presented by the member. [See page 6580.]

MINING REHABILITATION FUND BILL 2012 MINING REHABILITATION FUND AMENDMENT BILL 2012

Cognate Debate — Standing Orders Suspension — Motion On motion without notice by Dr K.D. Hames (Leader of the House), resolved with an absolute majority —

That so much of standing orders be suspended as is necessary to enable debate on the second reading of the Mining Rehabilitation Fund Bill 2012 and the Mining Rehabilitation Fund Amendment Bill 2012 to proceed as a cognate debate, noting that two members have already spoken and that the Mining Rehabilitation Fund Bill 2012 be declared the principal bill for the debate.

Second Reading — Cognate Debate Resumed from 20 September and 15 August respectively.

MR C.J. BARNETT (Cottesloe — Premier) [12.17 pm] — in reply: I thank members opposite for their support of this bill. As I think has already been said, it is a sensible bill which will work better for the mining industry and certainly will make a significant contribution towards improving the rehabilitation of mine sites


following the closure of mines. As members are aware, under the current system miners are required to maintain performance bonds to cover the costs of rehabilitation, should they fail to do so. Most if not all mining companies are now environmentally responsible and rehabilitate their mines, and under the current system if a company fails financially and funds are not available, it is protected through the bonds. Most of those bonds are actually bank guarantees, so they are quite expensive for the mining companies to maintain. In any case, the guarantees or bonds cover only about 25 per cent to 30 per cent of the environmental liability of rehabilitation. In addition, there is the further problem of mines that closed—so-called historic mine sites—prior to the bonding system coming into place. They ultimately become the responsibility of the state, but the state has no revenue to rehabilitate them.

This issue has been looked at; I think it was a good process set up by the Minister for Mines and Petroleum. A review in 2010 resulted in an increase in the bonds, but that was seen at the time to be only a partial solution, so the industry worked with government to find a more permanent and sustainable system of operating. That ended up as the mining rehabilitation fund, which is what this legislation is about. It sets up a fidelity fund into which companies will pay a levy of about one per cent of the cost of rehabilitating a mine. That principal sum, as it accumulates, can be used to rehabilitate the mines of those companies that contribute to the levy. The interest on that principal sum can then be applied progressively to the historic mine sites. Obviously, it will take decades to remedy that but at least a start will be made. The legislation will be supported by a range of regulations that are currently being worked on, and an advisory panel will also be set up. Clearly, there will be some teething problems, and adjustments to regulations, levy rates or whatever will be determined. It is a good piece of mining reform and also environmental reform, and I thank members for their support for the bill. Question put and passed. Bill (Mining Rehabilitation Fund Bill 2012) read a second time. Leave denied to proceed forthwith to third reading.

MINING REHABILITATION FUND BILL 2012 Consideration in Detail

Clause 1 put and passed. Clause 2: Commencement — Mr C.J. TALLENTIRE: The commencement of this bill is a matter of interest, given that we have some major mining proposals of a very different nature to what our system has dealt with in the past. I want to hear from the Premier how the commencement process is going to work. I am thinking particularly of the Toro Energy Ltd Wiluna uranium mine, noting that we are edging closer to that uranium mine getting approval; it would, of course, be the first uranium mine in Western Australia. The commencement date is quite critical to the processes that we have in place. We know that the Minister for Mines and Petroleum, Hon Norman Moore, has made commitments; in fact, I think he has given people some hope that the assessment process would be of the utmost rigour and that it would be coupled with his commitment to the implementation of world’s best practice when it comes to the actual management of that uranium mine. He also indicated that there would be mechanisms in place for isolating tailings from the environment for not less than 10 000 years. We need to know that we have before us a rehabilitation fund that would be able to deal with the commitment from Hon Norman Moore that tailings will be isolated from the environment for 10 000 years. We need to know that under this process, whether under the bonds regime—because I gather that could still be applied here—or under this levy system, we would have the capacity to ensure that tailings from a uranium mine would be isolated for 10 000 years. We know, as well, that Hon Norman Moore commissioned a panel to investigate uranium mining regulations and to benchmark them against world’s best practice, and one of the key components of that is making sure that closure plans are in place. We know that the standard practice in the Western Australian mining industry is that closure plans are always presented as a part of a mining approval. Yet it seems that no mine closure plan was presented through the approvals process for the Toro proposal. On the one hand, the minister says that there is a commitment to isolate tailings for 10 000 years, yet we do not have the full presentation of Toro’s mine closure plan. Given that serious inconsistency and failure to honour the commitment to world’s best practice for the uranium industry, I think there is a very real concern that we are putting in place a system that is not going to be able to pick up the pieces of what is probably a failed assessment process. Perhaps that is where the Premier can reassure me that, with the commencement of the act, we would see the application of a bond system to the Toro Energy Ltd Wiluna mine and we would also see the application of a levy system. I need to know, through this consideration in detail process, just how much bond or levy will be imposed on Toro Energy to ensure that it does meet these commitments, which it is happy to sign up to, for things like very toxic tailings. I can go into further detail on the nature of these tailings and look at some of the past measures that have failed us so badly when it comes to isolating tailings. In the past we have used such things as clay layers over tailings areas, and that has been assumed to attenuate the release of radon and thoron into the environment. Those sorts of concerns


have to be dealt with now. Will we have enough money from the proponent, Toro Energy, to ensure there will be no release of things like radon and thoron into the atmosphere? Will we be sure that a closure plan is in place before the final approval is given; and how much money through the bond and levy system will be applied?

Mr C.J. BARNETT: The Minister for Mines and Petroleum has already made the decision that Toro Energy will be required to have a 100 per cent performance bond for mine rehabilitation. That is obviously seen as a higher risk mining activity compared with others; and therefore that will apply. Ultimately, it may come under the levy system, but at this stage it will be under a 100 per cent bond.

Mr C.J. TALLENTIRE: I thank the Premier for that response. It is good to hear a percentage figure, with a 100 per cent performance bond. But we need to know the dollar figure as well so that the Western Australian public can be reassured that money has been set aside for this project in dollars. We need to know the exact amount in dollars—just how much there will be—and how that money will be put aside, and what sorts of guarantees we will have. I stress again this 10 000-year bond that we need in place. In the history of humanity we have never managed to do such a thing. We have barely had civilisations that last 1 000 years; a notable exception being our own Indigenous culture as a civilisation that has lasted for at least 30 000 years. But, in general, human constructs do not last for 10 000 years—certainly not our financial system. How are we going to be sure that the money that Toro puts aside today will last for the extent of these tailings, what amount will be put aside and where will it be put aside? Also, are these time frames actually being spoken of in the bond process? Is the government being honest with people when it involves a potential risk to the state of Western Australia, to human life and to the environment that lasts for such an extended period of time? How are we going to be absolutely sure that that bond will be there should we find in a couple of hundred years or, for that matter, a couple of thousand years that we need to draw on those funds? How will the government give people confidence that such a system can be developed?

Mr C.J. BARNETT: We have to deal with the reality and practicality. Obviously when Toro Energy Ltd’s mine or any other uranium mine develops and ultimately closes, rehabilitation will be to the highest world standard at that point in time. Tailings ponds will contain some contaminated material, as is the case in the alumina and mineral sands industries; and, indeed, the state government and the commonwealth have entered into long-term responsibility for the geosequestration of carbon dioxide out of the Gorgon gas project, so there are examples. I think this is a realistic approach, and Toro, or any other uranium miner, will be required to rehabilitate the mine to the standards that apply when that mine closes and probably will have a responsibility, I imagine, for some time after that. But ultimately, the responsibility falls back to the state. However, we have radioactive materials already in this state as a result of mining operations, and I do not see any unforeseen difficulty with this. A half-life, yes, goes on for thousands of years, but so it does also in other parts of the mining industry. Mr C.J. TALLENTIRE: I have to say that I think the Premier is being somewhat dismissive there and has not answered my question on how much money is being put aside.

Mr C.J. Barnett: Just on that, if I could interrupt, I imagine that amount is not yet determined, but you would need to ask a question on notice of the mines minister. This is about the policy of the bill, not about a specific project. Mr C.J. TALLENTIRE: Given the commitment to world’s best practice that the government is making to people, which includes the full presentation of mine closure plans, the Premier at this stage saying that he cannot tell me how much money will be set aside suggests that in fact he is so far away from giving approval. There is a suggestion in the media that this Toro Energy Ltd Wiluna uranium mine is quite close to receiving its final approvals, but if the Premier is not in a position to tell me how much money will be set aside, I think he is sending the opposite message.

Mr C.J. Barnett: I just told you it is 100 per cent of the rehabilitation.

Mr C.J. TALLENTIRE: Yes, and I asked the Premier for the actual figure.

Mr C.J. Barnett: The actual amount may not yet be determined.

Mr C.J. TALLENTIRE: That gets to my point that we are close to this thing receiving its final approval and the Premier cannot tell me what the actual bond amount will be. Mr C.J. Barnett: I just explained that it is project specific. This is a bill about a rehabilitation fund. If you want a project-specific answer, you will need to put a question on notice to the minister at the time the project is approved and the rehabilitation is determined, and he will answer it. Mr C.J. TALLENTIRE: This is a totally new form of mining for Western Australia. It is one that needs to be covered by a mine rehabilitation fund of some sort; therefore, it is entirely appropriate that in the context of this debate we talk about rehabilitation funds, the processes that we are using and the transitional arrangements between a bond system and a levy system. It is entirely appropriate that we debate the specifics of this particular


case given the potential, as the Premier indicated in an earlier response, that ultimately these costs would fall on Western Australian taxpayers. We do therefore need to know how much is involved. I am disappointed that the government is not being up-front about it. Western Australians should know how much money—not just a figure of a nice round 100 per cent—is involved so that they can be reassured that serious consideration has been given to uranium mining by the Western Australian government when it comes to mine closure. People would be quite within their rights to be concerned, given that this closure plan is not yet available to the public. Perhaps the Premier can confirm that as well. A mine of any description seeking approval is required to have a closure plan submitted, but somehow in this new form of mining we are not presenting a mine closure plan. What is going on there?

Mr C.J. BARNETT: I think the member is wrong. Mine closure plans are required under the Mining Act. That will continue and that will be required for every mine. With respect to uranium, Australia has been mining uranium since the 1930s. Australia is the second-largest uranium producer and exporter in the world. I would imagine that the conditions in central Western Australia are probably as safe as they can be for that industry, given water table issues and the like. Nevertheless, the standard will be the highest level. Although there has not been uranium mining in Western Australia, it is hardly a new industry for this country.

Mr C.J. TALLENTIRE: The timing of the commencement of this bill is absolutely critical. It is a real concern to me that the Premier, who so often points out that the way we do things in Western Australia is different from elsewhere and that in Western Australia we have different processes, suggests two things. One is the technologies that are used for uranium mining. Yes, of course, uranium has been mined elsewhere in Australia, but the Premier is confusing that technical issue with what is really being talked about here, which is a regulatory regime that has never been applied before. We are changing the regulatory regime. We are changing the rehabilitation fund process in Western Australia. That is one thing. However, also we have had agreements and commitments from the government that there will be a regulatory regime in place that will deal with uranium mining. That is because it is not something that we have dealt with in Western Australia before. This is new for us; it is entirely new. We are therefore entitled to know that we have a regulatory regime in place that can deal with it. We cannot just allude to the technologies used elsewhere in the country and say that the regulatory process here in Western Australia will be able to deal with this technology that has not actually being used in Western Australia before. I therefore do not believe it is fair to respond in this place in a way that confuses technical processes with actual regulatory regimes. That is why the timing of the commencement of this legislation is so very critical. We want to know actually what regulatory regime is in place. I therefore ask again: where is the closure plan and where is the dollar amount that will indicate how much Toro Energy Ltd has to put up before it can get final approval?

Mr C.J. BARNETT: As I said before, this legislation ultimately will cover up to 600 mining sites around Western Australia. The minister has made it very clear that since there is an issue in parts of the community, Toro uranium will operate under a 100 per cent performance bond, and may continue under that indefinitely. Clearly, mine closure plans are part of the approval process. A regulatory regime, which will be established and be subject to environmental assessment, is being put in place. When the project proceeds—I presume it will get final approval and will proceed—a bond will be determined, and Toro will have to maintain that bond, presumably through bank guarantee. At that stage—we are not at that stage—ask a question on notice in this place and it will be answered. But no-one is in a position to give an answer to that. This bill, if passed, will come into operation, presumably, in July 2013.

Clause put and passed. Clause 3 put and passed. Clause 4: Mining authorisation — Mr W.J. JOHNSTON: I am seeking information about the tenements to which this arrangement will not apply. I understand from the briefing I received from the Department of Mines and Petroleum that under clause 4(2), state agreement act tenements will not be automatically covered by this new tax. There was an indication that there may be some discussions with state agreement tenements, and I am wondering whether the government has an idea of which state agreement operations it is intended to cover, or whether there is no intention at this stage to cover any. Has there been any discussion with any of the state agreement mining organisations? What is the picture with the state agreement act proponents at this stage? Mr C.J. BARNETT: As the member is no doubt aware, state agreements can be altered only by agreement of all parties. That is sometimes complex, particularly when a number of joint venture partners are involved in a particular project. State agreements are with well-established, highly responsible groups, and we do not see that as a problem. However, as we go forward in time I can foresee that there will probably be provisions similar to this and maybe even in fact an agreement to pay into this fund. It does not apply retrospectively to state agreement companies or to their operations, but in the future it may well do and I would think that would be a responsible way to go forward.


Mr W.J. JOHNSTON: Obviously I understand that it will not apply to state agreements because they have been given regulatory certainty. I mentioned that in my contribution to the second reading debate. I am seeking to know whether it is the government’s intention to try to negotiate with those parties to have this new tax applied to them. The reason I am asking is obviously that the interest earned on this fund will be available for the rehabilitation of already abandoned mine sites. It is actually a critical issue. If the amount of funds available to this new fund is maximised, that will also maximise the amount of interest available to deal with our legacy issues in this state. At some point in time, we need to deal with our legacy issues from former times when mining companies were not as responsible as modern mining organisations. The answer to that may be no, that is not really an issue. I am just trying to establish whether it is intended to negotiate with the existing state agreement parties so that we can maximise the income into this fund. That has two benefits: firstly, it will potentially reduce the size of the levy, because it is being spread over a larger number of operations; and, secondly, it will increase the availability of the interest on the fund so that the interest can then be used to deal with the legacy issues that the state confronts.

Mr C.J. BARNETT: There is no intention to seek to renegotiate existing state agreements, which the member is advocating. State agreement projects are also subject to environmental protection laws, as they should be. However, it may well be that in future state agreements, or maybe at times when amendments are made to state agreements, this may be considered and may be a negotiating point, but we are certainly not going to start negotiations to retrospectively change agreements. Clause put and passed. Clause 5 put and passed. Clause 6: Purpose of Fund — Mr C.J. TALLENTIRE: The purpose of the fund is outlined in clause 6. It states that funds can be applied to “the rehabilitation of abandoned mine sites and other land affected by mining operations carried out in, on or under those sites”. I am curious to know how far that really does extend. One can well imagine—most members will have seen this sort of thing—the access roads that go to a mine. When the mine is abandoned, there is a need for the rehabilitation of those access roads. Sometimes during the operation of the mine, damage is caused to the surrounding areas, through dust most notably. Can the rehabilitation funds be applied to rehabilitation works, say, on either side of a road where vegetation is now covered in dust and dying as a consequence? I can think of cases down near Beenup where I have seen exactly that sort of thing. I wait to hear the Premier’s response to this. I think there are other dimensions, too, in the breadth of applicability of this fund. I think of things such as the clean-up that was required at Esperance. Can funds from the rehabilitation fund be applied to things that may not have been anticipated but are part of a mine’s impact on an area and therefore could be considered as necessary to the rehabilitation resulting from that mine? Mr C.J. BARNETT: How the money will be used and what are the boundaries and the level of environmental impact will be determined by the director general, obviously on the advice of that advisory panel. Members can imagine that if a tailings dam broke, there might be environmental damage outside a mining tenement. But this would not apply to something like the situation in Esperance in which the contamination occurred around the port through loading operations. That would not in any sense be declared an abandoned mine site. Yes, it could go outside the actual mining boundary if the contamination went beyond it, but not to some other purpose like that. Roads also could well come into it—rehabilitating the land if roads are no longer required and are ripped up—as could the removal of buildings or whatever else. Obviously, it is on a case-by-case basis. At least this will give funds to deal with current mines as they close and, in particular, to go back historically and fix up some of the potentially hundreds of abandoned mines around the state.

Mr C.J. TALLENTIRE: I thank the Premier for that response. Bearing in mind that the director general is going to have to consider many, many mines for rehabilitation, I think it is putting an incredible weight on the director general’s shoulders to actually make the decision. But that is what the Premier is telling me now—the director general is going to decide when the funds are applied and where they are applied. To me, that is a concern. I wonder whether there needs to be some guidance from this place and a commitment to some sort of regulatory framework or guidelines that would ensure that the director general and the advisory committee know exactly what the priorities should be and what recourse there would be should the director general find that there is not sufficient funds in the levy account to do urgent rehabilitation work that the director general has deemed necessary.

Mr C.J. BARNETT: I think it is well within the competence of the director general, on advice from within the department and from industry itself, to determine the priorities for the rehabilitation of historic mines. Bear in mind that these mines go back to the last century and in fact to the century before it—all the gold mines that developed through the 1890s all over the place. This is not going to be something that will be solved in the short term; this will take decades. But at least this is a start and will try to rehabilitate some of those old mines. It


would obviously be done where the risk to the environment or to people could be greatest and probably closer to population centres if it is a dangerous situation, but it is for the long term and at least it is being tackled.

A situation such as the one in Esperance would not come under this fund. As happened in Esperance, the state government basically contributed $30 million to fix it. That was something that this government inherited and we fixed it very quickly—as quickly as it could be done. If there is a major issue like that, that is not going to come under this legislation. I think of a Wittenoom situation. If anyone decided they wanted to rehabilitate Wittenoom Gorge, they would not be able to do that out of this fund, and probably not out of any fund. I think those issues on a mega scale become issues for government, not for this fund.

Clause put and passed. Clause 7 put and passed. Clause 8: Payments from Fund — Mr W.J. JOHNSTON: Subclause (2)(b) on page 6 states —

to fund programmes, or the provision of information, relating to the rehabilitation of abandoned mine sites, affected land and other land affected by mining operations;

I listened to the Premier’s answer to the member for Gosnells on the previous clause. Is the Premier saying that land affected by the transport operations of a mine is not land affected by mining operations?

Mr C.J. Barnett: My understanding of the terms of this legislation is that that would be land within the mining tenement. There would be transport impacts; for example, if dust or material was built around the mine location, that would be included, but not transport at a port. That would be separate; it would not be the mine site. Mr W.J. JOHNSTON: I understand that the bill intends to cover tailings spills that run off the land or other things that have happened when it is directly coming off the mine. The last phrase states “other land affected by mining operations”. I just want to clarify, so it is on record, whether the Premier is saying that the transport operations of the mine are not part of the mining operation? Mr C.J. Barnett: There is some scope, I am advised, to use some of these funds on educative programs on best practice across industry, which could relate to transport. Clause put and passed. Clause 9 put and passed. Clause 10: Power to enter abandoned mine sites and affected land for rehabilitation work — Mr C.J. TALLENTIRE: Clause 10 contains a definition of rehabilitation work and reads in part —

rehabilitation work means work to rehabilitate an abandoned mine site or affected land that is funded from money standing to the credit of the Fund.

When we talk about a mine site or affected land, how broad is the definition? Sometimes mines may start out in the pursuit of one particular resource but then another can become the priority. There is some confusion here when it comes to sites that are not necessarily for a resource defined under the Mining Act but may be for a basic raw material such as limestone or sand. Those kinds of quarries also require extensive rehabilitation work and are just as much a blight on the environment as mines abandoned by the goldmining sector or any other sector. I wonder what the breadth of the definition is when it comes to accepting what comes under the scope of potential rehabilitation work, especially in relation to quarries that may have been for basic raw materials and those that could include gravel pits. Can money from this fund be applied to the rehabilitation of those areas too? Mr C.J. BARNETT: No; the funds collected under this levy can be applied only to mining projects to which they relate in terms of the principal sums. As we have discussed, interest can be applied back to other sites. Gravel and sand pits and the like are mostly approved under local government powers, so a levy will not be collected from those operations; therefore, funds collected under this could not be used to rehabilitate. Some larger quarries are often regulated under the Mining Act. If they are subject to the Mining Act, they will be included in this system, but most quarries and sand pits will not be. Mr C.J. TALLENTIRE: I think that needs further clarification because there are occasions on which a mine has served multiple extractive resource functions, so it may have been used for some sort of mineral extraction but it may also have been used for basic raw materials. I am not sure what would be the response in terms of the availability of funds through this scheme. Likewise, there could have been extensive quarrying and dirt movement at a mine that was not directly related to the extraction of the resource but was necessary for the actual creation of the mine—the gravel required for the access roads and haul—truck roads and things like that. Often very extensive earthworks are the visual scars we see as a result of a mine, yet they are not directly related to the extraction of the ore as such. I am seeking clarification again on how broadly the funds can be applied.

Mr C.J. BARNETT: It is my understanding that the removal of overburden or the creation or levelling of laydown areas or whatever it might be will all be part of the mining operation; therefore, this fund could be


applied to it. This fund applies to mines covered under the Mining Act. In a hypothetical situation, which I think this is, if mining had ceased at a goldmine and it was being used as a quarry, it would have been included initially under the Mining Act and, therefore, would be subject to this.

Clause put and passed. Clause 11: Mining rehabilitation levy —

Mr W.J. JOHNSTON: This is really the key clause in the bill because it creates the levy. The only operation of the Mining Rehabilitation Fund Amendment Bill, which we will consider in a minute, is to amend this clause by inserting a provision to make the levy active. Can the government indicate how much it expects to raise each year from the levy and what is the expected charge, on an indicative basis, for mining operations?

Mr C.J. BARNETT: I am advised that in the initial year, at a one per cent levy rate, it is expected that somewhere in the range of $30 million to $40 million will be collected under this proposal. If we think about it, over time, that will accumulate very quickly.

Mr W.J. Johnston: What do you expect the charge to be? I understand it to be the area of a mining lease.

Mr C.J. BARNETT: No; the charge is a percentage of the estimated cost of rehabilitating the mine. It will start at one per cent of whatever that will be each year. The levy may go up or down over time. I imagine that if this fund accumulates at $30 million to $40 million a year, it will accumulate fairly rapidly and if it is not drawn down—let us say that it gets to $1 billion at some stage or whatever the figure might be—there may be an argument to reduce the levy at that stage. But we are a long way from that. At that stage there will be substantial interest earnings to go back to the historic mine site. I guess that is why this will be a bit of a work in progress, but it will start at that one per cent and accumulate at around that rate.

Mr W.J. JOHNSTON: I appreciate that answer, Premier. Is there an envisaged target for the size of the fund? The Premier said $1 billion, but he did not mean that literally. Is there a thought in the mind of the minister or the department about what size the fund should be? Mr C.J. BARNETT: I do not know what thought the minister might have—on a lot of issues. No specific target has been set, but we would not let the fund accumulate forever and run into billions of dollars. I guess that will be judged at the time. It is part of the role of the director general and his staff to see at what rate it is drawn down. In five or 10 years, I am sure whoever is in government will assess whether the rate should change or whether the fund is sufficient to guarantee rehabilitation. I think we are all very conscious that if we had a major environmental problem and a company went broke and did not rehabilitate its mine or fix whatever happened, a rehabilitation program could easily run into hundreds of millions of dollars.

Clause put and passed. Clauses 12 to 17 put and passed. Clause 18: Reassessment of levy —

Mr W.J. JOHNSTON: My particular compliments to the member for Mindarie!

When I was being briefed by the department officials, there was an indication that if a fund got to be quite large and was not needed, thought might be given to returning money to companies. Is this the clause under which that could be done? Can this clause be used to repay money from a former year? Obviously, we would want the mining companies that paid the money, and not some other company, to be the ones that receive the refund. A company might assess the level of contribution it makes each year to make sure it has enough resources available to it. That will go up and down as things happen, but if the department says that it collected too much in a former year, is this a sufficient head of power to retrospectively reassess those contributions and pay them back to somebody who might no longer be operating in the mining industry?

Mr C.J. BARNETT: As it is drafted, the bill does not provide any option for payments like that to be made out of the fund. This clause relates, for example, to when the rehabilitation cost of a particular mine is assessed at, say, $10 million and, therefore, the company is paying one per cent of $10 million into the fund. That company may well believe that $10 million figure is too high and put to the director general that he thinks it should be only $7 million, and therefore his company is paying too much into the levy. Obviously, that will be assessed and the director general would make a call on that, and that would prevent that company from coming back within two years for another assessment. It could work the other way. The director general might suddenly decide that the cost is too low and needs to be higher because the rehabilitation costs are seen to be higher. Mr W.J. JOHNSTON: I thank the Premier for the answer. Subclause (1)(c) reads —

it is otherwise appropriate to do so.

That is a broad power, and there is nothing wrong with a broad power, but I wonder whether that was the power discussed with me at the briefing. If not, that is fair enough.


Mr C.J. Barnett: I am advised it is not.

Mr W.J. JOHNSTON: That is cool. The Premier can answer this point in the third reading, not right this second, but I wonder whether a provision that I have missed authorises the CEO to return former-year payments in the circumstances described to me by the departmental officers in the briefing when the fund gets too big and it is decided that the tax rate was set too high. Mr C.J. BARNETT: If, for example, the mining rehabilitation estimate was agreed to be too high and therefore the levy lowered, that would be prospective only if previous payments can be claimed back.

Clause put and passed. Clause 19 to 28 put and passed. Clause 29: CEO may require information and records — Mr C.J. TALLENTIRE: Clause 29 mentions penalties that would be applied should a person fail to give information as the CEO requires. The penalty amount there—one has to assume it is a maximum—is $20 000. Given that a levy calculator will apply and that some of the higher limits on that calculator will involve rehabilitation rates of well over $20 000 a hectare, if someone fails to give the CEO information about perhaps an extension of a pit area or a disturbance area, they could avoid rehabilitation costs well in excess of this penalty amount. I am curious to know why that penalty does not have some sort of flexibility in it. If we are talking about someone failing to disclose information related to the disturbance of a small area that would only come to $1 000 in extra costs, of course they would not worry about it, but there is just as much potential for someone to avoid disclosing rehabilitation costs of areas well in excess of $20 000, yet our penalty rate would stay at this flat $20 000. I seek the Premier’s advice on how we can have some flexibility about the use of the penalty depending on the scale of the offence. Mr C.J. BARNETT: This penalty, which is set at a maximum of $20 000, is for a failure to provide information. There will be other penalties. For example, if a company failed to make its payments into a fund, the penalty would be a penalty rate of interest on that and ultimately actions would be taken under the Mining Act. It is laid down in the legislation. I would think the shame and embarrassment to the executive or the company would be the major penalty. A penalty of $20 000 may not make a big difference, but the reputation of a mining company would suffer significant damage if it failed to comply with an environmental obligation.

Mr C.J. Tallentire: Not if it is going to move on; it is not going to worry about protection.

Mr C.J. BARNETT: I think the minister of the day would be pretty hard on it.

Clause put and passed. Clauses 30 to 32 put and passed. Clause 33: Mining Rehabilitation Advisory Panel — Mr C.J. TALLENTIRE: I know that the member for Cannington also has some important points to make on this clause. The composition of this advisory panel seems to be an important issue. In discussion, we have already touched on some of the responsibilities of the advisory panel. I am keen to know about the diversity of skills on the panel. I would be concerned if we had people on the panel who were currently employed in the industry and could, therefore, on behalf of the panel, perhaps give information that was in just the industry’s interests. I am interested in seeing that this panel comprises people who might not just think about the financial implications for the industry, but also have the interests of the broader community at heart. I am therefore mindful that sitting around the table will be the very well funded mining executives, who will have great technical knowledge in mine site rehabilitation—admittedly, they will have that—and will be very well paid and resourced. We will also have around the table, I hope, people representing the broader community interest, but there is no way that those people, looking at this act, would be funded to the same level and resourced in the same way as those who represent the industry’s view. I am keen to know how the Premier will balance that. Some special provision is needed for community interest to be represented on the advisory panel and, given that those community people will not be resourced or paid in the same manner as mining executives, some funding is required so they can sit around the table in a position of equality and have access to the same level of resourcing to provide information and make meaningful contributions to the deliberations of the advisory panel. Mr C.J. BARNETT: The CEO is responsible for the administration of this fund but would obviously draw on advice. The advisory panel is not intended to be a representative panel, but an expert panel consisting of people with not only mining experience, but also environmental, technical and scientific expertise. Its credibility will depend on having that expert capacity. Mr C.J. TALLENTIRE: I am partly reassured by the Premier’s response but it perhaps needs to be more explicitly stated. Yes, I agree it needs to be an expert panel, not a representative one, but if we are not careful, that definition of “expert” can too quickly be used to define or describe just those who are well paid and working


in the sector. We need to acknowledge that some people who have expert knowledge—they could make an expert contribution—may not be currently paid. They might be retired mining executives or people who have worked in other areas altogether but have the technical expertise. They might be academics or retired academics. This does not get away from the problem that some people at the advisory panel meetings will be very well paid for their time and also very well resourced—they will be able to come up with all sorts of technical information to present or argue a particular point—and there could be people who do not have those resources. What will the direction to the CEO be to ensure that there is some assistance to those who may not have the resourcing behind them but do have the expert knowledge to contribute? We need to ensure that there is some fairness about the resourcing of all people who are members of the advisory panel.

Mr C.J. BARNETT: The regulations will specify the areas of expertise for the panel. The director general has some discretion, but he would obviously pay meeting, travel and out-of-pocket expenses for the panel members if that were required.

Mr W.J. JOHNSTON: I thank the Premier for the answers to the member for Gosnells’ questions. They have cleared up most of the matters that I wanted to raise. What is the intended number of people on the panel and what is the intended amount of —

Mr C.J. Barnett: Five.

Mr W.J. JOHNSTON: Is that the CEO plus five?

Mr C.J. Barnett: It is five in total.

Mr W.J. JOHNSTON: Five in total including the CEO. The Premier said that it is intended that they be recompensed for attending the meeting.

Mr C.J. Barnett: For meeting and travel expenses, but they are not paid positions.

Mr W.J. JOHNSTON: There is no intended stipend. Okay, that is great. They are the issues I wanted clarified.

Clause put and passed. Clauses 34 to 37 put and passed. New Clause 37A — Mr W.J. JOHNSTON: I move —

Page 22, after line 17 — To insert —

37A. Review of Act (1) The Minister must carry out a review of the operation and effectiveness of this Act as soon as

is practicable after the end of the period of 10 years beginning on the day on which this Act receives the Royal Assent.

(2) The Minister must prepare a report based on the review and must cause the report to be laid before each House of Parliament as soon as is practicable after it is prepared and, in any event, not later than 18 months after the end of the period referred to in subsection (1).

Mr C.J. BARNETT: Briefly, we obviously have not seen the wording of that because it was not on the notice paper. In principle we do not have an objection to a 10-year review of the bill, but I would like the opportunity for that to be looked at from a drafting point of view. As long as it does not create something that is not anticipated, we will probably agree to that.

Mr W.J. JOHNSTON: That is pleasing. I move this on behalf of my colleague, the shadow Minister for Mines and Petroleum, Hon Jon Ford. All we seek to do is insert a review mechanism. I accept that drafting by opposition is sometimes not perfect because we do not have all the resources available to us that are available to government. Obviously, the Premier needs to see the new clause first; I have only just moved the amendment and it is on its way back to him now. I wonder whether there is any way of delaying the conversation for a couple of minutes —

Mr C.J. Barnett: You have never struggled to speak before in the house, from my observation!

Mr W.J. JOHNSTON: If the Premier wants me to, I am very happy to continue to speak. The point I am getting to is that if the government formally puts on the record that it supports the insertion of a clause that would require the review of the act after 10 years, I could seek leave to withdraw this amendment and that could be dealt with in the other chamber when the government has a bit of time to go through the drafting matters.

Mr C.J. BARNETT: I thank the member for that. That would probably make it a little easier. I think we just need to look at the wording of that new clause. The bill will pass through here and I give the commitment that a new clause to establish a review mechanism will be inserted when the bill is in the upper house. The only


proviso is that the minister agree; I do not see why he should not agree. The preference is to check the drafting. I will give an in-principle commitment. So long as the Minister for Mines and Petroleum agrees—I imagine he will—that clause will be inserted in the upper house.

Mr W.J. JOHNSTON: I place on the record that the Labor Party’s understanding is that all things being equal and subject to the proviso the Premier has made, a provision will be inserted into the bill to have a review of the act after 10 years. On that basis I seek leave to withdraw the amendment.

New clause, by leave, withdrawn.

Clause 38 put and passed.

Title put and passed.

Third Reading

MR C.J. BARNETT (Cottesloe — Premier) [1.15 pm]: I move —

That the bill be now read a third time.

MR W.J. JOHNSTON (Cannington) [1.16 pm]: I know that my colleague the member for Gosnells also wants to make some remarks on the Mining Rehabilitation Fund Bill 2012 at the third reading stage, which is not surprising as he has such an extensive background in the environmental movement. He pays careful attention to these things and I place on the record my appreciation for the work he has done on this bill. I also place on the record my appreciation for Hon Jon Ford and his staff, and the staff of the Department of Mines and Petroleum, who were so careful when briefing me on the issues involved in this bill. I will make a couple of comments about what we have done. In a minute we will move on to the Mining Rehabilitation Fund Amendment Bill 2012 and that will formally impose the tax that we are levelling on the mining industry, which is a tax of about $30 million or $40 million a year, so between $120 million and $160 million for a four-year cycle of government. That is an exciting opportunity for environmental rehabilitation in this state. It is a good fund; it will ensure that when things go wrong in the mining sector, we will have the resources to ensure that there is proper and adequate rehabilitation. Having said that positive thing, I have been lobbied by mining interests on this bill and I just hope that they understand that just because this bill comes in, does not mean that bonding finishes. It may be quite a number of years before government is in a position to remove the bonds on mining companies. From the information that the various lobby groups have provided to me I understand the benefits of removing those bonds. However, as I said, it might be five or 10 years before bonds on mining operations in this state are removed.

We need to be careful about the wording and whether the transport of mineral resources is covered by the operation of the act. I think the answer the Premier gave us was that there is broad enough wording in the bill that we can broadly rehabilitate the effects of mining operations. That will be an issue in the future because quite often it is not only the direct effects of the mining or the effects of a runaway of tailings or undermining because something has happened such as geotechnical issues, but also more broader impacts that there might have been through mining activity through its transport of the resource.

I also want to comment on the advisory panel. I join the member for Gosnells in saying that I think the operation of that panel is quite important. It will be important to make sure that it is not narrowly focused and that it focuses broadly on the impacts with which we are trying to deal. The panel should comprise a broad range of people who can all contribute different viewpoints to the advice that goes to the chief executive officer and the CEO making decisions on how to use this new resource for government.

I have two things to say before I finish. Firstly, I thank the government for agreeing, subject to the caveat that the Premier made, to review the act after 10 years. It is a good opportunity to make sure all legislation works in the way we expect it to. Ten years is quite a good length of time to ensure plenty of history is under the belt before we look to see what we should do to move forward. It is a good idea to make sure we have a broad look at how we are going. The second thing I comment on is the legacy sites issue. Given that only the earnings on the fund can be used for legacy sites, that will encourage a large amount of money to be kept in the fund. Over time, there could be quite a substantial amount of resources. When we have a review in 10 years’ time, we will see whether it is an opportune time to look at broadening the operations of the underlying fund to ensure sufficient work is being done to rehabilitate legacy sites. We all expect that the mining industry, as we move forward, gets better and better in its environmental performance. We do not expect there will be future abandoned mines, yet that is where the bulk of resources will be focused. We need to look back at what will happen in the future to see how we can deal with those legacy issues that blight our state. As I explained during the second reading debate, it is not reasonable to use just the royalty income that the government receives—because that is the payment for the resource—to rehabilitate legacy sites. We need to think about what other resources are available to us to ensure those legacy sites are properly dealt with.


Mr C.J. Barnett: I think that is a reasonable point. After that 10-year review there may actually be a reduction in the levy, if environmental standards improve. Maybe some of that principal could be used for rehabilitation. If the fund is $1 billion or $2 billion, it would probably be pretty safe to do that.

Mr W.J. JOHNSTON: It is not unreasonable for the current-day operators of mines to say they should not be held responsible for some other person who received a benefit out of a mine because the environmental standards of the past do not meet current standards. I can understand why the mining industry says it does not want to be the principal resource for fixing up abandoned mines. One of the problems is trying to find out who received the benefit and who should make the payment—give it a user-pays approach. I understand why it is only the interest on the principal, but I think 10 years, as the Premier says, is probably an opportune period to look at how we can deal with an important issue for the state of Western Australia.

MR C.J. TALLENTIRE (Gosnells) [1.22 pm]: I rise to make a brief contribution to conclude our consideration of the Mining Rehabilitation Fund Bill 2012. I want to stress to the house that these bills are not trivial at all. I was at a function recently at which somebody from the Chamber of Minerals and Energy said that the actual footprint area of mine impact in Western Australia is about equivalent to the area occupied by shopping centre car parks. When those claims are tested, they do not stack up. The actual footprint area of mining is growing all the time. That is understandable when we consider the scale of mining activity and its growth in this country, and to use the Pilbara example the volumes of iron ore going out of that region. The disturbance footprint is growing all the time and the cost of rehabilitating those areas increases. It is something the state will have to deal with eventually, one way or another.

In discussion, the Premier pointed out that the reputation of companies is perhaps one of our best safeguards against them leaving sites in an unsatisfactory and unrehabilitated state. He is right to a point. That is true when it comes to the major mining companies. We know that even from the mining majors, we see all sorts of changes, including buyouts, takeovers, mergers and acquisitions. When that happens, a company that was perhaps a household name almost disappears and another one takes its place. That is often used as a technique to avoid reputational costs. That is something we need to be mindful of. We need to make sure this fund is adequately funded so it has the capacity to pay for expensive rehabilitation works. Something we have not managed to get through in discussion so far is a draft of the levy calculator, which will be key to things. Some areas have very, very high costs of rehabilitation. I remember Alcoa representatives saying 10 to 15 years ago that the company budgeted $20 000 per hectare just for earthworks at its bauxite operations in the Darling Scarp and in the south of the state. That figure of $20 000 per hectare does not include all the scientific research that goes into looking at the propagation techniques required for various recalcitrant plant species; that is, plant species that are difficult to germinate. Botanists apply the word “recalcitrant” to those species. They require many years of expensive, intensive research before they can be germinated and propagated in the lab, and then there are more years before they can be propagated out in the field on a rehabilitation site. Sometimes that work happens, and happens very well. I note that Alcoa claims nowadays that it can rehabilitate 100 per cent of the known species in a disturbed area. It stresses, though, that that is the “known” species. There could be species there that are unknown. They are not in the suite of species that are reintroduced. Sometimes when one goes into a rehabilitation area, it can be very good. It can be almost indistinguishable from an area of regrowth that has had a fire go through it. Sometimes the quality of the rehabilitation is excellent, but there are plenty of examples of it being quite poor.

We touched on the rehabilitation of quarries in our discussion. I am disappointed that the bill does not necessarily apply to quarries. The reason the Premier gave was that quarries are generally covered by local government. Those sorts of quarries can be relatively minor—gravel pits and things used for sourcing gravel for road construction. In those cases there should be some state government means to force gravel pit operators, who often are those very same local governments, to undertake rehabilitation work. It is sometimes too easy for a local government requiring some gravel to look at its roadside vegetation area and road verges to access it. It is sometimes convenient, but it seems like a cheaper and simpler solution than negotiating with an adjacent landholder who might already have some cleared land under a cropping regime that would be ideal for sourcing the necessary basic raw material. In those cases we need some sort of financial incentive to push negotiations along to ensure local government enters into negotiations with adjacent landholders and perhaps provides a new stream of income, or a temporary boost in income, to a landholder who has land under a cropping program. The returns for cropping are highly variable and are not always that great. If landholders with a five or 10-hectare area out of the cropping program for, say, 10 years, receive some recompense from local government, that is a very effective way to source the gravel. It also gives local people some sort of financial boost and gets a good job done without disturbing an area of native vegetation. That is why we need some form of state government capacity to impose on local governments a stronger involvement in rehabilitation. I accept, though, that this money will not be applied to those areas, but I think it will be a disappointment. Other areas, such as the quarries, which we see from our offices here in Perth when we look at the Darling Scarp and which are a blight on visual amenity, are certainly a concern to people. They want to feel that those areas will be rehabilitated. I


note in passing that the rehabilitation plan for the Holcim quarry, which dominates the scarp above Gosnells in my electorate, seems to have somehow managed to have got its approvals through at a time when there was not the consistent requirement to sequentially rehabilitate the quarry face. As a result, people in my electorate live in an area close to the scarp that should be an attractive area to view, but they look up at the scarp and unfortunately they see the huge Holcim quarry. I understand that quarry has a life expectancy of hundreds of years to come. The rehabilitation could have been required in such a way that there was a screen and that the quarry would not have to be before our eyes every day that we travel around the Gosnells area, but, unfortunately, that has not been the case. I do not think this legislation will deal with issues of visual amenity, disturbance or quarry rehabilitation, and that is certainly a disappointment to people in my electorate.

Another aspect of the legislation I do not think we have dealt with properly, unfortunately, relates to other impacts associated with a quarry or a mine, and I am thinking particularly of dewatering. The volumes of water that are often moved off mine sites are absolutely enormous. I know I have mentioned in this place before some of the projects in the Pilbara in which volumes of water—as much as 45 gigalitres—are diverted and dewatered, such as at the Rio Tinto operation that has been moved out of the Weeli Wolli Creek area. Forty-five gigalitres of water is the equivalent amount to the annual production level of one our desalination plants. These are absolutely huge dewatering operations and we cannot pretend that that does not have some negative consequence on the area that has been dewatered or the receiving area—and what a waste as well. I think when people hear about mine rehabilitation funds, they want to feel that the money will be applied as broadly as possible. Of course, there are other means of putting conditions on mines, and that can be through the environmental approval process or the Department of Mines and Petroleum’s approval process, and that process run by the Department of Mines and Petroleum needs to have greater transparency. I understand that that approval process is under review, and I mentioned in my second reading contribution that there are four working groups. One is looking at this approval process, one is looking at compliance, one is looking at governance and another is looking at petroleum issues. The hope is that we will get a more transparent system that enables people to be properly involved in the approval process—to be able to make comments on it so that the community can have some confidence that it can shape things, unlike the current arrangements in which things are done so much behind closed doors.

I refer to the example that I mentioned during consideration in detail of the Toro Energy uranium mining project at Wiluna and the failure of the government to honour its commitment to proceed in a way that is consistent with world’s best practice. Those were the words that Hon Norman Moore used when he described how he would shape the regulatory framework for the Toro Energy Wiluna uranium mine. Unfortunately, we have seen that that commitment is not being met because we do not have the closure guidelines, and that is a huge disappointment. I would think that a mine of this nature—the first uranium mine in Western Australia—would have to meet higher standards than other mines. When other mines have to present closure plans right up-front as part of the approval process, why is that not the case for the Wiluna mine? I just do not understand that at all. I would have thought that the closure plan should have been presented, just as it is with any other mine. The standard and expectation should be higher for the Toro proposal, yet we are letting it off at the moment; there is no closure guideline out for public comment. I think that deficiency in the regulatory process is very worrying, and it certainly seems like a breach of the commitments that Hon Norman Moore made for world’s best practice.

I think the community is becoming more and more aware of the environmental impact of mining. It is true to say that for a long time the majority of Western Australians were very metropolitan focused and did not necessarily get out to see areas that we derive so much of our great wealth from. However, with more and more people now employed in the sector and also with people wanting to explore the state more than ever before, it means we have increasing awareness about the consequences of mining—what the real cost is. Yes, we derive huge material gain from the sector, but we also want to know that this sector can manage itself properly and, when necessary, be correctly regulated by government. I think we need to anticipate that not only will the community’s expectation grow, but also the community’s vigilance will grow and, as they travel around the state, people will actually be the number one reporting mechanism. I know that officers from the Department of Mines and Petroleum are reporting on various mining standards, and there are requirements that individual mines submit annual environmental reports. Those reports sometimes do not get read, and it was highlighted in an Auditor General’s report that there are some serious deficiencies and that there is more work to be done on that. However, we need to anticipate that the community’s interest will grow. The community will expect to pass a mine and not just see signs saying, “No public access. Keep out” and telling people that they do not have a right to visit the area, as though the mining company actually owns the land. Of course, there are health and safety impacts—obviously we cannot just have people wandering onto mine sites—but people will want the ability not only to hear about the safety records of mine sites, but also to know about the environmental plans around a mine and what rehabilitation plan is in place. They will want to get those details as they drive past a mine. They would have every right to access that information and to stop at a mine, meet a site manager and be told about the rehabilitation plans, and perhaps even be pointed to some of the ongoing rehabilitation work so that they can inspect and see for themselves the quality of rehabilitation work. Why should people not be allowed to do that? I


think it is a very reasonable thing and it would be a great check in the system. We have seen that the system is not perfect, but we have an opportunity to improve things by allowing the community to be involved in what could almost be called random site inspections. Why not? As Western Australians, we should be entitled to see the quality of rehabilitation work and have it explained to us. I think that is the very minimum we should expect. In fact, we hear the mining sector quite proudly state that it employs more environmental officers and environmentally qualified people than any other sector in our community. I am sure that is true, but those people on mine sites doing the rehabilitation work should also be in a position to show general community members around mines, with some notice given so that there is no risk to safety. We do not want people in light vehicles encountering Haulpak trucks and things like that. We should have some capacity for people to visit mines much more readily than is presently the case, ask questions and see what rehabilitation programs are in place; and, if people are not happy, they should be entitled to report back to the Department of Mines and Petroleum, ask questions and get information. All that information flow will be so much more reliable if a decent approvals process is in place. That is what I have concerns about at the moment. Those concerns are not specific to this legislation, but I certainly have concerns about the lack of transparency in the approvals process. When closure plans are not submitted on major projects, that is a cause for concern. People have every right to be concerned and sceptical about the ambitions of the mining sector to rehabilitate a mine site to the community’s expected standards. I look forward to hearing about the effectiveness of mine site rehabilitation using the funds that will be gathered through this legislation.

MR C.J. BARNETT (Cottesloe — Premier) [1.40 pm] — in reply: I again thank members for their support. The new fidelity fund system will be introduced progressively. As I have said before, I think it is a good reform for the mining industry but, most importantly, it is a more modern way of dealing with rehabilitation obligations and, for the first time, opens the door to a source for funds for dealing with historic mine sites. As I said, the government accepts the recommendation moved by the member for Cannington. In 10 years—he may well be here; I assure members that I will not!—Parliament may decide to change the way the fund is used.

Question put and passed.

Bill read a third time and transmitted to the Council.

MINING REHABILITATION FUND AMENDMENT BILL 2012

Second Reading Resumed from an earlier stage of the sitting.

Question put and passed.

Bill read a second time.

Leave granted to proceed forthwith to third reading.

Third Reading

Bill read a third time, on motion by Mr C.J. Barnett (Premier), and transmitted to the Council.

WORKERS’ COMPENSATION AND INJURY MANAGEMENT AMENDMENT (JOCKEYS) BILL 2012

First Reading

Bill read a first time, on motion by Mr T.R. Buswell (Treasurer). Explanatory memorandum presented by the Treasurer.

Second Reading

MR T.R. BUSWELL (Vasse — Treasurer) [1.43 pm]: I move —

That the bill be now read a second time. This bill clarifies common law insurance requirements under the Workers’ Compensation and Injury Management Act 1981. The Workers’ Compensation and Injury Management Amendment Act 2011 introduced a new mandatory requirement for employers to hold compulsory insurance against their common law liabilities to injured workers. The new common law insurance obligation came into effect on 1 October 2011. While extensive consultation was undertaken with all stakeholders in the development of the amendment act in 2011, the changes to common law insurance obligations have resulted in unforeseen implementation issues for employers, brokers and insurers. These issues relate to legal uncertainty over the scope of the insurance obligation in relation to employers of deemed workers under the workers’ compensation legislation and the need for a limit on the common law insurance that employers are required to hold. In view of the potential for confusion around the insurance arrangements of employers —my apologies; I have gotten lost.


Point of Clarification Mr T.R. BUSWELL: Mr Speaker, can the Clerk attend to my left-hand side for a minute?

The SPEAKER: I am sure he can.

Mr T.R. BUSWELL: Can I have the Clerk’s attention for one more second? I do apologise; it is an unusual turn of events. Mr Speaker, I seek leave to recommence my second reading speech.

The SPEAKER: If you are seeking my leave, absolutely. Mr T.R. BUSWELL: I do not need to do it at a later stage; I just need to start again. I had a false start, a bit like the jockey who broke!

The SPEAKER: Members, we are going to return to the starting barrier. I give the call to the Treasurer.

Mr T.R. BUSWELL: If I could, just upon reflection, start again. Before I do, for the information of the house, I should point out that I had started reading from a second reading speech that related to a bill that had previously been before the house. My reason for stopping as I was reading it was that my somewhat dim mind was reflecting on the fact that some of the turns of phrase were sounding familiar and that the word “jockey” was somewhat absent even though I was doing the jockeys bill!

Second Reading

MR T.R. BUSWELL (Vasse — Treasurer) [1.44 pm] — by leave: I move —

That the bill be now read a second time.

This bill improves workers’ compensation arrangements for jockeys under the Workers’ Compensation and Injury Management Act 1981. Since 1985, the weekly workers’ compensation rate for jockeys has been linked to the weekly pay rate for a stable foreman under the Horse and Greyhound Training Award 2010, which is currently $706.10 a week. All licensed jockeys receive the same weekly compensation benefit if unfit for work, regardless of their pre-injury earnings. Jockeys are the only occupational class whose actual earnings are disregarded in determining weekly compensation payments. The current method, therefore, unfairly restricts workers’ compensation entitlements for the majority of licensed jockeys in this state who earn above the stable foreman rate. The government has consulted extensively on this matter and reached agreement with the Western Australian Jockey’s Association and Racing and Wagering Western Australia for legislative amendments that align the rate of weekly compensation paid to jockeys with their pre-injury earnings on the same basis as other workers. I am pleased to introduce a bill to effect this change.

The bill removes the link to the stable foreman award for determining jockeys’ weekly compensation payments for injuries on or after the commencement of the amendments. Weekly compensation payments for jockeys injured after the commencement date will be calculated based on their pre-injury average earnings on the same basis as other workers whose earnings are not prescribed by an industrial award. Accordingly, pre-injury earnings will be averaged over the 12 months prior to the injury and will include income from any concurrent employment. The cap on weekly payments and the step down from week 14 will apply to jockeys as it does to other workers. The change will ensure jockeys are not treated any differently to other workers in determining the amount of compensation payable.

A transitional provision will preserve the stable foreman award rate for determining weekly compensation payments for jockeys with injuries that occur before the amendment bill comes into operation. This ensures the amendments are not retrospective.

The bill also clarifies the scope of the workers’ compensation insurance obligation between Racing and Wagering Western Australia and licensed trainers regarding work done by jockeys at unlicensed facilities. Racing and Wagering Western Australia currently bears the workers’ compensation risk and premium cost associated with work done by jockeys for trainers at unlicensed locations. RWWA has no control over safety standards at unlicensed locations and therefore picks up a liability that would otherwise rest with the trainer. The bill will continue to deem Racing and Wagering Western Australia the employer of licensed jockeys while the jockey is racing, engaged in riding work or carrying out the usual duties of a jockey for a trainer at any licensed facility, such as a licensed racecourse, training track or trial track. However, when a jockey is performing work for a trainer on any unlicensed facility, such as work on a trainer’s own premises or beach work, the jockey will be covered by the trainer’s workers’ compensation policy. Trainers are already required to hold workers’ compensation insurance for track-work riders and other workers, and this cover will extend to licensed jockeys if they are performing work for a trainer at any unlicensed facility.

These changes will have a positive impact on jockeys by providing compensation payments that better reflect an individual’s pre-injury earnings and build on the government’s 2011 workers’ compensation reforms, which introduced a number of improvements including the removal of age limits on entitlements.


I commend the bill to the house. Debate adjourned, on motion by Mr J.N. Hyde.

LOAN BILL 2012 Second Reading

Resumed from 15 August.

MR J.N. HYDE (Perth) [1.55 pm]: The Loan Bill 2012 authorises the government to receive $5 billion in funding to meet borrowing requirements until 30 June 2016. I am keen to speak about this bill because the reality is that the majority of the $5 billion worth of funding will be spent in my electorate. I wish to speak about a number of important infrastructure investments that have been made in the electorate of Perth and that will be funded in the electorate of Perth. We need to put a lot of the work that is being done into context. The $5 billion worth of funding includes not only capital expenditure, but also the interest repayments that will be made on the funding that this bill seeks to authorise. It is important for us to reflect on last week’s debate on the Western Australian Future Fund Bill. I am interested in having the Treasurer provide information on the expected interest costs that will be paid out of the $5 billion of authorised funding and the amount of interest that we expect to accrue in the same period under the future fund. I would like the Treasurer to provide that information so that we can make a comparison.

Let us look at infrastructure needs, developments and improvements in the Perth electorate. I am certainly in favour of a waterfront development; but I am in favour of a visionary waterfront, one that embellishes all the benefits of living in Perth and that visitors from China, South East Asia and interstate will enjoy. Let us look at what was done under the previous Labor government. Half of the Northbridge Link project was completed—that is, half of the undergrounding of the railway line work had been done and the funding for it expended. I refer to the new building at 140 William Street. It was very important for the government to announce a commitment to not only inner city office accommodation, but also sustainable building. It has been a wonderful contribution to not only the accommodation needs of the inner city, but also architectural needs and sensible transport planning. By having the Mandurah railway line, which has provided two underground railway stations, we are able to service people who live in Mandurah and work at 140 William Street.

Mr T.R. Buswell: And Joondalup.

Mr J.N. HYDE: Yes, and those coming the other way from Joondalup; they are able to get off a train at the underground station at 140 William Street and go straight to their office. That concept was a good piece of forward planning and infrastructure planning. Perth Arena is rapidly drawing to an opening. I thank the Treasurer for stating earlier that the invitation for the local member is in the mail. I go to the mailbox every day, Treasurer, waiting for that invitation. Mr T.R. Buswell: When I get mine, which will say “Troy and friend”, I will give you a call straight away!

Mr J.N. HYDE: I thank the Treasurer very much. I seek confirmation that it will be me, George Michael and the Treasurer at the afterparty.

Mr T.R. Buswell: Yes, absolutely—count me in! But there will be no careless whispers!

Mr J.N. HYDE: Whenever I am at a function with the Treasurer, there are never any careless whispers. I assure him that there will be none at the afterparty with George Michael. I thank him for the invitation.

Let us reflect on the member for Midland’s bold decision to commit to Perth Arena and to not choke on the decision. If we reflect on the development of the belltower, the then Liberal government choked on what was an original vision and plan. Rather than proceeding with its original vision, the Liberal government choked and decided to whittle it down to a very small proposal, which not only has not worked, but also costs the state $410 000 a year. The member for Midland on the other hand went full steam ahead with the original vision, and that vision is being realised. It is an addition to Perth that will benefit tourism and, importantly, my inner city electorate. Given the residential investment that has been made nearby and the eventual investment that will be made in the Northbridge Link—which the government will hopefully complete and which will be funded out of the $5 billion Loan Bill that we are debating today—it has proved something of an attractor. It will be more successful because of the bold decision on and commitment to Perth Arena.

Let us look also at the Old Treasury Building, which has remained empty for many years. It is now being reactivated for use and is becoming an important development. The Gateway WA project is very successful. It embellishes the waterfront area and its scale is modest, looking towards Burswood and Victoria Park and providing a good link. The government needs to agree that the east–west light rail proposal by WA Labor is a priority. Debate interrupted, pursuant to standing orders.

[Continued on page 6579.]


QUESTIONS WITHOUT NOTICE CROWN BURSWOOD HOTEL — LAND SALE

546. Mr B.S. WYATT to the Minister for Sport and Recreation: I refer to the minister’s statement on 5 May 2012 relating to the sale of 1.2 hectares of state government land for $10 million to Crown for a car park.

(1) When did the minister or his office first have discussions with Crown or its representatives about the sale?

(2) Can the minister confirm that he agreed to the price before he consulted with the Valuer-General and the Director General of Racing, Gaming and Liquor?

(3) Can the minister explain why the land was sold at approximately half the value of adjacent land identified for Crown’s hotel expansion?

Mr T.K. WALDRON replied: I thank the member for the question.

(1)–(3) This matter was handled by the Department of the Premier and Cabinet.

Mr B.S. Wyatt: That’s not what your DG said.

Mr T.K. WALDRON: It was handled through Premier and Cabinet. I think the member needs to direct that question to the Premier, otherwise I can take it on notice and get details. I do not have those details with me today.

CROWN BURSWOOD HOTEL — LAND SALE

547. Mr B.S. WYATT to the Minister for Sport and Recreation: I ask a supplementary question. Did Crown commit to a 1 000-bay car park after the government announced it would construct a new stadium with no car park?

Mr T.K. WALDRON replied: I am not sure offhand. I will check that out. I do not want to give the member wrong information without doing that. I will check it for him and let him know.

TOURISM PROJECTS — PORT HEDLAND AND ESPERANCE

548. Dr G.G. JACOBS to the Minister for Tourism: I understand that the minister recently visited Port Hedland to launch the BHP Billiton Aquatic Super Series community program and just today announced the Esperance tennis tournament in my electorate. Could the minister please update the house on these exciting projects?

Dr K.D. HAMES replied: I would love to talk about these two projects and their bonds, in one case with the government through its royalties for regions fund, partnering with BHP, and the second, again a royalties-funded event, down in the member’s electorate in Esperance. The concept of the BHP Billiton Aquatic Super Series started following discussions between me and BHP. It was initiated by Tourism WA, which put forward this exciting concept of a major swimming tournament in January. The full Australian swimming team will be pitted against the Chinese and the South Africans. I am told that all three countries participating are sending their top swimmers to compete. There will also be a water polo tournament, with male and female teams. A team from Croatia, with whom we have a great rivalry in water polo, is coming to that event. There will also be a long-distance open water swim up the river that will include a mass participation swim. All I will need to do is dodge the jellyfish. It will be a fantastic event. BHP Billiton was very keen to use its funds to include a regional component to this event. In doing that, it takes some of the elite swimmers—past and present—to remote communities to get them involved in training and mentoring young children who are keen on swimming and water polo. People such as Eamon Sullivan, Blair Evans, Michael Klim, Nicole Livingstone, Matt Welsh and some of our senior people involved in water polo will also attend. We were there for the launch of that event in Port Hedland last week. The kids were so excited. Other kids, some Indigenous kids in particular, came from some of the remote areas just for the launch of that event. Five regions will be targeted, including the Kimberley, Port Hedland, Kalgoorlie and the south west. Over the next three years that will extend to the Peel region, the midwest and the great southern, making sure that all children in those areas will have the opportunity to participate. I am trying to organise a competition in which the best of those swimmers—the children from those regions—get to come and participate in the main international event at Challenge Stadium, just to give a great reward for those who are successful in those regional events.


Today we re-announced the Esperance tennis tournament for the fourth year running. Who would have thought that a place such as Esperance, a long way from the heart of the metropolitan area, could put up a tennis tournament of this quality? It is part of the Australian pro tennis circuit. It is a major event that gives players accreditation to participate in other senior events around Australia such as the Australian Open. It attracts 64 internationally ranked tennis players. While the players competing this time are not international names—in fact, the Association of Tennis Professionals ranking for men is in the three-hundreds—Ben Mitchell from Queensland, who is ranked number nine in Australia, is participating. The women are all ranked around the one-hundreds. Julia Cohen from the United States of America, with an international ranking of 100, is participating. In the past people such as Alicia Molik, Casey Dellacqua and Luke Saville, all well-known names, started their careers participating in these tournaments. It is great for the local region. It brings in about $250 000 to the Esperance region, which is a great boost for tourism down in Esperance. I congratulate the local member and the Esperance community for initiating and running such a fantastic event.

PUBLIC HOUSING — MAINTENANCE — AUDITOR GENERAL’S REPORT

549. Mr P.C. TINLEY to the Minister for Housing:

I refer to the Western Australian Auditor General’s report into the failed housing maintenance model introduced by this government.

(1) Can the minister confirm that the head contractor model was failing so badly that for a period of 12 months more than $50 million worth of payments were made in breach of fundamental Treasury guidelines that exist to prevent this exact type of abuse of taxpayers’ money?

(2) Can the minister confirm that these breaches have resulted in more than $3.4 million worth of taxpayers’ money literally being given away?

Several members interjected.

The SPEAKER: I think the member for Willagee asked the Minister for Housing the question. I am sure he did not ask anybody else.

Mr D.T. REDMAN replied:

I thank the member for Willagee for his question.

(1)–(2) The only new news in the Auditor General’s report is that there was no evidence of fraud that the Auditor General put into play. I highlight the fact that the information that I have already made available to this place is that there were challenges with the implementation of the new model. That is certainly acknowledged by the Auditor General. A range of processes have been put in place to cover those challenges. I am confident, as I said yesterday, that the processes that are in place now deal with the challenges that existed when that model was first rolled out.

The other point I make is that we absolutely support the recommendations made by the Office of the Auditor General. We will be watching those very closely, ensuring that all those processes are in place, if they are not at the level that they should be. I wish to highlight that on a number of occasions the member has raised questions in this place about the notion of fraud. He raised it in a media release on 7 August this year in which he said that more than 21 000 job orders had been fraudulently claimed. He asked in a question without notice whether any of the 21 000 plus job orders identified as fraudulent had been reported to the police. Even a question yesterday that the member put to me about issues of fraudulence related to an issue about clay tiles on a tin roof, as I recall, is something that happened two years ago, which was six weeks after the new model was put in place. That is the only issue that the member goes back to claim as being fraudulent. The Auditor General has been through this issue, at the request of the member for Willagee. We acknowledge the issues that are there and the issues that he has put up and we have said that we have processes in place. The Auditor General also went on to say —

… we also did not find any evidence of fraud …

…

The risk of fraud in Housing maintenance existed before the HCMM —

That is, the head contractor maintenance model —

was implemented. The HCMM potentially offers improvements over the previous maintenance arrangements in reducing Housing’s exposure to fraud risk and loss:

Although I acknowledge that there are issues and challenges with the implementation of this model, as acknowledged by the Auditor General, I also make the point that the only fraud in this place is the member for Willagee in what he has been raising over the last number of weeks.


PUBLIC HOUSING — MAINTENANCE — AUDITOR GENERAL’S REPORT

550. Mr P.C. TINLEY to the Minister for Housing: I have a supplementary question. What contractual obligation does the department have for oversight of fraud, not just to the head contractor but to the contractors that the head contractor subsequently brings in?

Mr D.T. REDMAN replied: It is my understanding that the head contractors are the ones who accept and wear the liability for fraud that goes down to subcontractors. Mr P.C. Tinley: What about you? You’ve outsourced the responsibility! The SPEAKER: Member for Willagee! Mr D.T. REDMAN: I am making the point that the issue of fraudulent behaviour between the head contractor and the subcontractor is something that the head contractor accepts as liable in the relationship that the Department of Housing has —


The SPEAKER: Member for Willagee! Mr D.T. REDMAN: — in the contractual arrangements that we have. Several members interjected.

The SPEAKER: Member for Albany! Have you finished your answer, minister? Mr D.T. Redman: I think so, Mr Speaker.

WESTERN AUSTRALIAN TRAINING AWARDS

551. Ms A.R. MITCHELL to the Minister for Training and Workforce Development: As someone who has a very, very keen interest in training, I am well aware that the achievements of Western Australia’s vocational sector were celebrated at the eighteenth annual Western Australian Training Awards earlier this month. Can the minister please update the house on the success of the participants in our state’s premier apprenticeship and trainee awards?

Mr M.J. COWPER replied: I acknowledge the member’s keen interest in training and her involvement, particularly in the tourism aspect of training and foreseeing the future needs of the state. I also acknowledge several winners of this event who are in the Speaker’s gallery today. Supporting apprenticeships, training and workforce development is a priority of the Liberal–National government. Since being elected, we have spent in excess of $1.9 billion to ensure that anyone who wishes to have an apprenticeship gets an apprenticeship. This unprecedented investment in training includes a government guarantee to fund these apprenticeships. As a consequence of this commitment, the number of apprentices and trainees in Western Australia reached an all-time high of more than 46 000 as at 31 July this year. The best and brightest of these apprentices and trainees, their trainers and the organisations and employers who support them were recognised recently at the prestigious Western Australian Training Awards, which are hosted by the Department of Training and Workforce Development and the State Training Board. Being new to the training and workforce development portfolio, this year was the first time I attended these awards. It was very encouraging to see young people—the next generation, if you like—who will take this great state to an even higher position.

Western Australia has world-class training and this is reflected in the young people who are this year’s winners. The winners were chosen from more than 200 entrants and include students who excelled in their chosen field and employers, trainers and training providers who have introduced innovative practices to support apprentices and trainees. I take the opportunity to congratulate these outstanding individuals—WA Apprentice of the Year, Mr Samuel Goodall; WA Trainee of the Year, Nicola Howe; WA Vocational Student of the Year, Stephen Moore; WA School-based Apprentice of the Year, Tim Gossage, who I believe is the son of the sports commentator; WA Aboriginal and Torres Strait Islander Student of the Year, Nathan McGuire; WA Trainer of the Year, Guy Truss; and the winner of the Culturally and Linguistically Diverse Training Award, Maria Lima Villahermosa. I must say that she is a very impressive lady from Venezuela who has been in this country for only two years. She is the sole carer for her daughter and has embraced being part of Western Australia; she is absolutely over the moon to be here. I further congratulate these outstanding organisations that did very well—WA Small Business of the Year, Ceiling Solutions; the winners of the VET in Schools Excellence Award, MPA Skills and John Forrest Secondary College; and the winner of the Training Initiative Award, JSW Training and Community Services.


I acknowledge the following individuals who are in the chamber today—Nicola Howe from PoolWerx, the WA Trainee of the Year; Alan Williams, managing director of the Australian College of Applied Education, winner of the International Training Provider of the Year; Jill Jamieson, acting CEO, Challenger Institute of Technology, winner of the WA Large Training Provider of the Year; Linda Engledow and Simon Gazia from LabTech Training Pty Ltd, winner of the WA Small Training Provider of the Year; David Gorman, learning and development manager, WA Employer of the Year, Main Roads; and Judy Silsbury from John Forrest Secondary College and Wayne Morling from MPA Skills, winners of the VET in Schools Excellence Award. Several of these winners will compete at the Australian Training Awards later this year in Melbourne. I am sure that all members in this place will get right behind our fantastic young people and support them in their endeavours later this year. Mr Speaker, as you can see, the range of winners includes individuals, state training providers, private sector training providers, schools and the like. I am very pleased that they are here. Dr A.D. Buti: Can you read that list? I didn’t quite hear it all. Can you repeat it?

Mr M.J. COWPER: I will table it, if the member likes.

[See paper 5345.]

PEEL HEALTH CAMPUS — HEALTH SOLUTIONS

552. Mr R.H. COOK to the Minister for Health: I refer to the recent announcement by Health Solutions, the private operator of Peel Health Campus, to expand the private wing of that hospital.

(1) Can the minister confirm that the Health Solutions contract at that hospital will expire in 2017, with the possible option to extend by just another five years?

(2) Can the minister confirm that Health Solutions has now asked for an extraordinary 60-year lease on that hospital land, effectively locking up its contract for that period; and, if so, how does the minister intend to respond to this request?

Dr K.D. HAMES replied: (1)–(2) The answer is yes and yes. I do not know what else the member wants me to say.

Mr R.H. Cook: How do you intend to respond?

Dr K.D. HAMES: Interject on me so I can answer some more!

Mr R.H. Cook: There’s the third point to the question, which is: how do you intend to respond?

Dr K.D. HAMES: I do not know how I intend to respond yet. Health Solutions has put that proposal. Yes, the contract goes until 2017 and, yes, there is potential for expansion. Health Solutions has put to the Department of Health a proposal for an extension of the lease, I think by the amount that the member said, and in return it will spend a significant amount of money in building a new emergency department and a new private wing and will hand over to us the private wing it has. The health department is currently assessing that, and it will report back to tell me which is the best option. There are two potential options. One is to say no and wait until 2017. Health Solutions has that option to continue, so obviously that limits to some degree the options we have. Do we go out and seek alternative bidders to take over the management of that hospital? What we need to consider is whether those additional funds and costs are in the best interest of the Mandurah region. Which option is best? Therefore, I have asked the department to do an unbiased representation back to me about those potential options. I asked today when I should receive that response, and the indication is within the next few weeks. Consequently, we will hopefully make a decision on which path to follow in the relatively near future.

PEEL HEALTH CAMPUS — HEALTH SOLUTIONS

553. Mr R.H. COOK to the Minister for Health: I have a supplementary question. Will the minister guarantee that other health providers, private and public, will have the opportunity to bid for the licence of the hospital and not just roll the contract over to the current operator?

Dr K.D. HAMES replied: I will not guarantee that, but I will guarantee that what will come to me from the health department will tell me which of those options is in the best interests of the people of Mandurah, and I will take an unbiased view of that. So, I will not just be — Ms J.M. Freeman interjected.

The SPEAKER: Member for Nollamara!

Mr R.H. Cook: You’ll have to wait for another $100 000 donation from Health Solutions!


Dr K.D. HAMES: I will be just waiting; I will not be just rolling over that contract if the health department puts to me that the best option for the people of Mandurah is to go out for expressions of interest. So, I will make that decision when I get that proposal.

MERREDIN COLLEGE AND RESIDENTIAL COLLEGE — ROYALTIES FOR REGIONS

554. Mr V.A. CATANIA to the Minister for Regional Development:

With the recent opening of Merredin College and the new upgrades to Merredin Residential College, can the minister explain to the house how the royalties for regions program is improving educational opportunities for regional students?

Mr B.J. GRYLLS replied:

I thank the member for North West for the question. We have just recently opened the new Merredin College. That is a really good example of how the royalties for regions program can partner with the Department of Education to deliver a revolution in education in the eastern wheatbelt region —

Mr R.H. Cook: A revolution?

Mr B.J. GRYLLS: It is a revolution. Let me tell members about it. This program has been able to accelerate the regional school upgrades across the length and breadth of regional Western Australia, with $100 million into the regional schools plan. This has been added to with a further $50 million into the regional residential colleges program, thereby providing a comprehensive funding model for the Department of Education to look at renewing its assets in regional Western Australia—but, more importantly than just renewing its assets, it is looking at the whole structure of the way we deliver education in regional areas.

During 2009, in close consultation with the Merredin community—it was not easy consultation—the decision was made to amalgamate North and South Merredin Primary Schools onto the high school site to form Merredin College. It is important for me to acknowledge the former Minister for Education, Hon Liz Constable, for the work that she did in bringing this project to reality.

Mrs M.H. Roberts: Will you also be acknowledging the BER money that went in? Mr B.J. GRYLLS: I will be acknowledging the Building the Education Revolution money that went in —

Mrs M.H. Roberts: Excellent.

Mr B.J. GRYLLS: — because that was important as well.

Royalties for regions contributed $6 million; BER put in, I think, $3.9 million; and I think the education department’s consolidated budget put in a similar amount to the royalties for regions account.

These new facilities were opened by education minister Collier on 14 September, and 650 students are now enrolled at Merredin College. The capital works included 17 new classrooms, a new canteen, and separate covered eating areas for primary and secondary students, and also a dental therapy centre to deal with issues of teeth hygiene for all the students. The students now have access to specialist facilities, including a gymnasium, science labs, home economics rooms, and design and technology workshops.

One of the things that, as a local member, I was very heartened by was that we had struggled for a number of years to lift the amount of pride felt in Merredin Senior High School, and trying to get the students at Merredin Senior High School to wear their uniform was a losing battle. To have the education minister there a couple of weeks back, with 650 kids in their brand-new, blue Merredin College uniform, said a lot about the culture of the school and said a lot about where the new principal wants to take that school, and I think it also sent a very clear message that we are striving to provide a premium level of education to students in regional areas.

The residential college has undergone a $9 million redevelopment, with four new accommodation units and 48 new beds. Until the upgrade, the maximum number of students at Merredin Residential College was around 25 to 30. We are now up to maximum capacity, and 77 students are enrolled for 2015, which means that the education department will need to look at adding more beds to the residential college because of the huge demand now for students from the region to come to Merredin College to undertake their schooling.

The really important thing to understand is that many families are concerned about the transition of primary school students into year 7 in high school. They are concerned about sending their children away to boarding school in Perth at this time. We need to make it very, very clear to them that if they live far enough away from a district high school, they are eligible for all of the subsidies that apply to boarding away from home. Advice has been given to me that if families live more than 50 kilometres from a district high school, for less than $1 000 a year, their child can get a boarding place at Merredin Residential College and can go to school at the brand-new Merredin College. This is a first-class state education that is offered close to home for students who want to be educated in their region rather than come to Perth. This is why this project is so important. It is leading the way


in providing a locally based education option for the many families who thought that Perth was their only option to educate their kids.

Mr P.B. Watson: Will you be shifting back to Merredin now to educate your kids?

Mr B.J. GRYLLS: I wish I could! It is certainly an outstanding school. We might do a bit of work on the Port Hedland school too, member for Albany, and have that option as well.

The great thing is that no matter where people live in regional Western Australia, there is now a complete plan to upgrade senior high schools and residential boarding facilities to make sure that as we look to transition year 7s into high school, there are options close to home and that people can have a choice between coming to Perth to educate their kids and educating them in their local area.

This has been a really important project, and I would encourage all regional members to come to Merredin and look at this project and see how it may provide options and opportunities in their own community. We will continue to work closely with the education department to make sure that a state school education in regional Western Australia is not seen as a second-class option, as it has been for so long. The new Merredin College and Merredin Residential College are certainly not a second-class option. They are a first-class option, and all those involved should be congratulated.

POLICE — LOCALITY ALLOWANCES AND VACANCIES

555. Mrs M.H. ROBERTS to the Minister for Police: I refer to the fact that it is now the end of September, and the Western Australian Police Union asked the minister in July to address the issue of locality allowances. I refer also to the large number of unfilled positions at police stations in the south west, the great southern and the wheatbelt, and elsewhere in regional Western Australia. (1) Has the minister read the Western Australian Police Union locality allowances submission? (2) What does the minister understand the problem to be? (3) What has the minister done about it?

Mrs L.M. HARVEY replied: I thank the member for the question.

(1)–(3) In answer to the first part of the question, yes, I have read the police union submission on locality allowances, and I have been in discussions with the union, and also with the executive of WA Police—the commissioner and other senior members of WA Police—in working out attraction and retention options that we can put to police officers to ensure that we attract the best police officers for the police stations and for different policing circumstances in regional areas. Indeed, I was recently in the south west, and I visited Katanning, Bunbury, Australind and Capel and spent a fair bit of time talking to these officers and hearing their concerns. Interestingly, members, officers in each of those stations had very different reasons for being there, and very different ideas as to what might attract officers to come to those areas and what might in fact be a hurdle to attracting officers to move from the city to regional areas. That is a work in progress. Once we have arrived at a course of action and a policy that we think is going to work and that we are all satisfied with, I will be announcing that.

POLICE — LOCALITY ALLOWANCES AND VACANCIES

556. Mrs M.H. ROBERTS to the Minister for Police: I ask a supplementary question. Does the minister have anything useful to say about the union’s locality allowances submission, and the one, or more, vacancies at Laverton, Norseman, Gnowangerup, Katanning, Kojonup, Mt Barker, Bunbury, Ravensthorpe, Bridgetown, Australind, Collie, Manjimup, Moora, Northam and Kellerberrin? Several members interjected.

The SPEAKER: Treasurer, and Minister for Regional Development, it is not your question. I want to hear the supplementary from the member for Midland. I formally call you both to order for the first time today.

Mrs M.H. ROBERTS: Does the minister have anything useful to say about the many long-term, current vacancies at Laverton, Norseman, Gnowangerup, Katanning, Kojonup, Mt Barker, Bunbury, Ravensthorpe, Bridgetown, Australind, Collie, Manjimup, Moora, Northam and Kellerberrin, and a whole list of other stations, or should the union not waste its time talking to the minister and talk directly to either the Premier or the commissioner?

Mrs L.M. HARVEY replied: I thank the member for her somewhat extensive supplementary question.


Mrs M.H. Roberts: It’s a very long list and it’s not even complete!


Mrs L.M. HARVEY: Vacancy management is one of those areas that can from time to time be problematic. Officers will apply for a transfer, and the commissioner will advertise for a transfer for people to fill those vacancies. It is a moveable feast. Officers move in and out of stations all the time as their period of tenure finishes. Mrs M.H. Roberts: These are long-term vacancies! Do you understand the issue? The SPEAKER: Member for Midland! Mr P.B. Watson interjected.

The SPEAKER: Member for Albany!

Mrs L.M. HARVEY: It is an ongoing discussion that I have with the commissioner. It is an issue that I have raised with the commissioner many times. As I mentioned previously, I have been to Australind and Katanning, and I have spoken to members and district superintendents in the south west and great southern, and they are managing their vacancies to my satisfaction. But obviously long-term vacancies are one of the discussions that we have had with respect to attraction and retention options and that we are arriving at a position on with the commissioner to put to the police.

Mrs M.H. Roberts: What have you done? Nothing!

Mrs L.M. Harvey: Rubbish! You do not know what you are talking about!

The SPEAKER: Member for Midland, I call you to order for the first time today. Minister for Police, I formally call you to order for the first time today.

Mr M.P. Murray: Take a Bex and have a lie down!

The SPEAKER: Yes, member for Collie–Preston, I take your advice. Before I take your advice, I call you to order for the first time today. Member for Murray–Wellington, you have not escaped either. I formally call you to order for the first time today.

GARY PRATTLEY — TRAVEL EXPENSES

557. Mr P.C. TINLEY to the Minister for Planning: I refer to Mr Gary Prattley’s leave from duties while the Public Sector Commissioner seeks further audit information on his personal expenditure. (1) On what date did Mr Prattley go on leave? (2) Did the minister request him to take this leave? (3) Has the commissioner, in his initial assessment, indicated any matters that may be referred to the

police? (4) Did Mr Prattley have the minister’s authorisation for his overseas travel?

Mr J.H.D. DAY replied: (1)–(4) In relation to Mr Prattley going on leave, that was agreed on 31 August this year. What was the

member’s second question?

Mr P.C. Tinley: Did you or your office request it?

Mr J.H.D. DAY: I did not request it; there was a discussion between him and the Director General of the Department of the Premier and Cabinet and he agreed to go on leave following that discussion, and with my support. Mr R.H. Cook: He agreed to take a long walk off a shortened jetty!

The SPEAKER: Member!

Mr J.H.D. DAY: That was with my support. The third question was whether anything had been made known to me that should be or might be reported to the police. That is not the case.

Mr E.S. Ripper: What about the CCC?

Mr J.H.D. DAY: In relation to the Corruption and Crime Commission, I think the member for Belmont would know that if any report was made by a representative of an agency to the CCC, it would not be able to be talked about. I have not made any such report, and whether any other agency might have is something the member should direct to them, but they probably would not be able to talk about it if they had. On the fourth question: yes, I have authorised overseas travel.


Mr P.C. Tinley: All of it?

Mr J.H.D. DAY: To the best of my knowledge, all of it, but if there is anything that has been undertaken that has not been authorised, then I would expect that to be made known to me as a result of the process that the Public Sector Commission has been going through in its request for further information from the Department of Planning. As a general statement, overseas travel has been authorised for the purposes that I referred to yesterday, but if anything has been undertaken in excess of what has been authorised, then I would expect that to be made known to me. I have not been given any specific information formally about that.

GARY PRATTLEY — TRAVEL EXPENSES

558. Mr P.C. TINLEY to the Minister for Planning: I have a supplementary question. Will the minister table the letter he wrote to the Public Sector Commissioner about the applicable allowances for the position of chair of the Western Australian Planning Commission?

Mr J.H.D. DAY replied: Once I have got further advice from the Public Sector Commission in relation to the inquiries it has initiated with the WA Planning Commission and the Department of Planning, I will consider what it is appropriate to table.

Mr P.C. Tinley: Or what is embarrassing, you mean?

Mr J.H.D. DAY: The letter that I wrote to the Public Sector Commissioner sought advice about the general allowances that should be made available for somebody in the position of chair of the WA Planning Commission. It was not about any specific concerns; it was seeking guidance about what should be approved for the future, bearing in mind that the chair of the WAPC is not a standard public service position and is, in fact, chair of a board. So, a person in that position is not employed under the normal conditions of the Public Sector Management Act, as I understand it, and certainly not the normal conditions that apply to members of the public service. I sought information from the Public Sector Commissioner. I will consider whether it is appropriate to make that available. It may well be, and I am certainly not trying to be secretive about any of this, but the processes need to reach their conclusion before we have a clear picture of what it is appropriate to provide information about, and after I am fully advised.

ROAD SAFETY INITIATIVES

559. Mr J.J.M. BOWLER to the Minister for Road Safety: With the terrible spate of run-off-road crashes that occurred last week, can the minister please update the house on what the government is doing to improve road safety in regional and remote Western Australia?

Mrs L.M. HARVEY replied: I thank the member for Kalgoorlie for his question and, indeed, his interest in road safety, particularly in regional areas. Last Friday was a terrible start to the weekend for families and friends of three Western Australians who tragically lost their lives in regional Western Australia in three separate single-vehicle run-off-road crashes. These tragedies have brought the road toll this year to 128, which is one more than at the same time last year. It is a regrettable state of affairs, and we have three networks of family and friends who are now suffering grief and trauma as they try to cope with the loss of those loved ones. Every death and serious injury on our roads is alarming, which is why in 2009 the Liberal–National government endorsed the Towards Zero strategy that is aimed and designed to reduce road crash trauma and fatalities by 40 per cent by the year 2020. It is a challenge. We have 18 000 kilometres of state roads and 140 000 kilometres of local road network. Probably the most significant problem that we have in regional and remote areas is in single-vehicle, run-off-road crashes. That is why we have put in the 2012–13 budget $20.1 million for road safety treatments that will address this problem of run-off-road crashes. The problem we have is that we need to retrofit these safe system treatments. Some of the treatments include sealing the shoulders of roads, which we expect can reduce road crash trauma by around 40 per cent; audible edging, which we expect can reduce road crash trauma by around 20 per cent; and then there are safety barriers, which can reduce road crash trauma by up to 90 per cent. This would not have been possible had we not hypothecated 100 per cent of the speed and red-light camera infringement fines into the road trauma trust fund. This has given us the ability to have an unprecedented $87 million to spend on road safety initiatives, of which $21.6 million, metropolitan members will be happy to know, will go to metropolitan intersection crashes, which are a big problem that we have in the metropolitan area with road crash fatalities and road crash trauma admissions.

In conclusion, I thought it would be timely to update members that we are coming into a long weekend. Effective midnight on Thursday, we will be in double demerit point mode for the long weekend. I encourage all members to be mindful of the way that they drive and to make sure that they can assist us in preventing road crash trauma and fatalities. Members will potentially face losing their licence under the double demerit point regime should they choose to exceed the speed limit. In addition, if that is what members choose, I will welcome their


voluntary contribution to the road trauma trust fund. Members’ voluntary contributions will be well spent in trying to prevent these road crash deaths and trauma admissions.

STATE TRAIL BIKE STRATEGY

560. Mr M.P. MURRAY to the Minister for Sport and Recreation: I refer to the June 2008 report “Back on Track: WA State Trail Bike Strategy” commissioned by the state government. WA has an estimated 50 000 trail bike riders.

(1) When will funding be available to allow for the implementation of the recommendations of this four-year-old report?

(2) When will the recommendations formulated around the six key focus areas be implemented?

(3) Is it true that the minister is going to tax trail bike riders to implement the recommendations?

Mr T.K. WALDRON replied: (1)–(3) I thank the member for Collie–Preston for his question on trail bikes. It is an issue we have been dealing

with. It is very complex; it is right across a number of government departments.


Mr T.K. WALDRON: Yes, we have —

The SPEAKER: Member for Maylands, member for Kwinana, I formally call you both to order for the first time today. I do not want to hear further interjections; I want to hear from the minister.

Mr T.K. WALDRON: Thank you very much, Mr Speaker.

The cabinet noted the submission I made concerning trail bikes. Part of what we wanted to try to do with trail bikes was introduce a new fee and licensing regime. We have decided that we need to take further action on the licensing side of this. There are quite a few issues. The Minister for Transport and the transport department have been finalising a review of the proposed licensing and registration regime. To implement that, I think exemptions would need to be made. There are issues with what we charge and issues with how that helps finance the trail bike strategy itself.


Mr T.K. WALDRON: We are looking at the licensing side of things. In the meantime, we did some interim work —


The SPEAKER: Member for Kwinana, I formally call you to order for the second time today. Member for Mandurah, I instruct you that you are no ventriloquist. I formally call you to order for the first time today.

Mr T.K. WALDRON: There are some issues with licensing et cetera, and we are trying to work through those issues. We want to assess the legislative implications also in implementing and enforcing the registration of off-road vehicles; we are also looking at that.

We have done work up at Gnangara, and we are looking now at —


The SPEAKER: Member for Warnbro, I formally call you to order for the first time today. Member for West Swan, I formally call you to order for the first time today. Member for Belmont, I do not want to hear you talking.

Mr T.K. WALDRON: I just make the point that even with some of the accidents, which really concern me, and even with the introduction of the report on the trail bike strategy, I do not think a lot of that will stop some of these accidents happening. The key thing is to provide upgrades to the areas we have now and also upgrade new areas. We have already done some of that. We are now working on a proposal to look at —


The SPEAKER: Member for Darling Range, I formally call you to order for the first time today. Member for Kwinana, you are on three calls; I formally call you to order for the third time today. I am sure you want to stay in this place.

Mr T.K. WALDRON: It is difficult to implement this and to do it properly. When we had the debate here before, one of the things I said is that we must get this right. There are some issues with the licensing that we are looking at. In the meantime — Mr P. Papalia interjected.


The SPEAKER: Member for Warnbro, I formally call you to order for the second and third time today.

Mr T.K. WALDRON: We must get this right. We have had ongoing consultation with the industry. That is why we did the interim works at Gnangara.

Ms L.L. Baker interjected.

The SPEAKER: Fascinating! Member for Maylands, I formally call you to order for the second time today. I would love to get through this question. I would like to get through the answer as well, minister.

Mr T.K. WALDRON: I am trying, Mr Speaker.

We also did an education and communication program, and a volunteer management and community awareness program, but we do need other areas, and that is my focus.

STATE TRAIL BIKE STRATEGY

561. Mr M.P. MURRAY to the Minister for Sport and Recreation: I have a supplementary question. Is the minister aware of the number of deaths in recent times because he has not implemented many of the strategies that are in this report?

Mr T.K. WALDRON replied: I am aware that we had some accidents with trail bikes et cetera; of course I am. However, as I said before, the key part of the strategy is to upgrade and to do other areas, and that is my focus.

CROWN BURSWOOD HOTEL — LAND SALE Question without Notice 546 — Supplementary Information

MR T.K. WALDRON (Wagin — Minister for Racing and Gaming) [2.44 pm]: Pursuant to standing order 82A, I have some further information on the question from the member for Victoria Park. I think I misunderstood the land he was talking about. The Department of the Premier and Cabinet negotiated the hotel land site. The member was talking about the car park site. Sorry, I misunderstood that. We did not negotiate that. The sale price paid for the car park land, 1.2 hectares, was consistent with the Valuer-General’s valuation. Car parking at Burswood and parking directly at the stadium are two separate issues.

STATE ENERGY SYSTEM — MANAGEMENT Matter of Public Interest

THE SPEAKER (Mr G.A. Woodhams) outlined that he was in receipt within the prescribed time of a letter from the member for Cannington seeking to debate a matter of public interest. [In compliance with standing orders, at least five members rose in their places.]

MR W.J. JOHNSTON (Cannington) [2.45 pm]: I move — That this house condemns the Barnett government for failures in managing the state’s energy system, particularly in relation to — (i) Pilbara energy demands, (ii) the Muja power refurbishment, and (iii) the Verve efficiency dividend.

The government will always get up in the media and say that its reforms have saved $1.7 billion over the life of the government. It is interesting that when I ask the government to justify that figure, it cannot do it; it cannot say one dollar of savings that it has generated in the system. I must say that straight up-front, because I know what the government will do.

We have an energy portfolio in chaos, and we are going to refer to three particular issues today, but I want to point out that these issues are the same as the ones in the past. They are all caused by the same problem: the minister does not pay attention in this portfolio. When I was a kid I used to watch the Six Million Dollar Man. Now I am shadowing the $800 million man, because this minister, Peter Collier, is personally responsible for $800 million in cost overruns, blow-outs and penalties. I will just remind members of a few. There is the merger of Verve and Synergy. The government has been in for four and a half years and it still talks about remerging Verve and Synergy, yet not once has it actually explained how that will benefit the community. In fact, we know that it will not benefit the community. We know that a remerger will put up costs.

I remind the community that the Economic Regulation Authority, the Chamber of Commerce and Industry of Western Australia, the Chamber of Minerals and Energy of WA, the Energy Supply Association of Australia, the Energy Retailers Association of Australia and the independent power producers all agree that remerging Verve and Synergy will put costs up. This minister was responsible for the $417 million blow-out in the solar feed-in


tariff—a $33 million program that is going to cost $450 million—and $150 million in the budget was announced to be improperly put onto the customers of Synergy. There is the Synergy billing system that on 2 April 2009 the minister said would be a world-class billing system, and he developed a five-point plan that would deliver that system to the people of Western Australia. He promised extensive cost savings. In fact, none has been realised and it has cost $55 million more than originally intended. There is the Pilbara underground power project. It is a $150 million project that is now a disaster and probably going to cost an extra $100 million. Then there is the shambles in Western Power—the shambles that this minister has overseen. The ERA report in December 2011 and the Trenorden report of this year show that Western Power is in crisis. The minister says it is fabulous. He says that Western Power is a fabulous organisation. Western Australians know the truth.

Point of Order Mr B.S. WYATT: The government may not be listening to this particular MPI from the member for Cannington, but I am. I ask that you bring particularly the front bench of the government into line about their interjections. The SPEAKER: I think you have made your point, member.

Debate Resumed Mr W.J. JOHNSTON: We also have the Western Power excess, the culture of excess that this government has allowed to grow in that organisation and the explosion in highly paid executives in the energy sector that the member for Victoria Park exposed. There is the excessive fringe benefits tax expenses in these organisations, the bullying of staff by this minister, the high staff turnover in his own office and the shambles of his performance. But today I want to talk about a couple of other failures of this minister. On 11 May 2009 the minister issued a joint media release with the Premier regarding the high-efficiency gas turbine in Kwinana and the refurbishment of the Muja A and B plant. This is now an embarrassing failure and it must be embarrassing to the Premier to see his name associated with these failures. I remind people that the minister said that the so-called high efficiency gas turbines at the Kwinana power station were unique in Western Australia, apart from the ERM plant next to it, which uses exactly the same technology, and the Perth Energy plant on the other side of the Kwinana plant, which also uses the same technology, and the other 12 or 15 high-efficiency turbines around the rest of the country, but apart from those plants it is unique. That plant was delivered late, $37 million over budget, and it was subject to $20.9 million in penalties.

That was half of the announcement of the Minister for Energy and the Premier on 11 May. The other half related to the refurbishment of the Muja A and B plant. They created a joint venture structure to hide the debt for this, and I point out that the minister representing the Minister for Energy in the budget estimates said that —

The use of the private sector investment through joint venture agreements for projects such as the Muja A and B refurbishment … is also expected to alleviate pressure on net debt levels …

The minister said that because the debt entered into by the joint ventures is not included in the state’s net debt position. That is an outrageous use of a device to hide the debt that this government is entering into through those joint venture projects. In this joint venture, a series of other problems has been created by the government’s poor management and this minister’s inability to pay attention to detail. The joint venture partner is quitting the joint venture. There are $50 million to $60 million in cost overruns on this project—we do not know exactly because the government will not answer that simple question from the media or the opposition. When the first unit of that project was being tested, it blew up and injured a worker, and now the government is facing the problem of trying to find people to continue with the refurbishment. The plant is so old it is not capable of functioning anymore. It is a 35 to 40-year-old plant that this government has already spent over $100 million on, and it is now faced with the fact that it is supposed to be operational on Monday next week, and it will not be. The problem for the government then gets worse, because we have not only the blow out of cost, the problem with the joint venture partner, and a project that was being used to hide debt from the people of this state, but also a penalty of at least $100 000 a day that that generation unit is not online. There will be more costs, more expenses, more trouble and higher energy costs for the people of this state. Let us not misunderstand this; every time this minister loses an extra dollar for the community that is an extra dollar on people’s electricity bills. The government says, “Oh well, we need to have a 25 per cent increase in electricity prices in this state”, but what it is not telling people is that the one reason for that increase is the incompetence and inefficiency of this minister; a minister incapable of managing his portfolio. Every time someone in the community gets an electricity bill and sees that rising cost, part of the blame for that can be aimed directly back to the desk of that one person, the Minister for Energy and his incapacity to run his portfolio. It is interesting how we get criticised for making pro-market reforms that will lower the cost of electricity. The Labor Party is proud to stand with families in this state and provide a fully costed policy that is endorsed by industry and the Economic Regulation Authority, and will make life a little bit easier for people in this state, and the government criticises the Labor Party for trying to make life easier for families in this state! That is an extraordinary position to take and shows the truth of this government.


In the estimates committees, we were interested to know what was happening with the efficiency dividend for Verve Energy because last year, in 2011, the chief executive officer of Verve made it clear in estimates that Verve was not able to meet the efficiency dividend demanded of it by the government. In answer, the minister representing the Minister for Energy said —

My understanding is that no direction has been issued at this stage.

That is, a direction to the board of Verve to meet that efficiency dividend. There they were on 31 May, just a month from the end of the financial year. He continues —

Discussions are ongoing between the minister’s office and the Treasurer’s office, and no doubt between the two ministers’ offices, with a view to achieving what has been announced by the Treasurer.

With a month to go, they were not achieving what they needed to do with the efficiency dividend. This is interesting because before that there had been some correspondence between the minister and Verve. On 13 April, the minister had written to the chairman of Verve, and in that letter he rejected Verve’s position on the efficiency dividend. His letter reads —

As the Treasurer does not support your proposal, Ministerial Directions have been drafted to require the Board to amend the 2011–12 Statement of Corporate Intent and the 2011–12 Strategic Development Plan to comply with the Government Trading Enterprises’ Efficiency Dividend. Ministerial Directions are attached for this purpose.

Let us understand what is happening here. Nearly at the end of the financial year, documents that were required to be tabled by Verve Energy in this Parliament had not been tabled because the minister was still trying to negotiate an outcome on the efficiency dividend with the management of that organisation. That is an extraordinary inability to come to a conclusion. What was the problem? The problem was that Verve was telling the minister that the only way it could achieve the outcome he was after was to cut maintenance expenditure; to cut essential expenditure to keep the power plants online in this state. That is what the minister was doing. Under freedom of information, we have received the draft ministerial directions. It is interesting to note that a week later, the managing director of Verve wrote back to the minister and pointed out that Verve was rejecting the draft direction. The letter reads —

The Board has reached its determination on the basis that the 5% Efficiency Dividend is not “discretionary” operating expenditure and instead will result in the reduction of the Corporation’s essential expenditure for its preventative maintenance programme. This in turn will expose the Corporation to punitive financial penalties to the extent its plant is not available during the crucial high peak periods in Western Australia. The Corporation’s preventative maintenance program is critical to ensuring the safety and reliability of its plant and operations and as already constrained by a sub optimal operational profile as balancer.

Now let us make it clear what that is saying. The managing director of Verve wrote back to the minister and said, “If we do what you want us to do, if we do what you are directing us to do, we are going to expose the electricity system to blackouts.” Let us make it clear: that letter was written this year, so that is about the essential maintenance to keep the electricity plant online for this summer. If we have blackouts over this summer, there will be only one person responsible for that—the Minister for Energy.

We are fortunate in Western Australia, due to the foresight of the former Labor government, that there is plenty of generating capacity in Western Australia in the private sector. Twelve new power stations were built due to the reforms put in place by the former Labor government. If the Verve plant goes down and it has to be penalised by the system operator, and it gets replaced by private generators, that will push up the cost of electricity for every person in this state. Every consumer in this state will have to pay more because of the incompetence of the minister and his inability to do his job. This is the sort of thing that the Premier likes to talk about all the time. However, these FOI documents demonstrate the reason the former managing director of Verve was so strident in her criticism in 2011 of the government’s efficiency dividend. It also reflects why all the energy corporations say, except for Western Power, that they cannot achieve those dividends because they have already cut their operations to the bone as they are market exposed. They are market exposed because the Labor government created a market. It is interesting that very shortly after that, the managing director—a fine and capable public servant—left the job. It would appear she may well be another person who could not put up with the Minister for Energy’s bullying. We know about bullying problems against the Department of Training and Workforce Development. Is this another example of bullying? The Minister for Energy has gone through all these personal staff, including chiefs of staff. There has been a high turnover of staff in his office. They are all problems he has created for this state.

I want to come to another issue—the demands of the Pilbara power system. We received some freedom of information documents in relation to this. On 7 December 2009 Horizon Power wrote to the minister to explain that by 2012 there would need to be an additional 100 megawatts of power capacity built in the Pilbara. What do


we find in The West Australian in September 2012? We find an advertisement for temporary generation; a request for tender for temporary generation capacity in the Pilbara. The government wants 60 megawatts by 2014 and 40 megawatts by 2015. Following tip-offs from people in the industry, we asked a question of the Minister for Energy about that. We asked why he was doing it and what is he doing about permanent generation capacity. We find that permanent generation capacity is to be installed in 2016. These are all highly technical matters, and a lot of people will not understand this, but the government is buying the same power generation capacity twice. It will spend an additional $100 million to buy power plants in the Pilbara. The Minister for Energy was warned three years ago that he needed to make a decision. We have dozens of documents from Horizon Power to the minister telling him he had to make a decision and telling him it was time to do his job and protect the interests of Western Australians. What the minister has chosen to do is spend $100 million on temporary generation and then $100 million on permanent generation immediately following the temporary generation! It will be the same equipment. He will pay for the same equipment twice. He is costing consumers in this state $100 million.

Let us not misunderstand exactly how bad the Minister for Energy’s incompetence is. The fact is if a tender is accepted to install 100 megawatts of temporary generation, it has to be paid for. Companies will buy equipment from around the world and they will go up to Port Hedland to install it. Then the government will put out a separate tender. That will have to be paid for. All those costs will be borne by Horizon customers. Because of the tariff equalisation system, every electricity consumer in this state will bear part of that cost. Then the government will spend another $100 million to replace that $100 million worth of plant with another 100 megawatts of power installation. It is crazy. It is interesting why Horizon says it is doing it. It says it is being done because the temporary generation capacity is able to be included as operational expenditure, whereas the permanent generation capacity will have to be capital expenditure and approved by cabinet. The government is adding an extra $100 million onto the bills of every family in this state so that it can avoid telling the truth to this Parliament and does not have to admit that debt is going up again. This is one of the most outrageous, incompetent decisions of any minister in this government. The Minister for Energy has cost us hundreds of millions of dollars in other projects. This is a $100 million Amateur Hour. This $100 million is a complete and utter travesty. There is no justification for it. Having had three years’ warning that it needed to install this capacity, the government has had plenty of time to get on and do its job. The fact this minister is incapable of making a decision and is incapable of protecting the interests of electricity consumers in this state is an example of why this government stands condemned. Whether this motion passes today or not, no matter what happens with the numbers in this chamber the fact is that this government is condemned for its incompetence in the energy sector. The government will look back and talk about the past, but it will not talk about today or the future. It will not talk about the real challenges that are generated in this sector; it will want to talk about things that are made up and invented from our past.

The disaggregation of the electricity system in this state, according to this government’s report by Mr Oates—paid for at a cost of $250 000—said that disaggregation is saving the taxpayers of this state $10 billion in generation equipment. That is what this government’s own report says. The Economic Regulation Authority has repeatedly said that disaggregation has saved electricity consumers money. What is costing people in this state are the decisions of an incompetent minister—$450 million in the solar feed-in tariff; the ridiculous decision to refurbish Muja power station in a mechanism designed to hide debt from the taxpayers of this state, and now a $50 million or $60 million blow-out to bring the 35 to 40-year-old plant up to standard, which everybody in this state told the Premier and the minister was a bad decision. Everybody told the government that there were too many risks in trying to refurbish that old plant. Now the chickens are coming home to roost here because the government knew that that was a bad decision. A decision the government claimed was about proofing us from power outages will now cost the taxpayers of this state tens of millions of dollars in capital costs, if it can ever get the plant to work—nobody knows if it ever will. It is interesting that Verve Energy will not give a deadline when that plant will come online or the daily penalties for delivering the plant late. What is more, we now know that the government has been bullying Verve Energy to cut its central maintenance program so it can increase the amount of money paid from the energy utilities to the government’s bottom line. Do not forget that this government intends to draw out billions of dollars from the energy sector over the next four years. It intends to have over $3 billion profit from the energy companies over the next four years. When the government says it has a subsidy of a few hundred million dollars a year, it forgets to tell the people of this state that it will take over $3 billion in profit from the four energy companies over the next four years. They are the facts. The government likes to hide the truth in the energy portfolio. It likes to avoid admitting problems. It is happy to put out a media release when things go well, but it will not ever stand and take responsibility when things go bad. There has been a series of bungles, problems and disasters with the Minister for Energy. Today we are exposing three additional ones. We have exposed the fact that he has bullied Verve into cutting expenditure on essential maintenance, which probably led to the departure of a fine and dedicated public servant. We have exposed the fact that there is $100 million in wasted expenditure. By doubling up on power in Port Hedland at a cost of


$100 million, the mums and dads and pensioners of this state will pay for that through their electricity bills. We have also exposed the disaster that is the Muja A/B refurbishment.

I want to finish on another point. Part of the Pilbara energy upgrade has been the installation of a temporary generator. Because of a bungling of the contract management, the government has forgiven the contractor for any liquidated damages. It has bungled that as well. It may well be that the contractor delivers on time, in which case it will not matter, but if there is any delay in that project—which is due for completion on 1 December—this government’s bungling means it will not be able to hold the contractor to any liquidated damages if it fails to deliver. The government is incapable of managing these programs. It likes to boast about its economic credentials, but its credentials in the energy portfolio are in tatters. It is incapable of running the electricity system. The Minister for Energy deserves to be condemned and whether or not this resolution is passed today, he is condemned. DR M.D. NAHAN (Riverton — Parliamentary Secretary) [3.12 pm]: I stand to lead debate on why we should not support this matter of public interest. Indeed, I stand to praise the Minister for Energy, who has a difficult job. He has been the Minister for Energy for the full four years of this Liberal–National government, and he has been struggling to deal with a difficult industry that is based on a fundamentally flawed disaggregation system put in place by Labor.


Dr M.D. NAHAN: It is fundamentally flawed.


The DEPUTY SPEAKER: Order, members! Member for Armadale!

Dr M.D. NAHAN: The general intent of the deregulation was in line with what was done in other states at the time, and was a move to a more private involvement in the electricity system, particularly in the generation system. Indeed, it was a step towards privatisation.

Mr W.J. Johnston: No, it wasn’t!

Dr M.D. NAHAN: Yes, it was. The aim was to curtail the public generation of electricity and to allow private generation to come in and compete with public ownership. It also put in a system that restricted not only the total capacity of the public system to create space for the private sector to come in, but also to shrink the public system generator’s rights and, therefore, to encourage the private sector to come in. It was basically derived to encourage and induce private sector generators to come into the market and compete with the public sector and with each other. That was the intent of the legislation. The electricity sector was split into Verve, Western Power, Synergy and Horizon. Many members here now were active in that debate; indeed, it took a long time and there were many disagreements. Personally, I supported the direction and intent of the reform at that time. I was not a member of this place, but the legislation was following in many of the steps that the eastern states had taken of a regulatory process—a process in which I had been involved. But it had fundamental flaws.

One of the flaws was that to get private sector competition into the market, the private sector had to make a profit or cover its costs.

Ms R. Saffioti interjected.

The DEPUTY SPEAKER: Order, member for West Swan!

Dr M.D. NAHAN: One of the flaws of the system was that when the system opened in early 2006, it failed to calibrate and ensure that the regulated price covered costs. Therefore, the regulated system had to be subsidised right from the start. If the regulated price was set under cost, no private sector company would come in, and, therefore, competition from the private sector would not eventuate. Therefore, the whole basis of the system was flawed. Mr E.S. Ripper: Do you accept the Liberal Party has to bear some responsibility for that outcome?

Dr M.D. NAHAN: No. When the government of the day entered into that system, it was informed that prices had not risen for a long time—I accept that. When it went into the system, as happened on the eastern states, it had to recalibrate prices so that price met cost if competition was wanted. However, that was not done.

Mr E.S. Ripper: Do you accept that the Liberal Party — The DEPUTY SPEAKER: Order, members!

Dr K.D. Hames: I was here, and the reason we demanded that prices not go up was because Labor was promising they would go down and we did not believe them.

Dr M.D. NAHAN: Member for Belmont, I read most of the debate, and the Labor government at the time was claiming that the deregulation would lead to an 8.5 per cent reduction in electricity —


Mr E.S. Ripper: That was compared with business as usual.

Dr M.D. NAHAN: What the then government did not say at the time—it should have—was that when the system is put in place in 2006, prices have to rise to meet costs.

Mr E.S. Ripper: Are you saying we were advised of that? We were not advised of that.

Dr M.D. NAHAN: The data was there. Pricing in the deregulated system was flawed. As we know from the many debates we have had in this house, the private sector did not come in from the start. When the government entered into that system, the regulated cost blew out in terms of wires and transmission lines, and a double-digit growth in the cost of investment that had to be recouped. The subsidy level grew by hundreds of millions of dollars a year. In 2008, a mere two years after the system was put in place —

Mr M. McGowan: Where’s the Premier? He should be here for the debate.

Dr M.D. NAHAN: Where have you been? Mr M. McGowan: The Premier should be answering this because it’s an MPI.

Mr P. Papalia: We don’t want a second-rater. We don’t want the monkey!

The DEPUTY SPEAKER: Order, member for Warnbro. This debate is degenerating.

Withdrawal of Remark Dr K.D. HAMES: I heard what the member for Warnbro called the member who is on his feet. I think that he should withdraw.

The DEPUTY SPEAKER: I think he was going to use that famous saying. Member for Warnbro, withdraw that comment, please.

Mr P. PAPALIA: I withdraw.

Debate Resumed Dr M.D. NAHAN: He does not need to; it just shows — The DEPUTY SPEAKER: I ask the member for Riverton to carry on, and I do not want any more gratuitous interjecting. Dr M.D. NAHAN: In 2008, the Economic Regulation Authority did a review, as required by the legislation, and found that prices had to rise by 72 per cent or thereabouts to meet costs.

Mr W.J. Johnston: Rubbish!

The DEPUTY SPEAKER: Did you hear what I said, member for Cannington?

Mr W.J. Johnston: He should tell the truth!

The DEPUTY SPEAKER: The member for Cannington was heard in just about silence. I have asked for the constant interjecting to stop. I call you to order for the first time.

Dr M.D. NAHAN: Of course, the government of the day entered into an election campaign, and it promised a 10 plus 10 plus 10 per cent increase—that is, a glide path to increasing the regulated price towards that 72 per cent. It seems to have forgotten about that in opposition.

Mr W.J. Johnston: No, we haven’t.

Dr M.D. NAHAN: What is the opposition’s commitment to price increases? Several members interjected.

Dr M.D. NAHAN: What we have done in government—opposition members know this because Labor advertises it all the time—is increase the regulated price of electricity quite substantially. The truth is that Labor would have done the same, but in opposition it does not necessarily have to tell the truth.

We also did a number of other things during that period. As a result of the structure, all the losses accumulated in Verve. Between 2006 and 2009, Verve accumulated $600 million in losses. I did not hear the Labor Party complaining about the struggles in Verve at that time. We had to change things; first, the vesting contracts—that is, the relationship between Synergy and Verve as to the amount of electricity they bought and sold between each other, and how the price would rise through the three utilities of Western Power, Verve and Synergy. We did that. We brought Verve back to solvency.

Mr W.J. Johnston: Rubbish!

Dr M.D. NAHAN: As the member for Cannington indicated, we also increased the capacity of Verve by redeveloping Muja A and B, which were closed in 2007; I might be wrong there. One of them was opened in


2008 to supply electricity when the gas pipeline blew up. We decided to develop Muja A and B for 15 years because it was a low-cost approach. This is the fundamental issue. I will return to this issue. All of us in this house have a desire to take the pressure off electricity consumers. Western Australia historically has been a low-cost electricity place—the same with energy generally. We are running against that now. The only way to reduce the price of electricity to households and other things is to reduce costs. Anything else is a con. We brought Verve back to solvency, we invested in Muja A and B, which is a low-cost process, and we also drove efficiencies through the expenditure dividend into Verve. We heard the member for Cannington, probably getting advice from his union mates in Verve, reiterate those points but the simple truths are that no firm—Verve or any other company—likes to drive efficiencies if it can avoid it. Verve has limited exposure to market pressure. When the efficiency dividend was put in and a second tranche increased, it did not like it. It said it could not do it. It did not want to do it but it did. Verve surpassed its 2011–12 target and achieved an efficiency dividend of $24 million. It said it could not achieve it, as the member for Cannington stated. The managing director said that. That is what bureaucracies do all the time. I can remember being involved in the State Energy Commission of Western Australia way back in the 1980s. It said it could not do it but it did; it drove efficiencies. This is what we have to do. Verve has done a number of things to achieve its efficiency dividend targets set by the minister and expects to be $4.5 million ahead of schedule to deliver both tranches of its efficiency dividend this year. It is not easy. It is not undermining the deliverability of electricity. It is not threatening brownouts. It is just a mechanism we have within a government-operated system without exposure to competition—largely because of price imbalances—to force efficiencies in the operation of a large operation. If we do not do that, prices and costs will rise. Muja A has had some operational problems. It is confident that it will overcome them, along with redevelopment problems. We were very confident they were going on. The member for Cannington, in his usual way, says it is all doom and gloom and everything is corrupt and bad and whatnot. It will be achieved and we will be held accountable for it. I expect the member for Cannington to get up in this house when it is up and operating to praise it. Mr W.J. Johnston: On Monday; it has to operate on Monday. The DEPUTY SPEAKER: Can we just carry on, member for Riverton and member for Cannington. Mr W.J. Johnston: He should just tell the truth. The DEPUTY SPEAKER: Member for Cannington! Dr M.D. NAHAN: One of the biggest issues in the next election will be Labor’s proposed pea and thimble game on electricity prices. This goes to another issue raised by the member for Cannington—that is, Horizon Power. When the disaggregation happened, the former government created Horizon Power. Horizon Power is responsible for generating and delivering electricity to hundreds, if not thousands, of small entities outside the south west integrated system. It is a high-cost system. It was set up so that its losses would effectively be covered by the consumers in the south west integrated market. This is called the tariff equalisation contribution—TEC. It has grown very rapidly since 2006 from $60 million—do not quote me as these are round figures—to $200 million a year. That is huge growth. A large amount of that growth is because of the structural flaw in Horizon Energy. Under the aggregated monopoly, Western Power delivered electricity to the SWIS and to the regional areas now serviced by Horizon. They would sit around the management table. I have seen this and done this and participated in this. Western Power was also required by the previous government, quite appropriately, to achieve a certain rate of return, pay a dividend and return a profit to the state. When they sit around, the managers who manage the investment into and operation of the SWIS would hear the rural people—the now Horizon people—suggest something. They would fight and argue. They had an incentive to force and make the rural people drive operations as efficiently as possible. Yes, there was a subsidy. Yes, it was an internal subsidy within Western Power and to some extent between Treasury and Western Power. There was internal pressure in that integrated system to force efficiency, particularly in the high-cost area. When they were separated, that was lost. Mr E.S. Ripper: Where is the minister and where is the Treasurer on this issue because that responsibility devolves to the minister? Dr M.D. NAHAN: I will get to that. There was a structural flaw in Horizon. I am not going to criticise the government on this but when the process was split up, I do not think enough work was done to find out the cost of the backlog of work in the rural area. That is what people tell me. In other words, the new Horizon Energy found huge cost demands in deliverability of energy to many of these sectors. Therefore, the subsidy just blew up. Another problem is that Horizon Power had a big dream when it was created. It hoped and thought that it could operate in the commercial market selling electricity to Rio, BHP and others, make a quid and cross-subsidise its losses in the servicing of small towns. That did not happen to a large extent. Mr W.J. Johnston: What’s this got to do with the $1 million efficiency? Dr M.D. NAHAN: The member should just wait. That is a fundamental flaw. Horizon Power had an internal desire to become larger. It has been coming to the government and asking for large amounts of money to be a


major player to build its own power stations in the areas. We have heard, particularly from the former member for Armadale, that Horizon Power wanted to take control over the north west integrated system by integrating all that; in other words, it had a desire to build an empire.

Mr M. McGowan: An empire! Providing power for Port Hedland is building an empire?

Dr M.D. NAHAN: That is my point. It wanted to go far beyond that. It wanted to own and operate the systems that provided for Rio Tinto, BHP, Fortescue and all the rest. Mr W.J. Johnston: Just rubbish.

Dr M.D. NAHAN: It is a simple fact. The government, confronted with the structural flaw and this large blow-out in cost and the persistent request from Horizon Power for more and more, has basically taken a large amount of the planning away from Horizon to a Pilbara procurement project board that includes the Department of Finance, the Department of Treasury, Horizon Power and others.

Mr M. McGowan: So you have no faith in Horizon?

Dr M.D. NAHAN: Horizon had some problems. It was part of that but because of the structural flaws, we had to get advice from outside Horizon. In other words, we had to overcome one of the flaws in the disaggregation system. We needed advice from a variety of sources.

Mr E.S. Ripper: Without the identification of the subsidy, we wouldn’t even be debating this issue. It was all hidden before.

Dr M.D. NAHAN: It was internal. I assume that when the former government took it out, it priced it properly at around $60 million and it has now blown out to $200 million a year. Mr E.S. Ripper: On your watch.

Dr M.D. NAHAN: It was under a structure we inherited. I might add, the blow-out took place —

Dr A.D. Buti: Are you responsible for anything?

The DEPUTY SPEAKER: Member for Armadale!

Dr M.D. NAHAN: The blow-out was happening under the former government’s watch. It was priced at $60 million from 2006. We only took government in September 2008 and the blow-out had started. There was a fundamental flaw in the system and we have been trying to fix it. We have made a number of investments in the Pilbara, some temporary and some long term. We are extremely confident that there will be enough capacity to meet the demands in the Pilbara. The Pilbara is a high-cost place. Gas purchased up there is expensive. We are confident that we will meet the demands of electricity in the Pilbara.

Mr W.J. Johnston: Don’t worry about the gas; you’re spending $100 million extra on the plant.

Dr M.D. NAHAN: Plants do cost money. The member for Cannington wants it both ways. He wants us to say that we are losing money up there. He wants to ship that somewhere else. But generating plants cost money. That is why we do it.

I would like to make a few comments on Labor’s pea and thimble game. The Economic Regulation Authority recommended a couple of times that the tariff equalisation contribution be shifted away from south west interconnected system users to somewhere else—the budget. It is about $200 million a year, so over a three-year period it is $600 million. That is a lot of money. According to the ERA, it is about seven per cent of the tariff; therefore, if we shifted the TEC to someplace else, that would reduce the subsidy by seven per cent. The problem with Labor’s proposal is twofold. Even if we shift the TEC, there is still a subsidy. Labor has promised the Western Australian public it will reduce electricity prices by seven per cent; in other words, it is promising to increase the subsidy by seven per cent. Then it still has to handle and cost the TEC.

Mr W.J. Johnston: That’s rubbish!

Dr M.D. NAHAN: This is not rubbish! It has shifted it away from the SWIS and it has not said where it will fund that $600 million. I might add — Mr B.J. Grylls: Where? Interject and tell them where you’re funding it!

Mr W.J. Johnston: General revenue!

Dr M.D. NAHAN: I might add —


The DEPUTY SPEAKER: Members!

Dr M.D. NAHAN: I might add that $250 million of the TEC is currently funded—paid for—but not by households.


Mr W.J. Johnston: Yes, it is.

Dr M.D. NAHAN: Forty per cent is paid for by businesses.

Mr W.J. Johnston: Yes, tax reductions for business —

Dr M.D. NAHAN: Here we go! So what it is going to do —

Mr W.J. Johnston interjected.

The DEPUTY SPEAKER: Member for Cannington! Member for Cannington, you had a chance; there are other people here who can take up the points. We cannot carry on by just shouting across the chamber.

Dr M.D. NAHAN: There is a $250 million reduction in cost for large businesses put on taxpayers. How will Labor fund it?


The DEPUTY SPEAKER: Member for Cannington! Dr M.D. NAHAN: Who? Payroll tax? Stamp duty? Debt? There are not very many options, member for Belmont.

So, this is a pea-and-thimble gang and the simple lesson here is—what we have been trying to do is fix a flawed system—that the only way to reduce prices is to reduce costs, not fiddle.

MR B.J. GRYLLS (Central Wheatbelt — Minister for Regional Development) [3.31 pm]: I thank the member for Riverton for his very illuminating speech on this issue, but there is a real debate that should be occurring today. We just heard the member for Cannington, who, as the lead opposition speaker in this debate, condemned the Barnett Liberal–National government, make a very interesting interjection when he said that the $200 million a year would be funded from general revenue. The challenge, member for Cannington, with funding it from general revenue —


The DEPUTY SPEAKER: Member for Cannington!

Mr B.J. GRYLLS: — is that all of general revenue is currently allocated, which means that the opposition has to outline which part of general —


The DEPUTY SPEAKER: Listen, the Hansard reporter cannot even take notes, member for Warnbro.

Mr B.J. GRYLLS: The interjections are getting better! Now the member for Warnbro is belling the cat by saying, “We’ll find savings.” The Labor opposition opposed every single savings measure that the Liberal–National government brought to the table. It opposed the efficiency dividend.

Mr P. Papalia interjected.

The DEPUTY SPEAKER: Member for Warnbro!

Mr B.J. GRYLLS: Members opposite have opposed every single method we have undertaken to deliver good government for Western Australia.

Mr M.P. Whitely interjected.

The DEPUTY SPEAKER: Member for Bassendean!

Mr B.J. GRYLLS: The Labor opposition now has a $200 million a year minimum commitment, because, as the member for Riverton said, there will be very strong growth in the community of the north west under the leadership of the Liberal–National government in growing country communities.

Several members interjected. Mr B.J. GRYLLS: We are not abolishing the tariff equalisation contribution. Our policy is not to abolish the TEC. My policy is definitely not to abolish the TEC and that does not create a $200 million plus black hole!


The DEPUTY SPEAKER: Member for Cannington!

Mr B.J. GRYLLS: What we have now from the Labor opposition —

Mr P. Papalia interjected.

The DEPUTY SPEAKER: Member for Warnbro, you are on three at the moment. If you want to have a rest, just carry on the way you are going.


Point of Order

Mr M. McGOWAN: Mr Deputy Speaker, when a minister on his feet is attacking the other side of the house and members interject, that is the ordinary business of the way the Parliament normally operates. If you are going to call people to order, I think you need to understand that basic principle and perhaps warn the person on his feet not to invite interjections from the opposition.

Dr K.D. HAMES: Mr Deputy Speaker, it is true that interjections are common and frequent across the chamber, but when someone is on three already, it is quite appropriate for you to warn him to stop him from interjecting.

The DEPUTY SPEAKER: Anyway, Leader of the National Party, carry on.

Debate Resumed

Mr B.J. GRYLLS: I am very disappointed that the member for Warnbro is on three warnings because that will not give him the opportunity to further answer how he will come up with this $200 million plus every year.


Mr B.J. GRYLLS: The member for Cannington came to the chamber with a motion on power prices today when the Labor opposition has announced its biggest policy leading up to the next election and it is unfunded. It has made every attempt not to bell the cat on where the funding will come from —


The DEPUTY SPEAKER: Member for Warnbro! If you want to make a speech, get up and make a speech.

Mr B.J. GRYLLS: The member —

Mr M. McGowan interjected.

The DEPUTY SPEAKER: Leader of the Opposition, do not try to be too clever. I heard what you said.

Mr B.J. GRYLLS: The Leader of the Opposition has never had that problem! The member for Warnbro —


The DEPUTY SPEAKER: Leader of the National Party, sit down; you are not helping either. We had a sensible speech from the member for Cannington, everybody listened and now it is just degenerating!

Mr B.J. GRYLLS: It is very appropriate for me to request of the opposition that it detail a fundamental plank of its energy policy in the middle of a debate on energy policy in the state of Western Australia.

Mr V.A. Catania interjected.

The DEPUTY SPEAKER: Member for North West!

Mr B.J. GRYLLS: The Labor opposition now, through the member for Warnbro, a senior member of the Labor opposition, has said that it will find savings —

Dr K.D. Hames: Was a senior member.

Mr B.J. GRYLLS: I think he is on the way back! The member for Warnbro says that Labor will find savings measures to deliver the more than $200 million a year that is needed to drop the price by seven per cent, but members opposite will not say where that $200 million is.

I will give the member for Cannington the opportunity to interject. Will Labor categorically rule out using royalties for regions funding to fund the TEC?

Point of Order

Mr B.S. WYATT: Mr Deputy Speaker, you have the member for Warnbro on three calls, you keep calling him to order, and now the minister is deliberately provoking, by asking questions of, the member for Warnbro across the chamber.

The DEPUTY SPEAKER: Member, he spoke to the member for Cannington; he never mentioned the member for Warnbro.


The DEPUTY SPEAKER: Just hold it! He never mentioned the member for Warnbro; he spoke about the member for Cannington. I do not want this cross-chamber bantering anymore. Leader of the National Party, please make your speech and then the other side can have their people get up and make their speeches. This is taking us nowhere.


Debate Resumed Mr B.J. GRYLLS: You are right, Mr Deputy Speaker, and I just hope that the member for Cannington can categorically rule out that royalties for regions funding will be used to fund the TEC. There is a great deal of concern and confusion in regional Western Australia because the Labor opposition —

Mr E.S. Ripper interjected.

The DEPUTY SPEAKER: Member for Belmont!

Mr B.J. GRYLLS: The Labor opposition has a policy that is not funded and it has given no indication of how it will be funded. It is of major concern to regional Western Australians that the royalties for regions program will be gutted to fund the TEC in the future. The member for Cannington can provide a great deal of comfort to the people of regional Western Australia by assuring them that the cuts Labor will make to government spending to fund the TEC will not come from the royalties for regions program. That will be a very important thing for the member to put on the record, and he can do it by interjection right now.

Mr W.J. Johnston: You’ve asked me to reply and what I want to know is: what are your cuts? You have cuts in your — The DEPUTY SPEAKER: Member! Leader of the National Party!

Mr W.J. Johnston: I’ve been asked to answer the question!

The DEPUTY SPEAKER: I know, but I do not want to hear interjections.

Mr B.J. GRYLLS: He cannot answer the question, Mr Deputy Speaker.

Mr W.J. Johnston: I can’t answer!

Mr B.J. GRYLLS: What is important in the Pilbara, which is where my focus in this debate today is, is to understand exactly what is happening in power provision. What has to be understood by members opposite, and those in the wider community who regularly face opposition-led fearmongering about the provision of power in the north west, is that at the moment Horizon Power has contracts with some of the major resource companies to buy the power that has been assigned to them but they are not currently using. This is a really important part of this debate because most of the resource companies have long-term contracts to ensure that they have power supplies as their projects come on-stream and their exports ramp up. Horizon has been able to procure from those resource companies the excess power that they have first right of call on, but are not using. So that is a massive saving to the Western Australian taxpayers.

Mr W.J. Johnston: That is not what is happening at all.

Mr B.J. GRYLLS: The member for Cannington does not know what he is talking about. There is a massive saving to the Western Australian taxpayers if we can use existing power capacity to meet our demand, rather than build a new power station, because if we did build a new power station, that new power station would be sitting right next to an existing power station that is not being used to its full capacity. Mr W.J. Johnston: But that is exactly what you are doing!

Mr B.J. GRYLLS: No. We are building 20 megawatts, not 100 megawatts.

Mr W.J. Johnston: Yes, right next to the Alinta power station!

Mr B.J. GRYLLS: The challenge is to get a very clear understanding —

Mr W.J. Johnston: You don’t know what you are talking about!

Mr B.J. GRYLLS: I absolutely know what I am talking about. I am the minister in charge of growing Pilbara Cities. I am the minister in charge of making sure that the lights are on. All the member opposite has done is offer platitudes to people in regional Western Australia about power supply. He has got nothing in rock-solid policy to give those people any comfort that he has any plan to deliver —

Mr W.J. Johnston: We have seven per cent lower costs!

Mr B.J. GRYLLS: All that will do is transfer that seven per cent lower cost back to them as taxpayers! It is smoke and mirrors—it is putting that seven per cent under a cup, moving them all around and telling the taxpayers that they will be getting it back! It is not a policy until the opposition has detailed where it is going to get those savings from; and the opposition has not done that. Mr M. McGowan: So you are opposed to it?

Mr B.J. GRYLLS: I am opposed to it. I am absolutely opposed to the opposition’s policy of funding the TEC through savings yet unidentified. If the Leader of the Opposition had any confidence in his policy, he would identify where the savings are. If this was an important policy to the Leader of the Opposition, he would identify


where the savings are. But the Leader of the Opposition is stuck on the fence in being able to announce any policy detail on any of the major issues facing regional Western Australia. He is on the fence on power pricing. He is on the fence on the sports stadium. He is on the fence on royalties for regions funding. He is on the fence on absolutely everything. The people of Western Australia deserve better from the Leader of the Opposition. As I said in my last speech, the member for Belmont, when he was the Leader of the Opposition, at least took a position. We did not often agree with that position, but at least he took it, and we knew where he stood. This new policy of the opposition, which is to announce a policy but not where the funding is coming from, is disgraceful, because it is simply confusing the people of Western Australia. There is no detail for it. Members do not need to listen to me. Just look at what the Leader of the Opposition said on the radio this week, when he could not detail his policy announcements in and around this matter.

Mr M. McGowan: Where is the two per cent efficiency dividend in royalties for regions coming from? Mr B.J. GRYLLS: The two per cent in royalties for regions is very easily detailed. Two per cent will come off the royalties for regions fund. It is very clear—two per cent will come off; it will not be spent.

Mr M. McGowan: You pose all the questions, but you cannot answer one!

Mr B.J. GRYLLS: The Leader of the Opposition should not get tetchy with me! The Leader of the Opposition cannot take a position. That is why he does not come to Parliament any more.

The DEPUTY SPEAKER: Members, now we are getting to the stage where nobody can hear anything. Leader of the National Party, do you want to conclude? Mr B.J. GRYLLS: Thank you, Mr Deputy Speaker. I am very determined to work closely with the new power procurement model in the Pilbara to make sure that we are providing energy security into the future. It is wise, when using taxpayers’ money, to exploit every opportunity to use private generation before the state builds its own generation. Every time the state builds its own generation, it adds to debt—which the opposition opposes—and it adds to the challenges of managing the state’s finances into the future. If there is existing capacity that we can procure from the private sector, that would seem to be the smart way to go. MR B.S. WYATT (Victoria Park) [3.43 pm]: I have a brief time in which to respond. It is good to know—the member for Riverton confirmed it—that the 25 per cent increase in power prices across the forward estimates will be implemented by the government. That is satisfying to know, because the Premier has been saying all sorts of different things. It is interesting that the Minister for Regional Development said to the opposition, “It is not a policy until it is funded, and it is disgraceful that you would go about doing that.” So I had a look at the ad, “It’s all part of the bigger picture.” I know that the light rail is a policy, because it is on that ad. But, unfortunately, we do not know two things: firstly, what its cost will be; and, secondly, how it will be funded. So certainly we do not need this mob opposite coming in here and talking about financial management, when they are spending $1.5 million of taxpayers’ money advertising things, but they have no idea where the money will come from, and they do not know how much it will cost.

I want to come back to the member for Riverton. The member for Riverton said—I wrote it down, so I know it is right—“All the loss is accumulated in Verve. We had to do something. We brought Verve back to solvency. We created efficiencies in Verve.” This is the issue that the member for Cannington brought up about the efficiency dividend, and I want to quickly reflect on that. The letter from Hon Peter Collier, the Minister for Energy, to the chairman of Verve, dated 13 April, stated that, “We have discussed this”—that is Verve’s alternative approach to an efficiency dividend—“with the Treasurer, and we do not agree.” So here we have the directions pursuant to the Electricity Corporations Act 2005. Then Shirley In’t Veld, the then managing director of Verve, wrote back less than a week later and said —

Pursuant to Section 112 of the Electricity Corporations Act 2005 … the Board of Electricity Generation Corporation … hereby notifies the Minister that it has determined it would be inconsistent with Section 61(1) of the ECA for the Corporation to comply with each of the Ministerial Directions.

That is why the direction came down from the minister. It is worth noting what section 61(1) of the Electricity Corporations Act states. It states—

A corporation in performing its functions must — (a) act in accordance with prudent commercial principles; and (b) endeavour to make a profit, consistently with maximising its long term value.

So, the minister said to Verve, “No, that is not your duty. It is not your duty to act in accordance with prudent commercial principles. It is not your duty to endeavour to make a profit, consistently with maximising its long-term value.” This highlighted that the efficiency dividend had one purpose and one purpose only—to ensure that more revenue flowed into the coffers of the Barnett government. That direction from Hon Peter Collier gives the


lie to—it undermines—the argument from the Premier that the reason that the government had to increase power prices by 62 per cent was to put the energy sector on a more sustainable footing. That is utterly not true, because as soon as the then managing director of Verve pushed back and said, “We cannot do this”, the minister said, “Bad luck. It is no longer your duty to operate in accordance with prudent commercial principles. It is no longer your duty to endeavour to make a profit, consistently with maximising its long-term value.” As the member for Belmont has said previously, the Premier has form when it comes to sweating the assets of the state’s utilities. That is all the Premier wanted to do. He wanted more money in his coffers from the families of Western Australia. That is the reality of those directions given by Hon Peter Collier to Shirley In’t Veld, the then managing director of Verve. Interestingly, that letter was written to Hon Peter Collier on 20 April, and then on 10 May, Shirley In’t Veld was gone. That was a surprise, members may recall. No-one was expecting Ms In’t Veld to leave her position as the managing director of Verve. That is because the minister, again, found himself challenged by another public servant. She was given short shrift; she was sent on her way. So now anything may happen to Verve in those areas that Ms In’t Veld was concerned about. I will quote again from her letter —

The Corporation’s preventative maintenance program is critical to ensuring the safety and reliability of its plant and operations and as already constrained by a sub optimal operational profile as balancer.

So the member for Riverton said, “We got Verve back onto a sustainable footing.” But what we know is that those directions given by Hon Peter Collier mean that no longer will Verve be driven by operating commercially and no longer will it be driven by making a profit, consistently with maximising its long-term value. From now on, Verve will be operating to ensure that more money comes from Western Australian families into the coffers of the Barnett government. MR M. McGOWAN (Rockingham — Leader of the Opposition) [3.48 pm]: This motion points out the failures of this government in the electricity portfolio. I want to list very carefully the financial blow-outs of this government in the electricity portfolio. There was a $400 million loss on the solar rebate scheme. There was a $100 million blow-out in undergrounding power in Karratha. There was a $100 million blow-out in the Port Hedland power procurement process. There was a $70 million blow-out in Synergy billing. There was a $60 million failure in the upgrade to the Muja power station in Collie. In total, the taxpayers have to meet $730 million of losses in just one portfolio. That is the crux of this issue: the incompetence of government that has been paid for by taxpayers across Western Australia.

Question put and a division taken with the following result — Ayes (25)

Ms L.L. Baker Mr J.C. Kobelke Mr E.S. Ripper Mr P.B. Watson Dr A.D. Buti Mr F.M. Logan Mrs M.H. Roberts Mr M.P. Whitely Ms A.S. Carles Mr M. McGowan Ms R. Saffioti Mr B.S. Wyatt Mr R.H. Cook Mr M.P. Murray Mr T.G. Stephens Mr D.A. Templeman (Teller) Ms J.M. Freeman Mr A.P. O’Gorman Mr C.J. Tallentire Mr J.N. Hyde Mr P. Papalia Mr P.C. Tinley Mr W.J. Johnston Mr J.R. Quigley Mr A.J. Waddell

Noes (29)

Mr F.A. Alban Dr E. Constable Dr G.G. Jacobs Mr D.T. Redman Mr C.J. Barnett Mr M.J. Cowper Mr R.F. Johnson Mr M.W. Sutherland Mr I.C. Blayney Mr J.H.D. Day Mr A. Krsticevic Mr T.K. Waldron Mr J.J.M. Bowler Mr J.M. Francis Mr W.R. Marmion Dr J.M. Woollard Mr I.M. Britza Mr B.J. Grylls Mr J.E. McGrath Mr A.J. Simpson (Teller) Mr T.R. Buswell Dr K.D. Hames Mr P.T. Miles Mr G.M. Castrilli Mrs L.M. Harvey Ms A.R. Mitchell Mr V.A. Catania Mr A.P. Jacob Dr M.D. Nahan

Pairs Ms M.M. Quirk Mr P. Abetz Mrs C.A. Martin Mr C.C. Porter

Question thus negatived.

LOAN BILL 2012 Second Reading

Resumed from an earlier stage of the sitting.

MR J.N. HYDE (Perth) [3.55 pm]: In addition to these exciting projects within my own electorate, we have to acknowledge the real importance of the private sector and private developers who have taken confidence from the stimulation to the inner city environment that government investment in building and projects has achieved. We look at what has happened this year with Print Hall in the old Newspaper House building and the Trustee building, and I also refer to the new Margaret River Chocolate Company store in Murray Street, which was again


the reuse of a heritage building for a modern retail use. I was very honoured to officially open that building. I worked in Print Hall as a journalist in The West Australian during the 1980s. At the opening of the Print Hall building, I was reunited with some colleagues, and we reflected that when we worked Sunday shifts on The West back in the 1980s there was nowhere, except for Fast Eddies, we could go to get food on Sunday in the CBD. If we look now at what has happened in Perth, there has been a tremendous transformation, and it is a good transformation.

I also want to pay credit to a lot of the community-based advocacy groups who have the future of Perth and the development of Perth as one of their core reasons for being. I praise groups like Future Perth, City Vision, Heritage Perth, and also the City Gatekeepers. There may be a wide variety of views on how the city should develop among these groups and others who are in my electorate, but all the people in these groups are passionately committed to a great future for Perth, and a future that involves development and change. I have been very supportive of what the City Gatekeepers have been trying to achieve.

Again, I remind members that I am very much in favour of a waterfront project. I just believe we can have a better project than what this government has, I think, timidly led us to with the Elizabeth Quay development. I think that was exposed even more this week when we had the great opportunity of the Duyfken. If we actually had a real quay, like any other city, we would have been able to have the Duyfken sail in and moor right in the quay. Again, what I think is one of a number of flaws in the current waterfront development of Elizabeth Quay is that we will not be able to get a boat of any decent size in there; it is limited. That is one of the fatal design flaws, whereas perhaps a waterfront project that was located in front of the Convention Centre or that had real access to the waterfront would have been much better to engage with such great tourist attracters as the Duyfken and others that we could have in the CBD. I urge the government to consider this. We are trying to find out exactly what contracts the government has signed and how much of the Esplanade public space has been sold over for development, because if there is a change of government, we will have to improve on what members opposite have currently left us on the waterfront. I honestly believe, even if the Liberal Party is re-elected, that it will end up amending the waterfront project of the Elizabeth Quay development to make it a much better project. It is not an inspiring project at the moment.

All of these capital intensive projects that are happening in our wonderful city have transformed our city. It is an important reminder of the central role that state government plays in Western Australia.

I would also like to refer to the Museum. As I have reminded members before, we left $500 million in the budget for a new museum at the East Perth power station site that we wanted and the community wanted. The government has not committed real money in the current budget but in the forward estimates, just $60 million or $70 million of planning money. It is incorrect for this Liberal government to be saying that it has provided for a new museum. All it has provided is a future promise in the forward estimates, which the Premier says are just an indication—they are not a rock-solid commitment in the budget; all that matters is the current budget.

Debate interrupted, pursuant to standing orders.

CRIMINAL CODE AMENDMENT (DOMESTIC VIOLENCE) BILL 2012

Second Reading

MR M. McGOWAN (Rockingham — Leader of the Opposition) [4.01 pm]: I move —

That the bill be now read a second time

In introducing the Criminal Code Amendment (Domestic Violence) Bill 2012, the violent death of Saori Jones is foremost in my mind. Saori Jones, a mother of two children, was 31 years of age when she suffered a brutal death at the hands of her estranged husband. Saori endured years of violence in her marriage. On a visit to collect her daughter who was visiting her father in December 2010, Saori’s estranged husband forcefully punched her in the head. He only stopped punching his wife when his four-year-old daughter begged him to stop. Saori fell to the kitchen floor, unconscious, covered with blood and vomit. While she lay prone on the floor, unresponsive, he lifted up her shirt to allow their 10-month-old son to suckle from her breast. Saori’s estranged husband did not seek medical help for his wife. He dragged her into the shower and washed the vomit and blood off her body, then dragged her into the bedroom where he covered her with a blanket.

By morning she was dead. Saori’s corpse remained in the bedroom for 11 days, rotting under the summer heat, while her two children remained in the house. Saori’s corpse was only discovered after police came to the house to question her estranged husband, her killer. Originally he was charged with manslaughter but this was downgraded to “unlawful assault causing death” because the delay in discovering Saori’s body made identifying the specific cause of death difficult. He was imprisoned for five years but may only serve three. This sentence enraged many in the community, with the Women’s Council for Domestic and Family Violence Services leading the battle for legislative reform to more appropriately reflect the seriousness of domestic violence. One cannot


fail to be moved by the horrific nature of Saori Jones’ violent death. As the Leader of the Opposition and as a legislator, I am moved to introduce legislation to ensure that sentencing in domestic violence deaths reflect the hideous nature of the crime.

After the sentencing of Saori’s killer for five years, the Director of Public Prosecutions, Mr Joe McGrath, said the government should consider doubling the penalty for an offence under section 281 of the Criminal Code, the “unlawful assault causing death” provision. This is what this bill seeks to do. The Criminal Code Amendment (Domestic Violence) Bill 2012 seeks to amend section 281 of the Criminal Code 1913 to provide for a maximum imprisonment of 20 years for an unlawful assault causing death offence in “circumstances of aggravation” as defined in section 221 of the Criminal Code. Section 221 refers to a number of “circumstances of aggravation” with family and domestic relationships being one such circumstance.

Section 281 of the Criminal Code was introduced in 2008 by the then Attorney General, Hon Jim McGinty, to address the so-called one-punch homicide cases. The aim was to “ensure people who caused a death by assaulting another were held accountable for their actions”. The second reading speech by Hon Jim McGinty did not consider whether and how section 281 might apply to domestic violence deaths. However, as noted by the Human Rights Law Centre, since the offence of unlawful assault causing death was enacted, the majority of convictions under section 281 have been against men who have killed their partners or ex-partners. Even though the maximum penalty for unlawful assault causing death is 10 years, convictions to date in cases involving domestic violence have resulted in sentences of two to five years.

Some domestic violence victim advocates contend that a charge pursuant to section 281 of the Criminal Code should not apply in cases where it can be established that there has been a history of physical violence and abuse. However, some difficulties would arise in translating into legislative terms and concepts the reference to “an established history of physical violence and abuse between the offender and the victim”. For example, if that history were to be defined in terms of convictions, what would be the range of relevant offences and how many convictions of those offences would amount to “an established history”? If matters other than, or in addition to, convictions could be taken into account, what would those matters be and what evidence would be needed to prove them? If a section 281 charge was to be brought against an offender, would it be open to the offender to prove “an established history” as a form of defence? Leaving aside those kinds of difficulties, the implications for the prosecution need to be considered if a particular offence such as section 281 is placed “out of bounds” in specified circumstances. As a general proposition, the DPP will charge an offender with the most serious offence available that is supported by admissible evidence. If, in a particular case, that offence would otherwise be section 281, but a charge of that offence cannot be brought because section 281 was excluded in domestic violence deaths, then it may be that the DPP could only allege a lesser offence such as, perhaps, assault occasioning bodily harm or common assault, resulting in a lesser sentence being imposed on the offender.

The underlying intention of this bill is the desire to ensure that the seriousness of a domestic violence offence is reflected in the sentencing process so that such an offence attracts a greater penalty than the same kind of offence committed in other circumstances. This can be achieved by reference in the bill to 20 years as the maximum term of imprisonment for an offence committed in circumstances of aggravation, analogous to a manslaughter conviction, reflecting the seriousness of domestic violence. An advantage of this approach in the bill is that it applies an existing concept—“circumstances of aggravation”—that has a defined meaning in the Criminal Code. I commend the bill to the house.

Debate adjourned, on motion by Mr D.A. Templeman.

WATER SERVICES Motion

MR F.M. LOGAN (Cockburn) [4.07 pm]: I move —

That this house condemns the Barnett government and Minister for Water for failing to —

(1) deliver affordable water services to the households of Western Australia; and (2) control the excesses of the government-owned Water Corporation.

This motion condemns the Barnett government and the Minister for Water for the two issues that I have raised in this motion; first, the delivery of affordable water services to the households of Western Australia. No further and better example of the reasons I have moved this resolution can be found than in the information that has come to light as a result of the water tariffs inquiry by the Economic Regulation Authority. The report of that inquiry was tabled yesterday for the media and the general public by the authority’s chairman, Mr Lyndon Rowe.

Everybody in Western Australia is fully aware of the size and scale of water price increases for the more than half a million households in Western Australia as a direct result of the decisions of the Barnett government.


Everybody is aware of it. If someone is a householder who has water services, they are personally aware of the decisions of the Barnett government. If someone is not a householder, if they are simply an observer, they are aware of the decision to increase water services because the opposition has made the community aware of those decisions by continually reminding the community of the scale and outrageous size of those water price hikes.

There has been a 47 per cent increase in the cost of water services over the last three years. Some of the media have taken a different view of the way in which those costs are calculated and have determined the increase in those costs to be 51 per cent. We simply go off the budget figures provided by the government and compound those figures and accept that it is more likely to be 47 per cent. Regardless of which set of figures are correct, when taking them into account, families and households have had to pay even greater increases in electricity and gas prices, which means that some families have literally gone under from the scale of the utility price increases during the term of the Barnett government. No better example can be found than the figures released by the government after questioning by the opposition last year when we discovered that 84 000 households in metropolitan Perth had applied for more time to pay their water bills; that is 160 per cent over and above what it had been in 2008–09. The Water Corporation, showing the sort of mercy that it clearly has, has pursued consumers who failed to pay by using a significant number of means, including legal means. When it was asked what the increase was in the number of people who had been pursued by the Water Corp through legal avenues for the non-payment of their water bills, over 35 per cent more people had been pursued by the Water Corp last year for non-payment of bills than in the previous year. Those figures are illuminating because they show the real picture of the Barnett government’s utility price increases in Western Australia; 84 000 struggling families and the Water Corp chasing down over 35 per cent more families by legal means in 2011 compared with 2010.

What have families and consumers got to show for these massive increases? The minister will say, “Well, over the last few years, including over the term of the Labor government, we have built two new desalination plants—the 2005–06 desalination plant in Kwinana that was initiated by the Gallop government and the 2008–09 southern seawater desalination plant that was initiated by the Carpenter government and its current expansion initiated by this government—and somebody has to pay.” That is what the minister will argue. That is one argument, but if a person pays 50 per cent more for a product or service, he expects a slight improvement in that service after the extra payment than he might have had before. What have consumers and families got for their payment of 50 per cent more for water? Have they got better water services to the home? No. Water services have not improved. I do not know whether water services to your home, Mr Acting Speaker, have changed dramatically. They certainly have not changed in mine, and I am sure they have not changed in anybody else’s home. Water services have not got better. Are water services more efficient now than before we paid the extra 50 per cent? Mr W.R. Marmion: Yep.

Mr F.M. LOGAN: The minister argues that they are better—that the water services are more efficient. I cannot see where those water services are more efficient. The bill still comes through the door the same way as it did before. We can now get it online, but we could have got our bills online before the election of the Barnett Liberal government. I will be waiting with bated breath to see what other efficiencies the minister points us to because I cannot see any improvement in the efficiency of water services to the home. For example, the widespread rollout of smart meters could be one of those efficiencies whereby we can see a change in the way water services are delivered to the home, so we could at least say, “I pay 50 per cent more for my water, but at least I have a smart meter and a little more control over my water than I had before.” Some homes have smart meters. I followed the progress of the minister’s announcements of the introduction of smart meters in some homes in Western Australia, but there are very few compared with the nearly 600 000 water customers in Western Australia. We have not seen the types of efficiencies that we could point to and say, “Yep, I am paying a lot more for my water but I have got a better service”. Have we seen any change in the nature of demand management in Western Australia, for example, with the purchase of discounted water saving equipment or services, like we used to have under the Labor government–initiated Waterwise program? No, that was scrapped by the previous water minister in 2009 and never replaced. All we got was a Target 60 campaign in February this year, which ended in a complete shambolic failure when the Water Corp, in newspaper advertisements, pleaded with and begged consumers to use less water because in February this year we were using more water than we were saving under the Target 60 program. To try to put the program back on track, the Water Corp advertised in the newspaper to say, “Help; the program has run off track and we need your help to bring it back on track because we are consuming more than we are saving.”

In the nearly four years of the Barnett Liberal–National government, that is the only demand management program we have seen that is significantly different from that under the Carpenter and Gallop Labor governments. The other programs have always been in place—the ones that the minister may well point to—and they occur from time to time; for example, the schools programs and various other programs that tinker around the edges. Specific demand management programs that would help households reduce water prices by reducing water consumption, and thereby also help the state, are nowhere to be seen. Time and again I have raised in this


house the reintroduction of demand management programs and water-saving programs as a sensible rollout to help consumers reduce water consumption and thereby save on their water bills. Nothing has been done. Despite the fact we have had nearly a 50 per cent increase in water prices, nothing has been done physically to help consumers reduce their water bills, apart from the pleading and begging campaign called the Target 60 campaign that was run by the Water Corporation.

For some consumers and households, their water services have gone backwards. On 21 June I raised with the minister the plight of residents in Kingston, Australind, in relation to the discoloured water from their taps. That was before the latest round of water increases. I pointed out that their water was highly discoloured. Not only was it damaging to the equipment in homes, including washing machines and dishwashers, but also, when they put clothes in the washing machine, they came out dirtier than when they were put in. I have photographs to show what are effectively iron oxides and various other organic elements in the water. That has ended up discolouring all the clothes in the washing machine. Clothes end up dirtier as a result of being washed in Water Corporation water than had they not been put in the washing machine. I would like to lay on the table for the rest of the day’s sitting some examples of water from Kingston in Australind. Here are some examples of the nice brown stuff.

[The items were tabled for the information of members.] Mr F.M. LOGAN: The minister is more than welcome to have a swig of that. Mr W.R. Marmion: When were the water samples taken? Mr F.M. LOGAN: Three weeks ago.

That is what residents have been paying 50 per cent more for since 2008. If the minister thinks that is quite acceptable, I would strongly encourage him to pour some of that into the glass he may have in front of him and show the rest of the house how he can swig it down without any fear or favour! For some residents in Western Australia, not only has there been no change to the services provided by the Water Corporation, but also their services are worse. They are paying 50 per cent more in water bills for water services, yet water supplied to them has got worse.

To follow up on the Kingston, Australind, water case, there is no doubt that work was done. After I raised this matter with the minister in this house on 21 June, a flushing was undertaken. The problem is that it has not worked. The water is now as bad as it was before. I think that is because of the extent of the problem further up the Water Corporation network itself within the outer Bunbury–Australind system of water supply. The member for Collie–Preston will say a few more words about the Australind situation, because he deals with complaints from constituents in that area. In terms of the first point in the motion before the house about the delivery of affordable water services to the households of Western Australia, I have given two examples of why the Minister for Water and the Barnett government should stand condemned. The first is the massive increases in the cost of water services to the households of Western Australia. It is 50 per cent more than it was when the Barnett government took office. The consequence of that is that households are struggling. More and more households are applying for extra time to pay water bills. The second example is that nobody can see any improvement whatsoever in Water Corporation services to justify even part of the 50 per cent increase in water bills. The Minister for Water will say that water bills have to go up because of the massive capital investment made—even through the Labor government period—and at some stage someone has to pay for it. That is acknowledged; there is no disagreement from this side of the house that ultimately water prices have to go up to pay for the investment. It is a question of how it is done and over what time. Should it be done in a way that causes major pain and suffering to those least able to afford water services in Western Australia? No, it should not, because it is uncaring and heartless. That is not a problem to the Liberal–National government—it does not care how hurtful these water price increases or electricity price increases are to Western Australian families. Nobody has seen any change to water services and what they are getting for the 50 per cent extra. In fact, for some—like the residents of Kingston in Australind and other residents around Australind—their services have declined and their water quality has declined. Sitting on the table in the middle of Parliament is a classic example of what I am talking about. The second component of the motion before the house deals with the condemnation of the Barnett government and the Minister for Water for failing to control the excesses of the government-owned Water Corporation. Again, there are two parts to this argument. The first is the profitability of the Water Corporation. The minister will remember I asked a question about this on 13 September 2012—not very long ago at all; only a couple of weeks ago. I asked whether the minister agreed with the Water Corporation’s suggested price path for the average residential household, which promoted a further 25 per cent increase in the cost of water over the next three years based on the average weighted cost of capital of 6.2 per cent. The reason I brought that before the house was it was part of the Water Corporation’s submission to the Economic Regulation Authority inquiry into the proposed water tariffs for the Water Corporation, Aqwest and Busselton Water. The Water Corporation


submission set out three specific price paths for the average residential customer. They were based on the weighted average cost of capital at 5.82 per cent, six per cent and 6.62 per cent for the years 2013–14 through the out years to 2015–16. The main driver of the increases in price for water in Western Australia is the average weighted cost of capital—that is, the borrowings of Water Corp and the formula that is structured for paying for those borrowings. There is a direct flowthrough into the tariff structure, and the price path the ERA adopted would depend on how much more was paid for water. The proposition put forward by Water Corp was that there would be anything from a minimum of a 4.7 per cent increase in 2013–14 to using the 6.62 per cent weighted average cost of capital scenario of 8.5 per cent over the years 2013–14 to the out years 2015–16. Remember that they are compounded increases, which means by compounding those, we are looking at an increase. If the ERA were to adopt the higher scenario, which was a proposal that Water Corp put forward, Water Corp would like that 6.62 per cent increase as a decision of the Economic Regulation Authority, because it would allow a significant increase on its rate of return. The only problem is that someone has to pay for it, and the people who pay for it are us, and we pay for it by 8.5 per cent increases in the price of water every year between 2013 and 2016. As a straight increase, that would be 25.5 per cent, but as a compounded increase it is more like a 28 per cent increase in the price of water between 2013 and 2016. Obviously, given the submission put forward by Water Corp, I asked the minister: which of these glide path and price paths would he choose? Of course, he fudged the answer, as ministers do, because obviously he did not want put his head in the noose as a result of the question put forward by his counterpart in the opposition, and the minister talked about the performance of Water Corp and the dividends of Water Corp. The minister will remember that he pulled out a very nice glossy chart with —

Mr W.R. Marmion: I’ve got it here!

Mr F.M. LOGAN: Bring it out again, because the ERA would love to see that chart! The ERA would love to see that chart, because it would give the ERA an indication of where the minister is coming from. The minister talked about me complaining. Does the minister remember that? I will quote him if he likes. The minister said —

The member for Cockburn is always going on the radio and saying that we are wasting money in the Water Corporation and having higher profits.

It is funny, minister, that that point of view was also shared by the Economic Regulation Authority when it had a very close look at Water Corp’s proposals and Water Corp’s books. It appears that I am not the only voice in the community saying that the figures that the minister put up on his chart and highlighted in this house were disgraceful. Basically, it was a water tax. The profits were so great that they were forming a significant income stream for the state government for other purposes. Mr W.R. Marmion: It is based on the weighted average cost of capital.

Mr F.M. LOGAN: That is right; it is the weighted average cost of capital. What did the economic regulator say about that, minister? It is interesting the minister raised that. It is a lesson for ministers never to get too close to the organisations that they are responsible for, because sometimes they will bite the minister or bring the minister down as well. Water Corp put up three price path scenarios, as I said, between 5.28 per cent and 6.62 per cent in terms of the weighted average cost of capital. I asked the minister the question because I wanted to know his opinion. That was the Water Corp’s submission. Did the minister support it or did he not? Was it appropriate?

Mr W.R. Marmion: I think I might have responded that I was going to see what the ERA said.

Mr F.M. LOGAN: I know the minister did. That is what I said earlier: the minister ducked the question. One of the things the minister should do is lead from the front—not wait for somebody else to do the leading for him.

Mr W.R. Marmion: So you would have taken the Water Corp’s answer.

Mr F.M. LOGAN: Lead from the front, minister. All he has to do to is say, “Yes, I agree with the Water Corp’s scenario, that of the company I own”—after all, he is the minister responsible for it; there is one shareholder and the minister is it—“and I think a 5.28 per cent weighted average cost of capital is a healthy, but responsible rate of return.” The minister could have said that, but he failed to do that. He ducked the question. What did the Economic Regulation Authority come down with? It said that not only would the Water Corporation not get any one of the three price path scenarios that it put forward, but that it considers an estimate of 4.6 per cent appropriate, which is significantly below —

Mr W.R. Marmion: Is it 4.06 per cent or 4.6 per cent?

Mr F.M. LOGAN: It is 4.60 per cent. The ERA said that that is appropriate. It said that the main reason for the relatively low rates of return that were applied in this inquiry is that the nominal risk-free rate is currently at a low level. As I said, the weighted average cost of capital is the direct driver of the price of tariffs going forward. Whereas the Water Corp wanted to have anywhere between 5.28 per cent and 6.62 per cent increases, which would lead to anything between five per cent and 8.5 per cent increases in water prices, the ERA said that that


was not acceptable and in fact that the risk rate, which is always part of the formula for the weighted average cost of capital, is significantly lower than what the Water Corporation is trying to claim, and therefore its weighted average cost of capital should be significantly lower. Following that line of argument, the ERA then said that prices for water going forward will be significantly lower as well. I asked those questions because I wanted to know exactly where the minister stood on this issue. Of course, as I said, the minister ducked the question, and that in itself is a failure of leadership and confirms the reason I brought this motion to the house. The Minister for Water, as the owner and leader of Water Corp—it has one shareholder and that shareholder sits over there—failed to control the excesses. When that submission came before the minister, I assume he read the submission cover to cover—he should not say he did not get it before it went to the Economic Regulation Authority, because every minister gets it. By allowing a submission to go to the ERA, there was in effect a de facto acceptance that water prices would have to go up between five per cent and 8.5 per cent. Of course that has to be so, because if what I say is not the case, the minister would have acted and he would have brought in the CEO of the Water Corporation, Sue Murphy, and the chief operating officer and said that the submission was not on. Putting this proposal to the Economic Regulation Authority will lead to further significant increases in water prices—up to nearly 30 per cent—taking the higher price path put forward by Water Corp — Mr W.R. Marmion: Nonsense.

Mr F.M. LOGAN: That is exactly what the — Mr W.R. Marmion: You’re mixing it all up.

Mr F.M. LOGAN: I am not mixing it up at all. This is the reason why I have moved this motion. The minister has failed to recognise his responsibility as a minister. He is the owner of Water Corp on behalf of the people of Western Australia. If he thinks that he cannot pull in the chief executive officer and chief operating officer and tell them very clearly as the owner of the company and the spokesperson on behalf of the community of Western Australia that he thinks they are wrong, they are greedy, they are profiteering and they are gouging the people of Western Australia—if he thinks he cannot do that and he does not think that is his role—he should stand aside, resign and get someone else to do it.

Mr W.R. Marmion: What average weighted cost of capital would you have come up with, and how would you have come with it if you’re so smart? Mr F.M. LOGAN: I do not have to.

Mr W.R. Marmion: No, because the ERA comes up with it. Mr F.M. LOGAN: That is right. Believe it or not, it is not my job. I do not get paid to do that. The minister gets paid double what I get paid. He gets that pay for the responsibility of answering these questions, taking Water Corp on and showing leadership, and he has failed miserably to do so. He allowed Water Corp to put forward a submission to the economic regulator that was going to further gouge the people of Western Australia. It is clear in this ERA document that it was profiteering. The minister accepted the fact that Water Corp was gouging the people of Western Australia and therefore he accepted that Water Corp, on behalf of the government, was going to continue to cause mayhem and misery for the poorest in our society. The 84 000 people who struggled to pay their water bills last year would have suffered a significant increase. Why? It is because the water bills would have gone up by 80 per cent by 2016. The minister failed to show any leadership at all on this issue. The economic regulator caught it out and clipped Water Corp’s wings by saying, “No, you are not going to get the type of price path that you are looking for. It is far too much. The risk is far lower and therefore you are going to get a far lower price path and thereby return to your company’s profitability.” In doing so, if adopted by the government—that will be the interesting thing—it means a much lower tariff path for the families and the customers of Water Corp going forward. That is one area in which I believe the minister has failed in his responsibility to control the excesses of the corporation. He has failed because he failed to rein in the greed and the gouging by Water Corp that has been going on for the past three years in the name of the Barnett government. The second element of the motion before the house relates to controlling the excesses of the corporation. Not only was Water Corp happy with a profit path when we added the dividend return to government plus the tax equivalent, both of which are basically income streams from Water Corp to government, but also when we added the dividend return and the tax equivalents and the local government rate equivalents together for the out years presented to this house in the budget this year, that company was heading for a return of nearly $1 billion by 2016 in those three elements alone. The minister would have said, “Yes, but we have to take some of that money and we’ve got to pay it back. It goes into Treasury and it comes back as a CSO for subsidising country water.” As I pointed out to the minister in estimates, it is $220 million, not $450 million. Some of that money comes back as a community service obligation for payment under the hardship utility grant scheme, which the government has been changing around, and other pensioner subsidies et cetera. There are elements of those CSOs that are way beyond the remit of the Water Corporation. Why they are being done is beyond me; nevertheless, somehow as part of the fix-up for its mates in the National Party, the government is using some of


Water Corp’s profitability to build infrastructure under the guise of a CSO payment in country and regional Western Australia—something that should have been investigated by the minister and pulled up.

The point I am making is that this was a greedy company, identified and pulled up by the economic regulator as part of its inquiry into tariffs in Western Australia. That culture of being able to do what it likes and the culture of greed were reflected in how much its executives paid themselves, which is the second point of my argument—that is, the minister’s failure to control the excesses of the government-owned Water Corporation. The minister is more than well aware of this because I raised this in the media the week before last. The salaries that the executives of Water Corp have been paying themselves are unbelievable. For example, Water Corp has given the chief operating officer, Mr Moore, a 31 per cent increase from 2008 to this year. He has been paid an extra $120 000. I know and the minister knows that the people who work for Water Corp—the poor hacks in the office down in Leederville—have received nowhere near a 31 per cent salary increase over that period. They would be lucky if they received a 15 per cent increase over that period. Most received between 10 and 12 per cent because of the policies of restraint initiated by the then Treasurer and the current Treasurer, who is back to his normal behaviour patterns of asking people to tighten their belts once again. When he was Treasurer before, those wage constraints that he placed on the public service and government employees ensured that their increases were between 10 and 12 per cent. That applies only to the poor old workers in the public service; it does not apply to the executives and it certainly does not apply to the executives of Water Corp. Over that same period, Mr Ferrari, in communications, received a 20 per cent increase, or $43 000. Mr Hughes, the chief financial operating officer, received a 27.5 per cent increase over that period; that is, an $86 000 wage increase. If we looked at how much all the Water Corp executives have earned across the board since 2008, we would see that they have received a 21 per cent salary increase since 2008; that is, they have paid themselves $578 000 extra since 2008. My understanding is that only one executive in the Water Corporation hierarchy is on less than $300 000; the rest of them are on between $300 000 and over half a million dollars—$511 000. It is unbelievable! How much does the Premier get? The Premier gets about, what, $320 000? So, even the lowest executive in Water Corporation thinks so highly of him or herself that they get paid more than the Premier of Western Australia. Can members believe this? We are not talking about BHP Billiton, Lehman Brothers in New York or greedy foreign exchange dealers in the City of London; we are talking about a government-owned monopoly company here in Western Australia, the one shareholder of which sits in that chair on the other side of the chamber. Mr P.B. Watson: Does he get a dividend?

Mr F.M. LOGAN: He wishes he had, he wishes he could! With these dividends, member for Albany, I bet he wishes he did!

Mr P. Papalia: Maybe they’re all in the 500 Club!

Mr F.M. LOGAN: They can certainly afford to be in the 500 Club and some of them are in the $500 000-plus club! When Mr Moore came out to defend his wage increase on TV two Saturdays ago—not last Saturday, the Saturday before—he said, “It’s justifiable because it’s the industry standard.” Which industry?

Mr W.R. Marmion: Engineering!

Mr F.M. LOGAN: Which industry? It is a monopoly water supplier! Who is Water Corporation in competition with? Nobody! It is not in competition with Aqwest or Busselton Water; it is a monopoly supplier of water, yet its executives have such grandiose views of themselves, they believe that they should be paid — Mr W.R. Marmion: They’re building a desalination plant that wins a world award.

Mr F.M. LOGAN: They are not building the desalination plant; they bring in the Spanish to build the desalination plant. The only thing the executives ever do is go down there and have a cup of tea and see how it is being built.

Mr W.R. Marmion: Sure!

Mr F.M. LOGAN: That is exactly what they do; the minister knows that and I know that. That operation was effectively completely financed and built by the Spanish. The minister knows that and I know that. Mr W.R. Marmion: You know it’s an alliance!

Mr F.M. LOGAN: The same thing happened in Kwinana as well.

Mr W.R. Marmion: It’s an alliance with Water Corporation.

Mr F.M. LOGAN: The minister can call it what he likes; the people we are talking about now who have paid themselves enormous salaries have nothing to do with that construction. As the Minister for Health said in this place last night—it is in Hansard; he wanted to make it clear in Hansard—when he was Minister for Water Resources, he put forward the idea of desalination here in Western Australia and the then CEO of Water Corporation knocked it back and did not want it. So, the Minister for Water should not run arguments in here that the executives —


Mr W.R. Marmion interjected.

Mr F.M. LOGAN: The minister should not run arguments in this place that the executives of Water Corporation deserve it because of their involvement in desalination —

Mr W.R. Marmion interjected.

Mr F.M. LOGAN: One of these executives was in the same role when the then Minister for Water Resources, the current Minister for Health, was there and that executive opposed the desalination plant. Therefore, the Minister for Water cannot use that as an argument to justify the executives’ 21 per cent increase in pay; the minister cannot do that.

There is a culture of greed within Water Corporation. It is reflected in the way in which it puts forward arguments to the Economic Regulation Authority for increases in the weighted average cost of capital, knowing that the flow-on effect of that application would lead to higher water prices and thereby higher profitability for Water Corporation. That is one reflection of the culture of greed within Water Corporation. The Economic Regulation Authority exposed and pulled that out for everyone to see. The second example of the culture of greed is in how much those executives pay themselves; what they think they are worth when they enviously look at their colleagues in the private sector and think, “I should be paid that amount of money. If that’s what they’re getting in the mining and construction industries, that’s the sort of money I should be paid because I’m worth it”. Do they face the risk of being sacked? No. Do they face the risk of being laid off—retrenched? No. Do they face the risk of losing their conditions of employment? No. I believe that one of those executives, I think it was Mr Moore, salary-sacrificed this year—I think it is within the agreement—$400 000 of his pay into his Gold superannuation account. He salary-sacrificed 400 grand in one year! Seriously, minister, how many of us in this chamber could do that? None. Why is that? Because the Australian Taxation Office rules have been tightened up anyway, so people can salary-sacrifice only $25 000, even if they have the type of money to do so. That is all people can do, apart from those who are covered by Gold Super in the state system. No problems—400 grand of his $511 000 pay was salary-sacrificed into superannuation. God knows what his superannuation account must look like; he has been there since the 1970s, so he will have millions. The point I make is that if that is not a culture of greed, the minister can tell me what is. It is there in the annual report.

As I said, the minister is the single shareholder of that company. He has the capacity to rein the executives in. The minister has the capacity, even if he is not willing to give them a direct order, because he has to table that direction in Parliament, to bring in the CEO and the chief financial officer and read them the riot act, to give it to them right between the eyes and tell them, “This is not on”. If the minister does not think that is his role, then really, seriously, he should look for another job, because that is what the minister’s job is. When I did the same to the then head of Western Power, Mr Doug Aberle, and cut his bonus, I had people from the minister’s side of government criticise me and say that I should not have done it. Members opposite said that I should have let him be paid whatever he likes and let the chair and the board give him whatever they wanted.

Mr W.R. Marmion: Did you cut the chief financial officer’s salary?

Mr F.M. LOGAN: No, I did not; I cut only the CEO’s salary. Mr W.R. Marmion: Why?

Mr F.M. LOGAN: Because he had not met his key performance indicators, and I know fudged KPIs when I see them! He did not meet his KPIs and as a result it was my job to lead from the front and show that CEO it was not on, and show the board and the chair that it is not on either. I was, just like the minister, the single shareholder of the company. As I said, in this case, despite the way the act is structured and despite the fact I recognise that the minister in giving a direction to the organisation has to table that direction—I understand all those issues—it still behoves the minister to tackle these issues head on. The minister has to tackle the culture of greed that has, over years, emerged in Water Corporation and is reflected in massive water price increases for the people of Western Australia and massive increases in the salaries of the executives—not the salaries of the general workers.

If we look at what is happening to the general workers, their jobs are also threatened because of the continuous contracting out of maintenance services, and now the contracting out of production services in our dams and our waste water treatment plants and our water extraction plants to the Transfield–Degrémont–Suez alliance. Do not tell me, minister, that people do not feel threatened. People do feel threatened, and they tell me they feel threatened. Even senior members of the Water Corporation tell me they feel threatened by that alliance. Some people know that ultimately those jobs in the Water Corporation will go and will not be replaced. The minister will remember that that was the question that I put to the chief executive officer of the Water Corporation during budget estimates. I gave the example of Mandurah, and I said to the CEO of the Water Corporation, “Are those Water Corporation jobs safe; will they replace future employees in the Water Corporation?”, and the answer was, “No”. The minister laughed! The minister laughed and said, “What do you expect?” I expect that the minister would do something about protecting jobs in the Water Corporation. That is what I expect. I expect that the minister would show some leadership and pull his CEO into line when she makes remarks like that.


But, instead, no problems; the minister continues to sign off on huge salary increases. The minister says, “It is not my fault. It is the chair and the board who recommend those increases. What can I do?” The minister can reject them. He can even issue the Water Corporation with a directive and say he rejects those increases, and he can table that in this place. Does the minister think I will get up and oppose it? Of course I will not—I will probably congratulate the minister for doing that. That is what the minister would do if he had guts and if he showed leadership as a minister. But the minister has failed to do that. It is easier for the minister to just go with the flow—excuse the pun—and manage his portfolio. It is easier for the minister to accept all the documentation that comes from the Water Corporation. It is easier for the minister to not challenge recommendations from the board and not challenge notes from the chief executive officer. It is easier for the minister to not take on the Water Corporation when it is seeking to increase water charges between five and eight per cent every year for the next three years. It is easier for the minister to not say to the Water Corporation, “You should not put that submission in to the ERA; it is far too great an increase, it is too greedy and it is inappropriate.” The minister does not do any of those things. It is easier for the minister to sit there and cop everything the Water Corporation gives him and act like a manager and not a leader.

That is the reason that this motion has come before the house. The purpose of this motion is to condemn the minister and the Barnett government for failing to deliver not only affordable water services to the households of Western Australia—I have shown clearly that that is exactly what has occurred in this state—but also any form of improvement in water services. Those two bottles that are sitting on the table in the middle of this chamber show that water services have gone backwards, yet people are paying 50 per cent more for their water. The second component of the motion is that the government has failed to control the excesses of the government-owned Water Corporation—a monopoly—which has put forward arguments to the Economic Regulation Authority that propose increases in water rates of between five and eight per cent over the next three years, while the minister says nothing. He lets it go through to the keeper—the ERA—and the ERA then whacks the minister and the Water Corporation around the head with its report and says that the Water Corporation is greedy; it has been overcharging in waste water services. Mr W.R. Marmion: That is not what it says. Mr F.M. LOGAN: That is what it says. It has been overcharging in waste water services. Mr W.R. Marmion: No, it has not. It is putting in a price path for the next three years. Mr F.M. LOGAN: It says that the Water Corporation is basically dreaming when it comes to its price path on the average weighted cost of capital. It says also that the Water Corporation’s outrageous profitability needs to be pulled back into a more acceptable rate of return. That is what that document says, and the minister knows it. Mr W.R. Marmion: No, I do not.

Mr F.M. LOGAN: If the minister does not know it, he should resign! That is what the minister should do! If the minister does not know that that is what it says, he should resign, because he does not know what he is doing. That is clearly what it says. It is written there, in English, in black and white. That is what it says.

The second part of the excesses is the greed that is shown by Water Corporation executives in lining their own pockets. Where does the money come from? It comes from our pockets. It comes from the money that we are paying through the increases in our water charges. Where does that money end up? A significant component of that money ends up in the bank accounts of Water Corporation executives. As I said, only one Water Corporation executive is on a salary of $300 000; the remainder are on salaries of between $300 000 and $511 000. Only one executive is earning the same amount of money as the Premier; the remainder earn a lot more than the Premier. As I have pointed out, one of those executives has the audacity and the temerity to salary-sacrifice $400 000 of his pay this year into his superannuation account. If that is not an example — Dr M.D. Nahan interjected. Mr F.M. LOGAN: Does the member for Riverton think that is funny? Tell the people of Riverton that! How many people in Riverton earn $500 000 a year, let alone salary-sacrifice it?

Dr M.D. Nahan: You cannot salary-sacrifice more than $25 000!

The ACTING SPEAKER (Ms A.R. Mitchell): Member for Riverton, thank you!

Mr F.M. LOGAN: Mr PhD, “Oh, yes, I forgot about that!”

The ACTING SPEAKER: Member for Cockburn! Thank you, members! We will get back to a quiet debate.

Mr F.M. LOGAN: Thank you, Madam Acting Speaker. I will continue with the story that I was summarising about the salary-sacrifice component of one executive of the Water Corporation, before I was rudely interrupted by the member for Riverton, who clearly does not know what he is talking about. My advice to the member for Riverton is: if you do not know anything, do not interject. This executive is salary sacrificing $400 000 a year. The point I was making is that is a classic example of the culture of greed within the Water Corporation. It is a


culture of greed by the Water Corporation in trying to get more money than it needs for profits and return to government, and it is a culture of greed by executives in paying themselves more, and basically abusing their position within the public service—whether it is a government-owned company or not—to gain an advantage that no-one else in our community is able to access. This is a culture of greed and a culture of excess that this minister has failed to address, and that this minister will stand in Parliament and justify and defend; and the minister stands condemned for that.

DR A.D. BUTI (Armadale) [5.07 pm]: I also rise to contribute to the motion before the house, which condemns the Barnett government and the Minister for Water for failing to deliver affordable water services to the households of Western Australia, and for failing to control the excesses of the government-owned Water Corporation. The member for Cockburn has prosecuted the case very well, so I will not need to add too many remarks to that case.

As we all know, this is an incredibly serious issue. We all know that water is life—without water, we would have no life. We live in a city that is one of the driest in the world, and in a state that is becoming drier and drier as each year goes by. I think three of the driest seasons in Western Australian history have occurred in the last six years. It is imperative that we manage our water supplies in the most efficient manner and that we seek to increase our water supplies as best as we possibly can. Therefore, it is a real worry when we have a Minister for Water who is incompetent in his position. The minister was also incompetent in his interjections to the member for Cockburn, with additional support from the member for Riverton towards the end of the prosecution of the case by the member for Cockburn. That shows that this minister and this government do not care about the excesses of the Water Corporation. As the member for Cockburn said, the culture within the Water Corporation is a culture of greed. When the member for Cockburn mentioned that, the member for Riverton—the Milton Friedman of the house —

Dr M.D. Nahan: I take that as a compliment!

Dr A.D. BUTI: The member for Riverton would, because he would be heading the Tea Party if it was in Australia. Mitt Romney would love you, as I am sure the Premier loves you, as you keep putting your foot in your mouth!

Members opposite laugh when we talk about the excesses of Water Corporation executives, because the Liberal Party is a party of greed. We had the former Treasurer, the member for Bateman, talking about getting rid of penalty rates, but members opposite laugh when we have these corporate executives earning $300 000, $400 000 and $500 000. They have no problems with that; they can earn that money without any performance indicators. The Milton Friedman of the house believes in the discredited trickle-down effect; the problem is there is not much water trickling down, especially with the minister who is in charge.

The Minister for Water holds one of the most important portfolios in Western Australia due to the climatic situation we find ourselves in but he is incompetent in his portfolio; more so because he shows no leadership. The member for Cockburn said that the minister is a manager. The member for Cockburn was being a bit soft on the minister. He may be a manager, but he is not a very good manager. He needs to show initiative—policy initiative and policy reform. Because the minister is not confident in his portfolio, he sits back and allows the Water Corporation to dominate him, rather than taking control of the Water Corporation. I can assure the minister that the Water Corporation has one of the worst reputations among government departments. The minister only has to ask agencies that have had to deal with the Water Corporation. We have had this discussion in this house before. The Armadale Redevelopment Authority had numerous problems with the Water Corporation in trying to advance its Wungong urban waterfront project. I am sure the member for Darling Range would know about the Wungong urban waterfront project in the Armadale region. One of the greatest stumbling blocks was the Water Corporation. I asked the minister about half a year ago whether he was going to do anything about that. The minister nodded his head, as he does often, without anything coming out of his mouth. I took that nod to mean that he would try to ensure that the Water Corporation does advance the projects in the Armadale region. But, as far as I am aware, nothing at all has happened. I would like the minister to show leadership and tell us what he thinks about the Economic Regulation Authority report that came out yesterday. Is he in agreement with its recommendations about how the Water Corporation should be charging for water? The current position is that there is a fixed water rate and a varied rate, which varies according to the volume of water that is consumed. It is based on property gross rental values.

Mr W.R. Marmion: That is the waste water component, not water.

Dr A.D. BUTI: Yes; it is the waste water proposal. The ERA’s recommendation, of course, will reduce the price for some people but increase the price for others. I wonder whether the minister agrees with the proposal by the ERA that the people in Bunbury will be paying 11.8 per cent more a year. If he does agree that should be the position, has he told his colleague the Minister for Local Government who happens to be the member for Bunbury? From my analysis of the ERA report—it came out only yesterday—it would seem to be an incredibly


inequitable series of recommendations whereby many people who are on low incomes will pay a greater percentage rise in charges than people on higher incomes. I may have that wrong but —

Mr W.R. Marmion: That is only if we adopt that part of the recommendations for the way we treat waste water.

Dr A.D. BUTI: Will the minister adopt that?

Mr W.R. Marmion: I haven’t got a position on that particular thing.

Dr A.D. BUTI: Does the minister have a position on anything?

Mr W.R. Marmion: Wait till I get up!

Dr A.D. BUTI: As the member for Cockburn was prosecuting, the minister does not seem to have a position on anything! The minister is the leader in Western Australia, the minister in Western Australia dealing with water management issues: delivery, quality and cost of water. As we previously established, water is an incredibly precious commodity in Western Australia; it is a precious commodity worldwide. There is an argument that the next major war will not be over oil; it will be over water. At least in Western Australia we do not face that problem — Mr I.C. Blayney: We are just about out!

Dr A.D. BUTI: It is an incredibly desperate situation, and I am sure it is more desperate in certain regional and agricultural areas. This is why the minister has to show leadership. The minister cannot keep saying that he is considering matters; he has to take control of his portfolio.

Mr W.R. Marmion: I have created water security in Perth.

Dr A.D. BUTI: The minister has to bring the Water Corporation under control and ensure that it is managing this precious resource in the most efficient and appropriate way for all Western Australians. The minister must put his mind to how we can improve the supply of water in Western Australia. What is the minister doing?

Mr W.R. Marmion: You wait! Sit down and listen when I get up!

Dr A.D. BUTI: This always happens with the Minister for Water. Whenever a motion is brought before this house, he says, “You sit down and I’ll tell you!” The minister should tell us before we bring in a motion. Why do we need to bring a motion before the house before we can get any information from the minister?

Mr W.R. Marmion: You want to look good!

Dr A.D. BUTI: Do not worry about us looking good; you are the minister; you are the one who should be looking good!

The minister does not want to see another opinion piece on page 5 or 6 of the newspaper, does he?

Mr W.R. Marmion: I don’t care!

Dr A.D. BUTI: That is not what the minister told me; come on! The ACTING SPEAKER (Ms A.R. Mitchell): Member for Armadale, could I suggest that the minister will have a chance to respond to your questions, so in the meantime you should keep to the particular areas.

Dr A.D. BUTI: It is hard, Madam Acting Speaker; if the minister interjects and asks me a question, I surely have the right to respond.

The ACTING SPEAKER: Member for Armadale, it did not occur that way last time, so that argument probably does not stand at this stage. Can I ask you to return to what you are talking about.

Dr A.D. BUTI: As I said, the member for Cockburn has prosecuted the case for the opposition extremely well. I am very concerned that this incredibly precious resource that we have, which is water—the basis of life and of what we do—is being administered under the minister’s portfolio, but he has not shown leadership and he has not controlled the Water Corporation. The excessive salaries that the executives are receiving do not seem to bother the minister—or the Milton Friedman of the house! However, it is a major concern for this side of the house because we are in favour of equity and a more efficient water supply system that the minister has shown no ability or inclination to get on top of. The minister stands condemned, as the member for Cockburn prosecuted, and, hopefully, at the end of this motion, the strong evidentiary case that we have presented will be shown in the vote.

MR C.J. TALLENTIRE (Gosnells) [5.18 pm]: I rise to support this motion put forward by the member for Cockburn. It gives us a chance to look at this issue of where those profits from the Water Corporation go and how that money can be used to help our water supply situation. Unfortunately, we see big profits being made and big investment being made, but it is all going towards developing a supply system that in many cases is probably not a sustainable one and one that will make for a more costly water supply as well.


We know from the budget papers that the government is talking about an investment in water infrastructure of $3.6 billion over the forward estimates. On the face of it that sounds good: we are going to protect ourselves from drought and things by investing in water infrastructure. But the downside is that such a big investment will mean that at some point we will have to share the cost of that level of investment. It is going to lead to an increase in water prices for consumers when there is an alternative. Given that the Water Corporation seems to be in the happy situation of making very large profits, I would have thought that more than ever this was the time for us to be investing in not just engineering solutions to water supply, but also demand management solutions. Then we would have the double benefit of actually helping people to meet their water needs with the water supply that is available, while at the same time helping them reduce their bills. That would be a much better situation than this constant view of finding a new resource.

I heard the Premier on the radio this morning talk about new water sources for Western Australia. I fully support a couple of the ones he was talking about. He touched on the aquifer recharge program and the idea of waste water re-use through that sort of scheme. That is excellent. I know the member for Cockburn and others on this side have supported that. When the member for Balcatta was Minister for Water Resources, he was one of the initiators of that whole research project, which has now been proven. We are getting to different scales of trial, and it is looking very promising. Managed aquifer recharge and aquifer recharge in general is looking quite good as a potential source of water for us in the future. I think about 100 gigalitres of water a year could be added to our scheme system through that. At the same time, though, the Premier was talking about revisiting the south west Yarragadee aquifer option. We know that that was talked about during the time of the Carpenter government. The Carpenter government made the wise decision to not go for the south west Yarragadee and instead went for the desalination plant at Binningup. Around $450 million in 2007–08 dollars for the south west Yarragadee was instead applied to the Binningup desalination plant, which had similar results in the delivery of water. It was a much better decision. The Premier is considering revisiting this idea. He will have to answer to the people in this place who represent those electorates in the south west that would be adversely impacted by the south west Yarragadee proposal. The people whose agricultural livelihoods depend upon a reliable south west Yarragadee would not want huge amounts of water to be taken from their farming and horticultural operations and brought up to Perth. They would be very concerned about that. I think it is interesting that the Premier is just flagging that as an idea at this stage. Members may recall how significant the campaign was to save the Yarragadee and how people from south west shires, conservation-minded people, horticulturalists and agriculturalists—a whole range of people—were involved in that south west Yarragadee campaign. The Premier needs to be very careful about what he is saying on that point and to be clear about it as well.

I was amazed to hear the Premier go on to say that possibly he would also look at dams in the south west. With declining annual rainfall, it is remarkable that he would contemplate building more dams in the south west. Maybe it was an off-the-cuff comment, but it was one that I heard him make this morning. I hope the minister can clarify that there is no serious intention of looking at major dams in the south west to provide for water supply to south west towns or to the Perth water supply scheme, which is the scheme system we rely on in the Perth metropolitan area.

This issue of making sure we invest in demand management is one that we really have to keep hammering home. I know the minister is going to talk about his Save 60 campaign. That is something, but it is very small bickies. How much of the $6.3 billion going into infrastructure is going in to help people be more waterwise? The minister will be able to tell me how much he has put into the promotion, education, awareness raising and website development of the Save 60 campaign. He will be able to tell me how much money he has put into the showerhead swap program as well. It will be a tiny amount. I cannot recall the exact figure. I think we have seen it in the past; I am sure the minister will be able to refresh my memory on those things. They are tiny amounts when we compare them with the $6.3 billion going into actual hard infrastructure. Why can we not put similar amounts into demand management initiatives?

When I got home last night, I opened up my bills that are always in the letterbox. I got my Water Corporation bill for the water supply to my home in Thornlie. I think these bills have improved. They show my home’s consumption for the period relative to the homes of other people in my suburb. That is useful information. Dr K.D. Hames: Was it higher or lower?

Mr C.J. TALLENTIRE: It was substantially lower. I would not be bringing it up if it was embarrassing, I can assure the minister. My home’s water use is significantly below the level of the typical Thornlie home. One of the reasons is that I have a waterwise garden. I see that the water bill actually refers to that. It states —

Choose waterwise plants for your garden as they are perfectly adapted for our climate and require a lot less water than other plants. Visit our Waterwise plants for WA directory at watercorporation.com.au to find the plants best suited for your region.

It is good advice, but the fact is that this is exactly the initiative that the government could be investing in. The government should not just be talking it up with a few lines on a bill and a few pages on its website; it should


invest in this and provide an incentive program. If the government had a $100 million investment program in waterwise gardens, it would produce a very big water saving. Let us do the sums on it. It would still be tiny in comparison with this infrastructure spend of $6.3 billion that the corporation is going to make over the forward estimates. I am saying that the minister can really do a lot more with waterwise initiatives, but he has to actually spend on those things and not just talk them up and use them in advertising and have green frogs talking about being waterwise. It has to be backed up with dollars. That is the future. That would make a huge difference. I think my property is a demonstration of it.

Turning to other aspects of the bill, it states that I paid $1.19 for the 41 kilolitres that I used. In fact, that was the total amount applied to me.

Dr K.D. Hames: Per kilolitre.

Mr C.J. TALLENTIRE: Forty-one kilolitres at $1.19. My daily usage is rather high—230 litres a day. I am amazed. In fact, I suspect there is a leak somewhere in the house. I think 230 litres a day sounds like quite a lot. The point is that I compare these tariffs with those in the Economic Regulation Authority report, which has received a lot of media attention in the last 24 hours. I heard Lyndon Rowe from the ERA say that if his recommended water charges for Water Corporation metropolitan residential customers are implemented, people will have a saving. I do not think that is right when I compare it with the tariffs that I am looking at here, if I am paying $1.19 per kilolitre and the report states that it is $1.36 for every kilolitre up to 150 kilolitres under the current tariff regime. But from 2013–14 it will be $1.39, in 2014–15 it will go up to $1.44, and in 2015–16 it will go up to $1.49. Obviously, that is significantly more than the $1.19 that I am paying.

Mr W.R. Marmion: They do recommend that it will create a slight increase in the water charges and a decrease in the waste water charge.

Mr C.J. TALLENTIRE: So there has not been a recommendation of a decrease in the price of water. I think that people were being a bit misled in some of the media commentary on that then. That is interesting.

With regard to sewerage charges, I heard some discussion that the gross rental value system currently being used is perhaps unfair in that it charges people more if they own a property with a higher gross rental value. The gross rental value charge is a useful policy basis because although the gross rental value will be higher for people with bigger houses, if they have a bigger house then they probably have more people staying in it and, therefore, it seems fair that they should pay more. There is probably an argument against this, and perhaps this is more prevalent in the minister’s electorate than mine, when only one or two people live in a big house.

Mr W.R. Marmion: I was not around years ago, but my understanding is that the ERA has had this view all the time, and it might have come up as a recommendation when you were in government and you chose not to do it. It is something you look at when the budget comes up.

Mr C.J. TALLENTIRE: Yes. If only one or two people live in a bigger house and they have to pay more in charges, then that is their choice to live in a big house. That policy message says that people can downsize to a property with a lower rental value and one of the rewards for making that decision is that they will end up paying less for water rates, especially sewerage charges.

In the past we have referred to documents like the residential water use study and some of the information—

THE ACTING SPEAKER (Ms A.R. Mitchell): Members, a lot of extra conversations are going on in the chamber and the volume of those conversations is increasing greatly. Could I ask that if you wish to have a conversation to go outside? Thank you.

Mr C.J. TALLENTIRE: Thank you, Madam Acting Speaker. I referred to the residential water use study and the initiatives. One initiative that the minister had in place—I know his predecessor brought it in—was the winter sprinkler ban. If it is raining this evening—I noticed this travelling home last night—I ask members to keep an eye out for how many people are watering even though we have a frontal system moving through over the course of this week. The minister needs to revisit this issue because it seems that the little rain we are getting now is coming later, so the whole winter sprinkler ban perhaps needs to be extended. It just seems crazy that people, just because they can water, are watering, and obviously there would be further savings to be made through the extension of that ban. Mr W.R. Marmion: You would be pleased to know that I have not got my sprinkler system on.

Mr C.J. TALLENTIRE: Very good. One thing I want to highlight is that it is often said that domestic users do not account for that much water use in the state, but it is important to remind the house that when it comes to the scheme water—this very expensive water supplied to us by the Water Corporation—71 per cent of water used is residential. That point needs to be highlighted because it underlines the need for us to implement those demand management options at the household level and to fund them. As I said, things like the Waterwise plants scheme is a perfect example of where people can make some huge savings.


I will say a little about the issue of salaries people receive at the Water Corporation. Obviously, if there is a problem there with people receiving excessively large salaries that must be investigated. I know a number of people who work at perhaps a more middle management to lower level within the Water Corporation. I can attest that they are hardworking individuals and their dedication to their cause is very strong. In fact, they see their role through the Water Corporation as being part of a cause, and they are passionate about things like water efficiency. I have no doubt that they are also aggrieved when they hear that some of the executives there are paid these exorbitant salaries, and they would be as worried as anyone else about that. I will touch on the important issue of waste water re-use and the need for us to develop programs that use water that is fit for use. The idea that we must have drinking quality water available through every single tap—it costs a considerable amount to provide—and that it has to be provided for things like watering lawns, football ovals, sporting grounds and parks seems very strange. We can do much better in providing water that is fit for use. Finally, on this issue of waste water re-use, we need to further investigate not just the managed aquifer scheme in which we are dealing with gigalitres of water, but also waste water re-use on a neighbourhood scale—almost a cul-de-sac scale—where water re-use is available to people to perhaps use on their gardens, but it is water collected at that small scale that the individual cul-de-sac or street has the responsibility to maintain and look after. I support the motion put forward by the member for Cockburn. We have so much to do in this area, and there are so many improvements that can be made on how we use our budget of $3.6 billion. That so little is spent on demand management is a real shame.

MR M.P. MURRAY (Collie–Preston) [5.36 pm]: I, too, would like to add a few comments, probably more at a local level. I do not quite understand the high salaries being paid and the service and water quality that people in the Australind–Eaton area are getting. I also have one of these bottles filled with water from that area and although it does not look too bad from a distance, if I were to pour it out into a cup I would probably have to use a knife and fork to drink it because the lumps in there would certainly jam in my teeth or probably catch on my tonsils, and that really concerns me. The harder I shake the bottle, the bigger the lumps become. Most times this sort of water does not come from a tap but out the back end of the toilet, and that is exactly what this water looks like. That is what concerns me about water supply in that area. The really concerning part is that I have brought this bottle in here before—we have talked about it before—and the problem continues.

I suggest to the minister that he gets onto Facebook—most people thought that I could not use Facebook, but I am just showing off. Seriously, every night on Facebook mothers from different areas ask each other whether they have a problem with the water. Some of the photos that go on there show a white bath filled with water that is very similar in colour to this timber bench here—a coffee-coloured bath! It certainly concerns me that at night people sometimes take their children to other people’s houses or their grandparent’s place to have their baths; that is just not on. Also women are not able to wash their hair and those sorts of things—we cannot keep using the excuse that there is no problem—but if they ring the Water Corp, it will bring around some special soap. It is one of the most insulting things possible. “It stinks, it is lumpy and it hurts when it comes out of the shower but don’t worry about it because we have some special soap for you to use!” I do not know what the special soap does. People have problems and they blame it on the water, but it is not always the water that is the problem. Cleaning showerheads and the rings around the toilet, where the water sits in the bowl, is continuous in those areas. People are getting sick of it. They have been very patient. It has been brought up previously, but my sources tell me it is not going to change. There is some problem with the bores. There are some problems with the system that separates the iron out, and it accumulates in different areas of the pipes. If one area is flushed, it pushes it into another, so there is an ongoing problem of it hopping down the line. People have said, “Now it is in my area.” It is like a lurgy; it is moving around. People do not know how to deal with it and are getting very frustrated. From an electoral point of view, it is quite good because I blame the minister! But I think it is about time it was fixed. Any candidate who stands there will be asked exactly the same thing. In the south west, there are not only water pricing anomalies but also structural problems. One area pays a higher water price than another, even on different sides of the street. That has to be addressed. I suggest the price should be lowered on the high side. The Economic Regulation Authority has said people are being overcharged in these areas. Why would the minister not give himself some room to lower water prices on the Australind side to match the Eaton side, or allow Aqwest to expand its area and put its price out into that area? It would stop the arguments, which are putting splinters in the community. It is unfair to many. When one thinks about it, all water comes out of the same bores.

The aquifers are very shallow. The infrastructure is there; the same with Busselton. Over time both departments, Aqwest and Busselton Water, have done a very good job in their investment profiles. Are people down there being rewarded for that? No. The ERA says that Aqwest will increase the water charges 38 per cent by the year 2015. That is a huge increase by anyone’s thinking. Over three years, prices will rise 38 per cent, if it is adopted. The profile is already written. It is very different from what I was told when I had a briefing in their office down there.


Mr W.R. Marmion: Who—Busselton Water or ERA?

Mr M.P. MURRAY: ERA. Aqwest told me it would not do that. Who has put the pressure on them? Who has said, “Get out there and lift those prices higher to get a bigger return for government, at the cost of the householders within those areas”? It concerns me immensely that these costs will be ongoing. Mr W.R. Marmion: Can I explain how the ERA did that? Mr M.P. MURRAY: No. I attended a briefing some months back, about the same time I released a press release saying it will increase. The ERA told me water prices would not increase. Now the proof is in the pudding because it is requesting different increases. The ERA is telling the Water Corporation not to go that high. Mr W.R. Marmion: The ERA analyses the water licensing authority, which is the Water Corporation, Busselton Water and Bunbury. It looks at the operational costs and also sets a price which is the average weighted cost of capital. It comes up with a price — Mr M.P. MURRAY: Then they send it off; I understand that. Mr W.R. Marmion: They recommend a price that reflects the cost of providing that service. Mr M.P. MURRAY: I understand that. But the ERA’s recommendation is 38 per cent over that period. It says “nominal”. It says “Aqwest residential customers’ water charges nominal, to be increased over that time from 2015–16 by 38 per cent.” That is there, and that is where it is headed. It is far too high when we look at the infrastructure the water comes from—the sand flats! The bores are shallow at this stage, with this orange water. They will try to deepen one bore. Sure, that is part of maintenance and the upgrading of systems. Why should we look at those sorts of increases when there have already been increases in many other areas? People come through my door on a regular basis asking how they are going to pay their water or electricity bills, and asking whether any assistance is available. The numbers seeking assistance have gone through the roof. It is very disappointing that there is no cap or real effort from the government to cap executives’ wages. It is different from what happened in Parliament over the last few years when both leaders said, “Let’s cap our wage to some degree”—not actually cap it, but restrict our wage increases along these lines. We do not seem to have that in the public service. It is about, “No. I will write out my own cheque; thank you very much.” It is much higher than the average in many areas. They work hard, as has been said, and they do a good job, but they are being overpaid at this stage.

They are the issues I have in my electorate. Minister, the main reason I am on my feet is about getting something done for these poor people whose good clothes—including everyone’s favourite jumper—have to be thrown out because they have gone through the washing machine. I am sure the minister has seen some photographs of that because I believe they were sent to his office. I do not know what they did. We have to be respectful about what is happening and ensure it does not continue.

The extension of infrastructure in some country areas has meant that prices are beyond belief. If a person wants to subdivide a small block and it involves a pipe being extended, the Water Corporation says that person has to go to the far end of the block and not the short end. I have some concerns about how that pricing is done. I also have concerns about preferred contractors. “Preferred contractors” probably equates to “how to print money”! The preferred contractor is rung up to do a job, but at what cost? It is not quoted properly. It does not give other people the chance to put pressure on the price quoted. If there is only one contractor, of course it will be done on a good hourly rate or a quote, knowing no-one else will quote against them. The minister should open that a lot further to allow competition in order to push those prices down so people can increase density in country areas—I am talking about from 20 acres down to five-acre lots—so small towns can survive. That is one of the problems. It costs $70 000 to put a water main on. Straightaway, that has to go onto the price of the block. It means people do not buy it—it is quite simple. Blocks that were cheap at one stage are not anymore due to the service requirements and the cost of those requirements. I ask the minister to also look at that I do not know whether the minister is aware that this Sunday, 30 September, is World Rivers Day. I wonder whether the minister has brought that to the attention of the general public. Our river ways, which we rely on in some areas for our water, and certainly many other things that —

Mr P.B. Watson: Marron!

Mr M.P. MURRAY: Many other animals also live in there.

Seriously, I do not think our rivers have as high a regard in this state as they should. Money is not being put aside. The part of the Collie River that runs through Collie is just a drain. Further down there is one of the most hidden, pristine bits of river below the Wellington Dam that comes out at Burekup. For anyone interested in walking trails who wants to do a great walk, they should look at that. We must keep those rivers in that state. We need money put back in.

It was very disappointing to see the $35 million that was going to go towards the desalination plant taken out of the budget, and that project was put back. There is also the third study of the river in three years, which will be


$250 000, to try to keep people quiet and to stop them from making a noise about the issue. But I will certainly make sure that the people of Collie are aware of the social benefits of our river and on Sunday I will run a function with the help of some other people out there and some of the Nyoongah people as well to celebrate. I just wonder whether the minister has put any money aside to try to lift the profile of looking after our rivers, which in many areas run into dams used for drinking water, especially in the Perth region. We need to work through that issue to make sure that we go out there and look after a vital part of our environment. I think he should do that, because he wears hats both for both portfolios and he has some functions to acknowledge. In early times the Swan River played a part in the development of Perth and now it is in a mess because we have not looked after it enough and we have not put enough back into it over many years. It is with concern that I talk about the rivers, but I think worldwide—Sunday is World Rivers Day—people are starting to acknowledge that we cannot just keep going on the way we are and we must do something about the problems rivers face. Just finishing off, I ask that the minister please—pretty please—do something for the people of Kingston. Enough is enough and sooner or later the minister will pay for it in the ballot box if he does not do anything.

DR G.G. JACOBS (Eyre) [5.31 pm]: I take the opportunity of the few minutes left before the meal break to make a few comments on this motion moved by the member for Cockburn. I would just like to introduce a bit of balance to the debate and pursue a little less negativity, and recognise that there are some good things happening in the water space. Before I share information about a project that is happening in my area, I would like to reflect on some of the comments made that nothing new is happening with water delivery; it is just the same and nothing has changed. That shows a total lack of recognition of the fact that we have an ever-increasing population faced with a drying climate and of the challenges we have in supplying water to the residences and residents of Western Australia. I am sure the member for Cockburn understands those challenges in the water space. I want to touch on a little project, if you like, in the Kalgoorlie–Boulder area that I am au fait with. I would like to share with the house some features of a program that, member for Cockburn, is showing some change, is delivering things differently and for which there are positives in demand management and monitoring, which is a really important issue. In the time I spent close to the water portfolio and the water ministry, I found that if something cannot be measured, we find it very difficult to manage. The smart metering project provides information on water consumption, leak detection, demand management, tampering and backflow monitoring, and there is a technology that allows us to do that better and it has been introduced and is working in Kalgoorlie–Boulder. For the benefit of the house I explain that this technology automatically collects consumption data by use of—the minister might correct my pronunciation—a cyble sensor located on each meter, which transfers the water consumption data to a central database for billing and other functions. Over the past seven years the Water Corporation has carried out a number of trials to better understand the reliability of the different smart metering technologies that are available and how they can best be used — Mr F.M. Logan: I acknowledge that.

Dr G.G. JACOBS: The member for Cockburn commented earlier that everything was bad and that nothing had changed, that the government delivers things just as they were delivered five or 10 years ago and that basically there is no improvement or movement in the water space. Of course, a cyble sensor does not cost any money, does it? It does not take people to run it, does it? It does not take people with knowledge of technology to make it work, does it? These cybles just float on to people’s metres and they just work! So, we do not need the knowledge base, intellectual property or people to manage this project such as the very good person we have in the regional office in my area—an absolutely outstanding man with knowledge and the ability to get things done. The trials undertaken showed that cybles really reduce physical risk, because a person to read water meters is no longer needed. I surmise there are two reasons that Kalgoorlie–Boulder was chosen for this trial. One of course is that we transport the water a very, very long way via the O’Connor pipeline—650 kilometres. I have to tell members that that is expensive. There are probably a couple reasons that in the goldfields—historically and now—water is gold. The second reason I believe the region was chosen for cyble technology and the smart meter program is that fences are tall and the dogs are big and angry, and I can attest to this because I have done a bit of doorknocking in the region!

Mr P.B. Watson: You should have been a postman!

Dr G.G. JACOBS: A person has to be very careful doorknocking in Kalgoorlie–Boulder because a lot of the men and women are shift workers in the mining industry and if someone disturbs them during the day when they are off shift and trying to get some sleep before the evening shifts—watch out! With cybles we do not need meter readers and this reduces the issue of dog attacks, manual handling and the entering of backyards. In fact, there are some truly operational efficiencies. Of course, the member for Cockburn is not in this place, so he does not want to hear about operational efficiencies in Water Corp; he does not want to know from where we have come and where we are going in the water space. It is all just the same. He has no idea from a regional perspective where the water for a lot of my region in Boulder comes from, how far it comes, the fact that the water has to be pumped and the infrastructure of the O’Connor pipeline. Yes, it was built more than 100 years


ago, but it needs constant upgrade and that does not happen on its own; it comes with a cost. These are enormous challenges and they come under the auspices of the Water Corporation. The operational efficiencies for smart meter water readings are that they are quicker and easier than manual readings, and of course, they are done in real time. The fact that they are done in real time provides an increased leak-detection functionality—excuse the term—and the ability to educate customers about consumption patterns. That is extremely important if a person gets a bill every three months.

Sitting suspended from 6.00 to 7.00 pm Dr G.G. JACOBS: Before the dinner break I referred to some of the comments made by the member for Cockburn, who suggested that nothing has changed in the water space over a number of years; nothing has changed in how we deliver water; and nothing has changed in water demand management. Essentially, nothing has changed, so why are the costs involved in delivering water to the people of Western Australia so high? Of course, he totally discounted the issue of the drying climate, our ever-increasing population and, of course, the demands on infrastructure, particularly for such a disparate state that has to deliver water over large distances. I referred to the delivery of water to a part of my electorate—namely, Boulder—and I talked about the fact very good Kalgoorlie–Boulder smart metering trial. Before the dinner break I talked about the safety issues; operational efficiency; water efficiency, particularly as leak-detection functionality is improved; and the ability to educate customers on consumption patterns, particularly as this technology shows real-time consumption.

With the entire Kalgoorlie–Boulder water reticulation scheme, a total of 13 500 cybles have been installed on all property connections in the city. Before dinner, I basically asked with some levity why Kalgoorlie–Boulder was chosen for a trial. Yes, the fences are tall, the dogs are big and the water is precious. Water is precious everywhere, but at the end of a 650-kilometre pipeline into the goldfields, water is gold. Kalgoorlie–Boulder was the site of a trial, and that trial was seeking to show that significant water savings could be made by providing customers with more information about their water use and the resultant costs. If you can reflect on your own bill, Mr Acting Speaker (Mr I.M. Britza), you will know that we get one every quarter, or every third. Essentially, what happens early in that time frame is not really evident until we get the bill, which shows us our water consumption and our water bill. If there has been a leakage or overconsumption during that time—whoops—we do not detect it until three or four months have gone by. This smart metering real-time program is a way of detecting those losses early, increasing the ability to identify and repair leaks in the corporation’s assets, and, indeed, on the customers’ side, in their water meters.

We had issues with that when I was sitting where Hon Bill Marmion is sitting, and the member for Cockburn absolutely castigated me on the issue of people who had leaks in the system and who had monstrous water bills. Those leaks were often on the consumer’s side of the meter and had been going on for some time, particularly at houses which had not been occupied full time and at which the water had not been turned off at the mains. The customer may go away or may basically use the residence as a holiday house. During that time the leakage continues, and there is obviously a significant wastage of water and significant costs.

In Kalgoorlie–Boulder, a reduction in total potable water use is obviously one of the goals of this smart metering program. This will be achieved by the early detection of leaks in the systems and on customers’ properties, followed by behavioural change. Retrofitting programs bring about water efficiencies, as do water efficiency audits and water efficiency management plans for large commercial and industrial customers. This is in fact a good program, and this is where the Water Corporation is going. Work is underway now in the Kalgoorlie–Boulder area to enable customers to, via a website, access and monitor their account, water usage and other information to drive water use reduction across the community. This is due to be released very soon; as the minister knows, it will be in January next year. This will commence the next stage of behavioural change programs. I want to give a little example of how this system works in practical terms. In December, a leak was detected at a property that was unoccupied, and the owner was notified. The property was unoccupied, and a leak was detected by the cyble detection unit. The leak was subsequently fixed. However, had the leak continued until the meter was read at the end of March 2012—the leak was detected in December—it would have resulted in approximately 3 700 kilolitres of water being lost; that is, 37 kilolitres a day for those 100 days. This would have amounted to $21 000 in water use charges.

Water Corp has currently identified, member for Cockburn, over 2 000 potential leaks on properties since the project started, and it is releasing 50 leak advice letters a day—it has done so for the month of September, which is almost at its end. The Water Corporation—that organisation that the member maligned for at least half an hour earlier — Mr F.M. Logan: No, it was a bit longer than that; it was nearly an hour. Dr G.G. JACOBS: That organisation that the member maligned for nearly an hour has demonstrated that that technology has helped to reduce metered water use in Kalgoorlie–Boulder by more than 6.6 per cent over the course of the trial, or more than 500 million litres a year. The vast majority of these savings have been in the


residential sector. The total cost of this project is $4 million, which is a combination of moneys from Water Corp and also federal grant funding. Mr C.J. Tallentire: From the federal government. It is all our money. Dr G.G. JACOBS: We give credit where it is due. We say it how it is. This is a program utilises technology. Things have changed. [Member’s time extended.] Mr F.M. Logan interjected. Dr G.G. JACOBS: The member for Cockburn may well moan but I had to listen to him maligning the Water Corporation for over an hour, saying that nothing had changed in the water space and we deliver water like we always used to deliver water, obviously discounting the effect of technology. He discounted the people who drive that technology—the people within Water Corp who implement that technology. It is really important to recognise the positives in delivering this very precious commodity to the residents of Western Australia. There are more and more of them, of course, because we are a growing state. We are a state whose population centres are generally separated by vast distances. No better person knows that than me, who essentially lives in the south east corner of Western Australia. As I have said, Boulder water comes some 650 kilometres from Mundaring Weir along the O’Connor pipeline. I want to touch a little on a couple of things because it is important to introduce a bit of balance. It is really a case of “you’re damned if you do and you’re damned if you don’t”. If the Economic Regulation Authority suggests in the work that it does that the price of water and the delivery of sewerage and drainage services is nowhere near cost reflectivity—the cost of delivering and providing a service—it suggests some increases in price towards that cost reflectivity concept. Yesterday Lyndon Rowe was seen in the media releasing a report that suggested that that did not need to occur in this cycle. We should keep in mind that he is not the government, that that is not necessarily government policy, and that decisions on that will be made by the minister, the cabinet and the government of Western Australia. However, what does the opposition do when the ERA makes its analysis and says, “We believe you’re somewhere near it. We believe that there may be some reductions in the sewerage component of that bill, which may mean the average total water service—that is, the water that is delivered, the sewerage service and the drainage issue are a component in the water space in charges to residences—might go down”? That is the ERA’s analysis. What does the opposition say? It says that the government has been over-scalping this for years; it was dragging money in when it did not need to, so it has overcharged all those poor residents of Western Australia.

We cannot win with this mob. If we put the prices up, the opposition says, “Why did you put the prices up?” If we hold the prices to where they are or there is a suggestion that the prices should come down, it says we have been over-recovering on water. What we know and what the opposition knows if it was honest is that water is precious, water is scarce —

Dr A.D. Buti: You said that already. Dr G.G. JACOBS: I am going to go over it for members again, if they do not mind. It is my time. The member had his time. Western Australia covers a very large area, we have an increasing population and we need to deliver this essential product and this essential service to people. There is the significant cost of infrastructure. That infrastructure not only obviously requires a lot of outlay but it also requires good people to run it. Just as we need a good person and good staff to run the smart meter program in Kalgoorlie–Boulder, we need good and smart people to run the Water Corporation, to look after the infrastructure and to deliver the product to every household in Western Australia. We have heard from the opposition that its staff and the executive are overpaid. We have a multibillion-dollar organisation and it has a big task to complete. We have seen the technologies involved in just delivering the smart meter program in my little patch. Area-wise, it is a big patch but it is a small patch of Western Australia. We cannot do that for nothing. If we try to run organisations in private —

Mr F.M. Logan: They’re not in the private sector; they’re a publicly owned monopoly with no competitor. Dr G.G. JACOBS: I am saying that we should compare apples with apples. We should consider the magnitude of the job being done and the magnitude of the organisation. There is a price for that. We are not only buying the technological and engineering skills, but we are also buying the management skills to operate and run an organisation that can deliver what we all expect and what we all deserve, but that comes at a price. Essentially, that is the job of the Water Corporation. I have given members local examples of how well that is delivered in a new technological program to deliver better outcomes in Western Australia. MR W.R. MARMION (Nedlands — Minister for Water) [7.18 pm]: I thank all members who have contributed so far to this debate. I particularly thank the member for Eyre for his very supportive comments on the great work that the Water Corporation and this government is doing in delivering secure water to Western Australia. I know that a couple of other members wish to speak. We want to get a vote on this motion so I will try to refrain from making my complete speech.


I want to set the scene. We have been going through an interesting period in the past 30 years in Western Australia. Thirty years ago we were in a situation in which we would get about 300 gigalitres of water in our dams. That was equivalent to what we are using today. A famous chart has been used by many water ministers, going back a couple of generations, I think. The Leader of the House might even remember this chart. It has probably got a bit worse since his time.


Mr W.R. MARMION: Unfortunately, I am the minister in the time represented by the yellow bit of this chart. Being a minister in the yellow bit puts a lot more pressure on the delivery of water to people in Western Australia, particularly in the Perth, Kalgoorlie and Mandurah regions. As members can see, we had in our dams an average of over 300 gigalitres per year from 1911 to 1975. In the period from 1975 to 2000, the average dropped to 177 gigalitres per year. From 2001 to 2005, the average dropped to just below 100 gigalitres a year. In the last couple of years of the Labor government and during our regime, the average has been 64 gigalitres a year. We can really rely on only about 100 gigalitres. Indeed, this year has been particularly dry; only 19 gigalitres have flowed into Perth’s dams so far this year. As I said before, on a 10-year average we would expect 100 gigalitres. As we close in on another hot long summer, this has probably been one of my biggest challenges, and the graph shows that with the yellow line.

What are we doing to meet this shortfall? The population in Western Australia is growing and will soon double. I think in about 2060 our population will have doubled. I will give some statistics. As of June 2012, there were 1 148 692 residential and non-residential properties connected to water compared with 1 066 964 properties connected in 2008—that is an increase of about 81 700 properties, or 7.6 per cent. I will not go through the actual calculations, but the amount of water supplied has increased by 5.345 gigalitres. To facilitate this increase in demand for water, we have built 1 000 kilometres of additional mains water pipe, with 33 560 kilometres now, compared with 32 635 in 2008. Therefore, we have certainly provided a lot more water mains! It is clear from the figures that there are a lot of people to supply water to in this growing state in the current climate. Our community requires good government, good education and good health services and that cannot happen without water. I refer to the motion’s statement to “deliver affordable water services to the households of Western Australia”. In order to continue delivering water services to the households of Western Australia, we have to ensure that there are adequate water sources and adequate waste water services. I am sure the member for Cockburn supports the state’s continued growth, which means planning so that Perth does not run out of water. Therefore, I am very proud to show the chart of our capital expenditure, which the member for Cockburn has mentioned before. This chart shows our program of capital expenditure over the last four years and the out years. It also shows four years during the Labor government. If members look at the difference—I will be quick —

Mr C.J. Tallentire: So that’s the $3.6 billion? Mr W.R. MARMION: Yes, it is the $3.6 billion — Mr C.J. Tallentire: So you’re talking about the demand management? Mr W.R. MARMION: No, that is the future; these columns are the past. Basically, I am pointing to the capital expenditure I am speaking of. That is what we are delivering in better services—more waste water treatment plants and more desalination plants—to make sure that in a growing economy the people of Western Australia have sufficient water and waste water services. Mr F.M. Logan: What about the rate of return on that?

Mr W.R. MARMION: I will get to that in a minute.

Mr C.J. Tallentire: And where are the demand management graphs?

Mr W.R. MARMION: I will get to that, if I have time.

We have to strike a balance. Water Corporation obviously wants to get as high a revenue as it can and we have to strike a balance between that and making sure that the consumer does not pay too much. There is a balance and at the same time we need the capital to provide the services. That is where we come in; the government makes a decision on what the actual charges are. I will get to the Economic Regulation Authority report in a minute. Last November, I launched the “Water Forever Whatever the weather” plan that addresses Water Corporation’s plan for the next 10 years to meet all the challenges of the demand for water supply. The aim of the plan is to make sure, obviously, that we do not run out of water and to drought-proof the metropolitan, Kalgoorlie and Mandurah areas. The plan outlines the different methods that we will use, which is a combination of a number of things. First of all, we will invest in more deeper underground aquifers. Currently, in the Gnangara and Jandakot mounds there are bores that go into the superficial aquifers. In the next 10 years, we will put bores into the Leederville and Yarragadee aquifers and reduce our draw from the superficial aquifers. That is one part of the strategy.


Mr C.J. Tallentire: That will still drop the aquifers, though.

Mr W.R. MARMION: We will also be looking at, as the member for Gosnells quite correctly pointed out and supports, the evolution of groundwater replenishment. The trials will be completed in December. That is a potential major new water source. The member for Gosnells suggested 100 gigalitres. That is true; certainly 100 gigalitres plus goes out as waste water into the oceans at the moment. The plan will be to do it in seven-gigalitre tranches. So if we get the tick and agree to progress the plan, we will go from seven gigalitres to 14 gigalitres to 21 gigalitres to 28 gigalitres in the next, say, 10 years. But certainly there is potential to go to 100 gigalitres in the future. On 1 August last year, the Premier and I announced the decision to press ahead with the next stage of the construction of the southern seawater desalination plant. By the end of this year, we will have the capability to supply Perth with about half of its water from desalination, which is a source completely independent of rainfall. Mr P. Abetz: Well done, minister!

Mr W.R. MARMION: I must say that I give credit to the Gallop government for being the first government to agree to build a desalination plant.

Mr W.J. Johnston: What do you think about the Premier’s view that that was a mistake?

Mr W.R. MARMION: The Leader of the House has suggested on more than one occasion in this house that it was his idea in the first place, but I give Geoff Gallop the credit.

Mr F.M. Logan: The Premier still said it was a wrong decision; we should have brought water down from the north. Mr W.R. MARMION: I quote from the press release that then Premier Geoff Gallop put out in 2004, which states —

The Premier said the State Government would be playing Russian roulette with our future if the project did not proceed.

“The threat of a drying climate is with us now and desalination is a proven technology capable of delivering large quantities of water independent of the weather,” …

That is what I am continuing to do.

Mr W.J. Johnston: What was the date of that?

Mr W.R. MARMION: The exact date was 29 July 2004.

As I said, obviously a place such as Western Australia with a big shoreline of salt water always has the capacity to bring on more desalination, if necessary. We are spending $500 million on the transition from the superficial aquifer to the Yarragadee and Leederville aquifers. That is a program we have committed to. Mr C.J. Tallentire: Minister, do you have information to show that there’s no connection between those aquifers? Are you convinced that it won’t lead to a dropping of the water table?

Mr W.R. MARMION: I do not have time to go into that. This is looking at a three-dimensional model of all the different aspects, but certainly the Department of Water has modelled the aquifer, and there may be some connection. I want to go into some of the other things the government has been doing in terms of community research alongside the desalination plant. In respect of the water replenishment trial, community acceptance is currently around 70 per cent; we are hoping that by December community acceptance will be higher than that. As other members have mentioned, we ran a sprinkler ban over winter and we will retain the two-day sprinkler ban over summer. That is mainly because of planning with desalination, and I take the point raised by the member for Gosnells that the month of September, which is one month after the end of winter, is a month during which, if we have the odd shower of rain, we probably do not need to put our sprinklers on. Indeed, I have been encouraging people to not put their sprinklers back on.

Amongst other things we have done is the Target 60 program. Following the very dry winter of 2010, when people got the message that we had not had a lot of rain, Target 60 worked very well; we saved about 16 gigalitres that year. Last year, following a reasonable winter, Target 60 was not as successful but it nevertheless still saved money. Over two years, it added up to the equivalent of 22 Patersons Stadiums, which is not a bad effort. I think the community embraces the program more following a dry winter, so maybe that is something we can work on in terms of marketing after a wet winter. Mr C.J. Tallentire: What about real investment in demand management, minister?

Mr W.R. MARMION: We are investing in both. The return on the Target 60 campaign is a very good return. My aim is to work with and assist the community to save another 15 per cent of water use by 2030. This will


ensure that we sustain adequate long-term water supplies in Perth’s ongoing drying climate and also provide a financial reward because we will be using less water. At the end of the day, the less water we use, the less treatment maintenance and new infrastructure we will require, which means that customers will save money in the long run, which is something that we are all trying to do. In respect of the per person reduction in water use, in 2000–01 the average consumption per person in Western Australia was 191 kilolitres; last year, the average was 135 kilolitres, which is a saving of 95 billion litres of water. Again, the demand management that the member for Gosnells talked about in terms of use by each consumer has been reduced by 95 billion litres. That is nearly the same output as what the Binningup desalination plant’s output will be when both stage 1 and stage 2 are completed. On the demand management side of the equation, the reduction between 2001 and today is 95 billion litres. Indeed, the last three years have been very good as well; it has reduced from 144 kilolitres per person to 140 and 135, so it is still on a downward path. Mr C.J. Tallentire: So invest more in demand management and get bang for your buck there.

Mr W.R. MARMION: Certainly we are investing in that area already.

I want to talk about the Economic Regulation Authority report, but before I do, I note that the process the government goes through for setting water prices is exactly the same process that the Labor government followed during its term in office. The ERA goes to the Water Corporation every three years, looks at its operational costs, sets a figure for the average weighted cost of capital and comes up with what Water Corp should be charging so that there is cost reflectivity. It has been doing that for some time and, indeed, three years ago it set a price range and the government has been looking at that. We have not yet met full cost reflectivity. We certainly increased prices by a little more than the Labor government did, but we actually seriously considered the ERA report and at the end of the day the minister makes the call on what actual price the consumer will pay. The ERA is currently going through the same process of looking at the operational costs of Water Corp for the next three years and it released a draft report yesterday. It has decided that the risk of capital is less than it was three years ago and has lowered the average weighted cost of capital in terms of the calculation. That means that the return that the ERA suggests we need on our capital over time is a bit less, and that could be for a whole range of reasons, including that the infrastructure may last longer. It could also be related to the cost of capital in the world markets in that interest rates are also low, so there are a whole lot of variables looked at. At the end of the day, that can go up and down every three years. The draft report has gone out to public consultation and when the report is finalised in November the government will seriously look at it, if we are still in government, for next year’s budget.

The inquiry also looked at the operational costs of Aqwest and Busselton Water. As the member for Cockburn said, the draft recommendations for Water Corporation in the metropolitan area are for an increase in water bills by about $10 on average, and a decrease in waste water charges of about $138 on average. I welcome the ERA’s draft report because it is very good news for consumers, even though I acknowledge it is only a draft report. I am also glad that the ERA has not recommended major price hikes because I acknowledge that it has been tough on Western Australian householders over the last few years.

The opposition has today accused the government of overcharging; that is actually incorrect, because as I mentioned before, the costs the ERA put into its model are made up of two components: operating costs and the weighted average cost of capital, which is referred to as the WACC. I understand that the proposed price path for 2013 to 2016 includes a substantially reduced WACC, from 6.6 per cent to 4.6 per cent. This readjustment of the WACC largely drives the price path for the future. I am not going to talk about the specifics of the draft report because I understand that the member for Cockburn is against the ERA recommendation on waste water charges as a flat rate. I also understand that he is probably concerned about the 100 000 householders who would be worse off under that model. However, it seems mildly inconsistent for the member for Cockburn to support the ERA recommendation for drainage being a flat rate, but not sewerage rates. As I have said before, the government will wait until the final report is handed down and it will be something that we will consider in our budget deliberations. I want to jump to another matter. Two other government members want to speak but I understand they will not speak for very long and then we can vote on the motion. As has been mentioned before about where we are going in the future—the member for Gosnells also mentioned it—we will be spending $3.6 billion over the forward estimates period on both major water and waste water infrastructure. That is essential in a state like Western Australia, particularly in areas like the Pilbara, which is growing very strongly. Both Port Hedland and Karratha need upgrades to their waste water treatment plants. They certainly need more water infrastructure and more bores on the rivers either side of the towns, including at Bungaroo Creek in Karratha, and they need piping to deliver more water to the growing towns. Of course that is a major part of our investment of $3.6 billion. Also embedded in that $3.6 billion is the last part of the expenditure on stage 2 of the desalination plant at Binningup. In terms of the cost of delivering water, it is fair to say that desalination is not cheap. That is one of the reasons that costs are going up, of course. There are reduced inflows of dam water. Dam water costs approximately


70c per kilolitre to supply to customers, which is one of our cheapest sources of water; groundwater is approximately 50c per kilolitre; and desalination water ranges from $1.40 to $2.40 per kilolitre. Even recycled water, which we hope will be a major source of water in the future, will produce water at a cost of approximately $1.85 per kilolitre—still more expensive than our traditional sources. The ACTING SPEAKER (Mr I.M. Britza): The level of noise in the chamber is rising. Can members be just a little quieter, please.

Mr W.R. MARMION: As we move forward with more desalination, even with recycled water, there will be more cost pressures on water. I will paraphrase my notes. The cost of water that we supply in Western Australia is comparable with, if not cheaper than, most of the other water suppliers throughout Australia. I will not go through the figures, but I will indicate the median figure in the graph I am holding up to show members. The annual water bill from the Water Corporation compared with other Australian water utilities of a similar size is right in the median across Australia, which is $974 per customer. Over the past five years, annual service charges for waste water, water and drainage have increased only marginally more than the consumer price index. A greater increase was applied to the volumetric water usage charge and to the water service charge. That means it reflects customers’ usage so that bigger water users obviously pay more because they use more water. An important point that I made a few weeks ago is that whilst the Water Corporation appears on the surface to make a large profit, the net return to government is nowhere near that because of the operating subsidy that is returned to both pensioners and people who live in the country.

I have two more charts to show members. The actual returns that the Water Corporation makes to government are then returned by the government to people through an operating subsidy. The amount of operating subsidy that has been returned to the Water Corporation over the last four to five years is up over $400 million, which is higher than the amount returned in the last four years of the Labor government. We are therefore concerned about the price that pensioners and people in the regions pay and that is why we have been delivering higher operating subsidies. What does that mean? The net returns by the Water Corporation to the government under our government are shown in the blue columns on the graph I am holding up. Indeed, it is a fallacy to think that under the Liberal government the Water Corporation has been gouging customers. Mr F.M. Logan interjected. Mr W.R. MARMION: The net returns when the Labor government was in power are shown in the red columns in the graph. The net returns indicate that they were over $200 million every year. Mr F.M. Logan interjected. Dr M.D. Nahan: What’s he been talking about?

Mr W.R. MARMION: I do not know. Several members interjected. Mr W.R. MARMION: The net return to the Western Australian government from Water Corp in 2011–12 was $169 million—it was a big one. Therefore, the Liberal government is far from gouging the people of Western Australia. In fact the Labor government was gouging more out of the Water Corporation than we are. Indeed, our return is quite a small net return. Dr M.D. Nahan: Minister, given the investment, the rate of return could be more. Mr W.R. MARMION: In fact, that is right, given the rate of return. Several members interjected. The ACTING SPEAKER: The noise in the chamber is rising a little. Member for Warnbro, I remind you that you are on three strikes, so be a bit more careful as there is not long to go. Mr W.R. MARMION: In conclusion, on the motion put forward by the member for Cockburn, I will rest my case with a final chart. Several members interjected. Mr W.R. MARMION: The Labor government was gouging more out of the Water Corporation than this Liberal–National government is.

MR P.T. MILES (Wanneroo) [7.46 pm]: Mr Speaker —


Mr P.T. MILES: The member for Morley sat next to me for four years!

The ACTING SPEAKER: I suggest you get on with it, member!

Mr P.T. MILES: I rise to say a couple of words about water and the replenishment that is going on in my electorate of Wanneroo. I am conscious of the time as well and I know that the member for Southern River also


wants to say a few words. I believe that the Liberal–National government has been doing an excellent job on the delivery of water and on providing the delivery of future water services to the households of Western Australia. More importantly, this minister has had a plan for the future support of ongoing development and growth for the northern corridor. The Water Corporation’s plan titled “Water Forever: Whatever the weather” states that it aims to drought-proof Perth over the next decade with more ongoing efficiency measures, reduced demand through investing in deeper and secure groundwater and increasing recharge through groundwater replenishment. That is what I want to talk about. The groundwater replenishment trial at the Binningup waste water plant in Craigie has been running now for some time—since November 2010. It has had quite a few positive results from people. I want to talk more about acceptance by people in the corridor of the system for the replenishment of water. It is treated to the level of drinking-water use and then it is injected into the ground. The people at the plant have actually injected just over two gigalitres of recycled water to recharge the ground. It is interesting to note the figures on people who have visited the site. More than 6 000 people have visited the site since it started. It is interesting to note that, excluding the school groups and some technical people who have visited, the results from community members in attendance who were polled indicated that 90 per cent supported the continuation of the recharge. They also supported increasing the recharge. That is something the government is looking at doing with part of the $500 million worth of investment in water for our future needs. Also a telephone survey was conducted in July 2011. Basically the question was: if the trial was successful, how would you feel about recycled water becoming part of your drinking water supply?” Sixty-seven per cent of those supported that, 21 per cent were opposed and 11 per cent were unsure. I think that shows us that over the past few years, the community accepts the fact that water does not fall from the sky; we have to use other resources and that is why the desalination plants were built, which the minister acknowledges were begun under the Gallop government. I think it was a commitment made in the 2005 election campaign by Gallop.

Mr W.J. Johnston: Absolute rubbish; it was July 2004.

Mr P.T. MILES: That is when it was mainly campaigned.

Mr P.B. Watson interjected.

Mr P.T. MILES: I am acknowledging that the government should be credited for doing that and members opposite are pooh-poohing that.


Mr P.T. MILES: Members opposite need to be humble. I think the member for Cannington is quite arrogant.

Post the support for the groundwater replenishment, 90 per cent of the people who have visited were very happy about it. The Visitor’s Centre, which is part of the advanced water recycling plant at Craigie, has been hugely successful. I know a lot of people who have visited it. We have organised tours from most of our schools and our seniors’ centres to look at it, so that they can feel reassured in future years when we start injecting that recycled water into the aquifer and then start using the deeper aquifers for our water in the future.

MR P. ABETZ (Southern River) [7.51 pm]: I want to address my remarks to the first part of the motion about the government’s supposed failure to deliver affordable water services to households. When it comes to knowledge about water in Western Australia, one would have to have some concerns about the level of knowledge among those on the other side of the house. In 2005 the member for Cockburn and the now Leader of the Opposition put out an advertisement headed “Western Australia is the driest State in the driest country on earth” Guess what? It is not the driest country on earth. The United Arab Emirates, Syria, Sudan, South Africa, Saudi Arabia, Namibia, Mongolia, Mauritania, Libya, Iraq, Iran, Greece, Chile and Afghanistan are all drier countries than Australia. And Adelaide is by far the driest city in this country.

An opposition member: What are you talking about?

Mr P. ABETZ: I am just talking about facts.

An opposition member interjected.

The ACTING SPEAKER (Mr I.M. Britza): Okay, member!

Mr P. ABETZ: Let us also consider the cost of water in the two remaining Labor states in this country. Let us go to South Australia, which is, admittedly, the driest state. Several members interjected.

Mr P. ABETZ: Let me tell members that South Australia’s water charge for just the service is $293 a year, compared with $188.10 in Western Australia. Tasmania’s service charge is a minimum of $305 a year. In Western Australia our cost is, say, $1.20 up to $1.58 a kilolitre and South Australia’s starting point is $2.42 and goes up to $3.73 a kilolitre. In Tasmania where it rains much more abundantly than in Western Australia or South Australia, the annual service fee is high, plus they charge 94.7c a kilolitre. Our dam water costs us 70c a kilolitre and the Labor government in Tasmania charges nearly 95c. Sewerage rates in the other states are a little


difficult to compare in some ways because in Tasmania, for example, they have a fixed price irrespective of the value of the property, of $550 a year. In South Australia it is based on 31.2c per $1 000 of the value of a house. Most people pay somewhere between $500 and $1 000 a year for being connected to sewerage. In Western Australia most people pay somewhere between $700 and $750, although the minimum rate is $313. On the issue of delivering affordable water services to households, our charges are very reasonable.

The reality is that compared to what the two remaining Labor states can deliver, we are doing extremely well. On top of that, we offer water rebates to our seniors of 50 per cent on the supply charge and, I think, 25 per cent on the water-usage charge, if I read the website correctly. I want to highlight that it is absolute nonsense for the opposition to claim that this government has failed to deliver affordable water services to households.

Mr E.S. Ripper: We’re going to let your electors know that you think your charges are reasonable.

Mr P. ABETZ: We have done extremely well and I think we ought to be proud of our record.

MR F.M. LOGAN (Cockburn) [7.55 pm] — in reply: I will make my right of reply on the motion. Nothing has been put by the government or the minister that challenges the arguments I have made in this house that form the basis of the motion. The two issues were: the impact of this government’s behaviour and its actions on the community, particularly on the families and households of Western Australia, and the failure of this minister and the government to stop those impacts. The Economic Regulation Authority in its report, which I pointed to throughout the whole of my speech, made it very clear where the overcharging can be found. Waste water, which the minister did not even address, is one of the clear examples in the ERA report. The actual rate of return on capital was another example of how the Water Corporation was found to be overcharging.

Mr T.R. Buswell: No they were not; the ERA changed the rate of return.

Mr F.M. LOGAN: That is exactly what it said. Do not come in here and try to challenge it; you have not been in here all night; you come in here and make stupid statements. Read the report. That is exactly what it says.

Mr T.R. Buswell: That isn’t what it says.

Mr F.M. LOGAN: Open your eyes and read it properly. You are absolutely hopeless. The other part of the motion I moved was the failure of this minister to rein in the excesses of the Water Corporation and how it charges its customers in Western Australia and how it rewards its own executives. I gave some clear examples of the really over-generous way in which the chair and the board of Water Corporation reward their executives. They provide outrageous overcompensation and the response from the government, particularly the backbenchers, who do not earn anything like Water Corporation executives, was that that is all right: “No worries; that’s no problem at all.” A Water Corporation executive salary-sacrificed $400 000 of his wage into superannuation. “That’s fine”, nobody else in the country can do that, but as far as they are — A member interjected.

Mr F.M. LOGAN: I said it in the media the other day.

As far as these lemmings on the back bench of government are concerned, that is completely okay. We will remind the people of Western Australia what they said.

Mr P.T. Miles: You’ve been standing up for too long; sit down.

The ACTING SPEAKER: Members!

Mr F.M. LOGAN: Thank you, Mr Acting Speaker. The minister went on at length about desalination. I will read this press release of Hon Colin Barnett, which states —

Mr T.R. Buswell: Read it out sucker.

Mr F.M. LOGAN: I will; it is so good, I have to do it. It states that the $346 million desalination plant as announced today by Labor is a desperate and expensive attempt by the Labor government be seen to be doing something at pre-election year after three years of inaction on essential services. The Premier of Western Australia opposed desalination, yet this government is trying to take credit for it. What a joke! What a shambles. I move that the motion be put.

Dr K.D. Hames: That is a different motion altogether.


The ACTING SPEAKER: I will put the question again.

Dr K.D. Hames: Good idea.

The ACTING SPEAKER: The question is that the motion be agreed to.

Question put and a division taken, with the following result —


Ayes (23)

Dr A.D. Buti Mr F.M. Logan Mr J.R. Quigley Mr A.J. Waddell Mr R.H. Cook Mrs C.A. Martin Ms M.M. Quirk Mr P.B. Watson Ms J.M. Freeman Mr M. McGowan Mr E.S. Ripper Mr M.P. Whitely Mr J.N. Hyde Mr M.P. Murray Mrs M.H. Roberts Mr B.S. Wyatt Mr W.J. Johnston Mr A.P. O’Gorman Mr C.J. Tallentire Ms R. Saffioti (Teller) Mr J.C. Kobelke Mr P. Papalia Mr P.C. Tinley

Noes (27)

Mr P. Abetz Mr G.M. Castrilli Mrs L.M. Harvey Ms A.R. Mitchell Mr F.A. Alban Mr V.A. Catania Mr A.P. Jacob Dr M.D. Nahan Mr C.J. Barnett Dr E. Constable Dr G.G. Jacobs Mr D.T. Redman Mr I.C. Blayney Mr M.J. Cowper Mr A. Krsticevic Mr M.W. Sutherland Mr J.J.M. Bowler Mr J.H.D. Day Mr W.R. Marmion Mr T.K. Waldron Mr I.M. Britza Mr B.J. Grylls Mr J.E. McGrath Mr A.J. Simpson (Teller) Mr T.R. Buswell Dr K.D. Hames Mr P.T. Miles

Pairs Mr D.A. Templeman Mr C.C. Porter Mr T.G. Stephens Mr R.F. Johnson

Question thus negatived.

WESTERN AUSTRALIAN FUTURE FUND BILL 2012 Second Reading

Resumed from 20 September.

MR T.R. BUSWELL (Vasse — Treasurer) [8.04 pm] — in reply: On instruction from the Leader of the House, I will not speak for too long in response.

Mr P.C. Tinley: Did he really say that?

Mr T.R. BUSWELL: He did. I was prepared. I want to canvass a couple of the issues quickly in response to what was a wide-ranging and occasionally interesting debate. A number of matters were raised by the opposition. I thank the shadow Treasurer, the member for Victoria Park, and the member for Armadale, with their obvious legal backgrounds, who spent some time canvassing the relevance of the manner and form provision contained within clause 10. I am no legal expert; suffice it to say that the government has advice from the Solicitor-General and that advice effectively counters the arguments put by the members for Victoria Park and Armadale, and perhaps others who might have gone over my head. Like a lot of matters of law, there will always be alternative opinions. I have sought advice about whether I can table the Solicitor-General’s advice, and that advice is that I cannot. However, I have approached the Attorney General and I am sure that when this bill gets into the other place, he will be in a position to better canvass those particular arguments. However, I will provide some excerpts from that advice that may perhaps help to illuminate the house. I apologise for reading this in. This is not my normal form but I will just read a couple of excerpts from the Solicitor-General’s advice that have been provided to me. He advises —

In my opinion, an attempt in the future to repeal or amend sections 6, 7, 8, 9 or 10 itself of the Western Australian Future Fund Act would be a law “respecting the powers or procedures … of the State Parliament”, within the meaning of s.6 of the Australia Act and thereby be required, by reason of s.6 of the Australia Act, to comply with the manner and form prescription of s.10 of the Western Australian Future Fund Act.

The Solicitor-General notes that there are divergences of opinion around the effectiveness of a manner and form provision. The member for Victoria Park in particular reflected on comments by Professor Anne Twomey, and the Solicitor-General thinks that her summary would be as follows —

• the intent of the Colonial Laws Validity Act 1865 or the Australia Act 1986 was not to extend powers to the States such that any law could be entrenched, which is evidenced by the fact that the term ‘constitution, powers and procedures of the Parliament’ qualifies the manner and form power enacted under the relevant sections.

The Solicitor-General counters that view with a number of factors including the following —

• Professor Twomey pays insufficient regard to an important decision of the High Court which touches on these matters; Attorney-General (NSW) v Trethowan [1931]; • his Honour’s conclusion that a Bill that imposes a manner and form requirement is one

“respecting the powers and procedures” of Parliament;


• …implications of widespread exercise that Parliaments do not as a matter of course entrench “every day” statutory provisions. This is not a question, however, of power or validity or efficacy but of inclination and good sense; and

• thirdly, and most importantly, the express terms of the provision, understood having regard to the Australian constitutional tradition, are contrary to Professor Twomey’s assertion … the Parliament in enacting the manner and form requirement, has sought to affect its power and modify its procedure; this is what a manner and form requirement is.

I do not profess to offer any significant legal contribution to the debate. I am of limited scholarly background.

Mr B.S. Wyatt: Do you have someone from the Solicitor-General’s office here?

Mr T.R. BUSWELL: I do not, but I have someone here from Treasury. I will answer the opposition’s questions to the best of my capacity on the advice I get, as I am sure the member would expect. Obviously, the Attorney General will be available in the other place. Ultimately, my engagement with the legal process is limited. Perhaps it goes into areas that I hope a lot of members do not have to go into! These are matters of interpretation, as they always are and as I suspect they always will be. However, I can assure the house that the advice we have received from the Solicitor-General is that the manner and form provision contained in clause 10 is not only valid, but also will stand a challenge —

Mr B.S. Wyatt: When we had a briefing, it was just with people from Treasury and I think your officer. Are we able to get a briefing from the Solicitor-General?

Mr T.R. BUSWELL: I would have to seek the advice of my colleague the Attorney General. As the member is aware, the Solicitor-General does not report to me.

Mr B.S. Wyatt: But he reports to government. Mr T.R. BUSWELL: I will request that information of the Attorney General. I suspect that he may wish to be present as well. He obviously has a much broader grasp of these matters than I would ever profess to have. I do not pretend to come before the house well-armed in my experience in this field; and I do not expect members opposite to expect that of me. However, there will be an opportunity for those matters to be canvassed as this bill passes through the houses of Parliament.

I have a couple of other quick points. The opposition often made the point that by tying up money in the future fund, the government is taking money that could have been used to repay debt to invest in instruments that will earn a lower rate of return. The Treasury Corporation did some modelling on this issue and we provided that modelling on the future fund investment framework to the opposition. The modelling shows that the Treasury Corporation is confident that the parameters around the investment of the future fund will yield a rate of return that, over time, is slightly—I stress slightly; five basis points is not dramatic —

Mr B.S. Wyatt: No, it is not. If I was getting that on my superannuation, I would be most put out.

Mr T.R. BUSWELL: I am sure the member is not. The point is that five basis points is still above the opportunity cost of retiring debt. An analysis was conducted on 18 September on the yields of the proposed framework for the investment of the future fund, as opposed to the cost of the funds on the day. That analysis showed that the return had leapt by 20 per cent to six basis points. No-one will retire on six basis points — Mr B.S. Wyatt: You should borrow more money and stick it in that fund.

Mr T.R. BUSWELL: I am not sure that is the role of government. I was very critical of the then Treasurer when I was in opposition and he placed the princely sum of $1 billion into the Fiona Stanley fund. I long for those days to return! The point I am making is that the then government did not have the investment parameters that sit around the future fund component that the state bank account will have. I made the point then that it would be cheaper to retire debt. Treasury Corporation has indicated to me that there is a marginal benefit—I stress that it is marginal—in the investment framework over the opportunity cost of retiring debt. The reason for that is twofold. Firstly, when we borrow money at a AAA rating, some investments will be AA or lower. That is a case in point. Secondly, the maturity of the investment funds will differ from the maturity profile of our debt. It is a combination of different terms of maturity and also different ratings on the investments relative to the borrowing that generates that modest difference. Without being too brief—we will have plenty of time to discuss these matters in consideration in detail —

Dr K.D. Hames: Do you want me to get your advisers?

Mr T.R. BUSWELL: Unless Mr Barnes has succumbed to the dodgy souvlaki he ate! We are not ready yet, Mr Barnes; I was just pointing out to members that Mr Barnes informed me earlier that in the true tradition of great Treasury officials, he did not leave his desk and he ordered in a souvlaki that he claims could have been slightly dodgy! If I see Mr Barnes take on a slightly different colour during consideration in detail or if he looks


a little unsettled, which is unusual for the unflappable Mr Barnes, I may well call for a brief interlude as he deals with a case of a dodgy souvlaki.

Dr A.D. Buti: I would be more worried about the dodgy manner and form provision!

Mr T.R. BUSWELL: I think the manner and form provision will be out the window if the souvlaki takes control!

Getting back to what I was talking about, there was a lot of debate on the bill, but when we sift through it, members said that we could do other things with the money rather than put it into the future fund. That is probably a valid argument and I will not argue against it because I think it depends on one’s point of view. We will always have that argument because the demands on the government purse are practically limitless in terms of investment in service delivery and infrastructure. When the government makes an investment decision such as our commitment to the stadium—I do not say that to be political, but it ties up a sum of money—members opposite will, and do, argue that it could have been used for other things. That is the process in this place. I am not disputing the validity of that argument; I merely reflect on the fact that we do not accept that argument. The government believes that preserving some of the wealth that has been generated by the current generation, for 20 or 25 years, and providing an intergenerational transfer of wealth is a valid argument. It can be argued that the money could be spent on many different things. During the debates on the Western Australian Future Fund Bill and the Loan Bill 2012, the opposition proffered a range of different investment opportunities for government. They are, of course, the priorities of individual members—I am respectful of that—in their electorates, and good luck to them. However, we have made a policy decision about the future fund. We will, of course, debate the detail of it shortly with the assistance of the souvlaki-inspired Mr Barnes.

I think that the chief point of difference as we work through consideration in detail will be the opposition’s assertion that the government should contribute to the future fund only when the general government sector holds no net debt. I think I understood that to be the opposition’s position. My view is that government finances move through cyclical periods. There are periods when governments enjoy comfortable surpluses and generally reduce debt, and there are periods that present different challenges. The future fund is a long-term investment. Over that long term, I expect that government financial cycles will move a number of times in ways that benefit government and also in ways that challenge government. My view is that we should keep investing in the future fund through all phases of that cycle, whether it is a challenging phase in the cycle or a phase when governments enjoy substantive surpluses and have the capacity to repay debt. To premise the capacity to invest in a future fund on what might be a short-term cyclical issue, I think devalues and undermines the true value of the future fund for future generations of Western Australians.

A range of issues were canvassed. I look forward to the consideration in detail stage and hope that we will have the opportunity to remove the bottles of discoloured water from the table in front of us!

Ms R. Saffioti: Mr Barnes won’t appreciate them.

Mr T.R. BUSWELL: No, Mr Barnes will get very nervous. Perhaps the water may be fitting, given the quality of the souvlaki he ate. However, enough has been said about Mr Barnes and his souvlaki challenge! It was a good debate about an important public policy issue. The bill is neither detailed in nature nor in the number of clauses. I look forward to working through it with the opposition. Question put and passed.

Bill read a second time.

Leave denied to proceed forthwith to third reading.

Consideration in Detail

Clauses 1 to 3 put and passed. Clause 4: Purpose of Act —

Mr B.S. WYATT: I thank the Treasurer for his brief response to the second reading debate. I will quickly make a couple of points before getting into my question about clause 4. I am surprised, because I never thought I would say this, but I certainly disagree with the view of the Solicitor-General. I certainly do not hold myself out as being as accomplished a lawyer as the Solicitor-General, but I am surprised by what the Treasurer read into the chamber tonight, and that the Solicitor-General wrote that, forming the advice to government about the ability of its manner and form provision to bind a future government; we will come to that later on tonight, no doubt. I also note the Treasurer’s comment that “government finances move through cyclical periods”. Certainly it is the opposition’s contention that that is one of the reasons to not create rigidities in the state’s finances such as the creation of this sort of fund, particularly since one of the reasons the opposition has argued against a future fund is the fact that the wealth generated from the royalties is not captured; again, those points have been made, and no doubt they will likely be made again.


Clause 4 states —

The purpose of this Act is to provide for the accumulation of a portion of the revenue from the State’s mineral resources and other money for the benefit of future generations through the establishment of the Western Australian Future Fund.

I note that to actually achieve that purpose of accumulating a portion of the revenue for the benefit of future generations, Treasury has established the future fund investment framework, dated August 2012. It is not a long document—about 15 pages—and I have a number of questions about this investment framework. Point 8 of the executive summary states —

WATC and Treasury will jointly establish and have representation on a Fund Management Committee, which will provide oversight and governance for the Fund.

Point 9 states —

Treasury will pay WATC a Management Fee for the operation and management of the Fund. The quantum of the fee will be agreed between Treasury and WATC.

I would appreciate some more information about that fund management committee, but also the quantity of the management fee Treasury will pay WATC, on, no doubt, an annual basis. Could the Treasurer provide some further information on those two points?

Mr T.R. BUSWELL: The advice I have is that that committee will be chaired by a senior Treasury officer, the level of which is yet to be determined. The management fee that will be paid to WATC is estimated to be approximately $250 000 per annum. Mr E.S. RIPPER: I see that the purpose of the act is to provide for the accumulation of a portion of the revenue from the state’s mineral resources. Given that we have the goods and services tax effect whereby our GST is reduced as a result of our receipt of mineral royalties, can the Treasurer give us the latest Treasury calculations for the net retention of mineral revenue the state enjoys? This calculation varies from time to time due to price impacts, but I would like to know the latest calculation of the net retention of mineral royalties revenue, given the reduction in GST share.

Mr T.R. BUSWELL: My understanding is that the net retention—let me look at it from the other side: we lose about 70 per cent over a three to five-year time frame. As the member will recall from his time in my position—I have new glasses and I am in a real pickle because I cannot see the member, but if I put them on I cannot read that, so I am going to have to go back and — Mr E.S. Ripper: I suggest you read your briefing notes —

Mr T.R. BUSWELL: No, I can read my briefing notes, but I do like looking at the member for Belmont!

Mr E.S. Ripper: That’s disturbing!

Mr T.R. BUSWELL: Not for me!

The advice I have, member for Belmont, is that over a three to five-year period we lose about 70 per cent, so $1 in royalties today equates to a 70c reduction in GST payments over a three to five-year time frame. I think the change from when the member from Belmont was in my seat was that that perhaps used to be a five to seven-year time frame. That was a result of some changes from the Commonwealth Grants Commission a couple of years ago.

Mr E.S. RIPPER: Treasurer, does that not create something of a problem? On a net basis we are retaining 30 per cent of our royalties and the government has a commitment to devote 25 per cent of the royalties to regional expenditure—by my calculation that leaves only five per cent that might be available for a future fund, let alone for any other purpose to which we might want to put royalties revenue.

Mr T.R. BUSWELL: There are two issues there. We have made a decision that in any one year, one per cent of the gross estimated royalties—I say “gross” because I am not discounting it for future discount because of the GST—revenue will flow through into the future fund. The member may well argue that one per cent of gross, if 70 per cent is disappearing, is actually a lot higher than one per cent. It is effectively one-thirtieth; I suppose that is the other way, if that makes sense. I think the member knows the point I am trying to make. I think the other point is that—not that we are holding our breath in hope—the GST review is underway, and we are working hard with our state colleagues, and also with the commonwealth, to try to have some aspects of that lag redistribution changed.

Mr E.S. RIPPER: Treasurer, I am actually looking at it in this way: only five per cent of the royalty income is left for discretionary purposes because 70 per cent has gone to other states, and 25 per cent is devoted to royalties for regions. So the government has five per cent left, and it is going to devote one-fifth of that to the future fund, let alone thinking about other responsibilities in health, education and law and order. A person in the


outer metropolitan suburbs might wonder whether they are getting anything out of the royalty stream given the calculations I have just made.

Mr T.R. BUSWELL: I understand the argument the member for Belmont is trying to raise, but the issue is that if $1 billion is raised in royalties this year, then $1 billion is made. We are targeting nearly $5 billion of royalties this year. The lag happens in two or three years’ time; it is delivered via a change in our distribution from the GST pool, which is affected by a range of other factors—not only relativity, but also the total size of the pool. So, although I understand the point the member is trying to make, in this particular year if we get $5 billion of royalties, we will have $5 billion of royalties available to spend. As the member for Belmont knows, the impact on the GST share is dealt with in a future budget at a future time. We may well complain about it, and it may have an impact on, in particular, some of the longer term capital programs over the forward estimates, but if we get $1 billion this year, that is $1 billion that is available to spend. The discount applies in future years, and we generally defer dealing with that until that time—generally.

Mr E.S. RIPPER: A former Under Treasurer used to call that “jam jar economics” in his discussions with me. Essentially, the revenue has to be treated as a whole, and the Treasurer knows that the more royalties we get, the less GST we get, and therefore any responsible Treasurer has to take the two factors together. So I repeat my argument: if the Treasurer is going to genuinely spend 25 per cent of the royalty income on regional matters, and we only have 30 per cent after the GST impact, then the people in the suburbs get five per cent and the government has just taken one per cent of that and put it away for 30 to 50 years, is it?

Mr B.S. Wyatt: It’s 20 years.

Mr E.S. RIPPER: Okay. It has been put away for a long time. Constituents in the electorate of Ocean Reef might be entitled to ask their member how come they are not getting any benefit from the royalty stream, given the way the government has arranged the finances.

Mr T.R. BUSWELL: Yes, but the flip side of that argument is that in a year in which royalties drop $1 billion over what the government anticipated, the member argues that we get that money back. Is that what the member is saying? Mr E.S. Ripper: It might be what you’re saying.

Mr T.R. BUSWELL: No, no. It is the logical extension of what the member is saying. I am not trying to be argumentative, and I am not disputing the argument that the member is raising in terms of the totality of the financial equation that governments have to deal with. I think the one good thing about the change from a five-year average lag in terms of royalties impacting on GST to a three-year lag is that the government has to deal with it in its forward estimates period. It cannot hide it out the back end anymore—not that the government would have hidden it; it just came into effect then. The government has to deal with it in its current forward estimates, and of course it does. It is not jam-jarring in the sense that the government pretends it is not going to happen because it happens across the forward estimates. What I am saying, though, is that if the government gets $1 billion worth of royalties this year, it has $1 billion worth of royalties to spend this year. Of course there is a lag impact on the government’s total revenue in three to five years, and it has to deal with that as well, but it still has the $1 billion of royalty revenue to spend.

Mr E.S. RIPPER: The breaking news is that the Treasurer of Western Australia says that there is something good about the GST system. If the government’s royalty income falls, it will get extra GST, and that will buttress, will it not, the retention of the AAA credit rating, despite the risky financial management in which the government has engaged?

Mr W.J. JOHNSTON: I just want to clarify the purpose. We are providing a fund for the use of future generations of our current income. Is that a fair summary of the provision here? I am just wondering, if that is the case, why are there no sort of governance arrangements around it? As I understand the Treasurer’s comments to the member for Victoria Park, effectively the fund will be run by a couple of public servants—I am not being disparaging, because I am a former public servant and they do a great job. But what is the process by which the community gets to have any say about anything to do with the fund, whether it is how much money goes in, what happens with the money while it is in the fund or what the purpose of the fund is at the end? From the figures that have been talked about, there is $130 million in 20 years. That is about half a per cent of government revenue, so we are not really talking about a lot of money with the proposal that the Treasurer has for the future benefit. If we look around the world, many of these funds have specific purposes. They have procedures about how they are to be dealt with. They might have a revenue stream for individuals. If we take the federal Future Fund, it is not designed to produce revenue; it is designed to take account of future liabilities. This is a very broad aim, but we do not seem to have any way of achieving the aim because there is no framework around what is being proposed.

Mr T.R. BUSWELL: My view is that the bill before us provides the framework. The bill outlines the amounts that will be invested, or the percentages that will be invested; it outlines the period for which the money will be


held and for which the interest will be accumulated before it can be spent; it outlines how it will be held; and it outlines how it will be invested. The member may argue that we need perhaps some broader controls around that. When I reflect on perhaps the controls and the governance that was put around the Fiona Stanley Hospital fund, which I think I may have been a minor critic of the then Treasurer for setting up, it is probably not dissimilar. I understand the point the member is making, but I think that the very purpose of the bill is to establish the framework that the member is talking about.

Mr W.J. JOHNSTON: I do not want to unnecessarily labour a point, but the Treasurer raised the Fiona Stanley Hospital bill as an example. However, that was very, very specific. It was a particular amount of money allocated for a specific purpose. There was not any argument because there was no gloss on that bill; it was very specific. Indeed, it was not intended to be for future generations because we knew that construction of the hospital was going to start presently. We go on the train and we see it sitting there now. Indeed, the $350 million from the two big mining companies, which was also allocated eventually into a special purpose account without an act of Parliament, is the same. If it is specific money allocated to a specific purpose, there is no argument about what it is about. I am sure that the Treasurer has done the same as I did—the moment there was a discussion about a future fund, he went off and talked to people who have been involved in this. If members want to read literature on these things, it is not hard to find. The Alberta fund was used as the example of a failed fund on the basis that it did not have a clear objective and it did not have a clear set of procedures to deal with the agenda of the fund. Of course, it made political loans to other provinces in Canada and ended up in all sorts of trouble, and is generally considered in the literature—which, again, is not that hard to find if members have a search; Google is a wonderful thing—to be a failure. Most of the arguments are that it was a failure, and I am afraid that we are setting up the exact same mechanism here.

It is interesting that when the Minister for Planning in his previous capacity in opposition moved the Western Australian Resources Heritage Fund Bill, he used the Alberta heritage fund as the basis for what he was proposing, and he discussed it again in the second reading debate, yet that is an example of a failed fund because it did not have a specific task and did not have clear procedures to engage with the community. All we end up with in this bill is a $4 billion sub account in an account that we already have, and in five or 10 years there will probably be exactly the same amount of money in that public bank account as there is today, plus or minus $1 billion. It seems to me that we are setting up what will probably be a failure in some time because we are not clearly defining what we are about. For example, Treasurer—I will finish on this—if the government had a fund that said that this was going to be for educational infrastructure, we would say, “Okay; we understand what that’s about”; or if it was to provide education for this category of people, we could say, “Okay”; or if it was clearly defined that we were trying to create an alternative source of income, that would be fine, too, but it would have to be for a lot longer than the period proposed in this bill because it is such a small amount of money in the end. What I am saying is that the Treasurer is creating a fund with no connection to the community and with no clear guidelines for what it is about, with a tiny, tiny bit of money at the end.

The ACTING SPEAKER (Mr P.B. Watson): Treasurer, did you want to answer the question?

Mr T.R. BUSWELL: Yes, I will. One of the issues the member raises is the lack of prescription that sits around the bill.

Mr W.J. Johnston: Yes.

Mr T.R. BUSWELL: I should point out that I would like to think that the Financial Management Act and the associated regulations that sit around it provide a degree of comfort in terms of the governance that will sit around how the money is invested.

Mr W.J. Johnston: I don’t think you’re going to steal the money; that’s not what I’m suggesting. That’s what the Financial Management Act is about. I’m talking about the purpose.

Mr T.R. BUSWELL: Yes. In terms of spending, the member makes a point that it is pretty broad. I think the points that the member makes are that it is a modest sum of money in current dollars and that, notwithstanding the fact that it is a modest sum of money, the capacity to spend it is somewhat broad. The bill does, as I recall, restrict spending on public works and public infrastructure; it is capital works only. That is still pretty broad, but the government’s view was, notwithstanding the relatively modest amount of the fund, that that would really be a matter for a Parliament and a government of the future to decide. Again, it is a point of view, and I am respectful that we have a different point of view, but the government’s view was that our job was to establish the fund, notwithstanding the potentially modest outcomes. Who knows what could happen around royalties? There are other onshore sources of resources and energy that might generate significant royalties for the state, especially in respect of petroleum. Who knows? Who would have predicted six years ago that state royalties would be approaching $5 billion and accounting for 20 per cent of total state revenue? It is a fact; five years ago, royalties were at —

Mr E.S. Ripper: They were at $1.3 billion.


Mr T.R. BUSWELL: Royalties accounted for about six or seven per cent of total state revenue. I do not know; I mean, fingers crossed that we make some fantastic discoveries within the next three weeks! I would be very happy, as would the Under Treasurer. I do not know, but the framework is there, so if that happens, I am not sure that we would call it a windfall gain, but we could call it an unexpected outcome. If it happened, a percentage of it would flow through. In a worst-case scenario it may well be a modest outcome; the government’s view was that it was our job to set up the mechanism to deliver the outcome, and future Parliaments and governments can enjoy the option of spending what may be only a modest sum of money.

Ms R. SAFFIOTI: My question again relates to governance; I think it is important to ask why there is not much detail about the governance arrangements. In most legislation in which funds are set up there is a lot of detail about committees, their composition and what experience committee members should have. I just want to ask: did the government consider prescribing the governance arrangements in this legislation? Why was that not the case? I would also like some details about the committee, which we heard was to be headed by a senior Treasury officer. What will be the number of members on that committee, and will they all be from Treasury? Will there be any reporting requirements in respect of the activities of the committee, either to this Parliament or through the budget papers?

Mr T.R. BUSWELL: The advice I have is that there is currently a committee made up of members of Treasury and Treasury Corporation that manages the investment of the public bank account; it has five or six members. The committee that would manage what is effectively a subset of the public bank account would loosely mirror that committee. Having the fund managed by Treasury and Treasury Corporation, with their reporting requirements under the Financial Management Act in particular, should give people confidence. The member for Cannington made the point that no-one here is concerned that there will be an attempt to raid the fund and disappear to the Philippines with the dough! It is a valid concern, but I am confident, having dealt with Treasury and the Treasury Corporation in both government and opposition, that this money will be well invested within the guidelines, and well managed. More importantly, the tracking of how that money is invested will be done in an open and accountable way to both Parliament and, more broadly, the general public.

The ACTING SPEAKER: Members, I just advise that some of the questions being asked relate to later clauses.

Mr B.S. WYATT: I actually have a follow-up question to the question that was asked by the member for Belmont regarding the portion of revenue from the state’s mineral resources. I just want to follow that up with the Treasurer.

The Treasurer made the point—he is right—that royalties, considered on their own, have increased dramatically. He used the figure of $5 billion, so let us assume we will get $5 billion a year. However, there is a danger in considering royalties on their own. That point was made at length by the former Treasurer, the member for Bateman. He explained to the Parliament in quite some detail why there is no such thing as a windfall revenue gain in royalties because we ultimately lose in other areas; we lose in GST. The Treasurer made the point that 70 per cent of our royalties are currently redistributed. The Royalties for Regions Act, based on the assessment of the year’s entire royalties, takes 25 per cent, so we get 70 per cent redistributed and 25 per cent into the royalties for regions fund, leaving us with five per cent. We now have a situation in which we have one-fifth of that five per cent left to the state because we cannot just look at the $5 billion in royalties. Certainly, the Premier does not, which is why he says that we are now scraping the bottom of the barrel, or words to that effect. I assume that once we effectively stick 20 per cent of what we get to keep into this fund, generating revenue of $130 million in today’s money, that revenue source will be redistributed. Will that also be subject to the GST, assuming that there is no change? I am not going to operate under some false hope for a change in the GST formula. Will the revenue generated by this future fund also be subject to the principles of equalisation?

Mr T.R. BUSWELL: I will provide the member with some interesting advice that I have received from Treasury. Under the Commonwealth Grants Commission’s current methods, the Western Australian Department of Treasury expects that the creation of the future fund and the earning of associated interest on fund balances, whether accrued or spent, will have no material impact on WA’s GST share. The CGC is likely to view the future fund as a financing mechanism, and states’ choice of financing mechanisms do not impact on the CGC’s calculation of GST shares.

Mr B.S. Wyatt: So it won’t have a material effect because it is ignored, or because it is such a small part of the revenue that we get?

Mr E.S. Ripper: Or because it’s an accounting trick! Mr T.R. BUSWELL: An accounting treatment.

Mr W.J. Johnston: But the money that goes into the fund will be subject to the GST.

Mr T.R. BUSWELL: Yes.

Mr B.S. Wyatt: So in effect, we’re putting 20 per cent —


Mr T.R. BUSWELL: Yes; my apologies. What I am referring to is the treatment on the interest earned.

Mr B.S. Wyatt: So the revenue source that in 20 years will be $250 million a year, will that —

Mr T.R. BUSWELL: The gross royalty will still be subject to equalisation, but the interest earned on the fund will not impact on —

Ms R. Saffioti: Can we ask why?

Mr T.R. BUSWELL: Because it is viewed as the state’s choice of financing mechanism, and the choice of financing mechanism—that is, the accounting treatment—should not impact on the CGC’s calculation of GST share. Mr B.S. Wyatt: Is that a policy of the CGC, or is that advice that Treasury has received?

Mr T.R. BUSWELL: That is the advice that Treasury has provided me, based on the policy of the CGC.

Mr B.S. WYATT: Has this been specifically put to the CGC? How will it consider this revenue? I find that an interesting answer: because it is an accounting treatment, it will not be considered as part of our state’s revenue as such, despite the fact that the Premier has said that this fund will be used for things like schools, hospitals and other such wonderful things—three-quarters of a school and a very small part of a hospital. But now, because the CGC will see it as an accounting treatment, it will not be subject to the principles of equalisation?

Mr T.R. BUSWELL: The advice I have is that that royalty money could be put into the consolidated account. In this case, it is put into the future fund. That is effectively immaterial to the workings of the Commonwealth Grants Commission.

Mr B.S. Wyatt: Yes, but much has been made by both you and the Premier about this revenue source we will be creating in 20 years, and that’s why I’m interested in whether the Commonwealth Grants Commission has specifically been asked how that will be treated. Mr T.R. BUSWELL: No, it has not been specifically asked. This is Treasury’s assessment of the current Grants Commission methodology. In 20 years the Grants Commission methodology —

Mr B.S. Wyatt: It hasn’t changed in the last 10 years.

Mr E.S. RIPPER: I wonder whether we could just pursue that issue. Given that the future fund is, in the Treasurer’s words, to be treated as a subset of the public bank account, how will income earned by the public bank account be treated in the GST analysis? If one state has a much larger public bank account than another, will that in any way affect the GST distribution? The only state I can think of where this might have been the case is Queensland, which some time ago had substantial positive income-earning assets that supported the Queensland budget. I would be very interested in Treasury’s advice on that particular aspect. Mr T.R. BUSWELL: Again, the advice I have is that it will be treated in the same way.

Mr E.S. Ripper: Perhaps you could just elaborate. In other words, it does not affect the GST distribution.

Mr T.R. BUSWELL: That is the advice I have, yes.

Mr W.J. JOHNSTON: In my second reading contribution I referred to—I had to look it up again because I could not remember the name of it—the Linaburg–Maduell Transparency Index. It is one of those things we find when we are looking on the internet for these things. It is a transparency index that is provided by the Sovereign Wealth Fund Institute. I imagine that Treasury, in preparing briefings, notes and these sorts of things, would have gone off and looked at all these issues. I just wonder whether the Treasury advisers have any advice about what rating we would expect to get on that transparency index. The index has a rating out of 10. I read out all the criteria when I was making my speech.

Mr T.R. Buswell: While you are on your feet, I can advise you that Treasury is in no position to offer you advice on that.

Mr W.J. JOHNSTON: Okay, so it has not looked at it. The reason I am raising it is that —

Mr T.R. Buswell: This is about the quantum fund relative to —

Mr W.J. JOHNSTON: No, it is a transparency list. It is an index comparing this country’s sovereign wealth fund with that province’s sovereign wealth fund and with this other one. It is about how open and transparent and how ridgy-didge—if we want to use a nice, old-fashioned word—the funds are and whether a sovereign wealth fund is real, or how much it is just an instrument of government with a name written on the front.

Mr B.S. Wyatt: An accounting trick.

Mr W.J. JOHNSTON: An accounting trick, if you like, yes. Some of these things will not be relevant, because we might engage external managers so that we get a zero rating and it would not be a problem. We do not expect to get 10 out of 10 for a fund like this, but I was just wondering whether anybody had put their mind to that.


Mr T.R. Buswell: No.

Mr W.J. JOHNSTON: That is fair enough.

Mr B.S. WYATT: I will continue on with the investment framework that we have been discussing. Part 3 of the Treasury Corporation’s “Future Fund Investment Framework” refers to the objectives. With some relief I note that the first sentence states —

The Investment Objective is to achieve a rate of return above the WATC Cost of funds —

That is a good thing. I think the Treasurer said that five basis points is what he thinks we can get with perhaps some different investing styles from the styles we invest in at the moment. The framework also later on at paragraph 3.1 states —

Over the long-term, the WATC Cost of Funds … is expected to be higher than the rate of inflation. An investment return which exceeds the WATC CoF would also then be consistent with the Fund having the ability to deliver an inter-generational wealth transfer with positive added value net of inflation.

The Treasurer makes the point that over the long term the cost of funds is expected to be higher than the rate of inflation. My question is: has there been some historical analysis of that done that the Treasurer may be able to provide to the house? Mr T.R. BUSWELL: The answer to the member’s specific question is no. But I can advise, for example, that in 2011–12 the actual interest rate on the consolidated account—that is, interest paid on borrowings—was 5.11 per cent. The actual rate of inflation was 2.5 per cent. Our anticipation is that we will generate a rate of return on the future fund over the cost of borrowing over the longer term. I think it is on a five-year rolling average. Let us say it is five basis points, which is marginal. That would mean 5.16 per cent, which in that particular case is about 2.5 per cent to 2.6 per cent.

Mr B.S. Wyatt: The real rate of return.

Mr T.R. BUSWELL: The real rate of growth. I think the point that is made on my reading of that particular paragraph is that we are saying we will earn a rate of interest that I acknowledge is marginally above the cost of borrowings, but because we have a positive real rate of interest, we will get a real capital growth or real growth on the balance in the fund. I have been reading an interesting book by Keynes and a couple of others. Is it Marshall or Marshallian economics that said in the long run we will all be in equilibrium? Then Keynes came along and said, “No, in the long run we are all dead.”

Mr B.S. Wyatt: That’s true.

Mr T.R. BUSWELL: The other day I was telling that to my son, who studies geography, and it went in one ear and out the other! Mr B.S. WYATT: The Treasurer’s answer to my question was no. However, following up on that, I would be curious to know whether the Treasurer is able to provide information on the WATC actual cost of funds compared with the actual rate of inflation over the last 10 years. I think the Treasurer made the point that over 2011–12 there would have been a real rate of return of 2.5 per cent or something. Can the Treasurer get that information?

Mr T.R. Buswell: I will get it for you.

Mr B.S. WYATT: I thank the Treasurer.

Mr E.S. RIPPER: Perhaps we could pursue that point. The Treasurer has been talking about modelling that shows over the future we might earn a modest additional amount on future fund investments compared with the cost of borrowing of five basis points. That is a very modest amount indeed. I wonder whether the Treasurer and/or Treasury have looked back to see what the history has been over the last decade or so. How has our cost of borrowing as a state compared with the investment returns on the public bank account? What is the history of the last 10 years? Have we been in a position in the last 10 years when the investment return has been ahead of the cost of borrowings?

Mr T.R. BUSWELL: I do not have the exact details, but the advice I have is that historically the cost of funds would be higher than the rate of return on the public bank account.

Mr B.S. Wyatt: That is what the former Treasurer said.

Mr T.R. BUSWELL: I think the point that Treasury makes is that through this investment framework the future fund will be subject to a different investment framework from the balance of the public bank account. Mr E.S. Ripper: Read “riskier”.

Mr T.R. BUSWELL: Well, different. There will be some different investments in terms of probably slightly lower rated investment instruments. I will get some advice on that. On the other point, the public bank account is


really around liquidity-related, short-term investments. This will be around long-term, high-yield investments trying to maximise yield. Clearly over a 20-year period the driving factor is not liquidity; the driving factor here will be maximising rate of return. I did not have any influence on the production of the document. I am sure the Treasury Corporation would not have produced this document, which is effectively the framework for the investment of the future fund, if it did not think that it could deliver on its objective. And the objective is a rate of return that is higher, albeit at the margin, than the cost of funds. That is the advice I have. The five basis point margin is based on a historical investment of what the future fund would have been invested in had it existed back in 2004. The historic analysis runs back for probably eight years. If in theory we had the future fund over the past eight years, and had it been invested within the parameters set out in this framework, it would have produced for future generations a rate of return five basis points higher than the cost of the fund. That is an eight-year analysis. It is not a figure I have plucked out of the air. It is based on a historic application of this framework over an eight-year period.

Mr E.S. RIPPER: The five basis point return is so skinny that it must be very vulnerable to changes in circumstances. I wonder whether any sensitivity analysis has been conducted on how risky that five basis point modelling is. What factors might conceivably eradicate that five basis point return that the Treasurer has been talking about?

Mr T.R. BUSWELL: I will have to get some advice on that. In eight years we might not pick up on all the sensitivities that would affect a rate of return over a 20-year period, which is what we are looking forward over. But we would like to think that a lot of the sensitivities that would impact on the relative rate of return between the future fund and the cost of funds would have perhaps been experienced over eight years from 2004 until now. There have been a few calamities along the way, which would have tested the financial market sensitivities. I am not sure whether I have a particular answer on the sensitivity analysis, only to say that the historic analysis going back eight years delivers the five basis point differential. Perhaps sensitivities could emerge other than those that occurred over the past eight years; I do not know.

Mr E.S. RIPPER: Am I to conclude there has been a historic analysis of the pattern of returns and the cost of borrowings over eight years should the new framework have been used during that time, but there has been no modelling of sensitivity to various risk factors?

Mr T.R. BUSWELL: Not that I am aware of.

Mr E.S. Ripper: You should be; you’ve got the Deputy Under Treasurer there.

Mr T.R. BUSWELL: I have asked him and the answer is not that we are aware of. When I say “not that I’m aware” it is not that we are aware of. Suffice it to say, Treasury Corporation ran an analysis over the future fund investment profile on 18 September last week and compared it to cost of funds. It showed a six basis point differential. That is reasonably consistent with a five basis point differential over the past eight years. I am not saying there may not be other elements that could induce financial market sensitivities, but I think in the past eight years we have weathered quite a few. I reckon if it stood up over the past eight years, on the balance of probabilities, we would like to think it will stand up over the next 20 years. The fact that when it was tested on 18 September it produced a result of six basis points probably indicates, albeit not conclusively, there is some validity to the argument.

Mr E.S. RIPPER: If the case for a new investment framework for the future fund is so good, why would the minister not loosen the investment rules for the rest of the public bank account?

Mr T.R. BUSWELL: The public bank account, as the member may recall—perhaps not as tested in his time—is liquid asset for government. For a range of reasons we need to draw down at different times on funds held in the public bank account. We simply cannot afford to tie up that funding over the longer period. The investment profile is short term because the focus is on delivering a safe liquid repository for the funds that are in the state bank account.

Mr E.S. RIPPER: Surely the issue is not so much liquidity as the degree of risk that the state will incur with these investments. The minister is saying that it is safe and profitable for the state to incur a higher level of risk with the investment of this subset of the public bank account, but he is shying away from saying that it is okay for the whole of the public bank account. I am interested in further explanation.

Mr T.R. BUSWELL: Without trying to be argumentative —

Mr E.S. Ripper: I’m not necessarily restrained by that same consideration.

Mr T.R. BUSWELL: I know and I respect that, having sat in opposite seats. The future fund is a long-term investment. The aim is to not access in any way the future fund or its earnings for a 20-year period. The public bank account has a different purpose. I approve the investment policy that governs investment in the public bank accounts. The maximum term for that investment policy is three years because of liquidity factors. The


maximum term, as I understand it, for the investment profile for the future fund is 12 years. Two different objectives are driving two different investment profiles—not dissimilar —

Mr E.S. Ripper: That does not go to risk, does it? That goes to time of maturity; it goes to liquidity, which is different.

Mr T.R. BUSWELL: The regulations that cover PBA investment cover future fund investment. A big issue here is around maturity; it is not dissimilar to the way the household may well carry a term investment account for the future against a small cash account—dare I say a credit card, but I do not think I will use that analogy! They are different purposes; they have different maturities.

Mr W.J. JOHNSTON: This is really the intergenerational question. I am like most people in this room; I have debt and cash on deposits. My cash on deposit is a super fund and my super fund investment horizon is not even 12 years. When I entered it, it was 30 years. The fundamental problem with this whole future fund is that it is based on today. The whole problem with the investment guidelines, which I have read, is that we are saying that we will increase our risk, which is why we get the increased return.

Mr B.S. Wyatt: Five basis points.

Mr W.J. JOHNSTON: Which is why we get the increased return, which is the massive five basis points! People should understand that five basis points is five hundredths of a per cent, or 0.05 per cent.

Mr B.S. Wyatt: Fingers crossed.

Mr W.J. JOHNSTON: I mean that over 20 years it is such a small amount of money as to be almost irrelevant. Over an individual year we can say, “Oh, well; we’ve got this much extra.” But over 20 years it is literally irrelevant because we will not be able to measure the outcome because of the variability of all the parameters in the fund. We will not be able to measure over the period. We will have a fund that is supposed to be for the future, but all we will really be doing is taking a current part of the bank account and changing the risk profile. We can do that and get a higher rate of return because we will be taking a risk. For example, in that document it refers to corporate bonds being rated, I think, A+. The collateralised debt obligations in the US that caused all the trouble for the councils had a AAA rating, so we can end up with some pretty odd outcomes and still be consistent with that investment policy.

Mr M.P. WHITELY: The other day in my contribution to the second reading debate, the Treasurer said that the basis of the difference was the duration of the investment when comparing borrowings with what we are effectively lending. He said that the capacity to earn a higher rate of return was due to a different investment horizon—in other words, different time frames for investment. Is he still offering that rationale? He seemed quite vague about it during the second reading debate. Is he still making that case today?

Mr T.R. BUSWELL: The advice is that the average maturity of investments in the future fund is anticipated to be 4.3 years, and the average maturity on borrowings is 3.575 years. The SPEAKER: The member for Belmont.

Mr T.R. Buswell: You don’t need to put your hand up!

Mr E.S. RIPPER: I do from this seat! Given that the future fund is a subset of the public bank account, can the Treasurer tell me what the forecasts are for the size of the public bank account over the forward estimates? Can he tell me the size of the public bank account now and what it is expected to be in each of the next three or four financial years? Mr T.R. BUSWELL: I think the member has just been provided with an answer. At the end of August, the size of the public bank account was $5.567 billion.

Mr W.J. Johnston: It is $600 million lower than on 30 June.

Mr T.R. BUSWELL: I think the member said that it is $600 million lower than on 30 June. Money goes in; money goes out. It might be opportune to take a note to provide the member for Belmont with our estimate of what the public bank account balance will be over the forward estimates period at financial year end for each of those years. None of us has that information readily at hand tonight.

Mr E.S. RIPPER: If the Treasurer could provide the house with the forecast size of the public bank account at 30 June in each of the forward estimates years before we get to the third reading, that would be good.

Mr M.P. WHITELY: In answer to my previous question, it is obvious that what the Treasurer told me the other day in the second reading debate was wrong. In fact, it has nothing to do with the different durations of the effective lending and borrowing period, and the only way we can get an increased rate of return is, as I proposed the other day, through an increased risk profile. In other words, we are investing in riskier investments than that allowed by the AAA status that Western Australia currently enjoys. The obvious issue that comes out of that is that the Treasurer brought the bill into the house not understanding the basic logic behind its supposed benefit.


What briefings did the Treasurer get prior to bringing this bill into the house, given that he did not understand the fundamental tenet of the proposition that could give a higher rate of return? I find it extraordinary that a Treasurer would bring a bill for a future fund into the house arguing that the basis of getting a higher rate of return is the different time frames on what is lent and what is borrowed, not knowing that that is not the basis of the miniscule proposed return. If the Treasurer did not understand the logic behind this legislation, who in government understood it? Did the Premier have some involvement in committing to this legislation or is this absolute evidence that this whole thing is driven by politics because, frankly, that is what it looks like to me? When the Treasurer brings a bill into the house arguing that there is a net return to the taxpayers of Western Australia, and he argues vociferously, as he did during the second reading debate, that it is to do with different durations of debt of what is effectively borrowed and lent, and that proves not to be the basis of the hypothesised return, it seems an extraordinary shallow level of understanding. Obviously, the Treasurer did not have his head around it. Who did in government? Did anybody understand the hypothesised basis of this one-twentieth of a per cent rate of return, or have we seen the truth of the facts here that this is all about politics and all about creating an illusion of responsible financial management?

Mr T.R. BUSWELL: The basis of the member’s argument is that the difference in average time to maturity of the public bank account at 4.3 years versus the government borrowings of 3.575 years does not provide the potential for a yield differential.

Mr M.P. Whitely: I suppose it is an eight-month differential over a four-year time frame.

Mr T.R. BUSWELL: I am not disputing the member’s level of expertise in financial matters. We provided a paper to the opposition—

Mr M.P. Whitely: I guess I am disputing yours.

Mr T.R. BUSWELL: I guess the member is. We provided a paper to the opposition called “Future Fund Investment Framework.” Page 6 of that report reads —

The longer weighted average maturity in the SAA —

Which is the strategic asset allocation, which is the future fund —

than in the WATC marginal CoF (4.3 years versus 3.575 years) —

That is the amount I just gave the member—

Mr M.P. Whitely: A nine-month difference.

Mr T.R. BUSWELL: I am not disputing the member’s expertise in this area. Please do not get me wrong. It continues —

can be expected to be a source of yield enhancement …

Perhaps the Treasury Corporation got it wrong. Again, I am not disputing the member for Bassendean’s credentialled expertise in financial matters; far be it from me to do that. I do not even pretend to hold a candle to his capacity on this front. I am simply relying on the advice that I am reading to him from a document that the government provided to the opposition. It does not seem to be a long period but it can be expected to be a source of yield enhancement. I can only reflect on the advice of people who advise me—in this case, Treasury Corporation, notwithstanding the fact that the member’s experience in this area probably surpasses that of Treasury Corporation, and I am very respectful of that. I am glad the member made a contribution. However, he asked me for the source of my information and he accused me of providing misinformation to the house, which I did not because it is clearly identified in the Treasury Corporation document. However, I am accepting of the member’s vast experience in these matters, relative to that of the Treasury Corporation, which manages the billions of dollars of debt and investment through some highly credentialled people—not as credentialled as the member—in this area.

Mr M.P. Whitely interjected.

Mr T.R. BUSWELL: I am just making the point that I relied on the advice that was provided.

Mr M.P. WHITELY: I thank the Treasurer for those sincere compliments, but I think he does overestimate my ability and expertise in this area. I do not have a great deal of expertise in this area but I am not completely innumerate and I can get my head around this fairly quickly. The obvious question is what proportion of the five basis points return is due to that marginal increase in time frame—a nine-month increase—as opposed to the difference in risk profile between AA and AAA rating? It would be seem unlikely to me—despite the Treasurer’s assessment of my abilities, which, although I do not think was quite accurate, I am sure was sincere—to be a component of the five basis points. However, if it is, that would be interesting to know.

Mr T.R. BUSWELL: Good question. Clearly there are two factors at play: a credit risk factor and a maturity risk factor. I do not have the advice before me on the compositional impact of those two factors on the five basis


points difference. I can seek to request from Treasury Corporation whether it has that information available, but I cannot guarantee that it can provide it. The member is right; there are two factors at play. There is a maturity factor, and I acknowledge the member’s point that it does not seem to be a big difference. The difference is about eight or seven and a quarter months but I expect it to have an impact. There is also a credit risk factor at play that leads to the five basis points difference. A five basis point difference, as the member pointed out and as has been discussed in the house, is a very small increment. However, the issue is not necessarily the size of the increment; it is the fact that that is the return objective of the fund. The return objective of the fund is to generate a rate of return that is higher than the cost of the funds. I think that is a good challenge to lay down for the Treasury Corporation. Again, I am not disputing the argument that the average maturity impact might be low. Clearly, the advice from the Treasury Corporation is that there will be an impact. I just do not have the money to invest—I rely on the Government Employees Superannuation Board, for better or worse, to invest my funds —

Mr M.P. Whitely: Do you have a hunch about what might have a greater impact? What do you think? My suspicion is that it being AA rather than AAA would be a far greater contribution than the marginal —

Mr T.R. BUSWELL: I am happy to accept the member’s knowledge in this area but I am saying that it is clearly a function of both. I just do not have the advice here to inform the member of the relative size of those two impacts. I can inform the member that the advice I have received is that it will have —

Mr M.P. Whitely: A marginal theoretical impact.

Mr T.R. BUSWELL: No, it does not say “theoretical”. It says that it can be expected to be a source of yield enhancement. That was the advice I provided in good conscience to the member last week during the second reading debate. I was not trying to deceive him or mislead the house. That was the advice I had. The advice I have is that there is a risk factor and a time factor. That is all I did. I hope the member is not suggesting that I tried to deceive or mislead him by the interjection I made during the second reading debate because it is entirely consistent with the advice from the Treasury Corporation that I have just read to the house.

Mr M.P. WHITELY: Why does the Treasurer think that a slightly longer time frame of 4.3 years as opposed to 3.5 years—they are roughly the figures the Treasurer quoted—attracts a slightly higher rate of return? Would that be because of a different risk profile? It is only marginal. Obviously, if the Treasurer is looking 4.3 years into the future rather than 3.5 years into the future, there is a marginally higher risk profile. Either way, whether it is because of the difference between AA and AAA or the difference between 3.5 years or 4.3 years, does it not come down to the same thing in the end? Is it not about getting a higher hypothesised rate of return because the government is taking a greater level of risk? Does the longer time frame of seven or nine months not result in a greater risk and is that not the reason for the higher rate of return? My point is that whether it is AA or AAA or 3.5 years as opposed to 4.3 years, is the whole thing not predicated on a different risk profile regarding what the government borrows and what it lends?

Mr T.R. BUSWELL: When my son was about five years old, I tried to teach him a lesson about the time value of money. If he were prepared to tuck away his money, he would normally offset that against an expected rate of return. Generally, the longer he tucked his money away, if he had a positive yield curve—I did not talk to him about that because it would have confused him and me, but I know the member for Bassendean would know all about those—the more he would expect to be paid for giving up his liquidity. When I did economics at university a long time ago—unlike the member, I have forgotten all that—I learnt about a thing called liquidity preference, which generally means that people would prefer to hold their assets in a liquid form and that if they did not, they expected to be compensated for that through the rate of return. When my little boy was trying to learn about the time value of money, I told him that if he left a dollar in the piggy bank for six months, I might put in another five cents.

Mr M.P. Whitely: That comes down to a convenience factor when you talk about liquidity. When you are netting off debt —

Mr T.R. BUSWELL: The member can get up and illuminate us with his brilliance on this topic when I am finished, and it is brilliant; I am enjoying it immensely, as I am sure are the rest of the members in the house. The member’s contribution is a great window into his intellect and I am happy to try to answer his questions. The member is saying that he would anticipate a higher rate of return if he tied up his money for longer because it is linked to risk. The risk factor is a separate factor and it impacts on the rate of return. There is a time-value-of-money component. If someone has a positive yield curve, the longer the money is tied up, the more the person would expect to receive for that because he is literally giving up liquidity. My understanding is that that is a reasonably broadly held economic view. The member is entitled to have a different opinion on that. I am not disputing that at all. I see that the member for Belmont will jump up and perhaps make a contribution along those lines, but that is the information I have. I am not disputing what the member for Bassendean is saying, his capacity to make those statements or his vast research and understanding of this issue.

The WATC document states —


The longer weighted average maturity in the SAA than in the WATC marginal CoF —

Cost of funds —

(4.3 years versus 3.575 years) can be expected to be a source of yield enhancement

And it would be. Similarly, a credit rating factor would contribute to that five basis points. I do not know the relative difference but I do know that we cannot confuse risk with the concept of the time value of money and liquidity preference.

Mr E.S. RIPPER: Before I make my point, I might give the Treasurer some gratuitous advice. If he insists on patronising the member for Bassendean, the member’s colleagues will take an even more intense interest in the detail of the bill than they are at the moment.

My question goes to the size of the public bank account. If the future fund is established, does the Treasurer expect that Treasury will increase its forecasts for the size of the public bank account over the forward estimates?

Mr T.R. BUSWELL: I would have to get more advice on that for the member for Belmont. There are other factors at play in terms of the size of the bank account. A case in point that is close to the member’s heart is the Fiona Stanley Hospital account. We are drawing down on that account. Although we would be making contributions to the future fund that would, all else being equal, notionally add to the balance, if we are drawing down for purposes like the Fiona Stanley account or, in due course, the children’s hospital account, there are drawdown factors at play. Although the future fund and the contributions to it would add to the balance in the public bank account, other factors would lead to a drawdown on the public bank account. I do not have in front of me profiling on the movements in the size of the public bank account. The best answer I can give is that it would depend on what was happening with the drawdown. Also, in the fullness of time there may be other factors. The relative size of the surplus would impact on the size of the public bank account well beyond the current forward estimates and well beyond the member’s time and my time in this Parliament. I cannot give a clearer answer other than to say it is a pretty dynamic balance that is affected by a range of factors. However, I suspect that if all else were equal—ceteris paribus—and all that happened was contributions of the future fund were deposited into the public bank account, it would have a positive impact on the balance. The exception is the first four years of contributions, when those four years of contributions are, effectively, contributions largely out of the royalties for regions account, which is part of the public bank account. That is effectively shifting funds within the public bank account from the royalties for regions component across to the future fund. Beyond that, the one per cent would impact in the way I outlined earlier, which I am pretty sure is what the member is trying to ask me.

Mr E.S. RIPPER: What an extraordinary concession from the Treasurer. We have a bill before the chamber to set aside money from present revenue for the benefit of future generations, and the Treasurer concedes that the size of the public bank account will not actually increase over the life of the forward estimates; in fact, the Treasurer goes on to say that it may actually decrease! So we are establishing a future fund, but the amount of money in the bank might actually be less in four years’ time than it is right now. This just shows what a con—what a confidence trick—this whole future fund is. If the public bank account is not going to increase as a result of the establishment of the future fund, it is meaningless.

Mr T.R. BUSWELL: I will just make a brief response to that very lively contribution from the member for Belmont; I just want to explain. What I said, just so the public record is clear, is that for the first four years—it is no secret; it is detailed in the bill—there will be a transfer of money within the public bank account from, effectively, the royalties for regions fund across to the future fund; for four years. Subsequent to those four years, one per cent of royalties will be added to the future fund and to the public bank account balance. We estimate that will be $65 million to $70 million per annum. The member’s argument is right for the first four years, but subsequent to that, for the next 16 years one per cent of royalties, estimated—albeit variable—at $65 million to $70 million, will be a net addition to the future fund; money from royalty revenue paid into the future fund. When the member asked me whether the future fund balance could decline —

Mr W.J. Johnston: Public bank account.

Mr B.S. Wyatt: Public bank account.

Mr T.R. BUSWELL: Sorry; whether the public bank account balance could decline, I said that it could because other components of the public bank account may be drawn down in excess of the $65 million or $70 million addition per annum because of the one per cent of royalties. The member for Belmont knows that as well as I do. I hope it is not the Fiona Stanley account at the time, but it may be the children’s hospital account that is drawn down in a particular year to an amount over and above the $65 million or $70 million. But it is not true to suggest that beyond the four-year period, the future fund itself will not contribute in a positive way—all else being equal—to the public bank account balance. One per cent of royalties per annum will come into the future


fund by extension and, because the future fund is effectively a subset of the public bank account, that money will go into the public bank account.

A whole range of factors can affect the total balance of the public bank account. However, the future fund component of the public bank account, which is what we are focused on here, will grow, and if nothing else changes, it will add to the public bank account. The member’s argument is valid for four years, but there is no secret about that. It is laid out in the second reading speech and the bill.

Mr E.S. RIPPER: If the Treasurer cannot say that this bill will increase the net savings of the state, it is meaningless. The Treasurer can talk about money coming from this account and money coming from that account and this factor causing a drawdown, and so on and so forth. The Treasurer can add as much mud to this water as he wants, but the basic fact is that if the net savings of the state do not increase as a result of the future fund, the bill is meaningless. Moreover, it is damaging to accountability and public understanding of our finances. The broader issue, which I will come to in later clauses, is the relationship between gross debt, net debt and the future fund, but even on this limited issue of the size of the public bank account, if the Treasurer cannot categorically declare to this house that as a result of this bill the balance of the public bank account will grow, he is engaging in a confidence trick.

Dr K.D. Hames: Then vote against it.

Mr T.R. BUSWELL: The member has made a statement that measures two different things. The first statement measured net savings; the second statement measured the public bank account, which is much broader than the future fund. I can categorically state—to clear the mud—that it is obvious that over time the future fund will add to net savings. One per cent of royalty income will flow into the future fund and interest will be earned on the balance of that. That money will be credited to the future fund, which is a subset of the public bank account. It will add to net savings in the state—full stop. Mr E.S. RIPPER: I am not arguing what the future fund will do; I am saying that if the Treasurer cannot declare that overall —

Mr T.R. Buswell: I just did.

Mr E.S. RIPPER: — net savings will improve and overall the public bank account balance will improve, the bill is a confidence trick.

Mr T.R. BUSWELL: Member, there is a slight complication. If a future government decides to spend some money on something that reduces net savings, how can I be in control of that? Mr E.S. Ripper: That’s my point precisely!

Mr T.R. BUSWELL: What I can be in control of is the future fund and the balance of the future fund, which will add, all else being equal — Mr E.S. Ripper: Jam-jar economics again! Mr T.R. BUSWELL: It is not jam-jar economics. Mr E.S. Ripper: It is jam-jar economics!

Mr T.R. BUSWELL: It is most definitely not. The member seems to be fixated on this point. The point is that the future fund —

Mr E.S. Ripper: I am fixated on what I regard as a key point.

Mr T.R. BUSWELL: — as a subset of the public bank account, will grow. The member knows that as well as I do. Myriad other factors will impact on the balance of the public bank account. This bill deals with the future fund. The future fund is a component of the public bank account; the future fund will grow. All else being equal—if nothing else changes—the future fund will add to net savings in the state. That is an unequivocal statement because it is a fact.

Mr M.P. Whitely: All else being equal.

Mr E.S. RIPPER: The key statement is, as the member for Bassendean says, “all else being equal”. Of course, the government is not declaring that all else will be equal, because otherwise the Treasurer would say that net savings will grow and the balance of the public bank account will grow. The Deputy Premier interjects and says, “Why don’t you vote against it?” The fact that the bill is meaningless does not mean it necessarily should be voted against; we should vote against something only if it is actually going to do damage. I am saying that it will do no good. I think it probably will not do any damage, but it certainly will not do any good.

Mr J.H.D. Day: If you save money, you’ve got more than if you haven’t saved—it’s self-evident.

Mr B.S. WYATT: I want to follow up on some comments made by the member for Bassendean. From the briefing I had from Mr Barnes and Mr Kannis from Treasury, my hunch, member for Bassendean, is that it is not


that seven or eight-month difference at all; it is the fact that it is very much reliant on Western Australia maintaining its AAA credit rating, and, in particular, Queensland not returning to AAA over the course of the next 20 years. Certainly the advice given during the briefing would suggest that a significant portion of the future fund would be invested in Queensland bonds, and that is of course reliant on the difference between credit ratings in two states and the impact that has on the cost of borrowing. But the Treasurer made the point that he got to that five basis points by looking at what would have happened over the last eight years if the future fund had existed and been invested accordingly, and the rate it would have returned. I assume Treasury did a hypothetical —

Mr T.R. Buswell: Treasury Corporation.

Mr B.S. WYATT: — investment profile based on investments held that the government currently does not hold.

Mr T.R. Buswell: Yes, that is right.

Mr B.S. WYATT: Does Treasury Corporation currently hold any financial assets in the same profile that the government intends to hold in the future fund? Mr T.R. Buswell: The short answer is no.

Mr B.S. WYATT: Can that hypothetical eight-year review be provided? I think the member for Bassendean would like to see exactly how those five basis points were arrived at. I think that is a fair question. A hypothetical was done for the past eight years and a five basis point difference was reached—a very skinny difference—so there must be a hypothetical case study document that the Treasurer can provide to the chamber that would allow us to assess that.

Mr T.R. BUSWELL: My understanding is that Treasury Corporation applied the asset class weighting allocation, as detailed on page 6 of this paper, to published indices over the past eight years, and that is the outcome that Treasury Corporation determined. That is the summary. If the member is desperately keen to see some detail, I might be able to provide it. It really is just an application of that weighting class between semi-government bonds, which are other state bonds, and corporate bonds over an eight-year period using that weighting applied to some publicly available indices. If the member needs additional information on that, I may be able to provide it. It is simply encapsulated in the summary provided by Treasury Corporation and is encapsulated in the advice provided in figure 1, “Historical Risk (standard deviation of return)” et cetera.

Mr B.S. WYATT: On page 6, the point is made that the split between semi-government bonds and corporate bonds is 80 per cent to 20 per cent and that they would mature in five years and 1.5 years. Corporate bonds have a credit rating of A or better. Bearing in mind that it is going heavy into semi-government bonds, the credit rating for semi-government bonds is referred to in the footnote at the bottom of the page, which states —

The FMA Regulations do not specify a minimum credit rating for Government or Semi-Government bonds, but no Semi-Government bonds are currently rated below AA+.

The 80 per cent weighting of the future fund is based on a minimum of AA+ for semi-government bonds, so it is very much dependent on states such as Queensland not returning to a AAA credit rating over the next 20 years. That must be correct.

Mr T.R. BUSWELL: I accept that in the last eight years, Queensland has had a rating of AA for only three years. What is really interesting is that the spread between a AA-rated bond and a AAA-rated bond has only recently expanded.

Mr B.S. Wyatt: There must have been a difference over the last eight years.

Mr T.R. BUSWELL: There would have been, but the member referred to Queensland.

Mr B.S. Wyatt: Only because Mr Barnes is suggesting that.

Mr T.R. BUSWELL: Queensland has been in play at a AA rating versus a AAA rating for a period of that time, but not for the totality of the time. The best of my advice from a briefing I had from Treasury Corporation recently is that the split between state AAA and commonwealth AAA and state AAA and state AA+, which I think Queensland is at, has only recently begun to diverge.

Mr B.S. Wyatt: But by how much?

Mr T.R. BUSWELL: I am reluctant to guesstimate, so I will not. I can certainly find the graph for the member. It is quite interesting, because it highlights that in the current environment, the cost of losing AAA — Mr B.S. Wyatt: Is that graph for that eight-year hypothetical?

Mr T.R. BUSWELL: No; it is for recent times. It was a separate briefing I had, and it was not on this bill; it was on the value of AAA. At that briefing it was highlighted to me that there has been a particular divergence of late between commonwealth bonds and state bonds, which we are obviously not too happy about, and between AAA


state bonds and AA+ state bonds. It may have been 20 basis points, but I could be wrong. I am sure I have got it in my office; and, if I have not, I am sure that I could get it from Treasury Corporation. The other point to note is that there is a 20 per cent weighting to corporate bonds of A or better. There will be a risk-driven component of the differential, and a significant component of that risk-driven differential will come from that 20 per cent in corporate bonds.

Mr E.S. RIPPER: I bet I know why the Treasurer has been getting briefings on the value of AAA. It is because he needs to stiffen up the rest of the government, in particular the Premier, on the need to avoid too many financial risks and the possibility of a downgrade in the state’s credit rating. I think we have had another unintended concession on internal government debates from the Treasurer in that particular statement.

Mr B.S. WYATT: I will continue with the investment framework. Paragraph 3.4, “Tactical Asset Allocation”, on page 7 states —

It is recommended that the fund manager be allowed discretion to deviate from the SAA within clearly prescribed investment mandates.

A “buy and hold” strategy means that, generally, once bonds are bought, they will not be sold unless it is necessary (e.g., if a downgrade occurs and the security’s credit rating becomes lower that that required by FMA Regulations).

I note that the footnote on the previous page makes the point that the Financial Management Regulations do not prescribe a minimum credit rating. My interest is in the fourth paragraph, which states —

Additional added value to the Fund could be derived by providing scope for discretionary Tactical Asset Allocation … decisions which would be exercised by the fund manager. TAA allows the fund manager to make short-term adjustments away from the SAA portfolio mix in an attempt to take advantage of short-term movements in financial markets.

I would like some more information around a TA allocation. We are talking now about the short term whereby we think we can get a better rate of return, which is very different from the longer term investment that we have been talking about. What parameters will be established for when a TAA investment decision can be made and over what time frame does the Treasurer expect that to be made, bearing in mind that short-term adjustments will be made away from the strategic asset allocation mix? I assume that the eight-year hypothetical that the WATC did was based on the SAA portfolio mix. This is adding an element of uncertainty to that hypothetical eight-year future fund that the Treasurer told us about in which there is a five basis point difference.

Mr T.R. BUSWELL: The fund manager will have some flexibility, as we would expect fund managers to have, to respond to market movements, market opportunities or market threats. A further paragraph on that page states —

It is proposed that WATC will manage the Fund maintaining asset class allocations within agreed Active Management Band limits, which are defined as follows:

They are the active band limits and the terms to maturity that will sit around any decisions that are made about the future fund.

Mr B.S. Wyatt: Including a TAA?

Mr T.R. BUSWELL: That is the TAA; my apologies.

Mr B.S. WYATT: At page 10 of the investment framework, reference is made to the internal benchmarking. I want it on the record that those documents will be made public and will be available for review by the Parliament and Western Australians. At page 13, reference is made to the quarterly investment reports. I assume that these reports will be public documents for review. Can the Treasurer confirm that?

Mr T.R. BUSWELL: Quarterly reports for the public bank account are published on the website. Mr B.S. Wyatt: So it’ll be part of that.

Mr T.R. BUSWELL: No; it will be separate, but we anticipate that quarterly reports will be published specifically about the future fund component.

Clause put and passed. Clause 5: Western Australian Future Fund — Mr W.J. JOHNSTON: I just want to get a picture of clause 5(4). One of the opposition’s criticisms is that this is quite a narrow fund. We have had an extensive debate and I do not want to again go over whether the state bank account will actually increase because of this fund. The Minister for Planning interjected that there would be extra savings, but, of course, if we have a larger budget surplus, there will also be extra savings; we would not have to have this particular arrangement. I just want to know whether there is a particular reason why all other


classes of assets have been rejected for this fund. Is there a philosophical reason? I know that the former Treasurer—the former former Treasurer—made reference to wanting to keep the costs of managing the fund low, which is why he criticised the federal Future Fund. Is there a philosophical reason why the government has rejected all other asset classes, or just the practical reason that because it is only a relatively small amount of money, we do not want it diversified into other types of assets?

Mr T.R. BUSWELL: It is an interesting question. I would like to think that the regulations that sit around the Financial Management Act effectively prescribe the manner in which investments can be made to reflect, if I can use the term, the “risk appetite” of Parliament. By extension, the investment of the future fund will be in a manner that is broadly reflective of the risk appetite of Parliament, whereby the regulations define that risk appetite. I heard the member talk about industry funds the other week; this is not an industry fund by any stretch of the imagination. The other thing is that $250 000 a year to manage the fund is a fairly low rate, although I am no expert in these areas. The advice I have is that if we had adopted the commonwealth model, the cost would have been around $6 million a year. The important point is that we wanted to make this as consistent as we possibly could with the Financial Management Act. Managing the risk associated with the future fund is, in our view, an important issue because it reflects on confidence in long-term investment even though, on current estimates, it is a relatively small amount of money.

Mr J.J.M. BOWLER: I move —

Page 3, after line 12 — To insert —

(5) Notwithstanding the requirements of subsection (4), ten per cent of the money standing to the credit of the Future Fund referred to in subsection (4) must be held in gold.

Mr W.J. JOHNSTON: As it happens, I was aware that the member for Kalgoorlie might move this amendment. I draw the Treasurer’s attention to strong criticism of the Australian government by the Association of Mining and Exploration Companies and other industry bodies for selling parts of its gold reserve. The association made the point that, as a large exporter of gold and the second-largest gold producer in the world, it is appropriate to hold some of our sovereign wealth in the form of gold to demonstrate to countries, companies and organisations around the world that gold is an effective hedge and an effective store of wealth. Western Australia is the major gold province in Australia, and Australia is the second-largest gold producer in the world; it seems appropriate that if we are going to set up a sovereign wealth fund in Western Australia, we should reflect the attitude that gold is an effective store of wealth. I congratulate the member for Kalgoorlie for moving that amendment.

Given that the Treasurer highlighted issues of security and other issues in reply to the question I asked about clause 5(4), I am sure he knows that despite the attractiveness of keeping cash and other instruments, it could be just as effectively done by having part of the holding in gold. I thank the member for Kalgoorlie for moving the amendment. I know that the Labor Party is in opposition, and despite the fact that the member for Kalgoorlie is part of the alliance that forms government, this amendment has not been drafted with all the expertise that is available to government, so if the government says that it is happy to consider this concept but that it would like to deal with the drafting issues, I imagine that that would be something that the member for Kalgoorlie would be happy with. Having had discussions with the shadow Treasurer, I know that he would be prepared to consider that also. Really, we want to put on the agenda the concept that if Western Australia is going to have a sovereign fund, we should recognise the importance to Western Australia of the gold industry and ensure that we are setting the standard that industry participants are demanding for these types of reserve funds around the world. I commend the amendment to the house.

Mr J.J.M. BOWLER: The future fund is a long-term fund; as the name suggests, it goes into the future, and I believe that there is no more stable protection for long-term wealth than gold. Although people say to me, “Gold’s pretty good right now; it’s up around $1 700 an ounce”, the fact is that it has basically tracked the same line over the last century—that is, an ounce of gold roughly equals a week’s wages for a tradesman. That was the case when gold was first discovered in Kalgoorlie and it was the case early last century. Probably the only time it dipped below that price was when the gold price was fixed in the 1920s and 1930s, but since the price has been allowed to float, that trend has continued. It goes slightly above at times and it goes slightly below at times, but it maintains that strong, constant line. Of course, it was not that long ago, during the global financial crisis, that everyone in the world wished that their superannuation, their banks and their future funds had a lot more gold than they had. As the member for Cannington said, this would also demonstrate great faith by the Western Australian government in one of the state’s major industries. I am not asking for 50 per cent; I am just suggesting 10 per cent as a minimum held in gold for the long term. European banks have more than that; we need only look at the Swiss economy. It is always very stable and it is always based on gold. As the member for Cannington said, this amendment was drafted by me. I am not an expert in what the government might consider to be the right legislative wording, but I hope that the Treasurer will tonight say that he will at least give it some consideration. Beyond that, I hope that the future fund has 10 per cent of its wealth locked away in gold bullion,


for the stability of the fund into the long-term future and as a demonstration of the government’s support for one of the state’s major industries.

Mr T.R. BUSWELL: With the greatest respect, if the member for Kalgoorlie wanted us to consider this amendment, he might have let us know, but that is his call. We would have very carefully analysed his proposal in the same way that we have very carefully built a risk profile around the investment. I am not in a position to provide any comment on how this will affect the risk profile. We have just spent a couple of hours talking about the risk profile of the future fund. I have absolutely no idea how tying up 10 per cent or $400 million of the future fund in gold over 20 years will affect that risk profile. I am trying to set up a government framework for a long-term investment for the people of Western Australia.

Mr E.S. Ripper: Does gold have a credit rating?

Mr T.R. BUSWELL: I have no idea, member for Belmont. Do you?

Mr E.S. Ripper: No, I don’t.

Mr T.R. BUSWELL: The point I am trying to make is that this is a serious piece of legislation. I simply refuse to consider this on the basis of having it dumped on the table two hours into debate. It is a very inappropriate way to try to deliver an outcome. I do not say that to be disrespectful but we are actually trying —

Ms M.M. Quirk interjected.

Mr T.R. BUSWELL: We are dealing here, member for Girrawheen, with billions of dollars of taxpayers’ money. For the record, we have the Gold Corporation in WA, which is one of the largest handlers of gold in the world. I do not know how many millions or billions of dollars’ worth of gold is currently sitting in the reserves of the Gold Corporation. I do not know how many millions or billions of dollars’ worth of gold is traded by the Gold Corporation. It may well be that it is one of the largest holders of gold on the planet; I do not know. I will get that advice because I think we need to have an informed debate about this. As I said, I would not have minded some notice so that I could have provided that information to the house a little earlier and to the member for Kalgoorlie himself. But I do caution against a knee-jerk reaction. We will therefore be adjourning this debate when I finish this contribution so that we can consider those matters. I think this is a serious piece of legislation. We are talking about at least $4 billion of money that is being invested by this government and by future governments — Mr E.S. Ripper: As far as I’m concerned, one gimmick deserves another.

Mr T.R. BUSWELL: That is very interesting, member for Belmont. I do not think the member for Kalgoorlie means this as a gimmick, member for Belmont. You may; I do not. I think the member for Kalgoorlie has a genuine interest in supporting the gold industry. Mr M. McGowan: He does.

Mr T.R. BUSWELL: I am not disputing that at all. The member for Belmont obviously is. That is his choice. I am saying that I now need time to consider this proposal that has been put on the table, and I will do that in good conscience and I will get good advice around that. We have just spent two hours talking about matters associated with risk and a desire to deliver a rate of return that is greater than the cost of funds and a whole range of factors, and I have absolutely no idea how this amendment impacts on that. There will be no speakers after this, Leader of the Opposition, and we will come back with that advice and provide that advice to the house. Clearly that will be in a couple of weeks. Mr J.J.M. Bowler: Mr Treasurer, I apologise.

Mr T.R. BUSWELL: No, no.

Mr J.J.M. Bowler: I should have let you know before so that you could consider it.

Mr T.R. BUSWELL: I am heartbroken! What I will probably do is when we get that information—we will be having a break now—I will make sure the member for Kalgoorlie gets a full briefing on that.

Mr B.S. Wyatt: If you’re going to get a briefing, will you make sure the opposition can go?

Mr T.R. BUSWELL: I will consider that, and I probably will.

Mr B.S. Wyatt: If you’re going to be serious about it —

Mr T.R. BUSWELL: I said I will consider it. What is wrong with that?

Mr M. McGowan: The member for Kalgoorlie can give us a copy.

Mr T.R. BUSWELL: There will also be a briefing on the activity of the Gold Corporation. I think it is important that we in this house understand the role that the government plays through the Gold Corporation in supporting the gold industry in WA. Again, I am not pre-supposing the outcome of our investigations. However,


on some of the objectives the member for Kalgoorlie is seeking to obtain—I am not dismissing those at all, unlike the member for Belmont, very rudely I should add—it may well be that we are already delivering them. I just cannot comment on that. So my proposal is to sit down; the member for Kalgoorlie’s amendment will stay on the table; the Leader of the House will rise very promptly as I return to my position; and we will adjourn the debate and come back and have an informed discussion about this in a couple of weeks.

Debate adjourned, on motion by Dr K.D. Hames (Leader of the House).

ELECTORAL AMENDMENT BILL 2012

Second Reading

Resumed from 15 August.

MS M.M. QUIRK (Girrawheen) [10.04 pm]: The opposition supports this bill with the exception of clause 31, which I understand the government is no longer pursuing. We appreciate that these laws need to be passed prior to 9 March 2013 when the state election will occur, and we will do our utmost to facilitate this occurring.

This election will come under particularly close scrutiny because it is the first one since moving to fixed terms for elections. Given that the date of the election is known so far in advance, there is ample time for planning, informing the electorate, training personnel and all other matters associated with the conduct of elections. One could argue that there will be fewer excuses if things go awry.

The principal impetus for this legislation was in fact an issue raised by the opposition in estimates hearings earlier this year. During the hearing on 29 May, the following exchange took place. I asked the Premier —

I refer the minister again to the desired outcomes on page 192 and also to the review of the last 2008 state general election, which was finalised in 2008. I want to ask about a couple of the recommendations. What is the progress, firstly, on recommendation 9 with the common federal–state roll; and, secondly, recommendation 45, on the abolition of the tally room?

The Premier said —

The recommendation on the commonwealth–state roll is supported; it is a logical thing to happen. I think there are some definitional differences that may have been sorted out. Again I will get the commissioner to comment on that.

The Electoral Commissioner was then asked to comment, and he said —

There is a disharmony between the commonwealth roll and the state electoral roll, and that has come about by the fact that the commonwealth requires people to prove their identity when they enrol. That is predominantly done by their driver’s licence details. That is not a requirement for state enrolment. The requirement for state enrolment is that it needs to be witnessed. So the challenge we have is that the rolls have diverged and there are about 12 000 electors who are on the commonwealth roll but not on the state roll because they have not provided their driver’s licence detail and proved their identity.

The Premier said —

The other way around, is it?

To which the commissioner replied —

The other way around is that there are about 2 300 that are WA-only electors that are not on the commonwealth roll. They are not necessarily my problem, but we want that harmony.

The Premier then said —

I am sorry; did you not mean to say that there would be 12 000 more on the state roll who are not on the commonwealth roll?

To which the commissioner replied —

No, there are 12 000 commonwealth-only electors. I should have those 12 000 electors on my roll.

The member for Victoria Park then asked —

I am sorry; there are 12 000 Western Australians on the commonwealth roll who are not on the WA roll?

Mr Gately, the commissioner, then said —

That is correct.

That was something that shocked and surprised some people in the chamber at the time. The commissioner went on to say —


They are flagged on the commonwealth roll as being commonwealth-only electors, so we know who they are. The challenge is when they enrol and they do not have their form witnessed, we can go back to them, but they do not follow it up. Therefore, I need to change the legislation, make it retrospective, get the driver’s licence detail, and bring them over from the commonwealth and onto the state roll. But at the moment those 12 000 electors will go to a polling place and will not be on the state roll although they will be on the commonwealth roll.

At that stage the Premier said —

Can I ask a question, Mr Chairman? Does that mean, commissioner, that if the law is changed and the state accepts the commonwealth criteria, those 12 000 people would be accepted onto the Western Australian roll?

Mr Gately said —

That is correct.

That, I think is the genesis of this legislation, and I am pleased that the state has acted to bring the amendments to the legislation so very quickly. I am advised that the figure of 12 000 that I have been quoting extensively has now blown out to 15 956 people who are not on the state roll as of 30 June this year.

Before addressing the bill itself, there are a few preliminary matters I want to canvass. The first of those is the notion that I think there would be some merit in establishing at a state level a standing committee on electoral affairs. As is the case in some other jurisdictions, I think there would be merit in establishing one in Western Australia. At the commonwealth level, there is a Joint Standing Committee on Electoral Matters, which inquires into and reports on such matters relating to electoral affairs and practices and their administration as may be referred to it by either house of Parliament or a minister. The matters that may be referred by the houses include reports by the commonwealth Auditor General. The committee can also inquire into matters raised in annual reports of commonwealth government departments and authorities. In its inquiry into the 2010 federal election, the committee looked at a range of issues, including maintaining the roll, polling and voting, reinstatement to the roll, formality issues and the redistribution of electoral boundaries.

Similarly, New South Wales has a Joint Standing Committee on Electoral Matters, which was established on 14 May 2004. It did not operate for a while and was re-established in June 2011. That committee inquires into and reports on matters referred by either house of Parliament or a minister relating to the administration of and practices relating to the Parliamentary Electorates and Elections Act 1912 and the Election Funding, Expenditure and Disclosures Act 1981. In the next session of Parliament, I think there would be some merit in considering whether to have such a committee in this state. Currently in the Western Australian parliamentary committee system, electoral issues are covered by the Community Development and Justice Standing Committee, which is responsible for another 17 areas of responsibility and, as such, key issues such as electoral reform are not subject to rigorous inquiry and debate in this Parliament. There simply is not the time with so many areas to cover, and that is unfortunate. Having said that, the standing committee called the Electoral Commissioner and deputy commissioner into a hearing this morning. The commissioner observed that it was the first time in his memory that he had been called before a committee to give evidence on electoral matters. I think there was great interest by all members of the committee and we only really scratched the surface of the many areas that we all have a keen interest in.

The second preliminary issue relates to informality. We in the opposition are concerned that the percentage of informal votes in the 2008 election for the Legislative Assembly was 5.32 per cent, which is an increase of 0.08 per cent compared with the votes in the 2005 election. My electorate has the dubious honour of having the highest recorded informal vote of 8.13 per cent. In the course of the May estimates hearings that I referred to earlier, I asked what measures the Western Australian Electoral Commission intended to take at the next election to address the position. I asked the Electoral Commissioner what was being done. Mr Avent, the Deputy Commissioner, answered as follows —

In the service level commitments document that we have circulated to all members, we have indicated what our performance indicators are for the forthcoming election. Our target is to reduce the informality rate for the Legislative Assembly to a state average of four per cent and for the Legislative Council to two per cent. In 2008 in the Assembly it was 5.3 per cent and 2.8 per cent in the Council. One of the key things we are doing, which is a new initiative for the forthcoming election, is to send an Easy Voter card to every elector on the roll. That will give them information about their enrolment, their nearest polling place to their residential enrolled address and so on. It will also contain information, however, about how to mark the ballot paper correctly. That has always been a target of one of the phases in the information campaign. But we believe that by targeting individuals with that personalised mail-out it will be one of the strategies we will use to get that informality rate down. We will also look at ensuring that the posters and instructions in the polling places are perhaps in plain English.


After being asked by the member for Cannington, given that a lot of people vote early, when that material would be mailed out, Mr Avent answers —

It is envisaged that that mail-out will occur two weeks before polling day. Certainly, we are not decreasing the number of early voting centres, so that will be similar to what happened at the last election. There will be plenty of opportunities for people to cast an early vote. We will ensure that the “Easy Voter” card hits letter boxes to coincide with the commencement of early voting.

I am not sure that that measure adequately addresses the range of issues identified as contributing to informality. There has been a marked change in how people receive information with the growth of social media, and letters or newspaper ads simply do not have the same level of impact or penetration as they have had in the past. Similarly, where literacy or language is an issue, this letter may well not be sufficient. It is something that will need to be scrutinised closely after 9 March in the event that this measure fails to arrest an upward trend. I was pleased to note in this morning’s committee hearing that the Electoral Commissioner is also targeting a number of electorates where there are high levels of people from non–English speaking backgrounds, and it is also contacting ethnic communities to conduct some information sessions with those voters. With that sort of measure, which I commend for fairly selfish reasons, we hope that the informality level will be reduced.

Similarly, voter turnout went down at the last election as well. In 2008, voter turnout was measured at 86.48 per cent, which is lower than the 91.5 figure for the 2005 election. I would be interested to ask the Premier when he replies whether he can proffer a reason why this has occurred. As of 30 June this year, there were 1.38 million electors on the state electoral roll. Although the number of electors on the roll continues to grow at the rate of about 15 000 a year, the proportion of eligible persons enrolled has been in decline nationally since 2001. In WA, the participation rate, as I said, is about 86 per cent with an estimated 225 000 eligible persons not on the roll. A lot of concern was expressed recently in an article written by the commissioner in The West Australian that many of these are young people. That is a more subtle issue and relates to people’s engagement or lack thereof with the electoral process. It is incumbent upon all of us to think of ways to ensure that every member of the community values their vote and wants to participate in elections. In that article, which appeared in The West Australian on 19 September, Mr Gately writes —

While enrolment and voting are compulsory, more than 10 per cent of eligible West Australians are not on the roll, including more than half of 18 and 19-year-olds.

He goes on to say — Whatever the reason, it is evident we are now less inclined to exercise our right and responsibility to vote and influence the direction of our State and nation.

And this will be of interest to my colleague sitting next to me — Of note, at the last State election there were three seats where the margin was less than 100 votes and Government was formed with a majority of just two seats. In the closest seat a change of 33 votes could have seen a different result. In more than 20 per cent of seats in that election, the number of informal votes was greater than the margin.

That is a salutatory reminder for all of us. From a philosophical perspective, if those people who choose not to vote knew that other Western Australians had a restricted capacity to vote, I wonder whether this would lead them to value their vote more. Similarly, if they realised that in some countries people go to war for the right to vote, that would impress upon them how valuable it is to have the unfettered right to vote. In Western Australia not all Western Australians are given the same opportunity to vote. Effectively, two weeks before the election, remote communities surrounding, for example, Bidyadanga or the Dampier Peninsula, have a two-hour window to vote, even though those communities might be drawing on an area with 1 500 or so people. Compare that with booths in the electorate of Wagin, where a polling booth is set up for the whole of the election day at somewhere like Varley store or Pingaring Community Centre, even though they receive respectively 57 and 64 votes. The Electoral Commission must look at giving communities, particularly those in the Kimberley and Pilbara, greater access to the opportunity to vote, rather than just a two-hour window sometime before the election. People in the Kimberley and Pilbara should have the same opportunity as someone in the wheatbelt. I was very gratified to hear this morning that the Electoral Commission has decided to have a number of additional booths in the Kimberley that will operate on election day for the full day. I think the evidence was of five more booths, and we heartily welcome that as a step in the right direction. However, until that equality of opportunity to vote is actually achieved, I think some people will choose to interpret the current practice as systemic racism, which is reminiscent, frankly, of some of the practices deployed in some states of the United States to disenfranchise African Americans and Hispanics.

On a related issue, both the AEC and the WAEC would respond by saying that no doubt the barriers that Indigenous electors face to electoral participation are best addressed by specific programs. The issue of


Indigenous participation in the electoral system was considered by the commonwealth Joint Standing Committee on Electoral Matters following the 2007 federal election. It noted that there are a number of barriers to participation in the electoral system by Indigenous electors. These included literacy and numeracy levels, cultural activities, school retention rates, and health and social conditions, as well as the general remoteness of Indigenous communities and the transient nature of their inhabitants. The committee went on to conclude that although many of the factors that reduce participation by Indigenous electors are not directly within the AEC’s control, efforts by the AEC to engage Indigenous electors and provide flexible voting services will, nevertheless, make a difference to lifting Indigenous participation. That report contained a number of recommendations made by the Joint Standing Committee on Electoral Matters as to how Indigenous participation can be improved. Certainly, the WAEC participates with the Australian Electoral Commission on what is known as the Indigenous electoral participation program. We heard some evidence this morning in the Community Development and Justice Standing Committee as to what activities the Electoral Commission intends to participate in, in this context, between now and the election.

The next issue that I will raise now—because the amendment to clause 31 is not proceeding so I will not have an opportunity in consideration in detail—is the issue of disclosure returns of election donations. As it presently stands, someone can make a donation to a political party on 1 July 2011 that will not need to be forwarded to the WA Electoral Commission until 30 November 2012, and those donations are then made public four weeks later, on 30 December 2012. It seems that time frame is inconsistent with the whole notion of timely political disclosure; namely, there should be a nexus between decisions made by government or decisions made by persons or particular actions taken by a local member and the act of receiving that donation. This delay renders the legislation somewhat less than effective. I think certainly that, technology going the way it has, there should be the capacity to lodge returns electronically. As in other jurisdictions, there should be access to those on a more regular basis, perhaps quarterly or six monthly, and not this delay of what is effectively 18 or 19 months from when the donation was made. That is something for another day obviously, but I think it is relevant to raise in the context of this legislation. It is also something that I think could be usefully looked at in the event that there was a standing committee into electoral matters. We are mindful that with an ageing population there will be an increasing number of — Dr K.D. Hames: You did say that you were only going to be 10 minutes. Ms M.M. QUIRK: I actually said 35 minutes, I have been going for 20 minutes. Interrupting me does not help me go any faster, minister.

We are mindful, Mr Speaker, that with an ageing population there will be an increasing number of elderly people who may want to exercise the right to engage in postal voting processes. For that reason, we certainly approve of clause 20, which amends section 23. That permits persons to apply to become a general early voter, which will enable them to automatically receive a postal vote. This will apply to persons who are 70 or over, a voter who is seriously ill or infirm, or their carer.

In terms of the central plank of the bill, as members have already heard—in the interests of economy of time I will try to speed this up—this is about harmonising identity requirements for enrolments. This is something that we very much support. We note that the bill acts retrospectively, which of course again makes common sense. As I said, at this stage over 15 000 persons are affected by the current lacuna in the rolls. The bill also deals incidentally with the better use of technology. I have already observed that certainly the greater use of technology in the context of disclosure is warranted; things like nomination forms, various returns that political parties have to make—for example, registrations and online applications for early ballot papers—are all sensible things. In the long term we would support a broader version of that. In fact we heard the commissioner say today that the capacity of a person to change their enrolment details has to be made in the paper form. We think that it is nonsensical. We would hope that that is considered down the track. The bill also corrects the problem that arose in relation to fining people who had not voted. In the context of the daylight saving referendum, because of a technical glitch, information provided to the Fines Enforcement Registry was not in the right form to pursue those people who had committed an offence by not voting in the referendum. This bill will change that situation. Clearly, if we are going to have a compulsory voting system, it is important to have a backup of a fine, be it only $20.

The final issue I want to raise is that of electoral defamation. This bill repeals a reference to defamation on the rationale that the commission has received legal opinion that a reference to defamation in the act is obsolete after changes to the Criminal Code meant that the charge of electoral defamation had been removed with the introduction of Defamation Act 2005. Also, a body of law has developed in the courts over recent years, which includes a court case involving my colleague the member for Pilbara. That body of law establishes that political comment should be unfettered in the political context and, in particular, during an election period. This is because there is an implied right under the constitution of freedom of communication. Proving defamation in a political context is much harder. We are all acutely aware of that.


A related matter, which is difficult and which I think has not been adequately dealt with, is the question of truth or accuracy in political advertising. Organisations such as the Australian Competition and Consumer Commission and consumer affairs and fair trading bodies ordinarily deal with issues of false and misleading statements in advertising. However, in all jurisdictions that is limited to matters involving trade and commerce and does not extend to political advertising. I do not believe there is currently any legal requirement for the content of political advertising to be factually correct. That to me is a concern. The Electoral Commissioner gave evidence today before the Community Development and Justice Standing Committee that he would be concerned only if that occurred on polling day. It seems to me that that is a concern, because we could have a situation in which objectively false claims are made about a candidate late in the election period and there would not be sufficient time for a candidate to dispel those inaccuracies, which would be costly to do. There do not seem to be any sanctions for making misleading or untrue claims at the time. After the event, it is of little utility in the Court of Disputed Returns because the candidate would need to prove a nexus between those untrue statements and the ultimate election outcome. Similarly, if a candidate were to pursue other civil legal action, again, the horse has bolted; they may well have lost their seat on the basis of these inaccurate and false claims. That may be a matter worthy of the newly established standing committee to examine after the 9 March election. With those brief remarks and few observations, I commend the bill to the house.

MR C.J. BARNETT (Cottesloe — Premier) [10.32 pm] — in reply: I thank the opposition for its support for the Electoral Amendment Bill 2012. As the member for Girrawheen said, the major reason for this bill is to correct a serious anomaly. When people apply to be listed on the electoral roll, they fill in a single enrolment application, but the criteria are different between the state and the commonwealth; the commonwealth requires simple proof of identity, such as a passport or driver’s licence, whereas the state requires that the application have a witness. The consequence of that is that the witness process is more difficult. Some 12 000 or perhaps, as the member said, 15 000 are enrolled on the commonwealth roll but are not enrolled to vote in state elections. This now standardises the criteria so that the state will be consistent with the commonwealth. The bill also contains elements relating to technology in elections. In a vast and remote state such as Western Australia, that makes some sense. There are also some provisions to make sure that the enforcement system for people who do not vote in the compulsory system is consistent with other legislation. As the member for Girrawheen said, a number of other anomalies are fixed. One is to make it easier for people who are ill or over 70 years of age to apply for early postal votes, and for parties to lodge group nominations. Postal votes that are stamped on the Sunday following the election will still be valid. A number of other fairly minor things have been changed. The most important consequence is consistency between the state and the commonwealth on the criteria for acceptance on the roll. Therefore, in the forthcoming election the 12 000 or maybe 15 000 people who are on the roll and can vote in commonwealth elections, but currently not in state elections, will automatically be able to vote. I thank members for their support. Question put and passed. Bill read a second time. Leave denied to proceed forthwith to third reading.

Consideration in Detail Clauses 1 to 30 put and passed. Clause 31: Section 175ZC amended — Mr C.J. BARNETT: This clause requires that the disclosure of financial donations to political parties be made on the same day as those that are disclosed under commonwealth legislation. The government proposes to delete this clause, given that we now have fixed election dates in Western Australia. Keeping this clause would mean that the process of financial disclosure would occur in the midst of an election campaign, which, of course, is when donations are coming in and it would be quite chaotic. Administratively, a different date will be found to keep it clear of the fixed election date. The government intends to vote against the clause. Clause put and negatived. Clauses 32 to 34 put and passed. Title put and passed.

BILLS Receipt

1. Retirement Villages Amendment Bill 2012.

2. Sentencing Amendment Bill 2012.

Bills received from the Council.


REVENUE LAWS AMENDMENT BILL 2012 Returned

Bill returned from the Council without amendment.

House adjourned at 10.38 pm __________

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