The Hon. Rob Lucas MLC

The Hon

Rob Lucas MLC

Treasurer

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Why are we paying millions for deadlines that are not met?

Wednesday, 30 March 2011

The Labor Government must explain why it paid Adelaide Aqua millions of dollars extra in a failed attempt to meet a construction deadline for the Lonsdale desalination plant, Shadow Finance Minister Rob Lucas said today.

In evidence to a Parliamentary Select Committee yesterday, Adelaide Aqua executives refused to reveal the exact level of the payment but insisted it shouldn’t be called an incentive.

“The Labor Government and SA Water signed a $1.26 billion supposedly fixed price contract with Adelaide Aqua which sets a series of deadlines which must be met and imposes penalties if they are not met,” Mr Lucas said.

“One of the key deadlines was the delivery of ‘first water’ by December 2010. We now know that deadline was not met and the latest tentative estimate is July/August 2011, and even that date is far from guaranteed.

“Adelaide Aqua’s Commercial Director James Ferry refused to answer some questions and told the Committee SA Water should be asked to provide the answers:

The Hon. R.I. LUCAS: But you've signed off on a contract for $1.2 billion (or whatever the number was at that particular time) to deliver security and safety at a considerable price. Why do South Australians have to pay you millions of dollars extra to meet a contractual commitment that you have?
Mr FERRY: Again, that is a question for SA Water, but I can see the benefit to the state in ensuring that the work is performed on time.
The Hon. R.I. LUCAS: But you have a contractual commitment.
Mr FERRY: But what good does it do if South Australia misses its water as of 1 December because of wet weather, because of wind and things of that sort?

“In summary we have the unbelievable situation where a contractual deadline of December 2010 was not met and instead of imposing penalties of millions of dollars under the terms of the contract the Labor Government and SA Water instead decide to give Adelaide Aqua millions of dollars extra!

“Only a Labor Government could explain that sort of logic.

“The Premier and Water Minister Paul Caica cannot continue to hide behind SA Water bureaucrats on this critical issue.

“They must come out of hiding and explain why we paid millions of dollars in addition to the $1.2 billion ‘fixed price’ contract to meet a contractual deadline which was not met.”
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