Desalination Plant Project

November 24 2010

Adjourned debate on motion of Hon. T.A. Franks:

1.That a select committee of the Legislative Council be appointed to inquire into and report upon the Lonsdale-based Adelaide desalination plant project including the following matters:

(a)the management and administration of the project;

(b)the procedures and practices with regard to workplace safety;

(c)the related matters of worker deaths and injuries; and

(d)any other relevant matter.

2.That standing order No. 389 be so far suspended as to enable the chairperson of the committee to have a deliberative vote only.

3.That this council permits the select committee to authorise the disclosure or publication, as it sees fit, of any evidence or documents presented to the committee prior to such evidence being presented to the council.

4.That standing order No. 396 be suspended to enable strangers to be admitted when the select committee is examining witnesses unless the committee otherwise resolves, but they shall be excluded when the committee is deliberating.

(Continued from 27 October 2010.)


The Hon. R.I. LUCAS (17:09): I rise briefly to support the motion from the Hon. Tammy Franks to establish a select committee to inquire into the desal plant. In doing so, I move to amend the motion, as follows:

Paragraph 1(a)—Leave out this paragraph and insert new paragraph 1(a)—

(a)the management and administration of the project, including all issues relating to the cost and financing of this project;

Paragraph 1(b)—Leave out this paragraph and insert new paragraph 1(b)—

(b)the procedures and practices used to deliver the project, including those with regard to workplace safety;

Paragraph 2—At the beginning of the paragraph insert before 'That standing order no. 389' the words—

That the committee consist of six members and that the quorum of members necessary to be present at all meetings of the committee be fixed at four members and

We suspect that these issues would have been clearly covered even in the initial drafting but, out of an excess of caution, we propose these amendments, and I understand that the mover is relaxed and comfortable with that (to use a phrase). They make it clear that issues in relation to the costs and financing of this project, for example, would be a term of reference of the select committee if it were established.

The reason for that is that some of the allegations or claims made in relation to workplace safety obviously relate to issues of cost and financing, that is, the need for speed, perhaps the need to meet various contractual time lines or to meet financial benefits or prevent the occurrence of financial penalties under a particular contract. Clearly, they will be important issues. First, I guess we need to establish the extent and nature of the workplace safety breaches, although there has been much publicity about them already thus far, and, therefore, a fair bit of public information about them.

Having established that we will need to look at the issues that may have been a cause of workplace safety breaches, and it will therefore be essential to look at issues that relate to the contract. Obviously, to a very large part the contract governs the behaviour of the contractors and sub-contractors. If the contract says that certain things have to be achieved by a certain deadline or certain financial penalties will occur, that could govern a pattern of behaviour that may have led—and I say this advisedly—to workers being placed in a dangerous position. So the issues of the contract, and the costs and financing of the contract, clearly relate to workplace safety issues.

Regarding the second amendment, as I said, we believe that this is probably covered in the existing wording but, in an excess of caution, we make it quite clear that the procedures and practices we talk about cover all the procedures and practices used to deliver the total project, including those with regard to workplace safety. This is just to make it absolutely clear that those issues are covered.

The fact that the mover has very sensibly incorporated those wonderful few words, 'any other relevant matter' in the terms of reference—which are the save-all for all committee inquiries—would, we believe, have covered it anyway. The only other point I would speak to is that, upon discussion with the mover, we understand that there are two non-government, non-opposition members of this place who are very interested in serving on the committee.

With two Labor members and two Liberal members it necessitates moving an amendment to the motion to allow the committee to consist of six persons, which will facilitate that. I do not speak on behalf of the government, but I assume that government members will participate and will insist on the convention of two government members; certainly, the Liberal Party's view is that this is such an important committee that two Liberal members should serve on the committee as well. With that, I indicate my support for the motion, with the amendments I have moved.

Debate adjourned on motion of Hon. I.K. Hunter.


Adjourned debate on motion of Hon. T.A. Franks (resumed on motion).

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Industrial Relations, Minister Assisting the Premier in Public Sector Management) (00:29): As Minister for Industrial Relations, I am fully aware of the critical importance of workplace safety and the consequences of unsafe work practices and worksites. With regard to safety at the Adelaide Desalination Plant it is important that I provide the chamber with a full and accurate account of safety management practices in what is clearly a major infrastructure project for this state. I also contend that a parliamentary inquiry, as proposed by the Hon. Tammy Franks, is unnecessary, certainly in the areas she has outlined pertaining to workplace safety.

I will explain to the house the extent to which SafeWork SA is both investigating incidents and working with management of the plant to ensure that safety is fully factored into all work practices at the site. It is unfortunate that some of the media coverage to date appears to be more concerned with generating good headlines than good outcomes. A proper appraisal of the true situation should convince the council that this proposed parliamentary inquiry is unnecessary.

I will turn firstly to the issue of safety management and the question of safety at the Adelaide desalination plant. The principal contractor on the project site is Adelaide Aqua, which is a consortium of McConnell Dowell, Acciona Agua and the Abigroup. The plant site itself is an intensive construction zone involving multiple contractors who employ a substantial number of workers on what is a large parcel of land.

As the government's regulator, SafeWork SA has had inspectors present on site since construction work began there in 2008. During that time, agency inspectors have discussed the on-site management of health and safety at the plant with senior project management and have reviewed safety management systems themselves. The inspectors also speak to contractors, workers and supervisors on site about safety.

The desalination plant has a project management structure including a project director and a manager of health and safety. There are safety superintendents managing safety coordinators on site who report to the health and safety manager. The site also has an occupational health and safety committee which has subcontractor representation. Subcontractor coordination meetings are held each afternoon, which plan the coordination of subcontractor work in each allocated zone for the next day. These meetings are also attended by the safety coordinators.

The client, which is SA Water, also has two of its own site safety auditors allocated to the site and occasionally engages a private occupational health and safety consultant. These personnel also check safety at the site and give feedback to SA Water on the project. As the regulator, SafeWork SA regularly discusses safety management with the Adelaide Aqua project director, the national safety manager for Abigroup, the Adelaide Aqua safety manager and on-site SA Water executives.

As part of this engagement, in September 2010, SafeWork SA inspectors conducted a review of the safety management system on site. This confirmed the extensive occupational health and safety management structure at the site. Given the extensive site management of occupational health and safety by the project staff, SafeWork SA has developed a strategic compliance plan for the project.

In addition to responding to any complaints or notifiable incidents received, targeted inspections are also carried out by SafeWork SA on a regular basis. These specifically target high-risk construction activities on the site and require inspectors to cover all sections of the site in a strategic manner, engaging the safety officers and senior project staff during their inspections. So, what we have here are not only multiple layers of safety management provided by the project consortium, but also extra layers provided by the government regulator.

In response to the allegations about the storage of explosives, SA Water advised that a licence had been sought from SafeWork SA to store the required explosives on site. SafeWork SA came to the site and selected the optimum location for the explosives storage area. Based on this location, SafeWork SA then placed the required restrictions on the amount of explosives that were stored on site.

On 14 July 2009, the licence for magazine, and hence the storage of explosives, was issued by SafeWork SA. Within this licence, the regulations around the access to the compound, and the safe storage of the explosives, were articulated. The storage of explosives complied with Australian Standard 2187.1—Storage of Explosives and the South Australian Explosives Regulations of 1996.

I am advised that all site storage has been undertaken strictly in accordance with Australian standards and complies with approved SafeWork SA licence conditions. SA Water audited and found 100 per cent compliance with all of the licence conditions. I understand that, as the works requiring explosives is completed, the explosives have now been removed from site, with no incidents.

Dealing with incidents, I will return to the second issue relevant to my portfolio that the honourable member's proposed inquiry wishes to address, namely, the related matter of worker deaths and injuries. Any workplace death is unacceptable. Our objective is to ensure that all workers are safe. I reiterate that, on top of the strategic efforts mentioned before, SafeWork SA occupational health and safety inspectors regularly visit and inspect the desalination plant site to ensure compliance.

Further, these inspectors undertake regular unannounced site inspections and attend to identify workplace issues. Interactions at the site also include after-hours inspections that are undertaken to assess overnight activities. To date, more than 200 inspector visits have been recorded for the desalination plant site.

That said, the reality is that there has been one fatality at the desalination plant that was notifiable under the Occupational Health, Safety and Welfare Act 1986. On Friday 16 July 2010 an incident occurred in one of the two reverse osmosis buildings which resulted in the death of 35 year-old Mr Brett Fritsch. Mr Fritsch was struck and fatally injured by a steel beam that came free as it was being lowered through the open roof space of the building.

SafeWork SA is in the process of conducting a formal and thorough investigation into this fatality, ensuring that all avenues of inquiry have been comprehensively investigated. Numerous statements have been taken and specialist advice has been sought where necessary. When all the necessary information has been gathered, it will be reviewed to determine the full circumstances of the incident and where any culpability might lie under workplace safety laws. If it is found there is a case to be answered then SafeWork SA will launch a prosecution in the Industrial Court. Accordingly, it is appropriate that I leave this matter to the investigators until that decision is made.

There has also been significant media interest surrounding another death that occurred at the Adelaide desalination plant site involving Mr Allen O'Neil. Mr O'Neil was an employee of Australian Reinforcing Specialists Pty Ltd, where he was employed as a leading hand steel fixer working on the desalination plant pipeline project. Mr O'Neil died in hospital on 15 February this year as a result of complications from ingesting fuel.

In accordance with its standard procedure for all reported deaths, SafeWork SA conducted a preliminary investigation to establish whether this incident fell within the scope of a notifiable death under the occupational health, safety and welfare legislation. The investigation identified that the company responsible for filling the generators with diesel fuel did have appropriate procedures in place at the time of the incident and had taken reasonable steps to avoid such an incident occurring. Accordingly, the investigation identified that there were no work-related issues that may have caused or contributed to Mr O'Neil's death.

While this is now a matter for the Coroner, I have asked SafeWork SA to review its investigation with a view to supporting the Coroner's inquest to the fullest extent. However, Mr O'Neil's death cannot and should not be connected in any way to work activity at the Adelaide desalination plant.

In both these matters, some critics in the media have hinted at cover-ups or soft treatment of these matters—'Caesar judging Caesar' as some have put it. Nothing could be further from the truth. SafeWork SA is fully empowered under its legislation to investigate and prosecute other government entities and their contractors. The records show that it has not shied away from pursuing government departments in the past.

In both of the tragic cases related to the desalination plant, SafeWork SA has exercised its functions appropriately. As I have indicated thus far, extensive and comprehensive systems are in place at the desalination plant to ensure that work-related harm is minimised to the broadest extent that is reasonably practicable.

In summary, the government is of the opinion that this inquiry is unnecessary for the following reasons:

  • ·The regulator, SafeWork SA, is actively involved at the site and maintains extensive engagement through formal dialogue and unannounced site visits.
  • ·The safety systems, procedures and resources in place are appropriate for the extent of work being undertaken.
  • ·While there has been a notifiable fatality, this is being fully investigated to determine the circumstances of the incident and where any culpability may lie. This is an important project for South Australia and the government is fully aware of the human cost to date. However, this is not a time for ill-informed hearsay and accusations to take hold. Accordingly, the government should keep faith with the safety management systems and regulatory processes in place and oppose this inquiry.

In these comments I have addressed issues relevant to my portfolio, but of course there are other issues which I understand my colleague the Hon. Carmel Zollo will address in relation to the motion by the Hon. Ms Franks.

The Hon. CARMEL ZOLLO (00:40): I would like to add some further comments to those already made by the Minister for Industrial Relations, the Hon. Paul Holloway. As he said, he has placed on the record issues relevant to his portfolio. My comments will address in particular the rigorous independent verification processes.

The government opposes this motion because a select committee based on hearsay, promoted by the media, would be a waste of public money and would be the product of nothing more than a mischievous political exercise. We oppose this motion because a dossier circulated by the Hon. Ms Franks, which is offered as substantiation of the need for a select committee, is by an author unnamed. Do a dossier that is unattributed and allegations in the media that are not credible warrant a select committee and the great cost and investment of time that it implies? The answer is clearly no.

The design and construction of the Adelaide desalination plant is being undertaken by three companies making up the AdelaideAqua D&C consortium, all being parties to the contract with SA Water. The companies in the consortium are Abigroup Contractors Pty Ltd and McConnell Dowell Constructors Australia Pty Ltd, which are joined in a fully integrated, unincorporated joint venture, and ACCIONA Agua Adelaide Pty Ltd.

SA Water advises that there are in place rigorous independent verification processes to ensure that the desalination project is conducted in a proper, effective and safe manner and in accordance with all contractual arrangements. This, of course, you would expect. I am advised that these processes include the appointment of an independent verifier, jointly by SA Water and AdelaideAqua. The independent verifier’s core function on the desalination project is to verify that the design and construction works are carried out in accordance with the design and construct D&C contract requirements.

The independent verifier undertakes the above functions through observing, through monitoring, through reviewing, and through auditing and verifying the quality assurance and project management systems. The independent verifier acts independently of SA Water and AdelaideAqua and as such is not influenced by the individual parties in undertaking its role. The verifier attends audits, safety briefings, and various meetings and design reviews to verify that contract requirements are being met.

Some of the critical aspects that the independent verifier has been involved in include verifying the D&C contractors’ compliance to the code of practice for risk management of tunnel works. They include attending, monitoring, reviewing, verifying and commissioning tests, the performance tests and the reliability tests run, and the corresponding programs for such activities. They include undertaking audits of the site to ensure contractors’ compliance with safety and management plans and environmental management and monitoring plans, and with supporting plans and standard work procedures.

There is also a rigorous insurance review process, as part of the insurance cover. Independent verification is carried out at various stages of project activities by the lead insurers. Insurers also conduct a continuous risk engineering program involving regular visits by experienced risk engineers from different disciplines to review the progress of construction, installation and testing works. The areas of interest cover safety and underground tunnelling. I am also advised that over the last few months the insurers have carried out regular surveys of the site as well as reviews of critical documentation. I understand that these scheduled visits are to assure the lead insurance group that risks are being managed at acceptable levels and that all documentation relating to AdelaideAqua’s critical works meet codes of practice and underwriting requirements.

I am also advised that a dispute resolution board (DRB) has been established to act independently in relation to any disputes that may arise at the desalination plant and that it is available at short notice should a dispute arise between parties and resolution cannot be reached.

The board is comprised of one senior member of the South Australian bar or legal profession, one senior member from Engineers Australia and one project programming expert. The group meets on a quarterly basis, inspects the site activities, reviews all AdelaideAqua monthly reports and meets with SA Water and the contractors and matters of interest following their review.

We are further advised that key independent experts carry out verification of AdelaideAqua's marine and environmental activities. Their engagement assures SA Water that an independent verification is carried out on AdelaideAqua activities to ensure compliance generally with the Environmental Impact Statement and the Environment Protection Authority requirements. The points I have made so far make absolutely clear that the attention to checking and verifying procedures and processes at the desalination plant are detailed and rigorous.

SA Water also advises that it monitors contractor compliance with approved safety and environmental management plans and specifications. It also engages in site verification processes that include routine audits against all of the contractors' management. SA Water advises that these processes also include the development of defects lists and site inspections to close out defects. They include regular site inspections by the project managers to verify compliance and the completeness of works.

They include joint inspections with the contractors before any completion or commissioning work packs are closed out. They also include workshops for risk assessments and hazard assessments and they assist with managing and monitoring risk mitigation. SA Water also advises that it undertakes daily physical inspections of the site. SA Water has provided the government with advice on the claims and allegations that constitute most of the explanation provided by the Hon. Tammy Franks in support of her motion, which I now wish to elaborate on.

In response to the honourable member's comment about simultaneous construction practices, SA Water points out that it is common industry practice that construction works are scheduled to occur concurrently. All works are subject to pre-planning via job safety and environmental analysis to identify risks associated with any works and to ensure that appropriate safety controls are in place before work proceeds.

With regard to vehicles without escorts, SA Water comments that the only oversized vehicles on site were the fleet of scrapers and water carts during the bulk earthworks. This fleet is operated by a team of fully ticketed and qualified operators. All other oversized road deliveries have been undertaken with appropriate escorts. With reference to the comments about security, SA Water says that, before workers and subcontractors are inducted onto the site, the safety department verifies the ticket of each individual and they list the high risk work licences on their induction record.

AdelaideAqua and D&C Consortium have also engaged a respected South Australian security firm to provide security services to the site. The service provides for a team of security guards on site 24 hours per day, seven days a week. The laydown areas and secured compounds have monitored alarm systems and, in the event of an unauthorised entry, this alerts the security guards on site. CCTV is present and operational on site, and a live feed is viewed at the site security hut at the main project entrance.

SA Water has also affirmed that no employee who experiences a lost time injury (LTI) faces any discrimination or dismissal. We are advised that AdelaideAqua has a dedicated return‑to‑work officer for AdelaideAqua employees to assist individuals who have an LTI to safely return to work, as their health permits. The Hon. Ms Franks also raised concerns about the tunnelling procedures at the desalination plant. SA Water advises that the tunnelling crew at peak numbered 96 workers and 25 staff, the latter being mostly qualified civil and mining engineers.

The tunnelling program was led by highly experienced managers who averaged more than 20 years' international experience in the specialist construction area of tunnelling. I am advised that an AdelaideAqua D&C Consortium partner is one of Australasia's most skilled tunnelling contractors, renowned for its micro tunnelling expertise and the capacity to provide fully integrated engineering and construction solutions.

Furthermore, SA Water advises that there was no downgrading of any specifications on the tunnel-boring machines. They point out that these were designed and manufactured by Herrenknecht, the world leaders in manufacturing these types of tunnelling machines.

Tunnel-boring machines manufactured by the same manufacturer have been used all over Australia; for example, at the Sydney desalination project, CLEM 7/NSBT in Brisbane, Melbourne sewer projects and are being used to construct the tunnels for Wonthaggi Desal in Victoria and the Airport Link in Brisbane.

SA Water also advises that the maintenance of tunnel-boring machine cutterhead tools at higher than atmospheric pressure is common practice in tunnelling in Australia and internationally. Specialist hyperbaric consultants were engaged to assist AdelaideAqua D&C Consortium to plan, manage and supervise these works. All workers required to work under pressure successfully completed a medical examination. The airlocks on the tunnel-boring machine that were used for this hyperbaric work had a registration of design for pressure equipment issued by SafeWork SA. Given SA Water's advice, it is clear that Ms Franks' allegations relating to tunnelling, like the rest of her allegations, are spurious.

With regard to remuneration of workers, SA Water advises that all workers are paid as per the EBA in place and paid for hours worked. Workers are also paid overtime, if this is earned, again, as per the EBA in place. AdelaideAqua D&C Consortium is audited by the Master Builders Association to ensure full compliance with all responsibilities to the EBA and existing legislation.

Ms Franks has also made reference to a Favco tower crane. SA Water advises that a Favco tower train was mobilised to the AdelaideAqua site for a period of five months to allow for the erection of formwork and reinforcement steel. The honourable member also makes references to delays at the desalination plant. SA Water says that, in all monthly reports issued to SA Water and consortia parent companies, AdelaideAqua D&C Consortium confirms that there has been no delay to the completion milestones that would see final handover by the end of December 2012.

Finally, SA Water says that in regard to the delivery of the project the AdelaideAqua D&C Consortium has a limited, fixed price lump sum contract to design and build the Adelaide desalination plant. Any cost overruns are at the risk of the contractor and are not borne by SA Water, the state government or the taxpayer.

There are no commercial disputes or claims by the AdelaideAqua D&C Consortium or any of its constituent companies against SA Water. McConnell Dowell, Abigroup Contractors and Acciona Agua have in place parent company guarantees for this project. Parent company guarantees are part of standard industry practice for the delivery of major projects, giving assurance to clients in regard to removing financial risk.

SA Water also advises that the Auditor-General has undertaken several audits of the Adelaide desalination plant project over the last three years and these include:

  • ·financial and compliance audits including delegations of authority and compliance with Treasurer's instructions;
  • ·governance and probity audits in the award of contracts;
  • ·expenditure commitments and commitments within government approvals;
  • ·transaction testing audits in the administration and management of contracts;
  • ·progress certification, payments and costs; and
  • ·comprehensive assessment of whole-of-life costs.

SA Water advises that all of the matters raised by the Auditor-General have been properly met and there are no outstanding issues or concerns.

I conclude by restating my opening remarks. The government opposes the motion calling for a select committee. The material circulated by the honourable member is unsubstantiated and based on hearsay. The advice from SA Water, some of which I have detailed, makes it absolutely clear that there are in place rigorous inspection, verification and checking processes, as any sensible person would expect. I would urge members not to support this motion.

The Hon. T.A. FRANKS (00:54): I will be brief in summing up. Given that the government has assured us that everything is fine and that all the claims that have been made with regard to the desal plant in the media, in the dossier that was circulated and in the Public Works Committee, where there have been many concerns raised that are still ongoing, are all unsubstantiated hearsay, according to the government, I imagine it will be a very quick inquiry.

However, we have heard a lot from the government and we have heard a lot from SA Water on the desal plant. It is time to hear from the South Australian people; it is time to hear from contractors who have not been paid; it is time to hear from workers who have concerns about safety; it is time to hear about what is really going on there.

Of course, the government says that it is opposing this motion for a select committee. The government should be welcoming it. It should be a chance for the government to put the record straight, to prove what government members have just claimed here in the chamber tonight. I imagine that, although they will be opposing it at the moment, it will be something welcomed by them as the sunlight of a select committee shines disinfectant on the festering boil of the desalination plant.

Amendments carried; motion as amended carried.


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