SA power plan: Fears cost of $360 million power station will kill off key infrastructure projects

LEADERS in the construction and property sectors have warned that key infrastructure projects could fall by the wayside after the State Government’s decision to spend taxpayer funds on a new power plant.

• THE PLAN: Jay’s $550m power crisis gamble
• THE REJECTS: What didn’t make the cut
• THE BILLIONAIRE: Companies invited to tender for giant battery
• THE VERDICT: Reaction to the State Government’s dramatic plan
• ANALYSIS: Labor facing blackout without a quick fix
• THE ECONOMIST: This could drive down power prices in SA

LEADERS in the construction and property sectors have warned that key infrastructure projects could fall by the wayside after the State Government’s decision to spend taxpayer funds on a new power plant.

It has committed an expected $360 million to build a state-owned, gas-fired power station to help secure South Australia’s energy supply.

The project can be funded through a $300 million surplus expected this financial year, announced by Treasurer Tom Koutsantonis in the December midyear Budget update.

He also forecast surpluses totalling about $1.5 billion by 2019-20.

However, the Government has set an ambitious time frame to have the new power station running — ideally by next summer, or by the 2018-19 summer at the latest.

This has prompted queries from industry leaders about what money will be left for other, new infrastructure priorities.

They have raised projects such as further electrification or extension of rail and tram lines, long-awaited upgrades to courts buildings, arterial road upgrades and maintenance, a new regional port, or a new contemporary art gallery. The Government allocated $500,000 towards building a business case for such a gallery in the 2016-17 Budget.

Spending the budget surplus will also rob the government of a war chest to pay for big promises ahead of next year’s election.

Property Council SA executive director Daniel Gannon warned that investing in a new government-funded power generator “will likely crowd out other projects and hinder South Australia’s much-needed infrastructure program”.

“What the built environment needs is a reliable source of energy that keeps the lights on, but we also need to consider what the Government’s announcement means for infrastructure projects,” he said.

Civil Contractors Federation chief executive officer Phil Sutherland said the “energy focus” meant the state’s road maintenance backlog — estimated to be worth about $1 billion — was “at risk”.

“A few cracks and potholes might not seem like the makings of a budget crisis but putting off repairs today means spending much more in the future,” he said.

Master Builders SA chief executive Ian Markos said a plan to invest in “next generation power is vital” but his organisation was “worried about things being dropped by the wayside”.

“If the State Government uses this as an excuse to back away from other reforms, then we would be seriously disappointed,” he said.

Former SA Director of Public Prosecutions Stephen Pallaras said the total $550 million cost of the Government’s plan to secure the state’s energy supply represented “money which other sectors of our society have been denied after being told that the Government could not afford it”.

Delivering the Budget update in mid-December, Mr Koutsantonis said the “growing surplus” gave the Government “the ability to make important investments”, particularly in job creation.