Estimates - Industry & Resources - Corporate Bailouts

CHAIR - Minister, I just wanted to just acknowledge that it's a difficult time for many of our major industrials buffeted by global headwinds. We've got a couple of those examples that I can think of, but unlike our GBEs, major industrial are not taxpayer-funded, so their profits are not returned to the taxpayer. Which begs the question why the taxpayer should be subsidising their losses. Particularly when we have a budget crisis which is requiring the Treasurer to slash funding to our public services? Noting in this current financial year almost $50 million of taxpayer money has been handed out to two of our major industrials by the government. What provisions are in the Budget for more handouts or bailouts for these large companies, and what sort of business case is prepared or cost benefit analysis is prepared, in advance of each bailout, and what role do your portfolios have in this process?

Mr ELLIS - Thank you, Chair. Look, seeing as we're going on to industry and resources, we've brought Mr Michael Morgridge to the table, who's Deputy Secretary, Department of State Growth. What do you call your area, markets?

Mr MOGRIDGE - Economic development.

Mr ELLIS - Economic development, excellent, and we'll bring anyone else that we need to the table as well, Chair, but noting other members may wish to continue on with mining and forestry, too. So, probably firstly in terms of the Budget, this $7 million provision, as it relates to strategic support for industrials, in this particular case, is the offer that's been made to Nyrstar, as part of the broader package between the Tasmanian state government, the South Australian state government and the federal government to support the twin plants here at Hobart, and also at Port Pirie. So, for Tasmania, that will bring our total financial support for the Hobart Zinc Works up to $30 million as part of this broader support package, which is a small portion of the overall funding that's come through from the federal government and the South Australian state government as well. So, you're not quite right to say that, you know, their profits aren't taxed because, of course, profits are taxed. Now, there's also a range of other taxes that they pay in terms of, you know, payroll tax; they pay substantial payments to our GBEs and you know, the broader supply chains, which they which they support. So, in the Tasmanian context, we do want our private industries to stand on their own two feet and to be profitable businesses. Now, what we've seen nationally and globally, particularly with the concerns around predatory pricing in the mineral supply chain -

CHAIR - Sure

Mr ELLIS - is that there may not be a level playing field. We're also seeing a once-in-a-generation global collapse of an industrial empire, in the case of the GFG Alliance, which is impacted the Whyalla steelworks, a whole range of British steelworks, and other major industrial businesses. In the Tasmanian context that's impacted our impacted TEMCO, the Liberty Bell Bay manganese smelter. And so we're seeing at once, this broad global challenge, that's being seen in basically all industrial businesses - all smelters, sorry, in Australia, that have seen significant bailouts from the federal government, in aluminium, in copper, lead, zinc, a range of other areas - manganese - then there's also the specifics with Liberty Bell Bay, too. So, it's something that we need to be very conscious of. We're living through very strange times, a globe that is more uncertain and more dangerous, and sovereign industrial capability is the key bedrock of countries being able to withstand global insecurity and geopolitical conflict.

CHAIR - Yes, I, understand that, but, I suppose, and back to my question, it was really around how do you make these choices? I mean, we're talking about lots of taxpayer money, taxpayer dollars going into this. So, how do you identify and, you know, like come up with the business case? I'd like, kind of understand that process within your department.

Mr ELLIS - Absolutely. They're really hard choices, and in many - you know, there are no easy answers in this space because we would prefer taxpayer dollars to be spent on essential services, obviously, but there are some real challenges with these major industrials and in the Tasmanian economic context, they are disproportionately large. So our four major industrials use 50 per cent of our electricity networks. That's quite unusual as well, for a small state with a small economy, to be so reliant on - in that case for businesses in the energy market, and, you know, if you broaden it out, some major other industrials. What I might do is pass to Mr Mogridge, to talk through some of the modelling work that we do to, kind of compare the costs and benefits and the different ways that they, these businesses support the economy, and how we weigh up some of these difficult choices.

CHAIR - That would be great.

Mr MOGRIDGE - Through you, minister, I think the minister summarised it very well. I guess the additional context that I would add is in relation to the support that's provided through the major industrial steering committee, which consists of secretaries of State Growth, Treasury, and Department of Premier and Cabinet, and also the major industrial Cabinet committee. These forums are the opportunity that the minister referred to, through which detailed analysis can be undertaken around the broader macroeconomic implications and benefits of these businesses. The minister's referred to energy usage, but also understanding the employment profile in relation to those businesses, understanding the economic benefits for their regions, understanding the regions themselves and the importance of those businesses in those areas, and also the durability of those businesses to the economy. Are they likely to endure difficult economic environments, and so on. What's laid on top of that is a broader context around the critical minerals implications, the capacity for us to seek to work with the Commonwealth Government in relation to these businesses. There's a whole host of considerations that go into the understanding of the government in how we turn our mind to the supports that might be available to a particular [inaudible].

CHAIR - Thank you, in the interest of time, we might go on