Cost to taxpayers revealed over failed hydrogen plan
Hundreds of millions of dollars was spent on the state government’s failed flagship hydrogen project, with a new Auditor-General’s annual report revealing the cost of the now shelved plan.
The Office of Hydrogen Power SA (OHPSA) spent $285.2 million up to June 30, 2025, on staff bills and projects relating to the Hydrogen Jobs Plan – the Malinauskas Government’s shelved headline project – according to the Auditor-General’s annual report tabled in state parliament yesterday.
At its height, the office employed 55 staff with its chief executive officer Sam Crafter appointed in 2022 earning an almost $600,000 annual salary.
The report also revealed former Treasurer Stephen Mullighan approved a $10 million boost in a loan to the South Australian Health and Medical Research Institute (SAHMRI) for cash flow and issues surrounding the state government’s whole-of-government maintenance contract with Ventia Australia.
The Hydrogen Jobs Plan was a much-publicised flagship project in the state Labor Party’s election campaign with $593 million committed in the 2022-23 budget after it won government to build a hydrogen power plant, electrolyser and storage facility near Whyalla.
The hydrogen power office was abolished on May 7 this year and its remaining operations, including responsibility for the facilitation of the Port Bonython Hydrogen Hub, transferred to the Department of Energy and Mining (DEM). This transfer included $366.3 million in net assets ($250.4 million in cash and $123.5 million of capital works in progress).
Former Energy and Mining Minister and now Treasurer Tom Koutsantonis on May 1 told parliament that Crafter had been appointed to a new role within his department to lead the Whyalla Steelworks Industrial Transformation. He was being employed on the same terms as his previous job.
Koutsantonis today told ABC Radio today that the government would claw back money for the sale of four 50-megawatt turbines it bought for the hydrogen project before the Whyalla Steelworks collapse.
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“It depends on the sale process of the generators. Most of that money is for the generators – we’re buying 200MW, four units at 50MW … we want those placed here in South Australia and we’re currently conducting an auction process where people are tendering for those generators,” he said.
The Energy and Mines Department advised the Auditor-General that it was hoping to sell the turbines to recoup the original purchase price and ensure the turbines were installed in South Australia.
Hydrogen office spending totalled $285.2 million at June 30, 2025, the Auditor-General’s report showed, including all expenditure reported in financial reports from its inception to its abolition.
Of the $285.2 million, $136 million was spent on land, property, plant and equipment; $12.8 million was on employees and $50.7 million was on ‘other expenses’.
The office also impaired $85.7 million in costs “that provide no immediate future economic benefit”. The Auditor-General said these “mainly relate to the early contractor involvement for work on designing and costing the hydrogen production, generation and storage facilities”.
DEM has $125 million of contractual commitments to ongoing obligations from the Hydrogen Jobs Plan and the Port Bonython Hydrogen Hub plus a $87.4 million contingent liability reflecting arrangements for the construction of electricity infrastructure that would have been required for the Hydrogen Jobs Plan. Construction of that infrastructure is contracted to conclude by the end of the year.
The revelations on the Hydrogen Jobs Plan were described as an “absolutely shameless waste of taxpayer money” by Opposition Energy and Net Zero spokesperson Stephen Patterson.
“Most of that money will never be recovered, with $85.7 million written off the government’s books and more than $60 million spent on wages and general expenses,” he said.
“What’s worse is the bill pain isn’t over for taxpayers who could still be on the hook for another $212 million of remaining contracted commitments and liabilities.
“That includes $87.4 million to build electricity infrastructure that was required for the project but now sits in scrubland alongside the Lincoln Highway as a monument to Peter Malinauskas’ wasteful hydrogen hoax.”
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Treasurer Tom Koutsantonis told ABC Radio today that he was “very confident we can recover a large portion of this”.
“A lot of those impairment costs and a lot of those asset costs are also including for upgrades to substations and transmission lines,” he said.
“Now, thankfully, a lot of that can be used for the Whyalla Steelworks if a new electric arc furnace and direct iron reduction facility is built but the way the accounting standards work is the language is used in terms of the use for the project. Any other associated benefit is not considered by the Auditor-General.
“So this is basically an accounting standard measure that they apply in their Auditor-General’s assessment of the project but the Government can use those assets for other things.”
Extra millions for SAHMRI amid proton therapy unit delays
The Auditor-General’s report also revealed former Treasurer Stephen Mullighan approved a $10 million increase to a $22 million loan facility for the South Australian Health and Medical Research Institute (SAHMRI).
This money is to provide short-term cashflow for SAHMRI’s operations and commitments, and at the time of writing the annual report showed the institute had drawn down $9.2 million from the loan facility.
It comes as SAHMRI’s project on delivering the Australian Bragg Centre proton therapy project for treating cancer is yet to meaningfully progress.
The project involved developing a building that would house a proton therapy system, purchasing a proton therapy system and developing and operating a proton therapy unit.
Proton therapy is an advanced form of radiotherapy that precisely targets and destroys cancer cells. It would be the southern hemisphere’s first such unit if installed.
A previous Auditor-General report, released earlier this year, showed that in October 2024, SAHMRI terminated its purchase agreement with ProTom International, the supplier of proton therapy equipment.
The Auditor-General said “establishing and operating one in South Australia will require significant additional public funding”.
The report said Treasury advised the government was still working to secure commonwealth funding for an alternative proton therapy project in the Australian Bragg Centre.
Speaking to ABC Radio today, Treasurer Koutsantonis said the extra $10 million was a “good use of public money”.
“I think no one would want to see SAHMRI go into administration,” he said.
“Research and development is always a risky endeavour and it requires a lot of long-term patience. I think investing in medical research, investing in scientific endeavour, is a good use of taxpayers’ money. I think this country should do more of it. In fact, I think one of the great tragedies over the last 30 years in this country is the lack of government investment in R&D and productive research.”
