On the morning of 19 February 2025, word reached the shop floor at OneSteel's Whyalla steelworks before it reached the radio: the company that had run South Australia's only integrated steel mill for more than two decades was going into administration, and workers who had spent careers pouring the state's steel were about to watch strangers from KordaMentha walk through the gate. Call him Mick, a composite standing in for the roughly 1,100 workers whose jobs sat directly on that furnace and the further 2,000 the works supported indirectly across the Upper Spencer Gulf — contractors, truck drivers, apprentices, the cafes near the port. Fifteen kilometres up the coast, at the Cultana site earmarked for the Malinauskas government's Hydrogen Jobs Plan, a different kind of activity was already slowing: design work and early contracts for the $593 million government-owned electrolyser and power station Labor had promised at the 2022 election would make Whyalla the country's hydrogen capital. Within a day, the government confirmed it was putting everything behind saving the steelworks instead — including, as it turned out, the money set aside for the hydrogen plant. Two flagship promises collided in one town in one week; only one of them survived intact.
What the government did
Peter Malinauskas took the Hydrogen Jobs Plan to the March 2022 election as his government's signature energy policy: a state-owned electrolyser of up to 250 megawatts, a 200-megawatt hydrogen-fuelled power station, and a 3,600-tonne hydrogen storage facility, all to be built at Whyalla and delivered by December 2025. The incoming government confirmed $593 million for the plan in its first budget, the 2022-23 State Budget handed down in June 2022, funded over four years (Government of South Australia, 2022-23 State Budget). The pitch rested on two justifications, not one: a dispatchable generator to firm the grid as South Australia pushed toward net 100% renewable electricity by 2027, and a future fuel source for GFG Alliance's Whyalla steelworks, which had its own stated ambition to replace coal-based steelmaking with a hydrogen-ready direct reduction plant. The government established the Office of Hydrogen Power SA (OHPSA) in May 2022 to own and deliver the project as a government business, appointed Sam Crafter as chief executive, ran a market-sounding and international proposal process through 2022-23, and in 2024 named GE Vernova as preferred supplier for four 50-megawatt turbines capable of running on hydrogen (Premier of South Australia, "Global energy giant GE selected as preferred supplier for Hydrogen Jobs Plan," media statement, 2024).
Then GFG Alliance's finances gave out. Liberty Steel's parent had run up more than $300 million in unpaid debts, including royalties owed to the state government, and by February 2025 the SA government said it had lost confidence GFG could keep paying its bills as they fell due. On 19 February 2025 it amended the Whyalla Steel Works Act 1958 to make GFG's debts enforceable against the company's property, and placed GFG's local operator, OneSteel Manufacturing, into administration, appointing KordaMentha (Government of South Australia, "State Government puts Whyalla Steelworks owner in administration," media statement, 19-Feb-2025). The next day, the Malinauskas and Albanese governments jointly announced a $2.4 billion, three-part rescue package — immediate on-the-ground support, stabilisation funding, and future investment — with $384 million of combined state and federal money committed up front to keep the steelworks operating and its workforce paid through administration (Prime Minister of Australia, media release, 20-Feb-2025). In the same announcement window, the government confirmed the Hydrogen Jobs Plan would not proceed as designed: the project was withdrawn from the energy market operator's generation pipeline, and the funding set aside for it in the state budget was redirected to prioritise the steelworks (Department for Energy and Mining, media statement, Feb-2025). The Office of Hydrogen Power SA was formally dissolved on 7 May 2025, its functions folded into the Department for Energy and Mining, and its former chief executive redeployed as the state's lead on Whyalla's industrial transformation.
The strongest case
An emergency that consumed the budget line built for a plan that had just lost its customer
Judged at the moment it was made, redirecting the hydrogen money looks like triage, not betrayal. On 19 February 2025 the government was not choosing between two equally healthy projects; it was watching the plan's own anchor customer — a steelworks with more than $300 million in unpaid debts and no confirmed buyer — slide toward the kind of shutdown that would have cost 1,100 direct jobs immediately and put a further 2,000 at risk across the region within months. A government-owned hydrogen plant built next to a steelworks that might no longer exist would have been a stranded asset regardless of what happened to its budget line; the Hydrogen Jobs Plan's own case rested partly on GFG's green-steel transition, and that transition partner had just gone into administration. Nor was the money simply thrown away: much of the $593 million had not yet been spent, the four GE Vernova turbines are saleable hardware the government says it expects to recoup most of their cost on, and the underlying problem the plan was meant to solve — dispatchable capacity for a renewables-heavy grid — remains solvable on a different timeline and by other means. Keeping a symbolic election promise moving at full pace while the town's largest employer collapsed around it would have been the harder position to defend, not the easier one.
The evidence
Layer the state's own figures over that case and a rougher picture appears underneath it. The Auditor-General for South Australia's report on the 2024-25 financial year, tabled in October 2025, found the Office of Hydrogen Power SA had spent $285.2 million in its three years of operation to 30 June 2025 — just under half the original $593 million commitment, but not a small sum for a project that no longer exists (Auditor-General for South Australia, Annual Report 2024-25, Oct-2025). Of that, $209.2 million was capital spending, and within that figure $85.7 million was formally written off, the Auditor-General finding it related to early works on hydrogen production and storage "not expected to generate direct economic benefits" — an accountant's way of saying the money is gone and nothing usable came back for it. A further $12.5 million went on land acquisition around Whyalla, and OHPSA carried up to 55 staff at its peak, with its chief executive paid around $600,000 a year while the agency was being wound down around him. The same report flagged what is not yet resolved: roughly $125 million in ongoing contractual commitments the state remains liable for, and an $87.4 million contingent liability tied to electricity infrastructure construction — a total potential remaining exposure to taxpayers of around $212 million on top of what has already been spent (approx., Auditor-General for South Australia, Oct-2025).
None of that $285.2 million bought South Australia a running plant, a single megawatt of dispatchable hydrogen power, or a secured green-steel pathway for the works it was partly built to serve. It bought three years of design and procurement work, an early-works contract now impaired, a land parcel at Whyalla, and four turbines the government hopes someone else will buy. The gap between the $593 million promised in 2022 and the $285.2 million actually spent by the time the project folded tells its own story too: construction was well short of complete, and well behind the December 2025 delivery date legislated at the outset, before the steelworks crisis gave the government a ready-made reason to stop.
The critique
Three things follow from that record, and none of them are answered by pointing at the steelworks alone. First, the timing argument cuts both ways. The Hydrogen Jobs Plan was not cancelled in a vacuum; by early 2025, large private hydrogen developers around Australia, Fortescue chief among them, had already pulled back sharply from green hydrogen projects as costs proved far higher and demand far thinner than the sector had assumed only two years earlier. A government-owned electrolyser project facing the same economics the private sector was fleeing may well have been heading for its own trouble regardless; the steelworks collapse gave the government a politically survivable moment to fold a project whose underlying numbers were already moving the wrong way, rather than defend it against a slower, more damaging admission that the technology bet itself had not paid off. Which cancellation actually happened — reluctant emergency triage, or a convenient exit from a project quietly failing on its own merits — is not something the government's public account fully separates, and it is a fair question to keep asking.
Second, the dual purpose the plan was sold on has now failed on both counts, not one. The Hydrogen Jobs Plan was justified as both a dispatchable generator for a state pushing toward net 100% renewables by 2027 and a fuel pathway for GFG's green-steel transition. South Australia now has neither: no state-owned dispatchable hydrogen capacity built, and no secured green-steel plan for whichever buyer eventually takes the steelworks. The two parties shortlisted in the 2026 sale process, M Resources (partnered with hydrogen technology developer Hazer Group) and Jindal Group, are each proposing their own approach to emissions reduction, not the government's. If Whyalla ends up with hydrogen-linked steel after all, it will most likely be because a private buyer chose a different, cheaper chemistry — not because of the $285 million the state already spent chasing broadly the same outcome through its own statutory authority.
Third, the accountability sequence ran backwards. The government announced the deferral itself in February 2025, but the full financial reckoning — the $85.7 million write-off, the $600,000 executive salary, the $212 million in remaining exposure — did not surface until the Auditor-General tabled it eight months later, in October 2025, and it was the parliamentary Opposition, not the government, that put the word "waste" on the public record. A $593 million election centrepiece that consumed $285 million and produced no operating asset deserved a government-led account of what went wrong and what happens to the outstanding $212 million next. It got an audit finding and a defensive response instead.
A $593 million election centrepiece produced no hydrogen, no power station and an $85.7 million write-off — and it fell to the Auditor-General, eight months later, to say so.
The risk to the future
The next techno-industrial bet has the same shape, and still no earlier off-ramp
The Hydrogen Jobs Plan's remaining exposure is not fully closed: roughly $212 million in contractual and contingent liabilities, including the fate of four hydrogen-capable turbines the government is still trying to sell, sits on the state's books with no confirmed recovery date. The irony sharpens rather than fades with time. In the 2026 Whyalla Steelworks sale process, hydrogen has reappeared in at least one shortlisted bid, built around a cheaper, gas-based production method entirely different from the electrolysis approach the state spent three years and $285 million building through its own government-owned authority. If that bid succeeds, Whyalla may get hydrogen-linked steel after all — just not the plant, and not the ownership model, South Australians were sold in 2022. The deeper risk is structural rather than purely financial: South Australia has now built and dissolved one standalone statutory office around a single unproven technology bet, spending three years and hundreds of millions of dollars before an external emergency forced the reckoning. Nothing in the government's public account of the plan's collapse describes what would trigger an earlier, calmer off-ramp next time a flagship energy project starts falling behind its own targets — before the money is gone, rather than after.