One of the key stakeholders in the Turnbull government’s much-vaunted plans to develop the north of Australia, the Western Australian government, is yet to sign on to the $5bn Northern Australia Infrastructure Facility (Naif).
A new Senate inquiry into the governance and operation of the Naif has flushed out a list of assurances the WA government is seeking from Canberra before it signs up to the Naif, which include a guarantee that any state involvement with the facility won’t impact on the state’s balance sheet or credit rating.
As well as revealing that Western Australia isn’t yet on board, material supplied to the committee by Queensland officials also suggests the Palaszczuk government will be more intimately involved in the assessment of any Naif concessional loan to a rail link associated with the controversial Adani project than the public commentary from various ministers has suggested.
While various Queensland ministers have indicated the assessment of the loan for the rail link is a matter for the commonwealth, the state government’s submission to the inquiry makes it plain the Queensland government will be consulted on any projects under consideration.
“The Naif Act and the investment mandate requires that the Queensland government be consulted on any projects under consideration for financial assistance by the Naif board for which there is an investment proposal,” the submission says. “It also outlines that the Queensland government has the right to veto any projects by the Naif board.”
The Turnbull government requires, for constitutional reasons, agreement from the participating states to facilitate loans and guarantees for private projects in northern Australia via the Naif.
The deputy prime minister, Barnaby Joyce, and the outgoing resources minister, Matt Canavan, have talked up the Naif as a vehicle to promote economic development, floating the prospect of the organisation funding a rail link for the controversial Adani coalmine, or a new coal-fired power station in Queensland.
But thus far it has made no investments. The Naif has told the Senate inquiry it has received over 131 inquires for possible infrastructure projects. Of those inquires, over 57 are active, with five having progressed to formal due diligence stage.
The organisation says it is “targeting financial close of our first transaction by the end of September 2017”.
A submission from the WA premier, Mark McGowan, makes it clear he intends to be constructive in the negotiation with the commonwealth but it is also clear the state is demanding considerable autonomy in the Naif process.
The state government has told the Senate inquiry it wants “sufficient and early engagement” on projects under consideration to allow appropriate risk assessment if the state is going to facilitate any loans or guarantees.
McGowan says the state wants discretion to agree or decline various loan guarantees and it wants to be able to conduct its own due diligence on projects under consideration.
He says he also wants the state to be reimbursed for any costs it incurs as a consequence of supporting any projects under the Naif.
A spokesman for McGowan told Guardian Australia: “We are keen to sign up to this initiative, however we are currently working through the issues highlighted in our submission to the inquiry.”
The Northern Territory government has also told the Senate inquiry while it has had a positive relationship with the Naif, it has some concerns that the current investment mandate may not be as flexible as it needs to be to kickstart projects in the territory.
“The Northern Territory considers that eligible infrastructure should not be limited to specific structures, such as ports, rails, dams, roads and energy, but instead should allow the flexibility to take into consideration the strategic imperatives of linking people, goods, services and information, enabling increased economic activity, particularly in regional areas,” the submission from the NT chief minister, Michael Gunner, says.
Gunner also points out that only one board member of the Naif is from the territory and the organisation has no permanent staff on the ground.
The Naif has faced considerable criticism for a lack of transparency about its internal processes.
The progressive thinktank the Australia Institute has pursued detailed information about how the organisation operates under freedom-of-information requests – but the Naif has refused to reveal substantive information on the basis of commercial-in-confidence.
Tom Swann from the Australia Institute said the Senate inquiry had made it plain that the Queensland government would play an active role in any Naif loan to Adani, which “contradicts numerous statements by Queensland ministers and representatives”.
“Contrary to those claims, Queensland will be actively involved in Naif project assessment and negotiations, becoming financially and legally responsible for provision, terms and conditions of any loans to Adani for its coal rail line,” Swann said.
The Productivity Commission also recently raised concerns about governance at the Naif and about the scope for political interference in the funding of projects.
The commission warned that a “lack of transparency to date and the promotion of certain projects by politicians in the absence of credible supporting investment data” has raised concerns about the viability of projects currently under consideration.
