The Northern Australian Infrastructure Facility cannot bypass the Queensland government and award Adani a $1bn loan, according to Senate testimony from its own executives that casts doubt on fresh suggestions funds could be fast-tracked before the state election.
Annastacia Palaszczuk’s belated pledge to veto the Adani loan if Labor holds government remains a campaign flashpoint, with the treasurer, Curtis Pitt, forced to refute a report that his office said the state would process the loan.
The Queensland premier is under attack for framing her dramatic about-face as a bid to quash a rumoured “smear campaign” by Coalition senators about a conflict of interest from her partner’s role in Adani’s Naif application.
But Palaszczuk also gained an unlikely supporter in the former LNP MP Vaughan Johnson, who said she made the right call amid “mudslinging” from Canberra.
The Guardian has been told that Labor’s decision to commit to a veto involved strategic input from the former Adani lobbyist Cameron Milner, who cut ties with the miner to devote himself to the party’s campaign.
A veto now hinges on Labor’s re-election after the opposition leader, Tim Nicholls, refused Palaszczuk’s request for bipartisan support in a caretaker period.
However, the University of Tasmania legal academic Brendan Gogarty on Tuesday queried Palaszczuk’s ability to veto the loan even after the election without bipartisan support.
Gogarty, who advised the Australian Conservation Foundation on the constitutionality of the proposed loan, said Naif meanwhile had “no legal restrictions on issuing the loan and, with the apparent agreement of the Queensland treasury, this money is likely to flow through to Adani”.
While the state needed to have a role under the constitution as a conduit of “tied grants” by the commonwealth, the money could still make its way to Adani as it “doesn’t need state approval (but rather explicit veto)”.
“While Palaszczuk can say her government gave no active assistance to Adani, without active measures to block the loan it would certainly be a silent partner in the process,” Gogarty wrote for the Conversation.
But this is at odds with Senate testimony in June by the Naif chief executive, Laurie Walker, and her senior counsel, Stephen Farmer. They told the Senate economics legislation committee that the state government effectively had two chances to veto a Naif loan.
Walker said the state could direct Naif not to make a loan before any “investment decision” by the facility.
Farmer, the head Naif lawyer, said the state would then also have to sign off on a loan agreement for money to flow.
“If the lender in any loan agreement does not sign the loan agreement then that loan is not a binding contract,” he said.
Farmer said that even though the Queensland government had insisted on a protocol where the commonwealth gave funds directly to the Naif applicant, “they would still need to sign the agreement”.
“They are still a party,” she said, agreeing with Waters this was “tantamount to a veto”.
Pitt’s office was reported by the Townsville Bulletin on Tuesday to have said the state would process the Adani loan regardless of Palaszczuk’s veto pledge. But the treasurer released a statement denying this.
Can the QLD govt get any more chaotic? The QLD Treasurer now defies his Premier and says NAIF loan can proceed!?!?!? pic.twitter.com/5J0BSTB40H
— Matthew Canavan (@mattjcan) November 6, 2017
Pitt said his spokeswoman had told the newspaper the government’s role in Naif “has not changed” but this related to other applicants, not Adani.
“As I told the media earlier in the day, the premier’s decision on Friday put beyond doubt that there is any Queensland involvement in that loan arrangement,” Pitt said.
Adani is now reviewing its options for clinching the $4bn-plus finance it is seeking in China for one of the world’s largest coalmines in remote north Queensland.
A government stamp of approval through a $1bn loan is seen as Adani’s key selling point to overseas investors who may be wary of signs of decline in the global coal export market and popular opposition to the project in Australia.
A Labor source said the decision to come out against the loan was made with the understanding, including with insights from Milner, that “the politics of the loan is very different to the politics of the mine” even where the project had support in key regional seats.
The former Australian Greens leader Bob Brown said Palaszczuk would have clearly “had the public with her” if she had “made the call to block the loan and then call the election”.
“The whole problem for Palaszczuk is it sounded like her concern about the rumours and her partner’s association with [Adani consultant] Pricewaterhouse were more important than the public’s concern about the loan,” Brown told the Guardian. “And that didn’t look good.
“But she should get out and sell why she’s on the right side of it and admit it was a mistake before.
“She’s really got to get out there and sell the fact that it’s obnoxious that $1bn should be going out of the public purse for this big company when there’s so many other cuts being applied to all sorts of health, education and arts [federal funding].”
Johnson told the ABC that “a bucket of mud” had been “thrown from Canberra that’s lobbed right in the face of the election campaign in Queensland – the fingerprints of Canberra are all over this exercise”.
“I’m an LNP member and I’m loyal to the operation but there’s one thing I am not loyal to – mudslinging,” Johnson said, adding that he knew Palaszczuk’s partner, Shaun Drabsch, as a man of “absolute decency”.
“I support the Adani operation in the Galilee basin but I don’t support the federal government injecting $1bn into a project that is going to benefit an Indian operation that’s already got a cloud hanging over it,” Johnson said. “I don’t believe the federal government should be pumping [one] cent into that operation.”
