It boondoggles the mind
The Northern Australia Infrastructure Facility (NAIF) is a $5 billion government fund for concessional financing to build infrastructure in northern Qld, NT and WA. The default financing mechanism is a loan. Adani has applied for a concessional loan of nearly $1 billion from the NAIF for a rail line so that it can export coal from its proposed Carmichael coal mine.
Minister for Resources and Northern Australia Matthew Canavan and Deputy Prime Minister Barnaby Joyce have strongly supported the Adani loan proposal, while at the same time insisting the NAIF is independent. Minister Canavan has said
“I want to make it absolutely and abundantly clear; any proposal, any investment from the Northern Australia Infrastructure Facility to any project is a loan, not a subsidy or a grant,”
This is contradicted by
- The government’s budget, which treats it as costing $1.6bn over estimate;
- The World Trade Organisation’s rules, which show it is a subsidy;
- Other coal companies, who have have called it a subsidy.
- The Productivity Commission, which views such loans as unjustified.
Subsidies to coal mines make little economic or environmental sense. Loans to this project prevent loans to other projects, and breach of Australian government commitments to the G20 to phase out fossil fuel subsidies.
Subsidies to coal companies are extremely unpopular. New polling shows 64% of Australians oppose a subsidised loan to Adani, including most Queenslanders and most LNP voters. Australians would prefer NAIF to spend money on almost anything else.
Minister Canavan is also not correct to say that any NAIF financing must be a loan. NAIF can also provide non-loan financing, through a vague “alternative financing mechanism”, on discretion of NAIF and government. It is unclear how such a mechanism would work. While equity is ruled out, the explanatory memoranda suggest guarantees or contingent repayment. Cash payments are not ruled out.