Northern Australia fund for overhaul
The Turnbull government’s highly vaunted Northern Australia Infrastructure Facility program will be overhauled to “make it easier for projects to attract finance” from the fund.
With the NAIF having processed only one major project since its establishment in mid-2016, Resources Minister Matt Canavan will today announce changes in a move to “increase its flexibility and improve its potential” and accelerate investment in northern Australia.
Mr Canavan said the program had “proven more challenging than we thought”.
“It’s a challenging exercise. It’s quite an innovative way of seeking finance for infrastructure,” Mr Canavan said. “When you find that what you expected is not working as intended, you change tack ... and that’s what we’re doing with these changes.”
The government will amend the investment mandate of the program, based on findings of an independent review of the facility by prominent business leader Tony Shepherd.
“Mr Shepherd consulted widely with NAIF, investors, project proponents and governments. He found the important need to develop the north still exists, but there have been challenges to making it happen,” he said.
“The government shares this view and we are committed to developing industry and job opportunities in northern Australia.
“We will implement changes to the NAIF investment mandate recommended by the expert review, in response to a key finding that (it) is too restrictive.”
Mr Canavan said he had been advised that a “number of existing proposals could be finalised because of these changes”.
“I’m also hopeful that this can be a reset and relaunch that attracts new interest to look again at the NAIF for finance to develop the north,’’ he said.
The program offers up to $5 billion over five years in concessional finance to “encourage and complement” private sector investment in northern Australia infrastructure, including developments in airports, communications, energy, ports, rail and water.
Its board last year made its first investment decision, indicating to the government it would offer financial assistance of about $16.8 million for the Onslow Marine Support Base Project in Western Australia.
Mr Canavan said the changes to the program’s investment mandate would include the removal of the 50 per cent cap, increasing the amount of finance available to infrastructure projects by “allowing the NAIF to finance up to 100 per cent of a project’s debt”.
The change would avoid the federal government inheriting the majority of financial risk in a project.
“There are currently 17 projects in the due diligence and execution phases across all three northern jurisdictions. There are seven in the Northern Territory, five in Western Australia and five in Queensland,’’ Mr Canavan said.
“There are 90 active inquiries in the pipeline. These are from diverse sectors including energy generation and gas pipelines, transport, tourism, agriculture, manufacturing, water infrastructure and communications.”