The follow was published by the Independent Australia (15 July 2017) and written by former public servant Mark Zanker. He argues that the purpose of the Northern Australia Infrastructure Fund (NAIF) is to “pump” billions in public money to Adani’s Carmichael mine project in Queensland’s Galilee Basin.
The Northern Australia Infrastructure Facility (NAIF) was set up ostensibly is to fund the states and territories to carry out infrastructure works to assist economic growth and increased population in northern Australia. However, a close look at the bill, and the people and circumstances surrounding it, suggests that it is, in fact, a tiny fig leaf behind which the Federal Government seeks to hide its desire to shovel billions of dollars of taxpayers’ money into Adani’s Galilee Basin coal mine project.
The legislation precludes the appointment to the board the representatives of traditional owners, pastoralists, scientists, environmentalists, the tourism industry and historians. These groups also have significant expertise in northern Australia — pastoral, cultural, spiritual, historical and scientific. Pastoralism, aquaculture, tourism –including conventional, cultural and ecological tourism – are very important industries in northern Australia, but none of them have a seat at the table here.
With the possible exception of Innisfail Mayor Bill Shannon, the board members of the NAIF all have strong links to the mining industry. Chair Sharon Warburton was a board member of Andrew Forrest’s Fortescue Metals Group and previously worked at Rio Tinto, as well as other resources companies.
Board members Justin Mannolini and Khory Mccormick have decades worth of experience working as energy, mining, resources and commodities lawyers. Fellow lawyer Sally Pitkin was deputy chair of the Export Finance and Insurance Corporation — coal, of course, is Australia’s biggest export. NAIF board member Karla Way-Mcphail is a mining employee trainer, coal mining enthusiast and personal friend of Minister for Resources and Northern Australia Matt Canavan, as well as being an LNP donor and supporter. Way-Mcphail also has a significant conflict of interest with respect to Adani, owning two companies that stand to directly benefit from the Galilee Basin mega-mine if it goes ahead.
The final board member, Barry Coulter, was previously executive chair of Sherwin Iron Ore. Sherwin set up an iron ore operation in the Northern Territory at the height of the last commodities boom. In August 2013, I wrote to the then minister responsible for mining activities, asking why the Sherwin project had been given the go-ahead when adequate infrastructure for the transportation of the ore was not in place. In particular, I wanted to know why it had not been a pre-condition of this operation that Sherwin had a contract in place with Genesee and Wyoming railway to transport the ore from Mataranka, or another suitable location to Darwin port, instead of using road trains that would substantially damage the Roper and Stuart Highways.
The reply I received on behalf of the NT Government conceded that it would have been preferable for arrangements to have been made from the start for the transport by rail of the ore, but justified giving a hasty go-ahead to the project on the basis of the mining royalties:
‘… revenues from mining operations … bring great benefit and it is through this income that we can afford the normal Government services that you and other people of the NT enjoy.’
Less than 12 months later, in July 2014, the Sherwin project collapsed, going into voluntary administration, leaving little other than a battered highway.
From an outside point of view, this project looked like a scramble for a fast buck, rather than a well planned project that took account of community interests, commodity prices and such issues before it started. The absence of commercial finance for a project is an indicator of lack of planning.
The Humpty Doo scheme made no lasting contribution to agriculture in northern Australia, gave rise to no increase in population and did not contribute to economic growth. However, there are some worthwhile legacies. The Fogg Dam Conservation Park is a significant wetland and habitat for birds. It is one of the most visited national parks in the country. The escarpment floodplain is an area of wonderful natural beauty. There is now a successful industry there in the form of the Humpty Doo barramundi farm. Aquaculture is an industry that can thrive, but we shouldn’t always fall for the idea that bigger is better.
Far from being a food bowl for Australia or the wider Asian region, these days the principal crop of the Ord Irrigation area is sandalwood. The sandalwood story itself has now run into difficulties. The Quintis company – formerly known as Tropical Forestry Services – came under attack, as they put it, from U.S. short sellers Glaucus Research Group. However, even before the Glaucus assessment, the value of Quintis shares had been steadily declining and it remains unclear whether it will be able to find a substantial market for its product. However, Lake Argyle is a popular tourist destination and there is a small freshwater fishery – the silver cobbler fishery – operating there.
In the second reading of the NAIF bill, then Minister for Resources, Energy and Northern Australia Josh Frydenberg said:
“The expert, transparent and arms-length design of the board established by this bill will cultivate credibility in financial markets, while ensuring that the government invests in projects which are viable, provide public benefits and unlock the potential of the North.”
However, the Investment Mandate states that funding for projects must not be provided unless the Board is satisfied the Project would not otherwise have received sufficient financing from other financiers. Is it truly realistic to believe the Commonwealth will recoup its expenditure from investments that commercial financiers have assessed to be unviable?
On the face of the constituent documents of the NAIF, there seems to be no basis for “political” intervention in investment decisions, but it would be unrealistic to believe that political considerations will not influence the decisions of what is after all a government agency. The Commonwealth and Queensland governments have demonstrated a sort of religious fervour in the belief that coal is good for humanity, that there can be such a thing as clean coal.
Ministers have attacked banks that have been reluctant to invest in coal, and universities over moves to divest themselves of fossil fuel assets. However, NAIF potentially provides cover for governments to appear to be legitimately trying to assist “new and exciting” big projects that will supposedly involve job creation in circumstances where no prudent investor would fund the project concerned and where even the project proponent does not believe there will be vast numbers of jobs created, or that those that are created will be long lasting.
Legal advice to the Australian Conservation Foundation suggests that channeling funds through this facility to underwrite Adani coal mining activities may be unlawful due to its financial risks. Oliver Yates, former chief executive officer of the Clean Energy Finance Corporation has raised similar concerns.
In his excellent book, Breaking the Sheep’s Back, Dr Charles Massy attributes the collapse of the wool industry in Australia after 1990 to an insidiously debilitating and deeply entrenched commodity culture. This is a culture geared to mediocrity — a culture that ignores best business practices.
In Australia, the commodity culture is deeply entrenched. It is not confined to the wool industry, but to just about every other aspect of the economy. No political value is really placed on innovation, research, seeking opportunities out of changed circumstances, rather than threats or value adding. All we want to do is dig minerals up and ship them out in vast quantities, as anyone who has visited the Hunter area of NSW, the Pilbara in WA, the coalfields district of Queensland or the hideous bauxite strip mining at Weipa on the Gulf of Carpentaria would know.
One needs look no further than the government’s savage assault on the renewable energy sector for proof of the debilitating nature of the commodity culture. The provision of funds for the declining industry of coal mining comes at the cost of massive withdrawal of support for publicly funded science and education. This determination to keep escalating minerals extraction proves beyond doubt how pervasive the commodity culture is. Its concomitant is that there is no investment in innovation and value adding, or to maximising the benefits to our community that would flow from doing so.