Article – $5 billion in loans to open up the north

13 May 2015
Mark Ludlow
The Australian Financial Review
The federal government will offer up to $5 billion in concessional loans to encourage the private sector and state governments to build ports, pipelines, electricity and water infrastructure to open up the economic potential of northern Australia.
The move is part of a concerted push by the Abbott government to shore up support in rural and regional Australia, which has been hit hard by drought.
With prominent Australians including billionaire mining magnate Gina Rinehart calling on governments to open up the untapped potential of the country’s north, the Abbott government will open the loan facility for offers from July 1. Money is expected to start flowing from mid-2016.
But Treasury is expecting cash-strapped state governments to make a significant financial contribution to projects before becoming eligible for funding from the northern Australia infrastructure facility.
The facility is based on the same financial structure used for the WestConnex road project in Sydney, where the Commonwealth has committed a $2 billion concessional loan to the NSW government to help fund the project.
The private sector is also expected to make a sizeable financial contribution to the public-private partnership.
Treasury is taking control of the concessional loans, which will have an $800 million impact on the budget bottom line over the next four years, but the money is expected to be repaid -with interest payments to start flowing into federal coffers from 2021-22.
Like other big projects worth over $100 million in which the Commonwealth has a stake, Infrastructure Australia will assess the viability of the bids.
Infrastructure Australia has already released an audit of “infrastructure gaps” in the regions, which it is hoping the state governments and private sector will use as the basis for pitching future projects to the federal government.
The federal government will provide $8.5 million to Treasury over the next five years to engage expert advice on appropriate eligibility criteria and governance for the proposed facility and for financial, commercial and legal advice required before entering into any loan contract.
It will released its White Paper on Northern Australia by the middle of the year after a range of parliamentary inquiries into developing the northern parts of Queensland, WA and the Northern Territory. Some of the ideas pitched included a taxpayer-funded abattoir, a casino on Christmas Island, new casinos in regional areas and tax breaks for those living in regional areas.
Courtesy of The Australian Financial Review

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