Article – Missing Budget detail on northern Aus

22 May 2015
Laura Tingle
Queensland Country Life

GOVERNMENTS of all stripes talk about developing our north, with the latest effort being a $5 billion development fund revealed in the budget. But what is this fund supposed to achieve?

They do things differently in the Northern Territory.

On Melville Island, part of the Tiwi Islands just off the coast of Darwin, a $50 million deep-sea port is under construction. It’s no small undertaking, including building storage tanks that can hold up to 30 million litres of diesel.

The one thing it doesn’t have is any environmental approvals, provoking federal Environment Minister Greg Hunt to announce earlier this month an inquiry into the port and its 36-hectare site, which has been variously described as a port for woodchip exports or as a base for offshore oil and gas industries.

Ports, of course, are one of the things we officially want more of in northern Australia, so hopefully the various parties involved can sort out the small matter of such a huge project apparently being in breach of the Environment Protection and Biodiversity Conservation Act.

Treasurer Joe Hockey outlined the importance of ports in last week’s budget when he announced the $5 billion Northern Australia Infrastructure Facility as “the first major step in our plan for our great north”.

“An extraordinary area of untapped promise is Australia’s north,” he said. “This is an exciting frontier for economic development that is filled with abundant resources and talented people. The north needs new infrastructure to get things moving. We need to build in order to grow.

“We will partner with the private sector and governments of Western Australia, the Northern Territory and Queensland to provide large concessional loans for the construction of ports, pipelines, electricity and water infrastructure that will open our northern frontier for business.”

Lure of the north
The last government to take the idea of developing northern Australia seriously and get excited by this vast “new” frontier was … the last government.

Northern Australia was a thing of interest to Kevin Rudd. He even had a frontbencher for northern Australia and a massive amount of work was commissioned to find out all about our deep north.

For example, there was lots of important scientific work done, which explored the complex and quite idiosyncratic underground water systems in the north, which will determine how viable the various ambitions for large-scale agriculture are.

Most of this work, unfortunately, came to nought under Labor, overtaken by the distractions of the GFC and various leadership crises.

But the north remains a compelling idea in federal politics.

Advocates of development in the current government are led by Trade Minister Andrew Robb. There is a white paper on northern development scheduled for release in June.

The $5 billion infrastructure facility is apparently a forerunner of the paper, but it seems to have been a very late budget inclusion, possibly when someone noticed that the overall infrastructure spend by our ‘infrastructure Prime Minister’ was actually forecast to fall.

There is no mention of it in any releases from Infrastructure Minister Warren Truss.

There is no mention of it in a 131-page document on the budget’s impact on the regions produced by Truss and Assistant Minister for Infrastructure and Regional

Development Jamie Briggs and released as part of the budget papers (including, incidentally, a $5 million spend in Queensland from the Foreign Affairs budget).

The Infrastructure Minister’s office said it had no details of the scheme when contacted this week.

The Treasurer’s office said the facility “is aimed at economic infrastructure that will increase the productive capacity of northern Australia”, and will provide concessional loans “to projects that would not otherwise be able to access finance at a reasonable cost”.

The facility will be open for applications from July 1, 2015 – in just over a month – but Treasury is yet to produce any eligibility criteria.

However, broadly speaking, “the facility will target projects that have the ability to generate a return, but not at a level sufficient to be 100 per cent financed by the private sector”, the Treasurer’s office said.

“The Commonwealth will assess all projects for financial viability before issuing a loan. The Commonwealth will not lend to projects that are commercially viable without government assistance, to ensure that the government is not crowding out the private sector.”

These projects can be proposed by State or Territory governments or the private sector “in partnership with a State or Territory government”.

Canberra “will have no role in determining which projects are brought forward for consideration”.

Normally, when a proposal like this surfaces, it usually emerges that there is actually a particular project that the government has in mind. In this case, rummaging around the infrastructure sector this week suggests there isn’t, despite Infrastructure Australia releasing an audit of northern Australian infrastructure just days before the federal budget.

Sources in the sector point out that the IA report notes that the priority in the north should be “maximising the efficiency of existing infrastructure”, including maintenance backlogs. Others scratch their heads about the quality of projects that would need concessional loans to be viable when interest rates are at record lows.

Spruiking the budget
In another life – in opposition – the same Andrew Robb who is now keenly pushing development in northern Australia led the attack on what the Coalition then liked to call the ‘Bob Brown Bank’ – but what is now known as the Clean Energy Finance Corporation (CEFC).

“The ‘Bob Brown Bank’ is a slush fund which will pump billions of dollars into pet projects that conventional financiers would not touch with a barge pole,” Robb raged. The Coalition famously tried to close the CEFC when it came to office.

But that was then. This is now.

Hockey was in Darwin this week spruiking the budget and, in what we think is an NT Newscompliment, the colourful local newspaper reported that “at the NT Chamber of Commerce breakfast yesterday morning, Mr Hockey sold his budget like snake oil with all its healing properties”.

Despite the large number attached to the loan facility, it hasn’t got lots of scrutiny to date. But it, and the whole northern Australia exercise, should be watched closely in coming months, partly because of the huge brawl taking place over Robb’s push to allow foreign airlines to fly into northern airports, to the extreme chagrin of Qantas and Virgin.

After a week in which the Prime Minister has scurried from one corner of the country to another, making policy on the run on iron ore, superannuation and anything else that pops up, note it as perhaps the best embodiment of the 2015 budget.

Courtesy of Queensland Country Life


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