With up to $5 billion in concessional loan facilities, the Northern Australia Infrastructure Facility is the Turnbull government's big lever to lift private sector infrastructure investment in northern Australia. Created a little over a year ago, the NAIF is reportedly pondering a $1 billion loan to Indian resources and energy conglomerate Adani, despite the company saying on Monday that it may not need the money. Should it eventuate anyway, the loan would be the facility's first big disbursement, and easily its most controversial, for it will help build a 310-kilometre-long, 100-metre-wide rail corridor to transport billions of tons of coal from the Carmichael mine in Queensland's Galilee Basin to Abott Point, north of Bowen, for shipment to India.
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Environmentalists claim the development's immediate impacts (which includes extensive dredging of Abott Point) would further harm the Great Barrier Reef. Longer term, they argue, it would sabotage global efforts to restrict rising global temperatures and avoid runaway climate change.
There is considerable scepticism among economists, too, about whether the mine and railway will deliver the economic benefits Adani claims, and whether the growing acceptance of renewables will eventually result in Carmichael becoming a stranded asset.
On the other hand, however, the Queensland and federal governments have eulogised Carmichael coal as likely to create "thousands of jobs", to consolidate Australia's reputation as a global resources superpower, and to transform the lives of millions of electricity-deprived Indians.
The Palaszczuk government has been particularly supportive of Adani's bid. It has declared the coal and rail project "critical infrastructure" (a step to fast-tracking approval) and last month it amended groundwater management regulations that in the event Adani is granted a water licence, individuals or groups will be prevented from mounting any legal challenge. As currently proposed, the Carmichael mine would extract 12 billion litres of water each year.
The biggest impediment to an official Adani go-ahead (apart from falling coal prices and efforts by environmental groups to tie things up in court), was money to build the railway and to dredge Abott point sufficiently to allow large bulk to berth. With the federal government apparently willing to stump up about half the estimated cost – and with steaming coal prices having risen in recent months – Carmichael's prospects have brightened. Indeed, Adani group chairman Gautam Adani is in Australia this week seeking assurances of continued Queensland and federal government support.
Unemployment is problematic in far north Queensland, and it's understandable that state and federal politicians would be keen to assure Mr Adani of their strong backing. But financial support should be offered on the basis of a realistic assessment of the mine's costs and benefits, not on hard-to-substantiate jobs claims. The company's statements that the Commonwealth money was not critical, further adds to the questions over why it is being considered.
Last year, a Fairfax Media investigation revealed the Queensland Treasury had expressed grave doubts about Adani's financial wherewithal to see Carmichael through to completion, noting it was "not particularly transparent" about company equity and debt. As well as being subject to rigorous cost-benefit analysis, any loan to Adani should be conditional on solid guarantees and security.
