Prospects for the controversial Adani coal mine have dimmed further after the Queensland government said it wanted no role in any federal loan to support the project.
In a statement on Saturday, Premier Annastacia Palaszczuk said that consistent with our election commitments, cabinet has determined that any [Northern Australia Infrastructure Facility] loan needs to be between the federal government and Adani.
If the NAIF does provide funds for the 388 kilometre, $1 billion-plus rail link to support the proposed Carmichael mine, it will do so without the support of the state government. The NAIF's guidelines say loans should align with a state's needs.
If [Prime Minister] Malcolm Turnbull wants to spend his money in this way, that's his decision, a source said, requesting anonymity.
David Barnden, a lawyer for Environmental Justice Australia, said Queensland's move appeared to block any NAIF loan to Adani under the current laws.
The Commonwealth's legal power to fund projects through the NAIF is granted by a constitutional power for the provision of financial assistance to the states, Mr Barnden said.
If Queensland is not a part of any agreement for NAIF funding, then, in our view, Adani's railway line cannot receive NAIF concessional loans under the current legal framework.
The NAIF abstention comes a day after the state government called a snap cabinet meeting to settle on the royalty plan to be offered to the Indian-owned miner. Adani says it will consider the plan.
Fairfax understands the cabinet agreed on a capped payment for the first six years of $5 million annually. Any delayed payments would be made up in later years with interest.
While touted as a $16.5 billion project – excluding the railway and port expansion – the mine is looking increasingly less ambitious, if it gets built at all. Rather than 60 million tonnes, annual output is likely to be much less than the mega scale promoted, and a price tag is closer to $4 billion at least for the start.
Ms Palaszczuk defended the royalty plan on Saturday, saying there was no holiday and that Adani would have to pay every cent … in full.
By avoiding involvement in the NAIF loan, the government will argue it has kept its pre-election promise not to provide financial support for the mine.
The Turnbull government has indicated it will support a loan of as much as $1 billion to help fund a railway between the Adani site in the Galilee Basin and its coal port at Abbot Point.
Resources Minister Matt Canavan said the Labor government has twice put the Galilee Basin rail line forward for consideration by the NAIF, in letters to the federal government.
The NAIF is continuing to assess the North Galilee rail project, he said, adding he welcomed the finalisation of the royalties plan but described the process as chaos.
Mine opponents say it has the potential to open up a huge new coal province at a time when the world has to prepare for a net-zero carbon emissions future to curb climate change.
They also point to the vulnerability of the Great Barrier Reef where about 50 per cent of its corals have died in the past two summers alone after unprecedented bleaching caused by heat stress.
Senator Canavan has said the mine will generate thousands of jobs in regional Queensland where unemployment tops 10 per cent. Adani's coal also has the potential to displace dirtier coal in India as well as promote the spread of electricity to the millions now without it, he says.
Environment groups have applauded Queensland's decision to avoid serving as a go-between for the NAIF funds.
Today Queensland Labor are holding firm to their promise at the last election not to throw taxpayer funds at Adani's coal rail line, by refusing to hand over money from Senator Canavan's slush fund, GetUp national director Paul Oosting said.
The pressure is now on the federal government to put an end to special treatment for the megamine, and stand with Australians to say no to Adani.
By Peter Hannam
Published by the Sydney Morning Herald on 27 May 2017