By Paul Karp
Inquiry dominated by Labor and Greens says finance minister should gain joint responsibility for $5bn NAIF
Oversight of the Northern Australia Infrastructure Facility is “severely inadequate” and the finance minister should gain joint responsibility for the $5bn fund, a Senate committee has recommended.
On Friday the inquiry dominated by Labor and the Greens called for the Naif to release more information on its investment decisions and any conflicts of interests, due to concerns about board members’ links to the mining industry.
In a dissenting report, Coalition senators labelled the inquiry a “politically motivated” exercise and said its main recommendation to give the finance minister joint responsibility was aimed at undermining the resources and northern Australia minister, Matt Canavan.
The Senate inquiry was established in June 2017, before a review lead to changes to encourage more lending from Naif, and the Queensland Labor government was re-elected promising to veto the controversial Adani Carmichael coalmine receiving Naif funding.
To date, the Naif has only written $120m of loans, although Coalition senators said a further $516m loan to the Kidston Solar/Pumped Hydro project is “well advanced”.
The majority report noted evidence from Transparency International Australia that “investment decision-making lacks transparency” and warnings from academics John Quiggin, Kristen Lyons and Morgan Brigg that loans could be “driven by short-term political imperatives”.
The Coalition senators rejected claims that oversight was “severely inadequate”, claiming there was “no authoritative evidence at all from the lending sector that would suggest any deficiencies in the Naif model”.
The majority recommended that within 30 days of each investment decision the Naif should publish information on:
- any conflicts of interest disclosed by Naif board members in relation to the relevant project and how they were managed;
- environmental and native title approvals needed for a project;
- how projects met the criteria for loans; and
- any loan conditions including “expected repayment rates, rate of return and length of investment”.
The Coalition senators warned that the recommendation to publish information about projects’ expected financial performance was “excessive and may breach commercial-in-confidence expectations”.
The majority report accused Naif of operating under a “veil of secrecy” and called for the Office of the Australian Information Commissioner to undertake a review of its transparency and freedom of information procedures.
In additional comments, the Greens noted that a large number of submissions “raised concerns” about possible Naif loans for the Adani Carmichael mine.
“This example provides good grounds for requiring the Naif to include a suitable person test as part of its assessment processes.”
The Greens said the Naif rules should also be amended “to consider the Australian government’s policy commitment to the Paris agreement, the climate impacts of a project, and to prohibit the Naif from financing infrastructure which would facilitate [coal and gas exports]”.
The Greens environment spokesman, Andrew Bartlett, said the Naif was “unaccountable” and had “refused to answer questions” about who has applied for loans, how decisions are made and what the conditions are to access public funds.
“This is public money, not the government’s, and certainly not mining companies,” he said. “The way it is spent should be subject to the highest standards of accountability and transparency.”
An Environmental Justice Australia spokesman said the Naif investment mandate “does not properly consider the climate risk of potential projects, and it has a very loose governing framework”.
The Coalition senators labelled the inquiry a “a blatantly political enterprise designed to capture Greens/Labor-left hysteria regarding the proposed Carmichael mine in the Galilee Basin”.
The inquiry contributed to “undue pressure that has been placed upon the operations of the Naif” and had “the potential for such pressures to interfere with the Naif executing its remit”.
“Coalition Senators wish to highlight that independent, reputable governance experts from Allens Linklaters and the Australian Government Solicitor have reviewed Naif’s core governance documents and confirmed in their view they are best practice.”
Published by Guardian Australia on 6 July 2018