The Federal government is shaking up its $5 billion northern Australia investment fund to get cash flowing into a raft of stalled infrastructure projects.
The changes follow an independent review of the Northern Australia Infrastructure Fund by businessman Tony Shepherd, which among other measures recommended the 50 per cent cap on loans be removed, allowing the Commonwealth to fully fund a project’s debt.
The NAIF was established in 2015 but has so far recommended one loan of $16.8 million loan to a private project, the $125 million Onslow Marine Support Base in Western AUstralia.
There are 17 projects in the due diligence phase and 90 active enquiries in the pipeline, with projects ranging from energy, gas pipelines, transport, tourism, agriculture, manufacturing, water infrastructure and communications.
Northern Australia Minister Matt Canavan said there was a “clear appetite” for private investment in Northern Australia, but bottlenecks in the NAIF process were holding back partnerships with the private sector.
"The Government's amendments will increase its flexibility and improve its potential to support projects in partnership with the private sector and northern jurisdictions,” Mr Canavan said.
“In particular, these changes will increase the proportion of a project that NAIF can finance and expand the types of infrastructure that will be eligible for NAIF finance.”
Other changes to the NAIF include:
The Minister will remove the mandatory criteria that financial assistance is only provided if it is necessary for the project to proceed, or proceed earlier than otherwise able.
Mr Shepherd’s review found this criteria imposed unnecessary, onerous requirements to demonstrate a genuine finance gap. Expert board members can use their discretion to determine whether NAIF support is required.
The review found that the NAIF should broaden the scope of projects it funds to include foundational infrastructure, which is likely required for projects in the under-developed region and could support additional local investment as well.
The NAIF will also investigate how it can cooperate with state and territory governments for targeted investment in regional economic hubs, where private projects could leverage off shared infrastructure.
“The development of these hubs will require dedicated effort to develop and require momentum generated by broad political support across the Commonwealth and the jurisdictions,” the report said.
“The NAIF can play a key role in supporting the financing of infrastructure projects identified in the strategic regional hubs. They can also provide an expert advisory and facilitation role with other private sector entities and financiers.”
Government is still considering another of the report’s recommendation, that the NAIF move beyond project finance to take equity stakes in projects.