Senator MOORE (Queensland) (10:08): Labor will be supporting the Northern Australia Infrastructure Facility Bill 2016. I know the people on the other side of the chamber will be pleased to hear that. We will be supporting these bills on the basis that this particular legislation contains a 'rigorous and properly structured decision making process under the direction of a competent and independent board'. It is most clear in our position that we need to ensure that this board will in fact be competent and independent. I think it is an element on which all parties can agree that it is so important that everyone is competent and that this process will be done in a rigorous fashion and completely independently. The two elements of independence and trust, which are so important in any process, must be absolutely central to any of the movements going forward.
It is important also to notice that the bill has gone to the Joint Select Committee on Northern Australia. They are the group of people in our parliament who have been most concerned about what is happening in Northern Australia. The bill has gone there and the committee has looked at it. There have been a number of recommendations out of that process. No doubt we will hear about that in the debate today as people bring forward the issues they raised in that committee.
At this stage, very early on, I want to particularly acknowledge my friend Senator McLucas, who will also be speaking on this legislation. Senator McLucas, as we know, is a strong northern Australian and Northern Queenslander and I want to put on record my respect and my thanks for the work that she has done in this area and also for her consultative process, which has been particularly effective both within this parliament and also, most importantly, in the community.
The Northern Australia Infrastructure Facility Bill 2016 will establish the Northern Australia Infrastructure Facility. It will also establish an independent Northern Australia Infrastructure Facility Board to make investment decisions under this legislation. Regarding the money on the table, NAIF will offer up to $5 billion in concessional finance to encourage and complement private sector investment in northern Australian economic infrastructure.
I think everyone in this place understands the importance of the development of northern Australia and having an effective infrastructure. We had the opportunity on many Senate committees to visit northern Australian communities across the board, looking at that concept of northern Australia reflecting not a state base but rather a geographic base. We understand what is clearly known-that there are elements of similarity and elements of concern that cross state borders. The fact that this legislation talks about the concept of northern Australia is particularly important and reinforces the already established need to ensure that those issues of regional importance are not forgotten, particularly at our level in federal government.
In relation to the geographic line, it is always very difficult to relate any particular process to geography, but I understand that there is a government amendment that will slightly change the definition of northern Australia as it was originally taken to the committee. We will have an amendment to ensure that one particular element of Western Australia is picked up in this definition. Infrastructure located outside northern Australia can be northern Australian economic infrastructure as long as it provides a basis for economic growth in northern Australia and stimulates population growth in northern Australia.
The facility was first announced in the 2015 budget. Details of the facility have been delayed a number of times and it seems that the work to develop the policy was done largely after the announcement. That in itself is not particularly peculiar, as a concept or a proposal is then backed up by much more detail. But it seems that, particularly after the budget last year, there was a lack of detail for people to understand and get their minds across. That detail has since been brought forward through the committee process and there is much more detail on the table, but it is important that we understand that this is an evolving piece of legislation and it engages the close scrutiny of all those who share the importance of northern Australia.
We know, and I put on record, some of the issues that stimulated the need for such legislation. Northern Australia faces significantly higher costs and service challenges, resulting in critical infrastructure gaps. We know-and it is something that we do talk about a lot in the electoral process-that northern Australia's low population density and smaller dispersed industry makes it difficult to capture the economies of scale that support commercially viable infrastructure at competitive prices.
The distances continue to confound people. Truly understanding the impact of distance and geography on our nation is an important element of this debate. No matter where people live, they should get a true understanding of the issues of northern Australia-the distance, the remoteness, the north's unique climate. I think many people-including Senator McLucas, I know-have great experience in the challenges of the climate across northern Australia. We need to understand. Too often, people in other areas just get immediate glimpses of some of the challenges of the climate conditions in the north when we have media coverage of such things as cyclones. It is also very important to understand the element of drought in that part of Australia. Certainly as a Queensland senator, I know the impact of drought on our northern community is something we need to really understand in the development of policy.
The NAIF, the Northern Australia Infrastructure Facility, is intended to support projects that otherwise would not be built or would not be commercially viable without an appropriate injection of public funding. Therefore, that $5 billion is an important element of the process. That is where decisions can be made that can give an injection of appropriate funding at the best possible time to encourage development of many kinds. That will be an extraordinarily important element of the process-the identification of the most effective programs and projects that can attract the funding which is so important.
The NAIF will be established as a corporate Commonwealth entity. It will provide concessional loans to enable major economic infrastructure projects to proceed on the basis that they meet specific eligibility criteria and are able to repay the Commonwealth in full and on time. That means that the relationship between the projects and the funding body will need to be maintained so that there will be that ability to report so that we will know how progress is going. So, there will not be any surprises, which is most important when actually looking at funding projects. We do not need to have surprises at the end of the time frame. The commitment is that any funding that is provided will be able to be repaid-and I stress-in full and on time.
Concessional features of a loan may include lower interest rates-and we hear much about the attraction of lower interest rates-longer loan tenure and/or different repayment arrangements that might be provided by the private sector. The important element is to ensure that the projects brought forward meet the specific criteria and are able to prove that they will, as required by the legislation, support projects that otherwise would not be able to be built and that they will respond to those issues of remoteness and population growth. There needs to be an understanding that the projects will meet those requirements before they are eligible.
The board will make investment decisions independently, and that is-as I said at the start-so important in the consideration of the establishment of this particular entity. There must be the sense of independence. It will determine NAIF investments in accordance with an investment mandate issued by the Minister for Northern Australia. I understand there were discussions at the committee about the size and make-up of the board, which is always an interesting element. Under the legislation, the board will consist of a chair and no less than four and no more than six other members. I am looking across at Minister Canavan now-that is kind of a tight frame. No less than four but no more than six, so that actually defines how many people will be involved on the board.
Senator Ian Macdonald: It'll be four, five or six then!
Senator MOORE: Four, five or six-yes. I am just wondering-will we toss a coin there? But I understand it is just a way of expressing it. But, yes, we know how many members there will be on the board. I am sure it will be an interesting process, determining who will make up the board's membership, because we know that there is great interest in this process. Ways to fund and invest in northern Australia appropriately have been on the agenda for a while. I would imagine that being on the board will be a very important responsibility and one that will be watched closely by everybody who is interested in this area.
The minister will be unable to direct the NAIF to invest in a particular infrastructure project or in relation to a particular person. The minister will have a veto power to reject decisions by the NAIF-and I think this is important to read into the record-only if assistance would be inconsistent with the objectives and policies of the Commonwealth government, have adverse implications for Australia's national or domestic security or have an adverse impact on Australia's international reputation or foreign relations. The NAIF can grant financial assistance for states and territories for the construction of northern Australian economic infrastructure and determine the terms and conditions for those grants. Again, in any consideration of development in northern Australia it is important to have the states and territories involved in what the best way would be to develop projects.
As I said, one of the important elements of this process is that it is not limited by state border, but it would be nonsensical to believe that effective discussions around appropriate investment in projects to develop northern Australia could be done without the engagement of the states and territories. It would be difficult if not impossible to ensure that projects could be successfully completed if there were tension or conflict with states and territories. So it is there that there will be consultation and discussion but also that states and territories would be able to have financial assistance if the projects they are putting forward meet those criteria which have already been developed.
Importantly, the mandate directs NAIF to consult with Infrastructure Australia and relevant Commonwealth departments where an investment decision is greater than $100 million. The mandate also describes the types of financial assistance that may be offered, the terms for the provision of financial assistance, objectives of the NAIF, strategies and policies to be followed, eligibility criteria, and risk and return parameters. The mandate is the core of this legislation, and the bill provides for the investment decisions of the board to be covered by the Northern Australia Infrastructure Facility Investment Mandate Direction 2016-which, I think gratefully, can be referred to in future as 'the mandate' rather than giving it the full title. It is a word I do not like. I do not like the word 'mandate' but, in terms of putting clearly what is there in the legislation, I think that, for people who are engaged in discussions about the development of our northern regions, having that clear mandate is an important element of building that trust and ensuring the independence about which I have spoken before.
The mandate covers a number of mandatory criteria, funnily enough, for an investment decision to be made. I just put on record again that the project must-these are the processes around which criteria will be developed-'involve the construction or enhancement of economic infrastructure'; 'be for public benefit'; or 'be unlikely to proceed' if not for the NAIF funding or be likely to proceed at a much later date or with a limited scope. Again, this focuses the need for the investment from NAIF-that, without the NAIF investment or the ability to get that, the project might not have been able to proceed in a timely way or might not be able to fill its total goals and might have to be limited in some way. Absolutely essentially, the particular projects must 'be located in, or have significant benefit for, northern Australia'. It is important that there be an understanding of the process. It does not necessarily have to be located in northern Australia, but, if the board believes that the project would provide effective benefit to northern Australia, it would meet that criterion.
The project must show that the finance from the NAIF will not exceed 50 per cent of the total project debt; provide comprehensive financial modelling to show that the loan moneys will be able to be paid in full and on time, as I said; and provide an Indigenous engagement strategy. Again, in the roll of legislation brought before this place over the last couple of years, we have consistently talked about having in these regions an effective Indigenous strategy, because without jobs-without the opportunity for employment-there would be limited support for building population, as I said, and for acknowledging the link between this legislation and other legislation which has gone before the previous government and this one about ensuring that there are employment opportunities for Indigenous communities. No longer will these kinds of projects be able to operate by bringing in outside labour and excluding any opportunity for an Indigenous employment engagement strategy. I think that, for me, is one of the most important elements of this legislation.
One of the things that Labor raised-and I take this opportunity also to acknowledge the work of Minister Gary Gray, who is retiring at this election and in whose portfolio responsibilities this was-was the importance of having this effective consultation with Infrastructure Australia. As I have said, the mandate spells out that NAIF needs to consult with Infrastructure Australia where an investment decision is greater than $100 million. We had raised concerns at the committee level-and I put them on record today-that the requirement to consult where the loan is greater than $100 million may not in itself be sufficient. Labor have indicated that we would like to see some integration at board level between the Northern Australia Infrastructure Facility and Infrastructure Australia. As you know, Infrastructure Australia was the author of the recent Northern Australian audit-infrastructure for a developing North in May 2015.
That report bears such relevance to the legislation about which we are having a discussion here today, because that whole report was about how you would be able to develop effective infrastructure for a strongly developing north. So the need to involve Infrastructure Australia, which is established and credible, all the way through with any project that we would be talking about under this legislation is critical. The absence of Infrastructure Australia expertise in some projects may create unwelcome duplication and waste resources across agencies and departments where NAIF projects are assessed.
The fact is that we have within the mandate an expectation-in fact, a rule-that there needs to be consultation for projects over $100 million. That is strong, but we believe that having Infrastructure Australia involved in projects in northern Australia would be a valuable element and would improve the legislation. It may well be that arrangements would be made so that those discussions could go on, but currently the mandate is particularly focused on projects over $100 million. It would be very valuable if the minister could address in his reply this issue of maintaining the expertise.
It is very important, as I said earlier in this contribution, that funding is allocated transparently and that decisions can be publicly assessed. This is an important element of funding. We need to ensure that not only the parliament but the community has strong trust that this fund will be effectively responding to the needs of the region and that it would pass any test of transparency. As we know, we would expect that to be the case. We have had occasions in the past where programs have been subjected to audits which have proven that some expenditure of government funds had not passed that element of transparency or trust.
So it is most important that in developing this new program it is clear at the start of the project that there is an open commitment that there will be transparency and also engagement so that, as projects are being assessed and when decisions are made, it is done in the public arena. People will be able to see what the basis of a decision for a particular funding allocation was and how that particular allocation meets the criteria which I spelt out in the contribution-in particular, how will it benefit northern Australia? How will it respond to the particular needs of northern Australia? We as a community and as a parliament will be able to be sure that these needs are being met and that the people who are living there are very much engaged in seeing how the project operates and will be absolutely certain that the money is well spent and effectively processed.
Again, it is important that we have the link with Infrastructure Australia. I know that that is an element that will come out in other contributions to the debate. But, as I said, Labor does support this legislation. We are optimistic and hopeful that this will be of benefit to northern Australia.
