The federal government’s $5 billion Northern Australia Infrastructure Fund has backed a major port upgrade as its first official project, signalling its readiness to rule on bigger proposals including a rail line to the controversial Adani coalmine.
The fund has recommended an $18.6 million concessional loan to the company building the Onslow Marine Support Base to support shipping along the West Australian coast linked to oil and gas exports.
The decision comes more than two years after Joe Hockey used the May 2015 budget to outline plans to develop the north with the help of favourable loans backed by taxpayers to build ports, pipelines, electricity and water infrastructure.
The NAIF board has recommended the loan to Onslow Marine Support Base Pty Ltd to develop the facility near the WA regional town.
The loan is matching a minimum of $24.5m in funding from the private sector to develop the project, which is estimated to create more than 200 jobs and generate tens of millions of dollars in economic growth.
While the support base has been under construction for months, the new loan will increase its capacity so that bigger ships can refuel.
Deputy Prime Minister Barnaby Joyce is expected to sign off on the decision over the next few weeks, in line with a process that gives NAIF the power to recommend a loan and the minister the right to accept or reject the finding.
The proposal outlines more than $100m in economic benefits to the regions around Onslow from the widening and deepening of the Onslow channel and the expansion of the support base wharf.
The deal is contingent on an agreement with the WA government but this is expected given state authorities backed the original proposal.
Mr Joyce, who took on the resources and northern Australia portfolios after his Nationals colleague Matt Canavan stood down from cabinet, has 21 days to decide on each NAIF recommendation.
The deadline for his decision on the Onslow project expires at midnight on October 20.
The federal fund has been contentious for years, with Labor taunting the government over the time taken to find projects worth backing and the Productivity Commission questioning the use of public funds.
“The lack of transparency to date and the promotion of certain projects by politicians (in the absence of credible supporting investment data) has raised concerns about the viability of future investments under the NAIF,” the commission said in July.
“The risk for the NAIF is … likely to be that some infrastructure projects will fail to cover their operational costs, let alone meet their loan-servicing and repayment obligations.”
The fund’s board is likely to decide by the end of the year on whether to extend a loan to Adani to help fund a rail line from the Indian resource giant’s port on the Queensland coast to its proposed mine inland.
While environmental groups oppose the mine, supporters argue public funds can be used to help develop coal fields in central Queensland just as they were used decades ago to expand mining in the Hunter Valley of NSW.
Lucid Economics provided a range of economic impact and financial analysis to support OMSB Pty Ltd through the NAIF funding process.