A second request for a federal loan to build a freight link supporting Adani’s controversial Carmichael mine has not been withdrawn, an inquiry has heard, but its status is still unclear.
The loan, made by the nation’s largest rail freight operator, Aurizon, would be used to build a vital rail link in the Galilee basin, opening the region up to coal projects, and ultimately helping facilitate Adani’s controversial mine.
Aurizon’s request for a federal loan from the Northern Australian Infrastructure Facility (Naif) has placed the Queensland Labor government in a difficult position.
The state government promised to veto any Naif loan that would support the Carmichael mine during the state election, but it is yet to state whether such a veto would extend to the Aurizon application.
Earlier this week the deputy premier, Jackie Trad, said she had advice that the Aurizon loan was no longer active before the Naif.
But on Wednesday a Naif spokesman told the Australian the Aurizon request was “still on our active list of inquiries and we’ll clarify this with the Queensland government”.
On Thursday Naif officials appeared before a Senate inquiry and were grilled about the status of Aurizon’s request.
The chief executive of Naif, Laurie Walker, said the Aurizon request had not been formally withdrawn.
But Walker confirmed Naif had told the state government – in a transaction pipeline report dated the 25 January – that the project was at the “inactive inquiry stage”.
“That does not mean that the proponent has formally withdrawn their request for funding,” Walker said.
The Labor senator Murray Watt asked why the Naif had given the media contradictory information by describing it as an active inquiry.
Walker responded: “Because as I said senator, the language of inactive is not language that we use publicly.”
The Naif, a relatively small agency, is responsible for administering about $5bn to help develop infrastructure in northern Australia. Naif is yet to allocate funding for any projects, but Walker said on Thursday it was on track to deliver three to five investment decisions of between $300m and $1bn by the end of June.
“We are on track to achieve that. We have 13 projects currently in due diligence right across jurisdictions,” Walker said.
Naif’s critics say it is open to bias and political influence, lacks transparency and proper governance, and is able to spend money without normal budget scrutiny on projects with limited benefit.
Walker said Naif had to balance transparency with the need to preserve commercial-in-confidence for applicants. She said the Australian government solicitor (AGS) and others had deemed its decision not to publish certain documents as “best practice”, and in line with banks and other public sector lenders.
Prominent economist John Quiggin, of the University of Queensland, appeared before the Senate inquiry, and was asked to rate the governance of Naif out of 10.
“Well, quite low. I suppose below five, certainly,” Quiggin responded. “The difficulty is that it is quite opaque. So it could be that the procedures are better than they appear from the outside but we have a very large sum of money being allocated by a fairly small, under-resourced as far as I can see, body.”
The Northern Regional Development Australia Alliance said it believed the guidelines governing Naif decisions were adequate.
The Australian Marine Conservation Society warned the environmental impact of applicant projects was not being considered by Naif.
Imogen Zethoven, a campaign director, said that was unacceptable at a time when the Great Barrier Reef was already experiencing significant coral bleaching. She also raised concerns about a lack of transparency.
Walker said the board did consider environmental issues when assessing loan requests.
Environmental Justice Australia, a not-for-profit, said Naif had not finalised an anti-money laundering policy, despite being alerted to lenders’ obligations by lawyers more than a year ago.
A year later, in October 2017, Naif told a budget estimates hearing it was in “advanced stages” of developing a policy, but has yet to release one, which EJA has said risks running foul of anti-money-laundering laws.