The Treasurer in his Budget speech announced a $5 billion Northern
Australia Infrastructure Facility to address northern Australia’s need for infrastructure.
This $5 billion forms part of the Government’s response to the yet to be
released White Paper on Developing Northern Australia.
A number of other measures included in the 2015–16 Budget also form part of the
Government’s White Paper, including:
positioning the north as a leader in tropical health
improving northern cattle supply chains
northern Australia infrastructure projects pipeline and
northern Australia insurance premium taskforce measures.
All together the measures forming part of the White Paper
included in the 2015–16 Budget total approximately $916.3 million over four
Background to Northern Australia
Prior to the 2013 Commonwealth election the Coalition
committed to producing a White Paper on the development of Northern Australia,
within 12 months of an election. Preceding the White Paper
was the Green Paper, as well as the Joint Select Committee on Northern
Australia Inquiry into the Development of Northern Australia. Both the Green
Paper and the Joint Committee Inquiry will inform the drafting of the White
The Budget states that all the measures discussed in this
article form part of the White Paper. The White Paper is not scheduled to be
released until June 2015. It is unusual to announce
a range of measures from a White Paper that has not yet been released.
Infrastructure deficiencies were identified as major issues
in Northern Australia in both the Green Paper on Developing Northern Australia
and the Joint Committee Inquiry on Developing Northern Australia Final Report.
Infrastructure Australia’s Northern Australia Infrastructure Audit found, among
other things, that:
road maintenance backlogs are a feature of the northern road
the limited population and often small industry sizes of northern
Australia can make it difficult to capture the infrastructure economies of
scale that allow commercially viable infrastructure services at competitive
70 per cent of premises in northern Australia received the lowest
broadband quality rating in 2013.
Budget related measures
A number of measures are included in the Budget to address
these issues. The largest of these is the Northern Australia Infrastructure Facility.
This facility will provide concessional loans up to $5 billion with the
objective of increasing private sector investment in infrastructure in Northern
Australia. Little else is said about this measure, other than the cost to the
Government will be less than $5 billion. The cost of the loan facility will also
be less than what is shown in Budget Paper No. 2. This is because the only expense
that the Commonwealth will incur is the differential between the regular and
concessional interest rates.
The Minister for Finance could not rule out mining companies
making use of these loans to fund the building of mine related infrastructure.
Another measure will provide $101.3 million over four years
to improve cattle supply chains in the north, with a particular focus on road
infrastructure. CSIRO logistics modelling will be drawn on, as well as input
from livestock transport and beef industry experts.
The other northern Australia infrastructure measure is the
northern Australia infrastructure projects pipeline. This measure will provide
$3.7 million over four years to develop a new infrastructure project priority
list which will be informed by priorities identified by Infrastructure
Australia Northern Australia Infrastructure Audit. This list will be developed
by the Department of Infrastructure and Regional Development.
The northern Australia insurance taskforce measure will provides
$2.1 million to establish a taskforce to assess ways to reduce home, contents
and strata insurance premiums in northern Australia. This taskforce was first
announced by Assistant Treasurer J Frydenberg on 30 March 2015.
The affordability and availability of insurance was another issue outlined in
both the Green Paper and in the Joint Committee Final Report.
A similar measure was included in the 2014–15 Budget, which resulted in the
establishment of an insurance comparison website for North Queensland.
The Government has not indicated what direction will be taken although the
establishment of a mutual insurer for cyclone cover or providing support to a
reinsurance pool are said to be possibilities.
The Productivity Commission, in its Natural Disaster Funding
Arrangements Inquiry Final Report, stated that ‘intervention in property
insurance markets (either through direct provision of insurance or by providing
pooling through reinsurance) is overwhelmingly ineffective.’
The Budget also includes a measure which will provide $15.3
million over four years to invest in research into exotic disease threats to
Australia and the region. This measure is further discussed in the Foreign
Affairs Overview of the Budget Review.
Commentary has centred on the headline measure, the northern
Australia infrastructure facility. Andrew Campbell of Charles Darwin University
states that the northern Australia infrastructure facility could play a very
useful role in supporting the smart development of Northern Australia if it uses
evidence, especially from the Infrastructure Australia audit, undertakes
transparent cost-benefit analysis and appraises projects using an independent
expert body at arm’s length from government.
Laura Tingle of the Australian Financial Review
considers the northern Australia infrastructure facility a ‘badly thought out initiative
which may yet bite the Government.’ Tingle had earlier
stated that the facility ‘will apparently give government guarantees or
concessional rates to unspecified projects, with undefined priorities having
been determined by undefined processes. It smacks of a very last-minute
addition to the budget ...’ A Crikey editorial says that
‘Northern Australia ... [is] a costly distraction from our real infrastructure
J Hockey (Treasurer), Budget
The budget figures have been taken from the following document unless
otherwise sourced: Australian Government, Budget
measures: budget paper no. 2: 2015–16.
The Coalition, The
Coalition’s 2030 Vision for Developing Northern Australia, June 2013,
Australian Government, ‘Green Paper on
Developing Northern Australia released for comment’, Department of Prime
Minister and Cabinet website; Australia Government, ‘Interim
Government Response to the Joint Select Committee on Northern Australia Inquiry
into the Development of Northern Australia’, December 2014, p. 2.
T Abbott (Prime Minister), W Entsch, ‘Joint
Press Conference, Cairns’, Media Release, 8 May 2015.
‘Green Paper on Developing Northern Australia released for comment’,
op. cit., p. 31; Joint Select Committee, Inquiry
into Developing Northern Australia – Final Report, The Senate,
Canberra, 4 September 2014, pp. 113–20
Infrastructure Australia, Northern
Australia Audit: Infrastructure for a Developing North Report, January
2015, pp. 6–19.
J McCarthy, ‘Mega-mines
can access $5 billion fund’, Courier Mail, 15 May 2015.
J Frydenberg (Assistance Treasurer), ‘Northern
Australia Insurance Premiums Taskforce’, 30 March 2015.
‘Green Paper on Developing Northern Australia released for comment’, op.
cit.; Inquiry into Developing Northern Australia –Final Report, op. cit.
Australian Government, Budget measures: budget paper no. 2: 2014–15, p. 213; M Cormann (Minister for Finance and Acting Treasurer), ‘Initiatives to help address insurance affordability for Northern
Queensland’, media release, 23 October 2014.
J Saulwick, ‘Northern
Frontier: Top of nation to get $5b in loans’, Canberra Times, 13 May
2015; D Kitney, ‘Plan
to boost north’s agriculture frontier’, The Australian, 13 May 2015.
Productivity Commission (PC), Natural
Disaster Funding Arrangements, Inquiry Report, Vol. 1, 17 December
2014, p. 222.
A Campbell, ‘Budget
harks back to old ideas for northern Australia’, The Conversation,
19 May 2015.
L Tingle, ‘Policy
Deficit’, Australian Financial Review, 16 May 2015.
L Tingle, ‘Strategy’s
success requires sticky tape and chutzpah’, Australian Finance Review,
15 May 2015.
Australia a costly distraction’, Crikey, 20 May 2015.
All online articles accessed May 2015.
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