Transparency, accountability, and communication
A perceived lack of transparency, accountability and communication from the
Northern Australia Infrastructure Facility (NAIF) about its activities was the
catalyst for the committee's inquiry. As noted in Chapter One, these concerns
have been echoed by a diverse range of individuals and organisations across the
This chapter discusses NAIF's practices around transparency and the governance
policies that guide its approach to the disclosure of information it receives
from project proponents. More generally, this chapter assesses how NAIF
communicates and engages with potential proponents, industry stakeholders and
the public, to share information about its processes and operations. This chapter
also considers recommendations from the review of NAIF conducted by
Mr Tony Shepherd AO (Shepherd Review) regarding NAIF's Freedom of Information (FOI)
Public disclosure of information
The public disclosure of information by NAIF in relation to its
operations and processes has been an issue that NAIF has been navigating since
its establishment in July 2016. NAIF and its board have created and are
governed by a number of policies relating to the public disclosure of
information including a Confidentiality Policy and a Freedom of Information
Policy (FOI Policy).
The Confidentiality Policy outlines that NAIF will treat any information
that concerns a proponent as confidential during all stages of the project
assessment process, clarifying that:
The Board has resolved that it is not appropriate to make
public statements regarding a proponent's engagement with NAIF, prior to an
Investment Decision being made, [except] to the extent required to comply with
the NAIF's statutory obligations.
The NAIF board has also resolved that NAIF will 'not comment on whether
any particular proponent has or has not approached the NAIF in regards to potential
funding for a project'.
Since its establishment, NAIF has refused to make public certain
information in relation to its operations and processes including at Senate
Estimates, through FOI requests, and in response to several Senate Orders.
For example, on 29 March 2017, a motion was moved and passed in the
Senate for the Production of Documents ordering the production of the following
NAIF governance documents:
- the contract or Memorandum of Understanding between the
Northern Australia Infrastructure Facility (NAIF) and the Export Finance and
Investment Corporation (EFIC);
- the NAIF Risk Appetite Statement;
- the NAIF Public Interest Test;
- any policies or other documents to be used by the NAIF
Board to satisfy themselves that the project meets each of the mandatory
criteria as set out in the NAIF Investment Mandate; and
- any policies or other documents to be used by the NAIF
Board to satisfy themselves that the project meets each of the non-mandatory
criteria as set out in the NAIF Investment Mandate.
On 30 March 2017, the Minister for Resources and Northern Australia
responded to this order, advising that he was unable to provide the requested
Submitters to the inquiry advised that they were frustrated by NAIF's
refusal to make public governance documents about its operations. A number of
these submitters also suggested that NAIF's unwillingness to disclose such information
had created a sense that it was not transparent and accountable.
Professor Thomas Clarke from the University of Technology Sydney informed
the committee that there is no effective transparency in NAIF's corporate
governance framework, including its project assessment and approval processes:
It's unheard of for a publicly funded body to operate in
these conditions of absolute secrecy. All meetings, information and decisions
are kept secret until they've been approved. The public is denied any knowledge
of specific projects and who is proposing the projects. This is not compatible
with accountability and probity in public office and neglects all established
principles and protocols in public service in Australia and internationally.
Indeed, this is apparently based on an inappropriate and misconceived
investment bank business model of commercial and in confidence and actually
negates the reforms in public governance of the last 15 years, commencing with
the Uhrig review in 2003 and subsequently added to by a series of important
public service governance reviews.
Mr Geoff Weir, a member of the Concerned Economists Group made a similar
assessment of NAIF's approach to transparency, pointing out the 'significant
differences between the responsibilities of a commercial lender and the
responsibilities of a body like NAIF'. Mr Weir expressed concern that as a
public body dealing with taxpayers' money, NAIF is not meeting its requirements
Dr Noel Preece, an environmental scientist, businessman, researcher and farmer,
also considered that NAIF lacked adequate transparency, commenting:
...it is difficult to determine the adequacy of its governance
framework. The decision-making process seems to be opaque, and there is little
information available on what NAIF is doing, how it operates and makes
decisions, and assesses projects and approves of them.
In their submission, Professor John Quiggin, Associate Professor
Kristen Lyons, and Dr Morgan Brigg advised the committee that there was
little evidence to suggest that NAIF was adhering to its established processes:
Thus far, the processes surrounding the establishment and
operation of the NAIF give no grounds for confidence that these risks to
governance will be managed appropriately. Among the most important concerns:
There is little if any transparency regarding the operation of
the NAIF, the criteria that will be applied in project selection and the way in
which risks to public finances will be managed...
In its submission, NAIF suggested that it was aware of the importance of
transparency in its role as an accountable public authority and indicated that
it seeks to be as transparent as possible having regard to its other
obligations. NAIF advised the committee that it 'has benchmarked itself with
other similar public and private organisations and is satisfied it is highly
Freedom of Information
As a corporate Commonwealth entity, NAIF must comply with the Freedom
of Information Act 1982 (FOI Act). NAIF also has an FOI Policy which sets
out the organisation's approach to its legal obligations around disclosure.
FOI Policy states that there are limits to the information it will disclose:
While NAIF will endeavour to be as open as possible, there
are certain provisions in the FOI Act, the Privacy Act and other legislation
that may restrict the information the NAIF may be able to provide to
applicants. For example, if a person seeks a document containing the personal
information of another person, there are provisions in the FOI Act and the
Privacy Act that apply to protect that information.
The FOI Policy also notes that some documents may be exempt from the FOI Act,
and that exempt documents may include 'those relating to national security or
documents containing material obtained in confidence'.
In its submission to the inquiry, made in August 2017, NAIF noted that
it had received over 1300 enquiries made under the FOI Act. NAIF advised that
where it had been able to disclose the information requested it had done so.
However, NAIF acknowledged that 'many of the requests have related to
information which the NAIF considers to be commercial-in-confidence and which
is protected in the public interest'.
NAIF's approach to commercial confidentiality is discussed later in the chapter.
A range of submitters expressed concerns about NAIF's FOI processes, and
shared with the committee their experiences of receiving limited or no
information from NAIF in response to FOI requests.
Some of these submitters went so far as to suggest to the committee that there
is a perception that NAIF is blocking FOI requests, with Environmental Justice
Australia claiming that NAIF has 'routinely rejected [FOI] requests'.
By way of example, the Australian Conservation Foundation (ACF) informed
the committee that NAIF has been 'extremely resistant to requests for
information from ACF and other interested parties'. ACF advised that:
FOI requests seeking information about NAIF, Adani and the
North Galilee Rail Line have yielded little or no information.
Likewise, Market Forces, Greenpeace, and many of Greenpeace's members advised
the committee that they had achieved little success obtaining information from
NAIF about Adani and the North Galilee Rail Line through FOI requests.
As part of his review of NAIF, Mr Shepherd examined NAIF's FOI practices.
Mr Shepherd noted the large number of FOI requests that NAIF had received since
its establishment and suggested that they were tantamount to 'targeted
environmental activism', and described them as 'vexatious'.
Mr Shepherd explained that in his view, the FOI requests had 'placed
significant pressure on the day to day operation of the NAIF', and
consequentially, 'diverted significant resources from NAIF's core business and
likely impacted the morale of the organisation in a negative way'.
The Shepherd review acknowledged that NAIF does not currently have any
exemptions from either the Administrative Decision Judicial Review (ADJR) or
the FOI framework. Mr Shepherd speculated that if NAIF were to be granted an
exemption from either of these components, there would be advantages, notably
the NAIF would be better able to promise confidentiality to
the ability of environmental and other community action groups to
inundate the NAIF with FOI requests (commonly known as 'lawfare') would be
greatly reduced; and
the NAIF would not have to devote resources to requests for
statement of reasons and review applications.
However, Mr Shepherd also acknowledged that an exemption would reduce
...without access to a statement of reasons, information about
NAIF's activities and the right to review, the public cannot be certain that
the NAIF is acting properly or lawfully within the Act and its Mandate.
Allegations of secrecy and lack of accountability when dealing with public
funds are a key risk, particularly because the NAIF is currently criticised on
the grounds that it acts in an opaque manner.
In addition, Mr Shepherd drew attention to the following potential
drawbacks of an ADJR or FOI exemption:
public money would be distributed without the right to request
justification through a statement of reasons (NAIF would be seen to be 'above
a reduction in transparency into how public money is handled;
the ability to request a statement of reasons generally promotes
better decision making and this would be lost;
without access to a statement of reasons and the right to review,
the public cannot be certain that the NAIF is acting lawfully within the Act
and its Mandate; and
without the right to request a statement of reasons, an
individual is denied the opportunity to get information that will inform their
decision whether or not to launch legal proceedings.
Unable to quantify whether the benefits or drawbacks of any exemption
from FOI or ADJR processes were more significant, the Shepherd review
Recommendation 3––Freedom of Information
Freedom of Information and transparency within the limits of
sensible commercial confidentiality are essential to good government and good
governance. However, NAIF is diverting significant resources and cash for a
small organisation to deal with FOI requests which can mainly be described as vexatious.
The government should review what it can do to alleviate this pressure on NAIF.
No action has yet been taken by government in relation to this
NAIF has claimed on a number of occasions––both in relation to Senate
Orders and FOI requests––that the main reason it will not disclose information
relating to its operations, processes and its project proponents is that it is
subject to commercial confidentiality.
As a general guide, commercial-in-confidence is a classification that
identifies information that if disclosed may result in damage to an entity's
In its submission to the inquiry NAIF states that it is in the public
interest for certain information to remain confidential for a number of reasons
NAIF is a 'gap financier'.
As NAIF will only ever be able to lend a maximum of 50 per cent of the
infrastructure debt financing of a project, NAIF will always have to work
closely with the other financiers. Those financiers will expect and require
NAIF as a standard practice to maintain as confidential commercial information.
NAIF maintains commercial-in-confidence on all potential
projects, unless there is agreement from all parties involved that certain
aspects that can be released publically. Applying this principle consistently
maintains the confidence of stakeholders and project participants in the
integrity of NAIF's processes. Any breach of this confidentiality protocol may
compromise the project and potentially it may not go ahead prejudicing the
public benefit and population and economic growth for Northern Australia and
more broadly that NAIF's objectives.
Project Participants have consistently indicated that they expect
NAIF to maintain the commercial-in-confidence position NAIF operates under.
NAIF's claims that information is commercial-in-confidence has troubled
submitters who insinuated that such claims are being used by NAIF as a tool to
avoid publicly disclosing details of NAIF's processes.
Mr Geoff Weir from the Concerned Economists Group considered that NAIF's
use of claims of commercial confidentiality was having a negative impact on how
NAIF is viewed by the public. Mr Weir explained:
...the point is that by refusing to provide [requested
information] NAIF is undermining public confidence in itself, and in the
process it's damaging the government's reputation.
The Australia Institute also raised concerns about NAIF's use of
commercial-in-confidence claims to avoid disclosing information, and suggested
NAIF develop a 'clear policy for how it will deal with public statements by
proponents' to ensure it applies a consistent approach to disclosing
information. The Australia Institute pointed out that NAIF's refusal to comment
on projects can lead to confusion and frustration, particularly when others (such
as project proponents and the Minister) are making statements that are 'disqualifying,
contradictory or damag[ing] NAIF's reputation'.
The Export Finance and Insurance Corporation (Efic) noted that NAIF's
approach to commercial-in-confidence material was consistent with its own,
however, it pointed out that Efic is partially exempt from FOI legislation.
This exemption, Efic explained, 'recognises the need to keep confidential the
commercial information obtained from Australian exporters and investors'.
In relation to issues around commercial-in-confidence, Mr Simon Every
from the Clean Energy Finance Corporation (CEFC) commented that trust between
the proponent and the lender was a significant consideration:
The clients or counterparties who want to do business with
you need to be able to trust that their information is not going to be used by
their competitors, the market more broadly or a corporate suitor at their own
disadvantage. So there are very important reasons across the Commonwealth why
there are a number of provisions in acts protecting individual privacy,
financial privacy or commercial considerations, and they apply to the CEFC in
the same way that they would apply to Australia Post or to other agencies.
[W]hen the Commonwealth is generally acting commercially or
generally in possession of people's or businesses' private information, it is
fairly standard across the Commonwealth that it not be disclosed.
King & Wood Mallesons agreed that 'borrowers expect a rigorous
system of confidentiality to be applied to protect their information', stating:
As a major Australian law firm, we frequently work with
commercial lenders and major domestic and foreign borrowers. From our
perspective, borrowers expect a rigorous system of confidentiality to be
applied to protect information relating to any potential or current loans and
to any commercial projects these loans relate to.
The National Australia Bank (NAB) confirmed this approach, acknowledging
that in their own work with clients on infrastructure projects, 'the protection
of the client's confidential information is paramount, particularly during the
planning stage of the project'.
However, NAB suggested to the committee that NAIF could do more to increase
their organisation's transparency:
NAB acknowledges the confidentiality requirement of NAIF
funding recipients needs to be balanced with the public's interest in NAIF's
developments. NAIF could consider creating a more transparent transaction
pipeline to assist building momentum in projects that NAIF is evaluating.
The RDA Northern Alliance shared the view that NAIF needed to '[strike]
the right balance' between confidentiality and transparency, noting that
'commercial-in-confidence discussions with prospective proponents [are]
critical to establishing and maintaining the appropriate transactional
relationships between the two parties'.
Submitters raised concerns about the way in which NAIF communicates to
the public on a range of issues including NAIF's own purpose, its progress assessing
the various projects in its pipeline and how it interacts with the northern
The joint submission made by the Arid Lands Environment Centre, Cairns
and Far North Environment Centre, Environment Centre NT, and Environs Kimberley
commented that not enough information had been provided about the relationship
between NAIF, the Commonwealth Government and the state and territory
governments prior to its establishment; pointing out that at the time, the
Master Facility Agreements had not been made public:
The constitutional relationship between NAIF, the Federal
Government and State/Territory Governments is not clear and NAIF has not made
public the Master Facility agreement, which is crucial to understanding this.
It seems the Queensland Government itself was confused about its role in
granting State consent for funds. These are fundamental governance issues that
should have been clearly communicated and understood between all parties before
NAIF was announced to the public in December 2016.
Ms Pip Close from Tourism Tropical North Queensland commented that in
...there is little or no awareness regionally of NAIF, since
there is an impression, rightly or wrongly, that this is something that only
multibillion-dollar companies or projects could possibly be involved in, and
again, rightly or wrongly, a program run out of Canberra with decisions being
made by people who are not local.
Councillor Elizabeth Schmidt, President of the Northern Alliance of
Councils Incorporated agreed, suggesting that 'engagement with grassroots is
really important and that we, as the grassroots representation of the
community, need to be more engaged'.
Several submitters also commented that having more direct engagement
with NAIF, perhaps through a NAIF person on the ground in their local area,
would be beneficial.
For example, Mr Michael Tennant from the NT Government said that:
We are always interested in people who are on the ground
living and working here in the Territory to understand the Territory context
and the unique circumstances of the Territory. It also provides someone on the
ground for more regular engagement by the project proponents. We are also
always interested in growing our population in the Northern Territory.
In its submission, NAIF noted that stakeholder engagement is one of the
five pillars of its Corporate Plan. NAIF's submission confirmed that as part of
its stakeholder engagement plan, NAIF has identified a significant number of
different stakeholder groups with whom it engages. These include equity investors,
lenders, financial advisers, contractors, alternative financiers, consultants,
and Government and industry associations.
Further, NAIF set out that it has engaged in direct communication
through 'direct engagement (including direct engagement with more than 1630
individuals); conference speaking events (more than 22 events); industry
networking, website and media interviews'.
Ms Jann Crase representing the RDA Northern Alliance observed that
NAIF's role balancing the need for transparency and accountability with
commercial-in-confidence was a 'tricky gig'. However, Ms Crase suggested that
more communication around the time NAIF was established could have improved the
community's engagement with NAIF:
If there had been perhaps some more communication when the
NAIF was set up, that would have helped the broader community understand what
concessional finance is—and it's not free money—and to better understand the
parameters within which the NAIF has to operate and where the NAIF fits in with
the broader picture of northern Australia. I like information, so I always want
RDA Northern Alliance encouraged NAIF to increase its communication with
We support more effective and ongoing communication through
media, via website and face-to-face to ensure clarity of messaging around NAIF
activities and operations; to build understanding and support for NAIF
operations and objectives; and to target potential proponents to engage in the
Regional Development Australia Mackay Isaac Whitsunday agreed that there
was room for improvement in NAIF's approach to communication:
To offset some of the criticism that the NAIF has faced in
relation to their progress, broader communications that provide some insight
into the types of conversations they are having, without breaching commercial
confidence, could be improved
In response to criticisms, Ms Laurie Walker, NAIF's CEO, agreed that
communication with all relevant sectors, including with the tourism sector was
Ms Walker further explained that the NAIF board does have a strategy for
communicating and engaging with industries at the 'grassroots level':
We have a practice of when the board meets—and we like to do
that in regional areas—we meet with local mayors, local industry stakeholders
and potential proponents in those areas.
Ms Walker also acknowledged that 'there is always going to be room to
improve here'; and that NAIF is 'very cognisant of that, but we have met with a
number of people and, in some cases, predecessors of the people that are in
The above criticisms of NAIF's engagement and communication differ from
the accounts given by some others. In particular, Mr Craig Graham, Under
Treasurer of the Department of Treasury and Finance of the NT Government noted
that their communication with NAIF was quite regular and includes the provision
of information about their project pipeline at least once a month.
Mr Ian Kew, Chair of the Darwin Major Business Group, and a project
proponent, also commented that his interactions with NAIF had been positive:
...we found them to be open and engaged. They have been
constructive; they have been confidential. They have outlined the process that
they need to work their way through. They have tried to get a good
understanding or our processes and our timelines. In our experience with them
so far, I think the projects that we put up are ones that they are quite keen
to be involved in as well. They have been very good to date to deal with and we
have not had any process problems being presented back to us from the NAIF at
The Shepherd review made a number of other observations and
recommendations about NAIF.
The Shepherd review observed that given the complexity of infrastructure
investments, such projects take time to develop and bring to financial close,
noting that the period from concept to close can span up to five years. In
light of this observation, Mr Shepherd recommended:
Recommendation 1––Market Expectations
The Government and NAIF should work together to communicate
to the market the time it takes in Australia (and most countries) to bring a
properly considered project to market. The role of NAIF as a provider of
concessional finance and not as a promoter should also be emphasised.
Noting that NAIF has a five year life span, the Shepherd review
considered that there was uncertainty around NAIF's future, as well as around
the upcoming three year review of NAIF, due to commence in mid-2019:
Recommendation 2––NAIF Continuation
The Government should assure NAIF and the market that it
intends the continuation of NAIF but as foreshadowed will review progress and
make any necessary adjustments to ensure it successfully fulfils its goals.
Transparency and accountability in
The committee shares submitters' concerns about NAIF's apparent refusal
to disclose certain information about its processes, particularly to the
Parliament, and agrees that this has created a sense that the organisation is
not transparent and accountable. Further, the committee believes that the way
NAIF is perceived reflects poorly on the Commonwealth and that the government
should act to remedy this.
The committee agrees with submitters that NAIF's role as a public body
ought to take precedent over its role as a commercial financier and considers
that NAIF should be held to the accountability standards that are incumbent on
a government body responsible for the allocation of $5 billion of taxpayer
The committee understands that claims of commercial-in-confidence are a
legitimate reason not to disclose certain information, however, the committee
shares submitters' frustration at the lack of information provided through FOI
requests and in relation to NAIF's day-to-day operations. The committee notes
the large number of documents that NAIF has not published, including documents
relating to NAIF's project assessment processes as well as documents relating
to specific projects that NAIF may or may not be assessing. Considering this,
the committee disagrees with NAIF's assertion that it is a highly transparent
The committee firmly believes that the need for commercial-in-confidence
surrounding large investment finance arrangements should not in any way
abrogate NAIF or any other Commonwealth backed investment corporations from the
necessary scrutiny and accountability to the Australian Parliament and the
Australian taxpayer. Further the committee believes that the Office of the
Australian Information Commissioner has a role to play in assessing NAIF's
practices to ensure that NAIF is as transparent as possible.
The committee also notes Mr Shepherd's recommendation about exempting
NAIF from either the ADJR or the FOI framework. However, the committee is of
the view that NAIF's transparency should be increased, not decreased and
considers that the implementation of Mr Shepherd's recommendation would have an
adverse effect on NAIF's transparency.
The committee recommends that the Office of the Australian Information
Commissioner undertake a review of the Northern Australia Infrastructure
Facility's transparency and freedom of information procedures, with a view to
removing the veil of secrecy the Northern Australia Infrastructure Facility operates
NAIF's project pipeline
The committee shares submitters' concerns about the lack of information
that is publicly available relating to NAIF's project assessment and approval
processes, and observes that this lack of information raises serious questions
about the adequacy and transparency of NAIF's governance framework.
The committee believes that NAIF could work to assess what information
it could share, particularly in relation to its project assessment processes.
Specifically, the committee would like to see NAIF develop processes to
facilitate the publication of information about project proponents prior to
Investment Decisions being made. The committee understands that any such
information sharing would require consent from the project proponent and be
subject to the standard commercial-in-confidence protections.
The committee considers that a more transparent transaction pipeline for
NAIF projects would facilitate faster passage through the process, which would
subsequently increase momentum in NAIF's project pipeline.
The committee recommends that the government work closely with industry
and consumer groups to develop and implement a more transparent transaction
pipeline to assist building momentum in projects that the Northern Australia
Infrastructure Facility is evaluating.
The committee is of the view that communication and engagement is an
important aspect of the role of any government agency and shares submitters
concerns about the way in which NAIF communicates to the public on a range of
issues including NAIF's own purpose, its progress assessing the various
projects in its pipeline and how it interacts with the northern jurisdictions.
The committee believes that NAIF has made a concerted effort to engage
with the stakeholder groups it has identified in its stakeholder engagement
plan. However, the committee also notes that NAIF has been established to serve
the whole of Northern Australia, not only its equity investors, lenders,
financial advisers, contractors, alternative financiers, consultants, and government
and industry associations.
The committee is pleased that NAIF agrees that communication with all
relevant sectors, including the tourism sector is important, but believes, as
NAIF has acknowledged, that there is room to improve in this area.
Noting this, the committee proposes NAIF should have more staff based in
Northern Australia, in particular in the Northern Territory and in northwest
The committee recommends moving more staff to Northern Australia and
basing at least one full-time staff member in Darwin to assist with stakeholder
management and investment pipeline development in the Northern Territory and northwest
The committee notes that from the 2016–17 reporting period, Efic, along
with other Australian Government agencies, will be providing greater
transparency of remuneration of their senior executives and employees earning
per annum. The figures provided in the annual reportable remuneration include
gross payments, reportable fringe benefits, reportable employer superannuation,
The committee considers that NAIF should also be required to provide
annual reportable remuneration information for its senior executives and highly
The committee recommends expanding the Northern Australia Infrastructure
Facility annual report to include more details on the Northern Australia
Infrastructure Facility's board and senior staff remuneration in line with
executive remuneration reporting undertaken by agencies such as the Export
Finance and Insurance Corporation. This would include details such as gross
payments, reportable fringe benefits, reportable employer superannuation and
bonuses. The Northern Australia Infrastructure Facility should also report more
details relating to procurement and other operating costs generally.
Senator Chris Ketter
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