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Economics Legislation Committee
02/03/2017
Estimates
INDUSTRY, INNOVATION AND SCIENCE PORTFOLIO
Northern Australia Infrastructure Facility

Northern Australia Infrastructure Facility

I welcome to the committee the Office of Northern Australia and the Northern Australia Infrastructure Facility. Ms Walker, I think you have given us a copy of your opening statement. Thank you very much. You are more than welcome to make an opening statement. Do try to keep it brief; we are trying to get through the agenda this evening within a reasonable hour. Welcome to Senate estimates.

Ms Walker : I will try to keep it brief. As you know, this is my first Senate estimates, so thank you for this opportunity. NAIF were established on 1 July 2016 as a corporate Commonwealth entity. There was an interim CEO in place, and the board and that CEO worked very actively to ensure that NAIF hit the ground running. We have continued to do that. I know there is tremendous interest in what NAIF have achieved to date. In my statement you will see that I have identified that as at 1 March we have had 100 inquiries from projects across a broad range of sectors: transport, resources, agriculture, water, tourism, energy generation and pipelines. We regard 47 of those 100 inquiries as active. It is a really good spread across the jurisdictions that are relevant to the north: 53 per cent for Queensland, 28 per cent for WA and 13 per cent for the Northern Territory.

We also think there is very good momentum in the pipeline. There is a net increase of 13 deals from the beginning of December to the beginning of March 2017. We have four transactions which are now in what we call the due diligence phase, and possibly a fifth one to come shortly. That is an important phase because that is when we start doing detailed assessment on proposals. We look at proponents' capabilities, we look at risks and mitigants, we look at the revenue and costs and then work with the other financiers and investors to determine whether there is a role for NAIF and how NAIF might play that role, because NAIF are what we call a gap financier. We can only finance if the project would not otherwise proceed with other finance. We have a mandate to put in what is called concessional lending terms of tenor or interest rate where we are serviced in priority to other lenders, but we have to put the minimum concessionality in. It is very important that those deals are now reaching this phase. We have probably another 11 or 12 that we expect in this calendar year to be in the strategic assessment phase, which is the phase before that.

NAIF has been very active in seeking to facilitate the pipeline and in engaging with stakeholders. The statement says that we have met individually with 320 stakeholders and have attended eight different fora, through which we have reached out to a further 500 people. We have been very active in articulating the vision of NAIF and also identifying for potential proponents the opportunities that NAIF can help with. We are particularly focused, given that we are in the north and have such a proximity to Asia, on those opportunities. Fifty per cent of the world's GDP and middle class consumption is sitting there on our doorstep. We are planning a series of regional workshops as part of facilitation of the pipeline. We are getting strong support from regional industry bodies across the Regional Development Australia network. We will be working closely with Austrade and the Office of Northern Australia to facilitate connecting potential proponents with investors. We think this is an important part of NAIF's role.

That brings me to the timing of when the NAIF pipeline is likely to convert to actually funding deals, because I know there is strong interest in that. We have had support from people as we move around the north in understanding that for infrastructure financing, which is what NAIF do, there is a certain level of patience that is required, because infrastructure is complex and it does have long lead times. Foundational work results in deals that take some time to come to a point where we can assess them, in the context that we will lend for potentially up to 30 years. Getting the feasibility work and the planning in place is really important. The process that NAIF have been set up under is in contrast to a traditional government procurement, where government would do the feasibility, would decide that this is project that they want to develop and would then stand in the market with a tender and have a date for assessing that they control. That is different to the way NAIF are set up. While I mentioned the various active roles that NAIF have been playing in facilitating deals in the pipeline, and we have been very successful in attracting deals, we are not actually the proponent. We are dependent upon investors coming to us. We have another role different from traditional financing, which is as that gap financier. We need to partner with other financiers. We have a specific mandate to encourage the private sector into these projects, and under our mandate we can finance only 50 per cent of the debt for the infrastructure components of projects, so we need to work with and attract private sector and other investment.

We now have eight dedicated full-time equivalent staff available to NAIF. Two of those are specialists, what we call originators, and they are involved in understanding and attracting the pipeline projects. We also have access to the full team of Efic. That is how NAIF were set up. We were deliberately set up as a smaller unit that was able to leverage all of Efic's resources. That relationship has been working extremely well, and we also have the benefit of the Office of Northern Australia.

The board has met four times. They have visited regional centres, including Cairns, Darwin and Rockhampton. While they are there, they meet with regional leaders and economic groups in order to understand the regions and the infrastructure priorities. Governance has also been an area where there has been a significant process focus. The board has invested a lot of time in understanding what governance is required and in putting that in place for the appropriate stages of where NAIF are at. They have confirmed the key principles of their mandate, they have developed a risk management framework, and there are various other policies—some of which have been published and some of which are internal. We are in the process of also refining the interface with the Northern Territory, Western Australia and Queensland jurisdictions because the Commonwealth money goes through those entities. I think a lot of work and good work is being done in that area.

CHAIR: Ms Walker, I do not mean to interrupt you but I know that Senator Ketter has a list of questions for you as long as your arm.

Ms Walker : That is okay.

CHAIR: I might just ask you to wind it up a little.

Ms Walker : I am nearly done anyway.

CHAIR: Mr Coffey, do you have anything you would like to add?

Mr Coffey : No.

Senator LUDLAM: I know you did not get to cover everything you want to but we have got your tabled written statement. Could you take on notice—I do not expect you to have this at the table with you—what proportion across the various categories, maybe excluding agricultural, the 47 inquiries that you classify as active across transport, resources and energy generation are fossil fuel related developments whether they be coalmining, transport infrastructure, gas pipelines or gas—onshore or offshore—or oil. I do not anticipate that you have got that with you but if you could provide that, that would be great.

Senator Canavan: I will have to take that on notice. The point I made when this was being debated in the Senate was some infrastructure has multiple users, so we will answer it as accurately as we can.

Senator LUDLAM: I get that.

Senator Canavan: I would say that some things like a port will service resources sectors, agriculture sectors et cetera.

Senator LUDLAM: If there is ambiguity, feel free to spell it out but it would be good to know. Ms Walker, how often do you or your staff communicate with the minister or with staff from the minister's office?

Ms Walker : I communicate with either the minister or his staff on an as-needs basis. Members of my team would also communicate with the staff at least once a month.

Senator LUDLAM: Fair enough, I did ask 'you or your staff.' For you or your senior staff, is it hourly, weekly, monthly? Is it hourly, monthly? I am trying to get a sense of the tempo of the contact. Is it through frequent? Is it very infrequent?

Ms Walker : It actually is not that regularly. If I had to think, in my time since I have been in the role, which is late October, I would say five or six times possibly with the minister.

Senator LUDLAM: Order of magnitude, that is fine. You described your assessment pipeline before and you gave us a couple of categories in your statement here. At what stage in your pipeline would you let the minister know that particular projects are being put in front of you for evaluation, or is there something of a Chinese wall operating?

Ms Walker : We have a process where we identify the top 15 or 16 deals that we think are probably most likely to move through the more active stages. It has limited information in it. It has the name of proponents and some very high-level detail and that is what is provided to the minister's office.

Senator LUDLAM: Okay, fine. So it sounds like it is relatively early in the evaluation pipeline? It is not that you wait until you have short listed?

Senator Canavan: Under the legislation, the NAIF is an independent statutory body. It has a process to decide on a proposal to provide to me as the minister. Suffice to say, that has not happened at this stage. There is not a proposal before me.

Senator LUDLAM: There is not?

Senator Canavan: There is not a proposal before me to make a decision on. Up until that point, it is up to the NAIF to do the assessment of the project.

Senator LUDLAM: Can I give you one specific example—it will not surprise you to learn which one it is. When you publicly announced in early December last year that the NAIF is looking into the Adani rail proposal, did you discuss that with the NAIF before you let the media know? Step us through how that announcement was made.

Senator Canavan: There was no formal announcement.

Senator LUDLAM: Was there a drop to a particular menu—

Senator Canavan: There was no announcement from government. I was asked questions about that particular project. I had spoken to both the NAIF and Adani about it and, of course, I was anticipating questions on this very high profile project so I discussed with both of them what the status was and what I should comment on in that regard. I have tried to be as upfront as I can. As I said in the previous answer, it is a matter for the NAIF to do the detailed assessment of this and the other projects, but discussions are ongoing with Adani, and I will wait to see the NAIF's advice on the project.

Senator LUDLAM: On notice if you need to, can anybody at the table please shed some light on which particular Adani entity has applied for the loan? I understand it is quite a complex corporate structure and there are various shell entities and goodness knows what else. Which particular entity is it that has lodged the request for assistance?

Senator Canavan: I am not aware.

Senator LUDLAM: I will maybe put that to Ms Walker.

Ms Walker : The NAIF has a protocol that it treats all its business dealings as commercial in confidence.

Senator LUDLAM: The minister announced one of them last December, so that is not working out super well.

Ms Walker : There are very limited exceptions for information that is able to be disclosed publicly; it is agreed with some of the proponents.

Senator LUDLAM: Are you heading towards not being able to tell us which particular Adani entity you are dealing with?

Ms Walker : Yes, because from a financing perspective, which the NAIF is, we regard it as very important to maintain the commercial in confidence information.

Senator LUDLAM: I gently remind you that it is public money that you are proposing to disburse.

Ms Walker : I am absolutely aware of that. We balance public accountability, which we are very aware of, and, obviously, we comply with the obligation in the investment direction which requires publication of details once an investment decision has been made. We think that is also appropriate and consistent with how the other lenders and investors would be expecting us to act, but, actually, I take this back to what is in the public's best interest and the best interest of achievement of the NAIF's objectives, which is to optimise the pipeline and to have circumstances which will most likely result in transactions reaching financial close.

Senator LUDLAM: As a member of the public, could you at least confirm for us that you are not going to be lending Australian public funds to a company whose ultimate owner is registered out of the Cayman Islands?

Ms Walker : I cannot discuss any particular details of any deal with the proponent until we get to the point where an investment decision has been made and then we publish.

Senator LUDLAM: So after you have made a decision you would let everybody know?

Senator Canavan: Can I just add something?

Senator LUDLAM: Please, Senator Canavan, help us out here.

Senator Canavan: We have provided the NAIF with a mandate and, of course, legislation approved by the parliament to try and invest in Northern Australia economic infrastructure. Under that legislation and that mandate there is no specific bar against foreign investors making applications.

Senator LUDLAM: I was not implying that there was.

Senator Canavan: Of course. I would fully expect any entity operating in this country, be they seeking or making a proposal to the NAIF or otherwise, to apply and abide by Australian laws. I have no evidence that Adani, who are an operating entity in Australia right now—operating the Abbot Point Coal Terminal—are not doing anything but abiding by Australian laws. I do not particularly find their company structure overly complex—

Senator LUDLAM: Then why not just disclose who it is you are dealing with?

Senator Canavan: I am not doing this for the NAIF, but you have made a characterisation on their structure. Many, many companies have a variety of different corporate entities. Adani is a very large business and they are actually not primarily a mining business, they are an infrastructure service-related business, so I think some of the characterisation of this company is being done either mischievously or by individuals and entities that do not have a lot of corporate knowledge about how companies structure themselves in the real world.

Senator LUDLAM: It is difficult to have this corporate knowledge when you will not disclose it. You would no doubt be aware that some companies in the Adani Group overseas have been alleged to have engaged in activities ranging from trade-based money laundering to environmental breaches and outright corruption. What kind of due diligence are you doing if you are not willing to disclose who you are dealing with—to ensure that the entity that you might be about to start writing very large cheques to has not been implicated in these practices overseas?

Ms Walker : If I can comment more on the generic process rather than specifics—

Senator LUDLAM: I am interested in the specifics, I am afraid.

Ms Walker : I think that I cannot discuss the specifics of a transaction—

Senator LUDLAM: Wow.

Ms Walker : and the actual due diligence that is being done, but what I can say is that the due diligence process is all about assessing the credentials and the capabilities of parties. It is also about taking into account relevant considerations and not taking into account irrelevant considerations. That, as a general principle, is how the NAIF board would be assessing any proposal, whether it was a port, a mine, an airport et cetera.

Senator LUDLAM: Are you in negotiations with Clive Palmer's Waratah Coal or any of his entities to help him build a so-called clean-coal-fired power station? Please knock that one on the head right now, if you can.

Ms Walker : Again, transactions that—

Senator LUDLAM: Just knock it on the head.

Ms Walker : are in the pipeline are commercial-in-confidence. For the same reasons that we—

Senator LUDLAM: We announced Adani is in the pipeline. Are we announcing Clive Palmer is there as well? If a journalist asked you, would you tell them?

Senator Canavan: I am happy that to disclose that I am not aware of that, but of course—

Senator LUDLAM: You would necessarily be.

Senator Canavan: it is a matter for the NAIF to assess those aspects. Clearly, in the case of Adani, there is a very heightened public interest and a heightened public scrutiny of it. That is appropriate. You and your political party are very focused on it, so I am trying to provide as much information as I can on that one, but I am not aware of Mr Palmer making any proposal.

Senator LUDLAM: And Ms Walker, you are prevented from disclosing anything, apparently. In terms of public interest immunity, the ground that you are claiming is commercial-in-confidence. Could you provide for us, in writing on notice, the specified potential harm to commercial interests. I need you to be quite specific about how the public or the commercial interests would be harmed if this information is disclosed.

Ms Walker : I am very happy to do that.

Senator Canavan: Yes, happy to take it on notice.

Senator LUDLAM: It is handy to have the minister at the table.

CHAIR: So it is harm to public interest, is that correct?

Senator LUDLAM: There is a public interest immunity ground being claimed by the officer. That is fine. It is commercial-in-confidence. That is a blanket that we need narrowing down to the specific commercial harm that would be created.

Senator KETTER: Ms Walker, thank you very much for your very detailed opening statement; that is very useful. My first line of inquiry is in relation to the 'pipeline of projects', as you call it. I notice that you use a number of different terms for different stages of the process. Can you tell me what are the stages, formally, within the process, from the expression-of-interest stage—I think you call that 'inquiry stage'; I do not know if those terms are synonymous—through to the final decision.

Ms Walker : There are, essentially, four major stages. The first one is what we call an inquiry and preliminary assessment stage. To give you some sense of what that is, it could be just taking a phone call from a potential proponent who is trying to get a sense of what NAIF's capabilities are and what its role is. So that would be stepping them through some of the mandatory and non-mandatory criteria, which are set out in the investment mandate, and there are other conditions. So it would be stepping people through that and understanding the parameters of the project that the person has called about, and trying to, at least at a very high level, assess whether it is something that would potentially meet our criteria or not. That is very high level.

Senator KETTER: That does not necessarily require any forms being filled out. It could just be a telephone conversation.

Ms Walker : It could be just a telephone conversation. Then the question is whether there is a follow-up, and we are, at this stage, happy to be relatively informal with how proponents come to us with information. Initially, we had expected that proponents would come with it much more developed than we are finding they are. That is actually why we refined this process a bit after I came on board.

The second phase is what we call a 'strategic assessment phase', or stage. Again, if the client has some detail on their proposal we would look at it, and on our website we have outlined the sort of information that, if it is available, we would look at, but we are not requiring that of each proponent at that point, because it really is very variable as to the quality of the information that we receive from different proponents. The purpose of that strategic assessment stage is for the NAIF team to approach the board and to understand whether there are any reasons why they might not want us to proceed with due diligence. Then they formally say to us, 'It is all right to proceed to due diligence'.

The next state is that detailed due diligence stage, which I described before. That is when we would require, throughout that phase, the development of the very detailed due diligence. We would be looking to work with the other 50 per cent lender and, obviously, the equity investors, and if it is a project where there is also non-infrastructure components there would be more financial parties. We would work with all of those parties to identify what due diligence expert reports we require during that phase, and we would need to get comfortable with the contents of those reports.

Towards the end of that detailed due diligence phase a proponent would be asked to submit, if they wanted to, a formal investment proposal. That would be considered by the board, and the board would decide either to finance or not to finance. That is what is called 'an investment decision', under the mandate. That decision may be conditional upon documentation—it, in all likelihood, would be conditional upon that. A final investment decision would not be made until that documentation is finalised.

Also, there are rights of the state and territories and the minister to actually say to NAIF that they should not proceed with making the loan. Again, you need to have exhausted the time periods for that to happen before you get to a point where you then have conditions precedent to the loan and, finally, funding. I hope that has been helpful.

Senator KETTER: Thank you. On the last occasion, Senator Canavan advised us that there were 80 projects that had expressed an interest and one project had advanced to due diligence stage. If I read your opening statement correctly, there are four, nearly five, 'transactions', as you call them, at the due diligence stage?

Ms Walker : That is correct, yes.

Senator KETTER: The one that has strong prospects is still in the strategic assessment stage—is that right?

Ms Walker : No, there are four projects that are in due diligence and, as I said, we are expecting that there might be another one shortly. We think at least four have strong prospects of requiring NAIF finance and reaching financial close. There are a lot of gates that NAIF financing needs to progress through, but that is our expectation at this point. Of course, we are a gap financier, so, if the private sector or other financiers can fill the gap, then NAIF may have done its job by attracting other financing. But we expect that there will be NAIF finance.

Senator KETTER: You have helpfully given us a breakdown by sector and also by state of the number of inquiries that you have had. When you say you have had 100 inquiries, is that for that first-stage inquiry, preliminary assessment period?

Ms Walker : That is right, and that is tracking from NAIF's inception.

Senator KETTER: Can you break down the projects by federal electorate as well?

Senator CANAVAN: I think the difficulty is that, depending on the nature of the project, some could be quite large given the potential infrastructure. How about we take that on notice. There might be some construction we can place on that. We will see how we go.

Ms Walker : What I can say is that at the moment our pipeline does not take that into account, so we would have to do work on that.

Mr Lawson : A number of them are actually multijurisdictional let alone in a particular area.

Senator KETTER: Okay, please take that on notice.

Proceedings suspended from 21:21 to 21:32

CHAIR: We will resume with questions from Senator Ketter.

Senator KETTER: Ms Walker, could you give us a breakdown of the four projects that are in the due diligence stage, in the same way that you have done with the inquiry stage? How would you characterise those? I think we know that one is a pipeline.

Ms Walker : I have given you a breakdown at the very high level, because we obviously want to be as transparent as we can with the pipeline. But I think to break down four deals that are in due diligence would be revealing information about those transactions, and our protocol would be that we maintain commercial-in-confidence of what those projects are.

Senator KETTER: I am sorry; I said pipeline before. I think you told us that one of those four projects is a rail link.

Ms Walker : Yes.

Senator KETTER: So we know that.

Ms Walker : As I said, we have a protocol that has a very limited exception as to information that we can disclose, and we can on that one under our protocol. But I am not at liberty to reveal the others at this moment.

Senator KETTER: I am a bit confused as to why we can know one of those four but not the other three.

Ms Walker : As I said, our general protocol is that we regard all business information in relation to proponents—whether or not a proponent has approached us—as information that is commercial-in-confidence that can give signals to the market that are valuable. Perhaps when I respond on that other question—the question on notice—about why we wish to maintain commercial-in-confidence, that would be the way I would like to handle it.

Senator KETTER: Has there been a breach of protocol in relation to the rail link project?

Ms Walker : NAIF have not breached a protocol.

Mr Coffey : Senator, maybe I can answer that. Last year in estimates I answered that question and at the time that high-level information was released through my office and there was not a breach of protocol at that time. NAIF have a policy now that they treat that information as commercial-in-confidence and they will maintain that.

Senator KETTER: So there has been a change in policy?

Ms Walker : As clarification: on that particular deal, we had the consent of the proponent to acknowledge that they have expressed interest in approaching the NAIF. That is the information that I have made public.

Senator Canavan: While I am obviously not party to the protocols and policies of the Northern Australia Infrastructure Facility—and it is a matter for them—I only commented publicly on that particular project after speaking to the proponent and ensuring that they were comfortable with that. I have not sought to do the same with other projects, because there simply is not the same level of public interest. That is of course a judgement call on my behalf, but I am trying to be as open as I can. In fairness to Adani, while I am not here to talk to them, they have not tried to hide anything either. They are being completely open and upfront about their project. There will certainly be a lot of commentary on it and a lot of interest in it.

Senator KETTER: Moving to the gas pipeline applications, we know that there are five of those at least in the early stages. That is based on your statement.

Ms Walker : These breakdowns are of the 100 inquiries.

Senator KETTER: Okay.

Ms Walker : They will include the 47 active that are then in those stages from strategic assessment forward. I would need to confirm that, but that is my understanding. The five gas pipeline projects could be active or inactive at the moment.

Senator KETTER: At what stage are the active projects? Are they at the strategic assessment stage? Does that mean they have progressed?

Ms Walker : Four are in the due diligence phase and, as I said, we expect 11 or 12 more to be in the strategic assessment phase within the calendar year. So the others are still working through the process.

Senator KETTER: I was just asking about the gas pipeline applications. So you say that there are five amongst the 100 and we do not know how many gas pipelines are amongst the active, the 47?

Ms Walker : We do know that, but I am saying that the information that we are comfortable with sharing is at that high-level breakdown of the 100. In giving the jurisdictional split of the 47, I am not comfortable revealing below that level because I think that potentially reveals commercial-in-confidence information.

Senator KETTER: And the 13 transactions between December last year and 1 March? When you say 'transactions', do you mean preliminary inquiries?

Ms Walker : I am sorry if it has been confusing. That is a project in the pipeline. It could be at any of the stages.

Senator KETTER: I am finding it hard to correlate the terminology used in your opening statement with the four stages that you articulated in response to my first question.

Ms Walker : Whether a transaction is in the pipeline and whether it is in the 100 or the 47 or the 13, any one of those deals could be in any one of the five stages. The quality of information when projects—I use 'project' and 'transaction' probably interchangeably—come to us means that some of them will be better developed in terms of readiness for us to assess than others. And also, some of them will be less complex and require fewer approvals.

The speed with which a project can move through the stages will vary. There is no time line that you could use to say a project comes in at the inquiry phase and within X months it will be through the due diligence phase. That really depends on the complicity of the deal and the approvals that are required. There are a number of factors, and another one is clearly where the other financiers are in terms of how much of the overall project cost they can support. Then we determine whether there is a role for NAIF and whether there is a gap.

So it is not like a grants situation, where the process has a start date and you put your application in on a certain date, which will then be assessed on a certain date. It is quite flexible and it needs to be, just depending on the quality of the information.

Senator KETTER: I appreciate you are being helpful with the length of your answers, but I do have quite a few questions, so I will try to move my questions along.

Ms Walker : Apologies.

Senator KETTER: Moving to a bit more detail about the energy generation projects, you have indicated that there are 20 out the 100 inquiries. Is that the case?

Ms Walker : Yes.

Senator KETTER: Can you tell us the nature of those energy projects? Are they gas, renewable, coal-fired or all of the above?

Ms Walker : I do have that information, but at this point I would have to take it on notice. I do not have it with me at the moment.

Senator Canavan: We will take that on notice.

Senator KETTER: I have series of questions in relation to that. Are you able to say how many coal-fired power generation projects you are currently considering?

Ms Walker : No. I would have to take any more detail on notice.

Senator KETTER: If you are considering coal-fired power generators, when did you start progressing those applications?

Senator Canavan: We will have to take that question on notice as well, given that the premise goes to the previous question, which we did take on notice in terms of if there are any coal in the 20, but I am not aware of that. But your second question is redundant, so we will take that on notice.

Senator KETTER: Minister, on ABC radio, on 2 February, you said that you received interest over the past week associated with a commitment to build baseload power stations, including to support clean coal options. Have you referred any of those approaches to NAIF?

Senator Canavan: I have certainly had discussions with people, and I have indicated publicly and in discussions with others that we have a Northern Australia Infrastructure Facility that can take applications for energy infrastructure. As Ms Walker mentioned before, this is a proponent led process. So it is up to those potential investors to bring them forward to the NAIF. I certainly think coal has a huge future in the world, and there is no reason why we, in Australia, should not be looking at it as well, given that we are the world's largest coal exporter.

Senator KETTER: Ms Walker, are you aware of the interest that the minister has just told us about and have you received the follow-up inquiries from those parties?

Ms Walker : I think that was a question on notice I was going to take.

Senator Canavan: I should say too, for most of these investors, it is early days. I think, unfortunately, there has been a view that various Australian governments have not been supportive of the coal sector, but it is fantastic that we have a Prime Minister that has said loud and clear that we back the coal industry and we think it is a very strong and important sector for our economy. We still rely heavily, of course, on coal-fired power stations built years ago for our energy needs, and it is certainly an option that we should keep on the table going forward.

Senator KETTER: Ms Walker, I have a series of other questions here. I am just going to see how you respond to them to see how we go. Can you produce any documents where the minister, his staff, the department or the Office of Northern Australia have referred projects to NAIF?

Senator Canavan: We can take that on notice.

Ms Walker : Yes, I agree. Thank you.

Senator KETTER: Are you able to tell us how you have received or solicited coal-fired power proposals?

Senator Canavan: We will take that on notice as well, contingent on the other information to your previous questions.

Ms Walker : Yes.

Senator KETTER: Given that the minister is, at least on his own evidence tonight, talking about referring or encouraging proponents to come forward and go to NAIF, how can we be assured that the NAIF independence is guaranteed?

Ms Walker : I think you can be absolutely assured of that. We have an independent board that has been established to be just that, and they deliberate independently. The minister has no ability under our act to direct the NAIF board to support any particular project or individual, and the board will absolutely adhere to its obligations under the act. It is a—

Senator Canavan: Can I just add to that, too, that I support everything Ms Walker just said, but I do see it as part of my role to help promote the fact that we have a Northern Australia Infrastructure Facility that investors to this country should, certainly, be considering as an option. So I regularly, in discussions with businesses, investors and financial institutions, promote the government's policy on the Northern Australia Infrastructure Facility and encourage them to discuss with the NAIF any potential investments. I should add, I do that with the government-owned corporations as well in Queensland. I have made contact with many of those. It is not only the private sector that we are seeking to partner with. I think it is very important that we do that. We have received 100 expressions of interest or inquiries so far, but there is always more to do and I will continue to promote the NAIF.

Senator KETTER: I think you can appreciate that there is some concern when it is reported that you say at the Mackay Resource Industry Network luncheon that you want to make it clear that:

We back clean coal options…

and

… we will back investment in clean coal through our $5 billion Northern Australia Infrastructure Facility.

Senator Canavan: We will certainly back proposals being brought forward to it. As I said earlier, we will absolutely back those investors that are seeking to consider this as an option. There are—

Senator KETTER: It sounds like more than an option; it sounds like you are making a direction.

Senator Canavan: I dispute that characterisation. There is nothing that I have said to the NAIF or publicly to direct them in any way to support a particular proposal. I will seek proponents who are interested to seek out the NAIF for investments. I will also put on the record that I do have a role here, as the minister. While the NAIF makes proposals, under the legislation there is a role for the minister and I want to give confidence to the broader investment community that we, as a government, do not have some ban on coal-fired power stations. So, if there is a proposal that meets the requirements and is brought forward to me, I will obviously consider the specifics at the time, but there is no jihad from our perspective against these power stations. We fully support our coal industry.

Senator KETTER: Ms Walker, can you provide any correspondence or records of conversations from the minister, from his staff or the department to NAIF regarding the consideration of coal power projects?

Senator Canavan: Take it on notice.

Ms Walker : Yes, I would have to take it on notice.

Senator KETTER: Minister, have you or your staff or the department spoken to NAIF regarding your support for coal power?

Senator Canavan: I do not recall having specific discussions with the NAIF about individual projects, apart from the broader desire to get projects off the ground, including in all of these infrastructure areas. I will take on notice the broader elements in terms of my office and what have you.

Senator KETTER: It sounds like you are directing the NAIF through the media rather than directly.

Senator Canavan: As I said earlier, I absolutely see a part of my role as the minister for northern Australia as being to promote the north and to promote the government's policies on the north. Given that this particular proposal is one where we require private sector investment to succeed and to meet the objectives that we have set, publicity for the NAIF is important. Part of that is, potentially, through the media, but I must say that more of it is about individual discussions and meetings that I have with businesses and investors willing to invest in Australia but in the north as well.

Senator KETTER: Has your department passed on directions to NAIF as to which projects to prioritise?

Ms Beauchamp : The department has not passed on any directions whatsoever. The obligations that Ms Walker talks about are clearly set out in the act.

Senator KETTER: Ms Walker, is it a condition of the NAIF's lending that a project must be able to demonstrate commercial viability?

Ms Walker : It is a requirement. It is a mandatory requirement that the project debt that NAIF puts in needs to be able to be repaid or refinanced. In that sense, there is an element of commercial viability. But there are obviously options for the NAIF to put its debt on concessional terms, and, as I think I mentioned before, that could be longer tenor; it could be being patient as to when interest and principal is repaid; it could be where we sit in priority as to other lenders in terms of when we are repaid. Those options are there because a project may not be commercial in the short term but may be in the longer term, and that is really a major objective of our mandate.

Senator KETTER: Are you aware that the government's chief scientist, AGL, Origin, EnergyAustralia, Gina Rinehart and Trevor St Baker have all rejected building new coal-fired power plants?

Senator Canavan: I am aware. I obviously take a keen interest in this issue. I am aware. They are welcome to their views. I know of others who see things differently. As I have commented previously, I do not think that the government, or we, more generally, should set up a policy which allows a few—some of those companies you mentioned have direct involvement in the energy sector; not all do, but some—to somehow have a veto on future investments in energy, be it coal, renewables, gas et cetera. So we want to keep all options on the table. There are other people with different interests out in the world that may seek to apply here. I would also make this point as to the future viability of investment in coal—and I am talking here broadly, not about the Northern Australia Infrastructure Facility specifically but about the use of our resources in this country. The former Labor government under Wayne Swan commissioned a GHD study on different power options in North Queensland, and that study concluded that an ultra-supercritical coal-fired power station could be commercially viable. Obviously a lot more work has to be done before bringing any such project to market, but that was a very detailed report and it gives some indication that there is certainly the potential for investment in advanced coal technologies here in this country.

Senator KETTER: Ms Walker, you said that projects need to be commercially viable—I think I am not putting words in your mouth—

Senator Canavan: Correct me if I am wrong, Ms Walker, but I think you did give a characterisation of what was meant by 'commercial viability'.

Ms Walker : Yes.

Senator Canavan: Obviously that could mean different things to us, financers, ultimate owners of companies or investors who are putting in bids, so I think you have to be very specific about how you use the term 'commercial viability' in this context. Is that correct, Ms Walker?

Ms Walker : Yes.

Senator KETTER: Ms Walker, are you able to rule out financing coal-fired power under the NAIF?

Ms Walker : That is obviously a hypothetical question. I cannot rule out or rule in any particular project that would qualify and meet investment criteria, mandatory criteria and other conditions of the act.

Senator Canavan: Senator Ketter, we obviously expect the NAIF to implement the mandate and the legislation that has been given to them. That legislation was supported by us and the Labor Party as well. I recall that there were various amendments at the time put forward to exclude investment in fossil fuels. I welcome the fact that the Labor Party stood strong on that and did not accede to those, so there is no restriction on such investment under the legislation or the mandate.

I think it is unfortunate that since that time the federal Labor Party has given support to the idea that we can walk completely away from coal and desert the coal industry that employs thousands of people in this country, including many trade union members. Otherwise there has been bipartisan support for coalmining and the coal-fired power section in this country. It is unfortunate. The Labor Party will have to explain those decisions and positions. On this side of politics we back those thousands of jobs and we want to make sure we have a country that has affordable, reliable and increasingly environmentally-sustainable power.

CHAIR: I am channelling my inner Senator Macdonald tonight. These are questions he has passed onto me. He has directed them towards the minister but I suppose anyone on the panel can answer. The first is about the cost of transporting cattle in northern Australia. He would like to know whether the minister or the panel can advise what the government is doing to help alleviate that cost.

Senator Canavan: I will kick off, but Mr Coffey might make other comments. As part of the northern Australia white paper we put aside $100 million specifically to invest in beef roads, to tackle the high cost of transporting cattle in northern Australia. It can sometimes be up to one-third of the cost of the final value of a beast. There is a significant need for investment in these networks. Our program built off in some respects the original beef roads program introduced by the Menzies government in the 1960s. Many of those roads are still integral arteries across northern Australia.

I think it is fair to say that the level of demand outstripped the $100 million. There was huge and very keen interest in this program. I do commend the work of CSIRO in developing a transport model that could assess in detail the costs and cost savings of investing in certain roads on a per head of cattle basis. That helped inform the government's investment decisions, which were all announced late last year. There are some very important projects. I am from Rockhampton and we will be able to get type 1 vehicles through to the meatworks in Rockhampton and save hours of time. Trucks have to decouple at the moment. It is risky and dangerous too. A young fellow was tragically killed doing that decoupling a few years ago.

This is hugely important to northern Australia. It has been a great program. The work CSIRO has done will be a legacy in informing government decisions I am sure for future investment in the road network. Mr Coffey, do you have anything to specifically add?

Mr Coffey : Yes, Minister. There are 38 projects in total under both the Beef Roads Program and the Northern Australia Roads Program, right across northern Australia, with $700 million invested and, of course, leveraging state government contributions as well. We will see some significant transport put in place which will benefit the cattle industry and other industries in the north.

CHAIR: Terrific. Mr Coffey, you might have just answered Senator Macdonald second question which was about road connectivity in northern Australia and whether you could advise what the government is doing to promote road connectivity and the benefits that will flow from it.

Mr Coffey : Certainly. The methodology and the policy behind developing that north is about the movement of people and goods across northern Australia and for trade and investment. The north Australia roads package is an important part of that. It is about the key roads that we can improve so that we can open up land to enable the movement of goods and enable new industries to start up in those areas where we know there is prospectivity. We are also doing some water studies right across the north which links in with those. So it is not just about the roads; there is also rail and it is also about where there is prospectivity, whether it is with the water resources, the resources industry or other industry across the north. That is where the Office of Northern Australia comes in, to have a broad, overarching view and a strategic view about how these projects and initiatives are rolled out so that we can leverage the best outcomes in a strategic manner that is good for northern Australia.

Senator Canavan: I will just add that, in addition to the Northern Australia Roads Program and the Beef Roads Program, the government made a commitment at the last election to seal the Outback Way over the next decade. It is a major investment for our country. It will only be the third sealed road east-west across Australia. We had, through the Northern Australia Roads Program, $28 million in round figures, I believe, put aside for the Outback Way. I will correct the record if I am mistaken. The election announced a further $100 million for the Outback Way. It is an incredibly important project and builds on previous investments we have made on that road.

CHAIR: Thank you, Minister, and thank you, Mr Coffey. Senator Macdonald also asked about Townsville in the wake of the mining industry's transition. From the investment phase to the production phase, Townsville has been struggling to adapt and he wanted to know whether you could advise the government on whether the government has a plan to re-energise the Townsville economy.

Senator Canavan: Last year—I believe it was 9 December—a city deal was signed. It was the first city deal that the federal government has—

CHAIR: This is one of the pilot programs?

Senator Canavan: I do not know if it is characterised as a pilot, but it is in Mr Taylor's area of direct responsibilities. It is the first city deal we have signed, definitely, in Australia. It is great for Townsville's accolade. It includes the government's commitment to put in $150 million to upgrade the Townsville port. There are huge opportunities to develop that area. There will be further work done through the infrastructure financing unit to look at ways of unlocking the development potential at the port. There are the commitments the federal government has made on the Townsville football stadium, along with the state government, and the urban renewal that can bring to Townsville. At the time we flagged that we would be basing the Northern Cooperative Research Centre in Townsville. Subsequent to the Townsville City Deal being signed, we announced, early last week, an establishment board. It is open for business now and is taking applications as well. Senator Macdonald and you know—and Senator Macdonald knows well—the difficult experience Townsville has gone through in the last couple of years. I must say that from the last few times I have been up there—and I am there regularly—there is definitely an uptick in confidence, thanks to both the state and the federal government's focus on these needed investments, but there is also the resurgence in the coal sector, with commodity prices increasing, and the announcements made by Adani last year that they would base their headquarters in Townsville.

CHAIR: That is terrific news. Mr Coffey, do you have anything to add to that?

Mr Coffey : No.

CHAIR: Thank you very much. That was very comprehensive. Senator Bushby, you have got no questions—I should check before I turn back to Senator Ketter.

Senator KETTER: There is Senator Macdonald as well to some extent, and I will turn to consider Townsville. My questions will be more to the Office of Northern Australia for this sector and perhaps to Ms Beauchamp. Can you tell us whether the department has identified a location for the CRC in Townsville.

Senator Canavan: Given we announced it, the establishment board last week—I know a little about this but if there are further updates since then, Mr Coffey, you might like to provide, or Ms Beauchamp, additional information. We have established a board, and one of the things they will be discussing is, as is my understanding, is the location for the CRC in Townsville. I know that there are certainly interested parties at the moment with a view as to where that location should be. Neither the government nor I have a specific view apart from trying to ensure that the location helps the CRC maximise its ability to meet its objectives. I am leaving that up to the board. I do not know if they have been able to have any further discussions—I would doubt it at this stage.

Senator KETTER: Ms Beauchamp, has the department played a role in engaging with any potential land holders for the site of the construction of the CRC?

Ms Beauchamp : I would have to take that on notice from people from the CRC program.

Senator Canavan: We should add, I suppose, just to help Senator Ketter: I know that it is a little confusing but the cooperative research centre and the administration for it is in a different part of the department. The Office of Northern Australia oversee a variety of CRCs around the country. Obviously, I have an interest in the northern CRC but the officials will probably—

Ms Beauchamp : I just have not got the details—

Senator KETTER: So, Mr Coffey, did you have an involvement or have you been discussing any potential locations with landholders?

Mr Coffey : No.

Senator Canavan: As I indicated, Senator Ketter, various parties have approached me about different options. As I say, I think it is most appropriate for the board to consider that. They have been charged with meeting their objectives and would be best placed to make that decision.

Senator KETTER: The program was first announced in the 2013 election; I understand it was a commitment in 2013.

Senator Canavan: That is a bit before my time. I am not sure that is quite correct.

Ms Beauchamp : At the time of the northern Australian white paper—

Senator Canavan: It definitely was an announcement from the northern Australian white paper—I can say that. I might just have to take on notice. I cannot recall it being a 2013 election commitment. That is going back a fair way, but it was a commitment under the white paper. It is also the case that, before the announcement of the white paper, there was a group called originally AgNorth—and then growNORTH—a group separate to government but they were certainly formed and interested in establishing a CRC in the north. So there had been ongoing and some public commentary about the potential for a northern CRC prior to the white paper and, in anticipation of the government's agenda for northern Australia, but I do not think the government exactly committed to the funding and the CRC specifically, until that white paper. I will take that on notice and correct any of that—

Senator KETTER: That is my information—I could be wrong but I understand it was part of the 2030 Vision for Developing Northern Australia. From my perspective, we are four years down the track. You have a board now, but when are they going to move into their premises and start to work?

Senator Canavan: They are starting to work. We have opened applications for under what is called a CRC-P program. The details of that—as I say, the officials are not here, but it is open for business now. In terms of establishing a physical location, that is a matter for the board now but that does not stop them and officials in the department from starting to consider those applications and making decisions on them.

For accountability, Senator Ketter, I said publicly when we announced it last week that it has been frustrating that it has taken a little longer than we expected to get this off the ground. The characterisation, as we announced this in the white paper in mid-2015, was we were hoping to have it established by late last year. It has taken a few months longer than we hoped. We have been at pains to ensure that it is commercially focused, focused on industry and delivering results. It is a little bit different, I am advised, to some of the other CRCs we have established, so those complications have contributed to those delays. It is up and running now. It is open for business, and that is good news.

Senator KETTER: Can you tell me how many staff will be employed by the CRC—or is that a board decision?

Senator Canavan: I do not have those figures at my fingertips, sorry. It is not a large number of staff. The benefits of the organisation are definitely about the $75 million we have allocated to it, which we spent right across Northern Australia. From memory, just to try to be helpful—and I will put a contingency on it—I think it is less than 10. I might take that on notice and get back to you, Senator Ketter.

Senator KETTER: Senator Macdonald placed a photo on his Facebook page on 20 February—

Senator Canavan: Did you like it?

Senator KETTER: I did not like it. I never like anything!

Senator Canavan: That is a bit mean, Senator Ketter. I hope you did not want to use one of those angry faces either.

Senator KETTER: He said that he was 'At the launch of the Cooperative Research Centre for Northern Australia at JCU this morning.'

Senator Canavan: It is correct to say that we made the announcement at the tropical health centre at James Cook University in Townsville. The CRC is focused on agriculture, food and tropical health. We see those as core natural advantages for the Northern Australian economy. We helped, under the white paper, provide funds to establish the tropical health centre at James Cook University, so it was an appropriate location to make the announcement. It was great to catch up. The last time I had been there, it was not an operating facility—it had only just been opened—so it was great to see people in the lab working on a variety of tropical diseases and viruses. They are doing fantastic work. They have a great person there who has come up from Melbourne who is world-renowned in tropical diseases. She is over the moon and stoked to be working in a tropical area with the latest you-beaut equipment to work on these viruses. These viruses are obviously quite contagious, so there need to be quite-detailed and accredited medical facilities to contain them and do the research they need. That is why it was launched there. That is no indication about its future potential location.

Senator KETTER: Thank you for that. I turn to water issues in Townsville. Mr Coffey, I am not sure if you will be able to help me here, but what is your view of the impact of the lack of available water in the area and that there are level 3 water restrictions? What is the impact on the development of Townsville?

Mr Coffey : Under the National Water Infrastructure Development Fund, there are a number of feasibility studies going on around Northern Australia, and some near Townsville, to have a look at the water resources in the area for both agriculture and potable water. Those processes are occurring. Decisions will be taken once those feasibility studies are completed and further information is known about what is available, and the next steps will then be taken.

Senator Canavan: Responsibility for those feasibility studies is with the agriculture and water department, so detailed questions will have to be put to them. I just add that I am very well aware of the issues in Townsville. It is an issue raised consistently by businesses in Townsville—Townsville Enterprise Ltd. We have put aside funds for three different projects in Townsville to try to alleviate the situation. It has been frustrating that it has taken a little bit longer, in discussions with state government, to get those projects rolling. A number of them have started; I am pretty sure the ones in Townsville have—or have been agreed to by the Queensland government, I should say—but I would need to check that with the Department of Agriculture and Water Resources.

Mr Coffey : They have certainly all been agreed to.

Senator Canavan: They have been?

Mr Coffey : Yes.

Senator Canavan: Okay.

Senator KETTER: Can you tell us a bit more about those three plans?

Senator Canavan: Keeping in mind that it is not my direct responsibility, there is a study into the potential construction of the Hell's Gate Dam, which is roughly north-west of Townsville, on the Burdekin River; a study on the raising of the Burdekin Falls Dam wall; and the upgrade of the Haughton River channel. The last two are certainly connected projects. The Haughton River channel helps at least feed water from the Burdekin Falls Dam, and if we were to upgrade or lift the wall there would apparently be potential need for consequent upgrades to the Haughton River channel. There are a variety of views in Townsville about the best steps forward, but that is why we are doing these studies. Hell's Gate, if it were to be built, is a much bigger project than is needed for Townsville alone, so a component of that study is looking at potential options for that excess water to be used in agriculture or other industries.

Senator KETTER: To understand what you said before, Mr Coffey: am I correct in saying that the ONA does not itself have plans to address water shortages in Townsville?

Mr Coffey : No. The responsibility sits with the Department of Agriculture and Water Resources and of course the state government. They determine and make some of those decisions, but we will work closely with those jurisdictions and departments to ensure that development across the north can take place. If there are challenges and issues, then we will be talking to the responsible departments about those types of things.

Senator Canavan: And, just to be clear, the government certainly has a plan to help tackle the water situation in Townsville, but the responsibility for that is with the Department of Agriculture and Water Resources.

Senator KETTER: In terms of the development of those three plans we were talking about, you have said they are not directly within your jurisdiction, but can you tell us which groups have been engaged with in developing those plans?

Senator Canavan: I will have to take that on notice. I know there has been a role for Townsville Enterprise Limited in this process. I am not sure of the status of that. As I say, there have been some disagreements and delays in deciding on funding agreements with the Queensland state government. I believe they have only been resolved relatively recently, but I do not have the up to date details on hand. I will take that on notice, and we will probably have to consult with the department of agriculture for that answer.

Senator KETTER: On the issue of compulsory land acquisitions, what discussions have you had, Minister, with the defence minister, in your capacity as minister for northern Australia, about the availability of land for the Singapore defence site?

Senator Canavan: I have had a range of discussions with Minister Payne, and some of those have involved landholders directly, including in Rockhampton recently. Could you just be a little bit more specific? I have spoken to her on an ongoing basis here, and it has been a very high profile and contentious issue.

Senator KETTER: When did these discussions take place?

Senator Canavan: I have spoken to her quite a few times in the last few months. If I could try to round it down to be more specific, it was the week the Prime Minister of Singapore was here that I was first briefed about the proposals. I think it is very important to stress here that it was never a decision by government to compulsorily acquire land. There was a proposal by the Defence department to expand training areas, and Defence indicated that they may seek approval for compulsory land acquisitions under the Lands Acquisition Act, but the government had made no decision there. Back then, I was first briefed on those proposals. Not long after that, I visited Stanage Bay and the Shoalwater Bay regions to talk to some landholders and businesses. I made, before Christmas, two separate trips to North Queensland, one to Townsville and one to Charters Towers, to talk to landowners and the council there about the Townsville training field area. There was a meeting in Marlborough earlier in the year that was quite well attended. Then there were a range of other discussions resulting from that. As I say, it is bit hard to catalogue discussions I have had with the defence minister, because they have been very regular. I think it is important to put on the record that the government has listened to the feedback from the community. We have made a decision that there will not be any forced land acquisitions, because that is the feedback we got from people. The very principle and reason why defence had put these up as proposals was to go and consult and to talk to people. We have done that; we have listened, and we have acted.

Senator KETTER: Minister, did you receive briefings from the department or from the Office of Northern Australia about the potential impact of the loss of prime beef growing land in North Queensland on the economy if Defence acquired properties around Charters Towers and Shoalwater Bay?

Senator Canavan: No, I did not, because the Defence department had commissioned what is still an ongoing study. They have commissioned KPMG to do a full socio-economic assessment of any expansion of the training facilities. Clearly, we were waiting on that advice, and now the government has made a decision to not proceed with forced land acquisitions, based on the community feedback, but not on that study, because it has not been completed. It is a matter for the Defence department. My understanding is that the study is continuing. They have recently have done consultations in the region, and that will obviously be something that is factored into the Defence department's final decisions on what will now be voluntary land acquisitions in Shoalwater Bay Training Area and Townsville Field Training Area.

Senator KETTER: Are you saying that neither the ONA or the department have made any assessment of the impact on the North Queensland economy of the loss—

Senator Canavan: I am not in the business of duplicating work unnecessarily. This is the Defence department's decision, and they have commissioned appropriately qualified people to make those judgements and decisions, and I was awaiting that advice.

Senator KETTER: Are you saying KPMG are performing that function?

Senator Canavan: As I said, you will need to direct those questions to Defence to get an up-to-date assessment of where that is at, but they have very recently—I know in the last few weeks—been discussing this and taking submissions from people. I presume that project is ongoing regardless of the decision the government has made recently about land acquisitions.

Senator KETTER: Minister, are you aware of any other options other than the land that was previously earmarked for compulsory acquisition?

Senator Canavan: Yes, I am. I mentioned trips particularly to the Charters Towers region—there was a group of landholders that were putting forward an option I believe west of Pentland, a town west of Charters Towers. It was a property apparently on sale—I cannot attest to it myself—but that was something that was put forward to the defence department and they had agreed to have a look at that. Again, you will have to check with them on the latest status but the last time I checked they were still looking at that option. To answer your question fully, there was a range of other options put by different people around the country, and I often did talk to Defence about the relative merits of those or otherwise. They would obviously put forward their proposals based on their assessments.

Senator KETTER: Is this the property which I understand is known as Longton?

Senator Canavan: I could not tell you. I would have to take that on notice. It is a matter for the defence department.

Senator KETTER: Are you aware of a proposal for Defence to acquire this property at Longton?

Senator Canavan: I am not aware of the name of the property.

Senator KETTER: It is south of Charters Towers.

Senator Canavan: It might not be the same one because Pentland is west of Charters Towers. I am aware, basically, of what I have just disclosed previously—that is the extent of my knowledge on those. I have referred them to the defence department. They are the ones charged to do the detailed assessment.

Senator KETTER: You have alerted the defence minister to—

Senator Canavan: And that was a while back now. I should say, I think Defence were aware of those proposals as well because they had been in constant discussion with the same landholders I was talking to.

Senator KETTER: Can you tell us what was defence minister's response to these other options?

Senator Canavan: As I said previously, the defence department, the defence minister, agreed to look at them.

Senator KETTER: Do you know whether they have actually, at this stage, examined the proposal?

Senator Canavan: I am not aware of the latest status of those assessments.

Senator KETTER: Is the minister aware that in February the member for Leichhardt wrote to the Minister for Defence suggesting that land near Weipa and RAAF Scherger be used instead of land at Shoalwater Bay and at Charters Towers?

Senator Canavan: I would have to check and take on notice whether I received a copy of that letter, but I was aware of those reports and others have put forward the Scherger option. I have raised it with Defence. They had a particular view on that option. I think it is appropriate for them to provide you information on their view on it. You will have opportunities to put those questions directly to them. Yes, I was aware and I did talk to Defence about them.

Senator KETTER: Have you urged the defence minister or the defence department to consider that land near Weipa, as suggested by the member for Leichhardt?

Senator Canavan: All I can say is that I did discuss that with them. I very much respect the Australian Defence Force. I think the advice they give to both the defence minister and to all of us here in parliament is well informed from a defence perspective—that is their expertise—and I take it on board seriously. I do not know all of the specifics but I know they looked at a range of options around Australia for these expansions. They chose, as their preferred options, the Townsville Field Training Area and Shoalwater Bay. I know Shoalwater Bay very well given my proximity to it. It is a world-class training facility and provides potential and training options that other parts of the country just cannot match. I think the proposals the defence department put forward are perfectly understandable, but I am not a military training expert and, while I am clearly very interested in those proposals and have had a lot of discussions with Defence about it, at some point you have to sit back and trust the experts on these matters.

Senator KETTER: I will just come back to Ms Walker, because I want to understand a bit about the expenses and costs associated with the running of NAIF. First I will ask: how much is each member of the board paid?

Mr Coffey : That is probably a matter for me. The payments for the board were set by the Remuneration Tribunal. The chair received $146,960 per annum. The directors do vary for various reasons: Barry Coulter, $43,825 per annum; Justin Mannolini, $63,840 per annum; Khory McCormick, $56,150 per annum; Sally Pitkin, $63,840 per annum; Bill Shannon, $71,520 per annum; and Karla Way-McPhail, $56,150 per annum.

Senator KETTER: Thank you for that. Are members of the board eligible to receive bonuses for performance or for any other reason?

Mr Coffey : There are additional payments available if they are on particular audit committees. Members appointed to audit committees are entitled to $7,690 per annum. And the chair of the audit committees are entitled to $15,370 per annum. The chair will also receive an additional loading of $34,000 per annum until 30 June 2017. And Mr Coulter has a particular arrangement where he receives an annual fee in lieu of other amounts, due to the fact that he is a former member of the Northern Territory parliament.

Senator KETTER: Can you tell us about travel? How much was spent on travel by each member of the board?

Ms Walker : I would have to take that on notice. I have an aggregated number. I do not have it for each member of the board. But I can provide that.

Senator KETTER: Okay. Thank you. Can you tell us how many trips each member of the board claimed an expense for how. How many full-time employees does NAIF employ in total?

Ms Walker : We have eight full-time equivalent. Three of those are seconded from Efic, and five are NAIF direct employees, and that includes me.

Senator KETTER: Do you have any teams within NAIF—for example, communications, media?

Ms Walker : We have access to the whole of Efic, as I mentioned before. If we wanted to hire consultants, we could do that. But we do not have that within NAIF.

Senator KETTER: So you do not have teams as such?

Ms Walker : I thought you said 'communications'. Sorry.

Senator CANAVAN: I think he did, but—

Senator KETTER: Just to use that as an example. Do you have a communications team or other functional teams within NAIF?

Ms Walker : We have origination specialists and we have execution specialists. Then we have shared services that we access from Efic, across all the range of the other services that we require. We have chief of staff as well. And we have ongoing recruiting.

Senator KETTER: So you are continuing to recruit to a particular target?

Ms Walker : Yes.

Senator KETTER: What is the objective?

Ms Walker : The total objective?

Senator KETTER: Yes.

Ms Walker : I think we would like to recruit a further two originators and I think three or four more execution staff directly into NAIF.

Senator KETTER: Are there any current vacancies in NAIF? You said you are recruiting.

Ms Walker : Yes. We have searches underway. So, yes, there are currently positions that we would be looking to fill. But, as I say, we have access to the full resources of EFIC and we have access to other resources in the market on an as-needs basis.

Senator KETTER: When you come back to me, can you tell me how many board meetings each board member has attended or missed?

Ms Walker : Yes, I can do that.

Senator KETTER: And how much was spent on office fit-outs for the NAIF headquarters?

Ms Walker : I do not have that information, but we could take that on notice.

CHAIR: Senator Ketter, it is 10.30. I am just wondering whether we could potentially move on. If there any further questions, we might be able to put them on notice.

Senator KETTER: Yes. Thank you.

CHAIR: Thank you very much then to the Office of Northern Australia and to the Northern Australia Infrastructure Facility.