Reviewing the NAIF Act – filling the investment gap

Introduced in 2016 with bipartisan support, the Northern Australia Infrastructure Facility Act 2016 (Cth) (the Act) established the Northern Australian Infrastructure Facility (the NAIF), which was intended to provide financial assistance to infrastructure projects in Northern Australia. Eight years later, it is time for another review of the Act and the continued operation of the NAIF.

Reviewing the Act

The Australian Government has commenced a review of the NAIF that will occur over the next 5 months. One of the mandatory considerations of the review is whether the time limit of 30 June 2026 for making decisions to provide financial assistance should be extended.

The review is a requirement under the Act and will seek to re-align with the strategic objectives of the Northern Australia Action Plan and make recommendations to the Australian Government on how to support investment that delivers economic and community benefits to Northern Australia. The review will also seek to set the strategic direction for investment and growth in the region. This is the second statutory review of the Act following a review in December 2020, which recommended that the investment window of the NAIF be extended until 30 June 2026.

Minister for Northern Australia, Madeleine King, noted that ‘the review is an important opportunity to explore the role of the Australian Government’s $7 billion loan facility and how it can contribute to government priorities in the national interest, such as the Critical Minerals Strategy and our Future Made in Australia agenda’.

NAIF currently has a portfolio of about 32 projects which range from large-scale critical minerals and energy developments to agriculture, aquaculture, health and social infrastructure, like new university projects and airport upgrades. Following reforms to the Act in 2021, the range of financial assistance the NAIF could provide was extended to include, by way of example, project finance loans and equity investments up to $50m per project. The geographical focus of the NAIF includes all of the Northern Territory and those parts of Queensland and Western Australia above or directly below or intersecting with the Tropic of Capricorn. The intention of funding these projects is to drive public benefit and population growth, advance local businesses and communities in Northern Australia, and materially improve the lives of First Nations people.

Many of the projects that have been funded by NAIF require funding to fill the gap where commercial funding was not available to the projects because of decreased appetite to fund in a particular sector or in respect of a particular project. Accordingly, it has assisted in filling a necessary gap in funding Northern Australian projects in a range of sectors.

One of the conditions to funding is for a proponent to have an Indigenous Engagement Strategy which has to date ensured that over $49 million has been spent on indigenous procurement in support of projects.

What’s next?

The report to the Australian Government is expected to be delivered in December 2024 and the Independent Panel is encouraging public submissions to inform the Review.

You can view the Discussion Paper and provide a submission at: Have Your Say - 2024 Review of the Northern Australia Infrastructure Facility Act 2016.

The December 2020 review ultimately resulted in the operation of the NAIF being extended and broadened the scope of financial assistance available. The Australian Government forecasts that the NAIF portfolio will generate more than $33 billion in economic impact and more than 18,000 jobs across Northern Australia.

Given the social and economic importance of the Act and NAIF, it is paramount that submissions be provided to the Independent Panel.