NAIF Act and Investment Mandate
NAIF is facilitated by two core legislative instruments:
- The Northern Australia Infrastructure Facility Act 2016 (NAIF Act) which was passed in 2016 with bipartisan support. The NAIF Act was amended in 2021 to extend NAIF’s operation until at least 2026 and provide a broader range of investment tools to NAIF to support the economic development of Northern Australia.
- The Northern Australia Infrastructure Facility Investment Mandate Direction 2021 (Investment Mandate) is made under the NAIF Act and guides the investment strategy of NAIF. The Investment Mandate was updated in 2021 to support the amendment of the NAIF Act.
NAIF has an independent Board of Directors, which is responsible for making all Investment Decisions in accordance with the NAIF Act and the Investment Mandate.
1) NAIF Act
The object of the NAIF Act is to establish NAIF to provide financial assistance to the States and Territories, and other entities, for the development of Northern Australia economic infrastructure.
Following reforms to the NAIF Act in 2021, NAIF may provide a broad range of financial assistance to infrastructure proponents in Northern Australia including:
- Project finance loans
- Corporate finance loans
- Equity investment up to $50m per project
Since the 2021 reforms, NAIF may in certain circumstances have a choice to provide financial support either directly to the proponent or through the relevant State or Territory government.
Each of these financing mechanisms must meet the requirements of the NAIF Act and the Investment Mandate, such as satisfying the public benefit test, demonstrating indigenous engagement outcomes, and being located within the NAIF jurisdiction of Northern Australia.
NAIF may offer loans on concessional terms, having regard to:
- the extent and mix of all concessions necessary for the project to proceed; and
- the extent of the project’s overall public benefit.
Concessions can include:
- longer loan tenors;
- lower interest rates;
- extended periods for interest capitalisation beyond construction completion;
- deferral of loan repayments or other tailored repayment schedules;
- lower or different fee structures to commercial financiers; and
- equal or lower ranking security than commercial financiers.
NAIF’s jurisdiction includes all of the Northern Territory, and those parts of Queensland and Western Australia above and directly below or intersecting with the Tropic of Capricorn.
It also includes the regional centres of Gladstone, the Gladstone Hinterland, Carnarvon and Exmouth, as well as the Local Government Areas of Meekatharra and Wiluna and the Shire of Ngaanyatjarraku in Western Australia. Territorial seas up to twelve nautical miles offshore adjacent to these areas are also included in the definition.
Projects do not need to be entirely within the boundaries of Northern Australia if they produce significant benefits to NAIF’s jurisdiction. For example, a project that enhances north-south connectivity may be eligible.
The NAIF Act establishes an independent NAIF Board of Directors which consists of the Chair, between four and six other members, and one representative from the Commonwealth government. Functions include:
- to decide, within the scope of the Investment Mandate, the strategies and policies to be followed by NAIF;
- to ensure the proper, efficient and effective performance of NAIF’s functions; and
- any other functions conferred on the Board by the NAIF Act.
Members of the Board are appointed by the responsible Minister. Members are appointed on a part-time basis for a period up to three years. The NAIF Act outlines the experience or expertise an individual must have to be eligible for consideration for an appointment.
The Commonwealth Ministers responsible for NAIF are the Minister for Northern Australia and the Minister for Finance. The Department of Infrastructure, Transport, Regional Development and Communications supports the Ministers in this role.
The responsible Ministers’ legislative responsibilities for NAIF include:
- issuing the Investment Mandate (both Ministers);
- appointing NAIF Board members (the Minister for Northern Australia); and
- considering Investment Decisions (the Minister for Northern Australia).
Once NAIF makes a final Investment Decision to offer financial assistance to a particular project, it must inform the responsible Minister. The Minister has a 21-day consideration period which can be extended to 60 days.
During the consideration period the responsible Minister may provide written notification to NAIF that financial assistance is not to be provided to a project. The Minister may reject the proposed financial assistance only if providing the financial assistance would:
- be inconsistent with the objectives and policies of the Commonwealth Government; or
- have adverse implications for Australia’s national or domestic security; or
- have an adverse impact on Australia’s international reputation or foreign relations.
If the Minister issues a rejection notice, NAIF cannot progress with offering financial assistance to the project.
The responsible Ministers are required to give directions to NAIF about the performance of its functions and these are outlined in the Investment Mandate.
The Investment Mandate does not direct NAIF to provide financial assistance for the construction of particular infrastructure or in relation to a particular person. All decisions regarding financial assistance are the responsibility of the independent NAIF Board.
The Investment Mandate provides direction as to what constitutes infrastructure. It provides for infrastructure such as physical structures, assets (including moveable assets) or facilities which underpin, facilitate or are associated with:
- the transport or flow of people, goods, services or information; or
- the establishment or enhancement of business activity in region; or
- an increase in economic activity in a region, including efficiency in developing or connecting markets; or
- an increase in population.
The Investment Mandate provides examples of the types of Projects that NAIF can invest in. These include energy and communications networks, ports, airports, rail, roads, water, social infrastructure (including health facilities, education facilities, research facilities, training and related accommodation facilities) and processing facilities (including abattoirs and agricultural processing plants) and transhipment vessels.