The Federal Government has announced its changes to the $5 billion Northern Australia Infrastructure Facility (NAIF) to make it easier for projects to obtain financial backing from Canberra.
The move, announced by the Resources and Northern Australia Minister Matt Canavan, was in response to the slow pace of dispersement. So far, only one project in Western Australia has been funded to the tune of $16 million, while 17 others are in due diligence and execution stages and another 90 inquiries in the pipeline.
The following changes will now apply to NAIF:
- The $50 million threshold has been abolished, allowing smaller infrastructure projects to apply for financing.
- The definition of “infrastructure” has been broadened beyond road, rail and similar projects to also include supplies, services and facilities which are essential to establishing business in remote regions. In the words of NAIF CEO Laurie Walker, “This includes for example food or other agricultural or resource processing plants and supply chain operating assets.”
- The 50 per cent cap on NAIF debt financing has been removed and so the Facility can now lend up to 100 per cent of the debt for an approved project.
Previously, at least 50 per cent of a project had to find private funding before NAIF would step in with its financing. The idea behind the requirement was to ensure that the Government did not bear the full financial risk of the project, but it has proved to be difficult to achieve in practice, and so now the NAIF Board will instead have a greater responsibility in diligence and risk assessment of potential projects.
NAIF has been in existence for nearly two years of its five-year term and the Government clearly wants to speed up approvals. Says Minister Canavan, “We have already funded $700m worth of roads, including building the inland link between Cairns and Melbourne, the Hann Highway, and the really important beef roads such as the Alpha to Clermont link that’s starting in the next couple of months. These things are happening now.”
If you want more information about NAIF or any other potential sources of government funding for your project, make sure you get in touch with us – we would love to help you.