Budget 2015: Plenty of takers for northern loan fund

A rail link between Mount Isa and Tennant Creek and an expansion of the Ord River scheme are among ideas laid out for a new northern loan scheme.

A rail link between Mount Isa and Tennant Creek, expansion of the Ord River irrigation scheme and upgrades to the Hann Highway are among ideas laid out for a new $5 billion northern development loan scheme leveraging the commonwealth’s balance sheet.

Joe Hockey announced the headline measure in Tuesday night’s budget. The Northern Australia Infrastructure Facility will be targeted at projects likely to generate returns not sufficient to attract full commercial funding.

The commonwealth will not choose projects to be brought forward, but will assess applications.

The government has budgeted a cost of $1 million in 2015-16, $327m the next year and $800m over the forward estimates. The money will cover the difference between the concessional interest rate offered to borrowers and the commercial cost of the loan.

A spokesman for the Treasurer said terms would be set with the aim of recovering the commonwealth’s borrowing costs, thus giving the scheme a net zero cost in the long term. The aim is to give state and territory governments and the private sector access to capital to build “productive infrastructure” at the lowest possible borrowing costs.

Northern Territory Chief Minister Adam Giles welcomed the “fantastic” loan scheme, but said yesterday it was unlikely the Territory would borrow directly due to the size of its existing debt load.

“We are already putting forward money to model up a potential rail line between Tennant Creek and Mount Isa,” he said. “There’s no dams under serious consideration.”

The cost of the rail link is still being assessed. Mr Giles also suggested a marine industry park likely to cost “hundreds of millions” near Darwin port, which the government is moving to privatise, and sealing the rugged Tanami Track for about $290m.

West Australian Premier Colin Barnett also welcomed news of the new loan facility, predicting it could be used to fund road upgrades and increased storage capaci­ty for the Ord River dam at Kununurra, a longtime goal of his and state government partners the Nationals.

But Queensland’s Labor government and local councils were more cautious. State Treasurer Curtis Pitt said north Queensland could be the “engine room’’ of state economic growth and needed investment, but expressed concern that Mr Hockey was only offering loans and not new money.

“An upgraded Hann Highway and the proposed Nullinga Dam would be good starting points for Mr Hockey if he was serious about north Queensland infrastructure,’’ Mr Pitt said. “Townsville Stadium is another perfect example — yet so far Mr Hockey has refused to match Queensland Labor’s $100m commitment to help fund it.”

Several billion dollars in infrastructure investment, mooted for north Queensland by the former Newman government under its proposed privatisation of the electricity network, was scrapped under Labor’s campaign platform.

Mr Hockey’s spokesman said Queensland’s controversial Galilee basin coal projects could qualify for NAIF investment.

Additional reporting: Paige Taylor