The drift to protectionism in Australia continues, with the Turnbull government lining up to breach its election promise and prop up the Carmichael coal mine project with a concessional loan from its Northern Australia Infrastructure Fund.
Despite saying during the election campaign that there was no public funding in the project, run by corrupt Indian company and Australian political donor Adani, the path is being cleared for a concessional loan for half the cost of the rail link that is critical to the white elephant project (that the rail line isn’t the mine itself is a distinction without a difference — especially any financial difference for Adani). Prime Minister Malcolm Turnbull, who has already met with Adani owner Gautam Adani to discuss special legal protection for the project, is meeting with the billionaire again today. The company has had difficulty raising finance for the project, but many of its capital problems would be solved by a government loan at below-market rates for part of a $2 billion (at least) rail line that the market sees no viability in.
[Government gets it part-right on submarines]
Meantime a number of coal mines remain on sale in eastern Australia, with Wesfarmers only the latest to put its coal mines on the block.
Trying to lure a multinational company to operate an unviable project with a concessional loan is straight from the protectionism playbook — as is the tiny number of jobs that a $1 billion loan would support: the company itself has been forced to admit it would create just 1460 jobs — so the loan would mean around $680,000 per job. Admittedly that’s a figure dwarfed by the staggering expenditure of millions per job in the submarine project, and the ostensible loss to taxpayers would simply be the difference between the loan rate and the market rate. But what happens when the mine becomes unviable and is shuttered or sold — does responsibility for repaying the loan fall to the new owner or stay with Adani? Or will it be written off by the Commonwealth?
The Palaszczuk government, it should be noted, is also an enthusiastic, though non-financial, supporter, of the mine, having cleared the way for the project through planning and environmental processes.
[Keane: neoliberalism is fine, but what we have is crony capitalism]
To add insult to policy injury, the government will be committing $1 billion on a rail line for a white elephant at a time when there are regular calls for greater government investment in genuine infrastructure projects that would generate economic benefits well in excess of their cost. Given the alarming fall in public infrastructure spending under the Abbott government, misallocating $1 billion to a rail line to a large hole in the ground is a particular waste — even the “rail line to nowhere” Inland Rail project will at least benefit some agricultural producers.
Adani’s donations to and dealings with the government smack of the crony capitalism that has been such a hallmark of this government and is effectively a business version of the union-driven manufacturing protectionism of Labor, in which the key sectors of party allies receive favoured treatment unjustified by any rational policy analysis. As Australia retreats into handout-based protectionism, the cronies from all sides will be queueing up for their piece of the action.
I usually disagree with your articles on protectionism and I’m sure I will again – if protectionism keeps several thousand people employed it passes my cost benefit/ rational policy analysis- but I agree with you this time, Bernard.
“…if protectionism keeps several thousand people employed it passes my cost benefit/ rational policy analysis…” Obviously “rational” is there for comedic purposes, Mr Chaplin, but why do you have the word “cost” in this mantra, given that you just ignore it?
All too sadly true Bernard, but isn’t that the nature of Australian economic policy? Billions on submarines, the purpose of which is profoundly unclear. Billions on the F35 fighter that has yet to fly successfully, will defend us from no-one and could only be used, if ever, in yet another illegal war on behalf of the Americans.
You might have noted however, that Adani are said to be basing their operations in Townsville, which just happens to be a seat taken by Labor in the last election with a single figure margin.
For less than 2000 jobs we are willing to risk damaging the Great Barrier Reef which provides over an order of magnitude more jobs? Doesn’t anyone in government think that is stupid or do they all believe that accidents wont happen, the company will behave responsibly and global warming is a myth? If they do, I have a bridge to sell to them.
Imagine how Australia’s renewable energy industry would flourish if such generous loans & conditions were channelled into it.
And the energy jobs would be long term unlike those generated by the hole-digging Adani. Are our politicians actually becoming dumber?
Old technology at the cost of new. That’s an innovation agenda if ever there was one?
Who’s writing the donor cheques?
Need to keep your eye on the ball with this Adani operation. Just last month Adani announced a 200MW solar farm to be built next year at Moranbah (vaguely in the vicinity of the Carmichael mine) – a very big distraction. But also on the horizon, right next to Adani in the Galilee Basin, is another monster mine, China Stone (possibly connected to GinaR) which will use the same rail and port facilities. It’s well advanced in the EIS process and proposes a new on-site coal-fired power station. Not that far away, to the south, is yet another already approved monster mine, China First, in the Clive Palmer stable – in case you thought Clive and Waratah had disappeared off the radar. So keep your specs on and your eyes open because there’s big money, big politics and big environmental impacts getting runs on the board this Christmas out in the boonies way west of Mackay.
Wow, that is all mind boggling. I had not kept my eye on this project lately, as I thought that the company could not raise the money and therefore it would not happen, bit like our pulp mill in Tasmania. How wrong can you be.
With such a dearth of willing financiers, I suppose it will be left up to us to stump up to back-fill that void?
What’s one more Turbott non-core promise?
I can see $100 million being spent on Landcare projects on the properties that the rail line passes through – in case the compensation packages from the Queensland government aren’t adequate. Have you noticed that the Galilee Basin is mostly located east of the Great Dividing Range on or near the Belyando River which is ultimately in the Burdekin River catchment – flowing out to the GBR. Nice eh? Nicer still, these super mines will demand state government guaranteed water licences drawing from the catchment that fills the Burdekin Dam. That dam is the (only) fallback water supply for the city of Townsville (180,000+ residents) which is about to go on to Level 4 water restrictions because its current reservoir (Ross River dam) is heading for 10%. A failed wet season will see Townsville in dire straits. But imagine if we have another ‘millennium’ drought in a few years time, the Burdekin Dam gets low on water and Townsville has to compete with the coalmines for essential water supplies. Oh dear. Unfortunately we can’t drink coal.
Not yet.