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Legislative Reporting

Ministerial Directions

The NAIF Act is structured in such a way as to maximise NAIF’s operational independence particularly with respect to Investment Decision making. The responsible Minister gives NAIF direction through the NAIF Investment Mandate.

In addition, the Minister has provided NAIF with a Statement of Expectations which outlines in a formal and public way the Minister’s expectations on the operation and performance of NAIF beyond that considered by the legislative framework. The NAIF Chair has provided the Minister with a Statement of Intent outlining how NAIF will direct its operations to meet the Minister’s and Government’s expectations.

Legislative Review of the NAIF Act

Section 43 of the NAIF Act requires a review of NAIF’s operations to occur as soon as possible after 1 July 2019. This review was required to cover among other things:

  • whether the time limit of 30 June 2021 for making decisions to provide financial assistance should be extended; and
  • appropriate governance arrangement for NAIF after that date.

This review has been ongoing throughout the reporting period, however on 17 July 2020 the responsible Minister announced NAIF’s extension for a further five years to 30 June 2026, which is subject to finalisation of legislation. The broader statutory review is still underway with outcomes expected to be announced before the end of the calendar year.

ANAO Performance Audit of NAIF

In April 2019, the Australian National Audit Office (ANAO) tabled its audit report with six key recommendations to improve the effectiveness of NAIF’s governance and integrity framework.

NAIF has undergone a wide-ranging change program, including initiatives to enhance the operational and governance support of NAIF’s growing investment activity. These initiatives will address the ANAO findings and key recommendations.

The NAIF Board has appointed an independent firm to monitor progress in addressing the ANAO recommendations and report back to the Board.

The change program is well underway with most of the initiatives outlined below in table 18.3.1 now completed. The appointed independent firm is expected to report to the Board on the outcomes from the initiatives and whether the ANAO recommendations have been substantially addressed, by the end of the calendar year.

Progress against ANAO Recommendations

ANAO Recommendations

Initiatives

Publish Investment Criteria

NAIF publish criteria and all information necessary for applicants to submit complete applications for grants of financial assistance.

  • Refreshed functionality and content of NAIF website.
  • Improved collateral including updated fact sheets that clearly and succinctly describe NAIF’s financing proposition.
  • Improvements to information provided to proponents at the initial investment review stage.

Information Governance

NAIF develop an information governance framework, electronic data and records management system, and appropriate records disposal authorities in line with National Archives of Australia requirements.

  • Records and Information Policy.
  • National Archives approved NAIF Records Authority.
  • Formation of an Information & Records Governance Committee.
  • Implementation of SharePoint document management system.

Demonstrate Investment Impact

NAIF publish more information about decisions, public benefit assessments, environmental assessments and Indigenous engagement strategies.

  • Board approved Communications Plan and Stakeholder Engagement Plan.
  • Website content upgraded to include case studies for each Board approved Investment Decision.
  • NAIF strategic objectives, Corporate Plan and Annual Report all have a clear focus on the positive impact and outcomes of NAIF investment activities.

Non-Official E-Mail Accounts

NAIF cease the use of all non-official email accounts and servers to conduct official business.

  • Non-official email accounts are no longer used for NAIF business.

Consistent and Transparent Rationale for Decision Making

NAIF select projects at each assessment stage on a consistent and transparent basis in accordance with published criteria, and retain adequate documentation to record the rationale for decisions made and actions undertaken.

  • Redesign of NAIF investment assessment and approval process for greater clarity to project proponents.
  • Updated internal processes to streamline investment origination, approval, execution and portfolio management functions.
  • Establishment of a formal Investment Review Group to review investment proposals and ensure consistent approach to decision making.
  • Updated formats of NAIF investment proposal papers and Board resolutions to ensure consistent and documented rationale for investments.

Performance Management

NAIF revise its performance measures and targets to provide clearer accountability and transparency in the measurement of its performance, and measure and report on the realisation of public benefit.

  • Corporate KPI’s, as published in the Corporate Plan for both 2019-20 and 2020-21 drive accountability in NAIF performance against its strategic objectives, including public benefit outcomes.
  • Board approved Performance Management and Development Policy, including half-yearly staff performance reviews.
  • Quarterly dashboard reporting to ensure accountability and monitor achievement of 2020-21 Corporate KPI’s.

NAIF Act - Section 42 Reporting

For the purpose of s42 of the NAIF Act NAIF reports as follows.

  1. Investment Mandate changes: There were no Investment Mandate changes during the period.
  2. Summary of proposal notices given to the Minister: NAIF must give the responsible Minister a written proposal notice under section 11(2) of the NAIF Act for each project on which it proposes to provide financial assistance. NAIF provided notices for the eleven Investment Decisions made by the NAIF Board between 1 July 2019 and 30 June 2020.
Summary of Proposal Notices

Proponent

Jurisdiction

Project

Max. value of NAIF Investment Decision

Genex Power Ltd

Near Einasleigh, Qld

Kidston Project (Stage 2) - pumped storage hydro project with integrated solar project. Reuses existing mine pits for storage of power.

$610m

Signature Onfarm Pty Ltd

Clemont, Qld

Greenfield on-farm specialist service beef processing facility.

$25m

Australian Aboriginal Mining Corporation Pty Ltd

Pilbara region, WA

Metal ore mining

$12.5m

Metro Mining Ltd

Western Cape York, Qld

Expansion of existing Bauxite Hills Mine

$47.5m

Cowboys Rugby League Football Ltd

Townsville, Qld

Townsville Community Training and high-performance centre

$20m

Northern Territory Government

Darwin, NT

Darwin Ship Lift and Marine Industry Project

$300m

James Cook University

Townsville, Qld

Construction of a student accommodation facility in Townsville JCU Campus

$46m

Mater Health Services North Queensland Ltd

Townsville, Qld

New multi-deck carpark at the Mater Hospital’s Pimlico campus

$19.75m

Kalium Lakes Potash Pty Ltd[1]

Beyondie (Pilbara), WA

Beyondie sulphate of potash project

$10.5m

Strandline Resources Ltd

North of Geraldton, WA

Coburn Heavy Mineral Sands Project

$150m

Charles Darwin University

Darwin NT

Transfer of Significant portion of CDU's existing Casuarina Campus to the Darwin CBD

$151.5m

[1] This includes an Investment Decision to offer Kalium Lakes project an $10.5m contingency facility to ensure that the project would have the best chance of progressing if their proposed equity raising was not fully subscribed. Due to a successful equity fund raising, this facility was not ultimately needed by Kalium Lakes and therefore it is not included in the NAIF commitments $ amount

c. Summary of rejection notices by the Minister: There were no rejection notices from the responsible Minister during the period.

d. Summary of projects for which financial assistance was approved during the period: Table 18.4.2 below provides a summary of each project supported by an FY19-20 Investment Decision.

Summary of Financial Assistance approved during the period

Project[1]

Tenor

(years)

Senior

Subordinated

Secured

Interest rate concession

Interest capitalisation

Interest only

Genex Power

30.25

Y

Y

Y

Y

Signature Onfarm

12.75

Y

Y

Y

Y

Y

AAMC

1.5 - 3

Y

Y

Y

Y

Metro Mining

9

Y

Y

Y

Y

Cowboys

15

Y

Y

Y

Y

Y

Darwin Shiplift

28

Y

Y

Y

Y

JCU

25

Y

Y

Y

Y

Mater Health

20

Y

Y

Y

Y

Kalium Lakes

7

Y

Y

Y

Strandline

15.5

Y

Y

Y

Y

CDU

27.5

Y

Y

Y

Y

[1] See proponent names and project details in Table 18.4.1 Summary of Proposal Notices

Each loan pays an upfront facility fee and an interest rate above the Commonwealth cost of borrowing which represents returns to the Commonwealth.

The risks to the Commonwealth are rigorously assessed during the due diligence process to ensure the risks are understood and mitigated where possible. Risks include project, credit, transaction, structure, environmental and social, construction, technology, operation, management, market, industry, business, financial and concentration risk.

e. Summary of adjustments or concessions made by NAIF in relation to infrastructure projects that have not progressed as planned: There were no adjustments or concessions of this type during the reporting period.

Indemnities and Insurance

Insurances provided by Comcover and Comcare have general application that includes Board members and NAIF staff as per the ordinary insurances required of Commonwealth entities. Total premiums paid during the reporting period were $18,960.