The 2024 NAIF Review: missed opportunities

Striving to better, oft we mar what's well.

King Lear Act one, Scene four

The Minister for Northern Australia, Madelaine King MP tabled the statutory review of the North Australia Infrastructure Facility (NAIF) on 28 August 2025. In her short media release (link here), she thanked the review panel which comprised the Hon. Warren Snowdon (Chair), Professor Peter Yu and Dr Lisa Caffery, and indicated that the Government would consider the review and respond to the 21 recommendations over the coming months. It is unclear why the Government and Minister have been so slow to respond to the Review. A cynic might surmise that when addressing a policy issue on its merits is not front and centre, then political management comes to the fore.

The review is available on the Infrastructure Department website (link here). The published submissions made to the review are also available on that website, albeit on a separate page which may be vulnerable to deletion at some point in the medium-term future. This would be unfortunate (link here).

This blog has followed NAIF closely over the past decade, and (inter alia) has been quite critical of its narrow focus on commercial (private sector) infrastructure and its effective absence in financial social infrastructure (link here, link here and link here). I posted my submission to the current review in September 2024 (link here) whereas (contrary to common practice such as adopted by the Productivity Commission) the Government decided not to publish the submissions to the review until it had released the review itself. The review was provided to the Minister on 12 February 2025 and released six months later on 27 August.

While the review team brought significant experience of northern Australia to the task, and extensive background in both politics, policy and Indigenous affairs, my high-level reaction to the final product has been one of disappointment and in some respects incredulity. The review team appears to have been heavily influenced by the Department and NAIF, both formally and informally. I wont list all the available evidence for this assertion but invite readers to read the Review Report Executive Summary and consider whether it reads as a ministerial media release or as the summary of a truly independent policy review.

More substantively, the conceptual framework adopted by the Review is to my mind flawed and underdone. There is virtually no data presented to underpin the arguments pursued. The single graph on page 22 (lifted from the NAIF submission) is difficult to interpret (it would have been more appropriate to present it as a bar chart) and the key take-out (contrary to the Review conclusion) is that over the past nine years, less than $2billion in concessional loans have been drawn down by successful proponents. In relation to Indigenous data, there is none provided to speak of and there are several questionable assertions that are smoothed over by statements suggesting data shortcomings in the census mean that Indigenous data is unreliable.

There is no clear description of the how the NAIF works, and what the net cost of The NAIF is to government is on a year-by-year basis. While there is the occasional mention of the views of those consulted or who made submissions, the Review makes no attempt to summarise even at a high level the totality of the views they received either thematically or by topic. This then allows the Review to avoid any discussion of why particular views advocated were either accepted or rejected and the reasons for doing so. Many if not most submission authors will likely conclude that the Review just ignored their views.

At a more technical level, key conceptual flaws in the Review report include:

·       The level of demographic analysis in the Review is close to zero. Yet this is crucial for understanding the infrastructure needs of the North. One consequence of this analytic gap is to facilitate avoiding the question of just who is the NAIF aiming to support: the users of infrastructure in northern Australia, or the owners of firms investing in infrastructure in northern Australia?

·       It is unclear from reading the Review whether the alleged benefits arising from NAIF decisions are real or imagined. (The Review somewhat amazingly mentions on page 22 ‘forecast benefits of $38.2 billion in public benefit for the north’ arising from the $4.4billion ‘committed’ (but over $2billion not yet drawn down). There is no mention of the source for this data, nor when this benefit will accrue, no explanation of why it is public benefit and not private benefit, no indication of whether it includes provision for failed projects (see the Addendum below for extracts from the AFR article about the NAIF dated 21 October 2025 headlined ‘$200m losses highlight risk of government ‘picking winners’) and no indication that these alleged benefits have been discounted appropriately to reflect their Net Present Value.

·       There is no examination of the rationale for NAIF assistance (i.e. why should government be subsidizing particular projects, how to determine if market failure exists or not, and what is the appropriate definition of infrastructure to use). If there is no market failure, then firms will invest if there is a commercial return available. If there is not a commercial return available, but there is a public interest in the project proceeding, then the concessional finance is best structured as a public investment with the returns being allocated to taxpayers. The risk in the NAIF model (not discussed in the Review) is that the provision of concessional loans to privately owned firms risks making no difference to the ultimate decisions on whether firms will invest but transferring the net quantum of the concession from taxpayers to firm owners.

·       There appears to be a preconceived assumption that the best way to assist remote Indigenous citizens resident in northern Australia is through support to Indigenous businesses. In relation to infrastructure investment required to support Indigenous communities across the north, the Review has adopted a framework built around what I termed in a recent post (link here)  ‘the policy pivot to Indigenous economic empowerment’ and which Professor Peter Yu has been instrumental in developing and advocating. Indeed, Chapter Four where the Review deals with Indigenous issues is titled: ‘Supporting First Nations economic empowerment’. While there is nothing innately wrong with such a focus, it is only partial and includes an inherent bias away from core infrastructure traditionally built by government in remote communities including housing, schools, essential services, health and community administration infrastructure, and importantly townscaping (roads, parks, ovals etc) usually provided by local governments. In focussing on Indigenous controlled commercial business opportunities, the Review has implicitly given governments at all levels an implicit ticket of leave to (yet again) not take the action necessary to bring social infrastructure up to acceptable standards (link here) in hundreds of remote communities.

·       There is no discussion of the rationale for focussing on support to small businesses rather than limiting NAIFs focus to infrastructure needs of strategic significance. Throughout the discussion, the Review advocates for the NAIF to expand its focus to the provision of smaller business loans. Such an expansion risks adding significant process to NAIF’s operations (with the concomitant risks of loss of focus) at the risk of losing strategic focus on the major infrastructure issues confronting northern Australia. It is never made clear why this should be a NAIF responsibility and not some other government entity’s role, either at state or national level. Both NIAA and Indigenous Business Australia have the capacity to fund such a program in the Indigenous policy space if they so chose.

·       There is an inadequate discussion of the rationale for the Review’s findings and recommendations to provide NAIF with greater autonomy. The Review essentially argues and recommends that the NAIF be converted from a ‘facility’ or mechanism for providing concessional finance operating within the Infrastructure Department’s financial balance sheet into an entity with its own balance sheet and governance structure. In effect, it is arguing for the establishment of a North Australia Infrastructure Finance Corporation, though it doesn’t articulate this overtly. To do so, it argues that the current model underpinning NIAF’s operations has a negative effect on the Department, the NAIF, the relevant Jurisdictions and proponents (see Observation 2 on page 13). It also points to the apparent success of the existing Board and Executive team’s leadership. (see Observation 3 on page 13). The message is that the governance quality of the NAIF is such as to warrant greater independence and autonomy. The reality is that the record of the NAIF has been very patchy with critical ANAO reports (link here) and as recently as 2023, there were allegations that it was ignoring its own processes (see Addendum below). The Review Discussion fails to demonstrate that the systemic flaws evident in 2019 are no longer a risk and fails to provide a comprehensive argument for the quite significant changes it is proposing. There may be a case for doing what the Review recommends, but to my mind, it does not make anywhere near a persuasive case for doing so. Not least in relation to the Review proposals, there is no discussion of whether there are potential additional costs for taxpayers going forward.

·       There is zero discussion of the issue of transparency, and its role in protecting taxpayers from potential missteps that are facilitated by excessive secrecy and the systemic issues that led to the critical 2019 ANAO review discussed above. The media reports NAIF as being overly secret (see the extracts in the Addendum in the articles by Wilson and Ludlow); the Review makes no attempt to assess this and identify a way forward. This is of particular importance because a shift to greater NAIF autonomy will exacerbate financial and governance risks which adequate transparency and greater commitment to merit in selecting Board members would play some role in managing (see Bill Shorten’s comment on former Board appointments in the Wilson article extract below).

·       It is significant in my view that there does not appear to have been an independent effectiveness evaluation (as opposed to the five-year statutory reviews such as the current Review) since the NAIF was established. Those Reviews have been largely focussed on operational issues and not overarching effectiveness. It is circumstances like the challenges facing the NAIF which strengthen the argument for a Commonwealth Evaluator General (as proposed by Nicholas Gruen) to independently evaluate major strategic initiatives by the Commonwealth on a periodic basis.

The conceptual shortcomings evident in the approach adopted by the Review inevitably invites deep scepticism regarding the robustness of its recommendations. To my mind however, the potential analytic flaws are not the major problem with the Review.

The fundamental policy problem is that the Review represents a missed opportunity. It fails to undertake a rigorous and conceptually sound examination of the problem NAIF exists to address, then identify potential solutions, and then recommend an approach to addressing the problem. Instead, it appears to be providing cover for an agenda that has already been decided. In relation to Indigenous interests in northern Australia, the Review focusses overwhelmingly on the absence of Indigenous engagement with NAIF (as if this will somehow drive greater social and political inclusion of Indigenous interests in northern Australia) rather than focussing on the absence of NAIF’s engagement with driving increased investment in social infrastructure. It won’t surprise readers if I acknowledge that this was the core message in my submission (link here), which was comprehensively ignored by the Review.

Incentivising greater investment by local, state/territory, and national governments in social infrastructure across the north will drive greater indigenous inclusion because that is where the overwhelming levels of needs are. Indigenous people represent a substantial proportion of the permanent population of the north. They deserve inclusive policies, not exclusion. What is required are across-the-board improvements in employment, health and education. These three sectors are all adversely affected by the extreme infrastructure deficits facing remote Indigenous populations including in northern Australia (link here).

In terms of driving medium- and longer-term change that will expand the contribution of northern Australia to the nation’s economic, social, cultural and strategic wellbeing and improve the quality of life of citizens living in northern Australia, the NAIF represents a potential mechanism to make a major contribution. So far, the NAIF has failed to take up this role, and the recent Review offers no real roadmap for it to do so going forward. This is both a missed opportunity, and to my mind a tragedy.

 

 

Addendum: Extracts from selected AFR articles

Grant Wilson AFR 18 July 2022, The NAIF is no longer an abject failure, (link here Paywall):

Before the federal election in May 2019, and in full campaign mode, then-Labor leader Bill Shorten eviscerated the Northern Australian Infrastructure Facility.

He characterised NAIF as an “abject failure”, and committed to an overhaul, with an emphasis on projects of national economic significance, such as gas infrastructure from Beetaloo Basin. Shorten was particularly aggrieved that “half of the board members are donors to the LNP…

…A longer-term issue for NAIF to consider is its status as a facility. As distinct from the Clean Energy Finance Corporation (CEFC), that also operates as a special investment vehicle of the federal government, NAIF has not been fully corporatised, and does not have a special account to receive appropriations.

This setup, while understandable given NAIF’s initial five-year remit, undermines the quality of its financial reporting. The contrast to the CEFC is stark, where financing facilities are included as part of the income statements and balance sheet, enabling its financial performance to be assessed on a comprehensive basis.

 

Aaron Weinman, AFR 23 June 2023, NAIF allegedly broke its own lending rules for barramundi farm (link here Paywall):

The Northern Australia Infrastructure Facility allegedly ignored its lending rules on at least two investments, and later pressured an employee who raised concerns to quit in a bid to avoid embarrassment while it sought about $2 billion in additional funding from the federal government.

The NAIF reviewed several loans it had written over the past 18 months but when some were deemed a potential concern – meaning the borrower could struggle to repay the debt – staff played down the severity of the borrowers’ creditworthiness, according to documents filed as part of an unfair dismissal claim lodged with the Fair Work Commission.

 

Mark Ludlow, AFR 10 August 2023, The $7b fund for projects commercial lenders won’t back (link here paywall):

In June, a former member of the NAIF’s credit committee lodged an unfair dismissal claim with the Fair Work Commission. They alleged the NAIF ignored its own lending rules on at least two investments, including $31.4 million in loans to the Humpty Doo Barramundi farm in the Northern Territory, which had “deep credit issues”, and the Kalium Lakes project….

… As of June 30, the NAIF has committed $3 billion in loans to 25 approved projects, with the agency confirming to the Financial Review that $1.41 billion in loans have been drawn down by 23 projects.

The NAIF, which can provide debt or equity finance, won’t publicly release a detailed breakdown of projects, saying it is up to potential proponents to reveal how much they have drawn down from their approved loans. Some money has been repaid to government, but NAIF won’t confirm how much.

 

Ronald Mizen AFR 21 October 2025, $200m losses highlight risk of government ‘picking winners (link here paywall):

Taxpayers will be forced to carry more than $200 million in losses after two companies backed by government loans failed, an outcome economists say underlines the risks of trying to pick winners with public money.

The Northern Australia Infrastructure Facility loaned $84 million to potash aspirant Kalium Lakes in 2019 and $150 million to mineral sands operation Strandline Resources in 2020. Kalium collapsed in 2023, while Strandline went into administration in February this year.

 

2 November 2025