Queensland government’s secret deal with Adani

August 5, 2017

Queensland Premier Anastacia Palaszczuk’s 2015 election commitments to transparent decision making, no “secret deals” and that the Adani project must “stand alone on its feet ... on the economics of the project itself” have been challenged by documents released under a Right to Information request.

A request for documents, submitted to Queensland Treasury by Adam Walters from Energy Resource Insights, has revealed that details of the Queensland government’s “transparent policy framework”, under which Adani’s Carmichael mine has received a royalties “holiday”, are being kept secret. Walters’ Right to Information request resulted in thousands of pages of redacted or withheld documents.

Nevertheless, as Guardian Australia reported, “the document dates, and the reasons for redactions, appear to confirm the so-called ‘transparent policy framework’, which the Palaszczuk government said was not a special deal for Adani, was made specifically for Adani.”

However, Walters did receive a letter from Adani to Treasury accepting the terms of the royalty deal, which referred to a letter from Treasury dated May 27. The resources framework was announced on May 27 and four days later Adani became the first company to reach an agreement under the policy. This strongly suggests the policy may have been designed for Adani.

Analysis by the Australian Greens, checked by the Parliamentary Library, shows the government's agreement to defer royalties for the Adani coalmine would cost Queenslanders $253.3 million in net present value terms and almost $370 million in nominal terms over the next five years.

The Australia Institute released a report “Palaszczuk subsidies to Adani” on August 2 that said the royalty deferment deal was really a form of subsidised loan but the cost of the subsidy cannot be verified as the terms of the deal are not public.

“Because Treasury entirely redacted its letter to Adani offering the royalty deal,” it said, “the deal with Adani is totally secret. There is no information about the terms of the deal, the interest rate or repayment schedule and only unsourced reports of the amount of the loan.

“Even if the loan is being made at commercial rates, depending on other terms, it is likely to be a subsidy since the Queensland taxpayer is taking on the risk of the project failing, potentially leaving the loan unpaid.”

In the report, Australia Institute researcher Tom Swann said the royalty deal was one of two subsidies the Palaszczuk government was planning to provide to the Adani project, breaking two of its election promises.

In the 2015 election campaign Labor committed to not spend taxpayers’ money to build a rail line for Adani. But the state government is ultimately responsible for any federal subsidy through the Northern Australian Infrastructure Fund (NAIF), so its support for the proposed $1 billion NAIF loan to build the rail line also amounts to a subsidy, the report said.

“The Palaszczuk government could veto the NAIF loan to Adani at any time. By failing to veto the loan, the government is effectively taking funding away from other job-creating investments in Queensland, for example in tourism, agriculture or renewable energy,” the report said.

Recent polls have shown strong opposition to subsidies for the Adani coal proposal, including among LNP and One Nation voters. In May, The Australia Institute conducted a nationally representative poll of 1400 Australians. It found almost two-thirds (64%) opposed the proposed $1 billion subsidised loan to Adani.

Activists campaigning against the Adani mine have called on the Queensland government to veto the proposal. The government’s response has been to wash its hands of it.

The Australian reported on May 20 that Queensland Treasurer Curtis Pitt wrote to then-federal resources minister Matt Canavan to insist the Queensland government would “not stand in the way of those arrangements. The state’s balance sheet will not be impacted and … the state will direct that all NAIF funds (drawdowns and repayments) will flow between the Commonwealth and the proponent. No state government bank accounts will be involved in any transactions.”

The ABC reported on August 2 that the loan Adani is seeking from the NAIF could be less than half of the reported $1 billion. "It may be more than $500 million, it may be less than $500 million," company spokesperson Ron Watson told 7.30. "It all depends on our financial arrangements, which we've yet to finalise.”

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