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Governance

NAIF Act and Investment Mandate

Explore how the NAIF Act and Investment Mandate outlines the terms for infrastructure investment, funding eligibility, and governance.

View From Below Of A Blue And White Construction Crane At JCU Engineering And Innovation Place Site

The Northern Australia Infrastructure Facility (NAIF) operates under a legal framework designed to support investment in infrastructure projects that unlock economic potential in northern Australia.

This framework is defined by two key instruments: the Northern Australia Infrastructure Facility Act 2016 (NAIF Act) and the Northern Australia Infrastructure Facility Investment Mandate Direction 2023 (Investment Mandate). 

Through these instruments, NAIF can offer a range of financial assistance, including concessional loans in some cases (see further information below). The aim is to support infrastructure development, job creation, and long-term economic growth across the north.

What is the NAIF Act? 

The NAIF Act establishes NAIF and provides the basis for our operations. The NAIF Act was amended in 2021 to extend our operation until at least 2026, and to broaden our investment capabilities. 

The Act enables us to provide financial assistance to States, Territories, and other entities for economic infrastructure development in northern Australia.

How we provide financial assistance

  • We can offer a range of tailored financing tools, including:
  • project finance loans;
  • corporate finance loans;
  • equity investment up to $50m per project; and
  • letters of credit, guarantees and similar instruments

Each funding type must comply with the NAIF Act and Investment Mandate, satisfying conditions including delivering public benefit, achieving certain Indigenous engagement outcomes, and geographic eligibility.

What is the NAIF Investment Mandate?

The Investment Mandate is issued under the NAIF Act and provides directions from the Commonwealth Government relating to how NAIF should perform its functions. 

Eligible infrastructure projects

The Investment Mandate sets criteria that must be satisfied in order for NAIF to provide financial assistance.  This includes that a project involves developing or enhancing northern Australia economic infrastructure. 

In summary, the Investment Mandate defines economic infrastructure to include physical structures, assets (including moveable assets), technology or facilities which underpin, facilitate or are associated with:

  • the transport or flow of people, goods, services or information; or
  • the establishment or enhancement of business activity in a region; or
  • an increase in economic activity in a region, including efficiency in developing or connecting markets; or
  • an increase in population; or
  • an increase in existing local workforce availability or capability.

Examples may include:

Concessional finance terms

Each of these financing mechanisms must meet the requirements of the NAIF Act and the Investment Mandate, such as satisfying the public benefit test, demonstrating indigenous engagement outcomes, and being located within the NAIF jurisdiction of northern Australia.

NAIF may offer loans on concessional terms, having regard to: 

  • the extent and mix of all concessions necessary for the project to proceed; and
  • the extent of the project’s overall public benefit. 

Concessions can include: 

  • longer loan tenors;
  • lower interest rates;
  • extended periods for interest capitalisation beyond construction completion;
  • deferred loan repayments or other tailored repayment schedules;
  • lower or different fee structures to commercial financiers; and
  • equal or lower ranking security compared to commercial financiers.

Loan eligibility criteria

Projects must meet the following criteria to be eligible for NAIF financial assistance:

  • involve the development or enhancement of northern Australia economic infrastructure (as described above);
  • be of public benefit;
  • be located in, or have significant benefit to, northern Australia; 
  • be able to be repaid or refinanced (for debt), or generate a return to the Government (for equity-like investments); and
  • incorporate an Indigenous Engagement Strategy (IES), including objectives relating to employment, procurement, and participation for First Nations peoples.

Projects must also comply with other NAIF’s legislative and policy requirements, including those outlined in the NAIF Act and Investment Mandate, and are subject to NAIF Board approval and a Ministerial consideration period (see “the role of responsible Ministers” below).

NAIF Governance Framework

The independent Board

We are governed by an independent Board consisting of a Chair, between four to six other members, and one Commonwealth representative. Board members are appointed by our responsible Minister on a part-time basis, for terms of up to three years. The NAIF Act outlines the experience or expertise an individual must have to be eligible for consideration for an appointment to our Board.

Importantly, all of our proposals to grant financial assistance to a project must be approved by the Board.

Board functions include:

  • to decide, within the scope of the Investment Mandate, the strategies and policies to be followed by NAIF;
  • to ensure the proper, efficient and effective performance of NAIF’s functions; and
  • any other functions conferred on the Board by the NAIF Act.

The role of the responsible Ministers

The Commonwealth Ministers responsible for NAIF are the Minister for Northern Australia and the Minister for Finance. The Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts supports the Ministers in this role. The responsible Ministers’ legislative responsibilities for NAIF include:

  • issuing the Investment Mandate (both Ministers); 
  • appointing NAIF Board members (the Minister for Northern Australia); and 
  • considering Investment Decisions (the Minister for Northern Australia

Once NAIF makes a final Investment Decision to offer financial assistance to a particular project, we must inform the responsible Minister. The Minister has a 21-day consideration period which can be extended to 60 days. 

During the consideration period the responsible Minister may provide written notification to NAIF that financial assistance is not to be provided to a project. The Minister may reject the proposed financial assistance only if providing the financial assistance would: 

  • be inconsistent with the objectives and policies of the Commonwealth Government; 
  • have adverse implications for Australia’s national or domestic security; or 
  • have an adverse impact on Australia’s international reputation or foreign relations. 

If the Minister issues a rejection notice, we cannot progress with offering financial assistance to the project. The Minister’s rejection notice must also be tabled within each House of Parliament.

NAIF’s geographic jurisdiction

NAIF operates across the entire Northern Territory and areas of Queensland and Western Australia above or near the Tropic of Capricorn, as well as the Indian Ocean Territories. 

It also includes the regional centres of Gladstone, the Gladstone Hinterland, Carnarvon and Exmouth, as well as the Local Government Areas of Meekatharra and Wiluna and the Shire of Ngaanyatjarraku in Western Australia, and the Indian Ocean Territories communities of Christmas Island and the Cocos (Keeling) Islands. Territorial seas up to twelve nautical miles offshore adjacent to these areas are also included in the definition. 

Projects located outside these regions may be eligible if they provide clear benefits to northern Australia, for example improving supply chains or infrastructure connectivity.

Statement of Expectations and Statement of Intent

The responsible Ministers have issued us with a Statement of Expectations, outlining the Ministers’ policy objectives and governance standards for NAIF. NAIF’s Board has issued a Statement of Intent in response, which affirms NAIF’s commitment to meeting these expectations.

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