The NT Government will scrap its $200-million Infrastructure Development Fund amid growing controversy over the fund’s effectiveness and allegations of mismanagement.
- NT Infrastructure Development Fund (IDF) to be dissolved
- “Not the right time” for fund, Gunner Government says
- Funding to be reinvested in stimulus projects, digital grants and debt repayment
The IDF was established with proceeds from the sale of TIO and was initially intended to fund major infrastructure projects for the Territory, raise an additional $800 million in private capital for future investments and deliver “jobs and prosperity for years to come”.
But over more than two years, it had failed to attract any private investment and only made one controversial $10-million investment in a Darwin water-bottling company that came under scrutiny for the perceived lack of due diligence the IDF had undertaken.
Chief Minister Michael Gunner announced the fund’s termination Tuesday afternoon and said the remaining $185 million would be used for a “local jobs package” to stimulate the sagging economy and to pay down debt.
“It had one project out the door in two years,” he said.
“Recognising the current state of the Territory economy, it was clear the structure of the NT IDF and where it was looking at making bankable investments was outside (what) we felt was necessary for creating local jobs and that was evident in the decisions it made.”
Half of the remaining funds — $92.5 million — will be used to pay down debt, with the other half invested in capital grants for “economic transformation projects”, concessional loans for small and emerging businesses, equity finance and a grant program for “technology-focused innovations”.
Mr Gunner said the Government did not have the ability to end the IDF on its own and needed the board to agree to dissolve the IDF.
It will officially end on November 30.
‘No bankable investments’ forecast
The Government had said in the past they were concerned about ending the IDF because of prospective investment projects in the pipeline.
Mr Gunner admitted yesterday that there were no immediate investments on the horizon.
“They had no bankable investments on their immediate works program,” he said.
The fund cost taxpayers roughly $200,000 a month to operate for board members fees, travel and consultancy costs and only made one investment in more than two years.
That investment was $10 million to Darwin water bottler NT Beverages, a company that has been mired in controversy, including for misrepresenting the source of its water, operating a charitable foundation that never made a donation and most recently for billing their water as offering “incredible health benefits”, which independent water tests showed was no better than tap water.
Mr Gunner did not rule out recouping that investment.
“As part of the NT IDF winding up, they will be talking to that beverage company,” he said.
“That decision still rests with the NT IDF and the NT Beverages company because it was an investment decision they made.”
The IDF was managed by Mike Fitzpatrick’s Infrastructure Capital Group.
The company was paid $1 million a year to manage the fund and recommend investments.
It had only recommended the one investment to NT Beverages in more than two years.
Chief Minister Michael Gunner said the funding would be reinvested in stimulus projects and debt repayment (ABC News: Mitch Woolnough)
‘A more agile and flexible fund’
The IDF had also been unable to attract any private capital, despite claiming it would grow the fund to well over $1 billion.
Treasurer Nicole Manison said the IDF made every effort to be effective but that it was “not the right time for a fund of this type”.
“We heard loud and clear that the money wasn’t going out the door fast enough through the IDF,” she said.
“We’ve created a more agile and flexible fund and we will be working very closely with businesses to make sure we are supporting more local jobs.”
She said they were working with ICG and could not say how much the Government may have to pay.
“Those are details we are working through,” she said.
“We’re working through a very orderly closure of the fund and of the agreements that are in place.”
The IDF was conceived by the previous CLP government but ultimately signed off on by Ms Manison upon coming to office in 2016, which she said was under the expectation that it would be reviewed after two years.
It acted as a private entity, separate from government control, that did not have to explain its spending to the public.
The IDF was chaired by Les Fallick, a former executive director of ICG.
Other board members included head NT Government public servant Jodie Ryan, Paspaley Pearls CEO James Paspaley, former Macquarie Bank boss Bill Moss and former Future Fund managing director Mark Burgess.
The new local jobs package will be managed by the Department of Trade Business and Innovation.
Details of how businesses can access those funds are expected in the coming weeks.
Mr Fallick and Infrastructure Capital Group have been contacted for comment.
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