Giving private company taxpayer funds to bottle water without license is risky, NT Treasurer says


Updated

June 12, 2018 19:21:07

Giving $10 million of taxpayers’ money to a private water bottling company that doesn’t have a water extraction licence was risky, the Northern Territory’s Treasurer has admitted, saying she wouldn’t have signed the deal.

Nicole Manison made the comment while being questioned during Estimates hearings on Tuesday over why the NT Infrastructure Development Fund (NTIDF) gave $10 million to NT Beverages to upgrade its bottling facilities before it had formal approval for a water licence.

The company’s September 2017 application has still not been assessed.

“In my risk-averse mind, would I have been comfortable with that decision? No,” Ms Manison said.

“Because if you were a water company I would expect that [you] would have that part of the deal stitched up and all done and ready to go.”

The NTIDF was established in 2016 with $200 million from the previous Country Liberals Party Government’s unpopular sale of the Territory Insurance Office, done without consultation with the community.

The fund was set up to finance critical infrastructure projects in the Territory and to attract $800 million in private investment.

However, in more than two years, it has not attracted a single dollar of private investment and has made only one investment — the $10 million given to NT Beverages, makers of the Akuna Springs water brand.

That decision was made by the board of the NTIDF, consisting of chair Les Fallick, head NT Government bureaucrat Jodie Ryan, and businessmen James Paspaley, Mark Burgess, and Bill Moss.

That $10 million is a straight investment, meaning taxpayers are on the hook for the cash if the company fails.

An investment like that is considered “opportunistic” and “high risk”, according to the IDF’s founding document.

Opposition Leader Gary Higgins questioned during Estimates why taxpayer money was given to a company that didn’t have final approval for the extraction licence.

“Why would we give $10 million to someone that hasn’t even got a water extraction licence?” he asked.

“This is the same as a mineral coming out of the ground, it belongs to all Territorians.

“There’s no guarantee they will get [the licence], it has to be advertised publicly… Did [the board] point out that there was a risk in this, and that is that they do not have a licence?”

Ms Manison said she agreed with Mr Higgins.

“I would have thought that having certainty around that licence would have been a critical component with regards to making that final investment decision that that board has made,” she said.

“Nonetheless, the NTIDF is a board of some very thoroughly experienced investors, we’ve got [the management company] doing their due diligence work and this type of research.”

She said she would have to take on notice any further questions regarding the licence.

Outside Parliament, Mr Higgins said to reporters: “What back-room deal’s been done in this area? I’m not saying there has been, but you’ve got to ask that question, has there been some influence there?”

NT Beverages permitted to extract water without license

Under Northern Territory law, groundwater users are not charged any money by the Government for drawing water.

In September 2016, NT Beverages applied for a groundwater extraction licence for 26.8 ML/year.

A government spokesman said the application would be assessed this August, 11 months later.

The company draws the water from an aquifer at Acacia Hills and trucks it to its bottling plant at East Arm.

The spokesman said NT Beverages is permitted to draw water while its application is being considered because of changes to the extraction rules from July 2016.

That ended exemptions for users extracting less than 15 litres per second, which covered NT Beverages.

There are currently 260 other commercial applicants seeking extraction licences.

“Commercial operators extracting groundwater from a Northern Territory aquifer don’t pay for the water they extract, other than the cost of the bore’s installation, operation and any other repairs and maintenance that might be required,” the spokesman said.

“As with all licence applicants awaiting processing, NT Beverages are permitted to extract at the rate they were extracting at before the exemption was lifted, in this case, 26.8 ML/year.”

Government considering future of fund

The ABC revealed in April that the NTIDF ran a $1.4 million deficit last financial year, made up of board member fees and more than $560,000 in management fees paid to private investment company Infrastructure Capital Group to oversee the fund.

It was criticised for operating as a private company and avoiding public scrutiny of its operations despite being fully funded with taxpayers’ cash.

Ms Manison said she would not wind up the fund, despite it failing to attract private investment or invest in any other infrastructure projects to date.

She said there are a number of future projects the group is looking at funding.

“We are having a serious discussion at the moment about where the NTIDF is at and where its future goes to,” she said.

“They are engaged with a lot of projects, though… if a decision was made to wind it up, you’d have to seriously consider those projects.”

Topics:

business-economics-and-finance,

government-and-politics,

rural,

water,

darwin-0800,

nt

First posted

June 12, 2018 19:11:53



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