Citizenship, the Nationals and Adani's uncertain coal mine
The citizenship debacle engulfing the Nationals, and in turn the Coalition government, has as much to do with trust and integrity as it does with the constitution. Being consistent is important in business and in government.
[This article was first published by the Australian Financial Review - here]
After the Greens' Scott Ludlum and Larissa Waters resigned over citizenship issues, Barnaby Joyce declared "It's quite clear under section 44 you can't be a member of parliament and have dual citizenship. It's black and white."
But today he suggests there are shades of grey. To be clear, while there's no problem with Joyce asking the High Court to adjudicate, there is also no doubt that the Deputy Prime Minister's words are no reflection of his actual thoughts. His only principle is that of self-preservation. That's a real problem for any leader.
Regardless of what the High Court finds, what investor would ever take the Nationals "principles" seriously again? While much has been made of the short-term chaos associated with months of uncertainty surrounding the composition of the Parliament, far less has been said about the long-run consequences of the Prime Minister and the Deputy Prime Minister's willingness to jump from gloating over the "black and white" mistake of the Greens to insisting that Coalition errors reside firmly in the grey. The only principle being demonstrated is that of one-eyed partisanship.
Waiting on the NAIF
Few industries have said more about the need for investor certainty than the mining industry. Yet surprisingly, miners have said nothing about Joyce's backflip and Adani, the coal company seeking a $1 billion subsidised loan from the Commonwealth, seems unperturbed by the dose of sovereign risk the Nationals have recently dished up.
Adani is banking, literally, on the belief that Australian taxpayers will put $1 billion into a rail line connecting its proposed North Queensland mine to Abbot Point. The Coalition created the Northern Australia Infrastructure Facility (NAIF) to fund exactly such projects, but alas, the minister responsible for the NAIF, Matt Canavan, stepped down over Italian citizenship. In his place, Barnaby Joyce has assumed responsibility for the NAIF.
All year Adani has said that the NAIF loan is critical to their financing, which will be finalised any month now. Yet the citizenship saga means it now isn't clear who would sign the subsidy cheque.
For years Adani has been demanding that its approvals be expedited. Back in April it was claiming that if the Queensland government couldn't finalise arrangements to provide free coal then the whole project would collapse. Yet now Adani now seems quite content to wait for the High Court, and possibly even a byelection, to sort out which minister will sign-off on its subsidy. Some hurry.
Never really in a hurry
So what gives? One explanation is that Adani was never really in a hurry and was simply creating fake deadlines to put pressure on inexperienced negotiators like Canavan and Queensland Premier Annastacia Palaszczuk. Given the financial and political cost to the Queensland and federal governments of subsidising Adani it seems to have worked.
Another is that the world coal market is shifting even faster than Australian political debate. Having once argued that all of the coal from the Adani mine in the Galilee Basin would go to Adani's power stations in India, Adani is now saying, in India at least, that it hopes to rely solely on coal mined in India and "do away the need for importing coal".
While it's a commercial decision for Adani whether it wants to sell coal to its Indian affiliates or to other countries, it is a political decision to give $1 billion of Australian taxpayers' money to support the venture. And the politics get a lot harder when those seeking new subsidies for new coal mines admit that they will soon be competing head to head with existing export coal mines in the Hunter Valley and Southern Queensland's Bowen and Surat Basins.
The fact that an Indian company seeking substantial support from Australian taxpayers is so inconsistent about what it needs the money for and when it needs it should raise alarm bells. But Adani's inconsistency is nothing compared to Barnaby Joyce's backflip on constitutional interpretation. No matter what the High Court rules, business certainty has already been harmed and the credibility of statements by the PM and his Deputy has been permanently diminished. How can anyone base long-term decisions on their stated principles.
Richard Denniss is the chief economist at The Australia Institute @RDNS_TAI