Government refuses to rule out funding coal projects across northern Australia

The federal government has refused to rule out financing huge coal projects in central Queensland as part of its $5bn package to develop infrastructure across northern Australia.

The Greens have called on the government to withhold funding from a series of proposed coal projects in the Galilee Basin following the announcement of a concessional loans initiative in the federal budget.

The $5bn loans facility will allow the northern states and private companies to access funds for infrastructure projects. The policy, aimed at boosting economic activity in northern Australia, will provide successful applicants with funding at cheap interest rates.

The Greens said mining companies including Indian firms Adani and GVK, as well as Clive Palmer’s Waratah Coal, should be barred from the funding due to the impact upon the climate and local environment from the Galilee Basin mines.

The projects will, at capacity, dig up 330m tonnes of coal a year and take it to the coast via a new rail line. The minerals will then be exported by sea, primarily to India, via the Great Barrier Reef. Eleven international banks, including Barclays and HSBC, have already ruled out funding the mines.

Mathias Cormann, the federal finance minister, said the fund will not be used to finance “white elephants”, but wouldn’t rule out backing for the coal projects.

“We haven’t made any decisions but I won’t rule it out,” Cormann said. “Coal is very important, I believe coal is good. It has helped lift people out of poverty and long may it be the case. It’s an industry I’d like to see grow and prosper.

“The northern Australia infrastructure facility is a very important tool for us to strengthen growth and create more jobs across our great north, but it will not be used to fund white elephants.”

Queensland’s mining industry has welcomed the funding measure, predicting it will help a region that has been “hamstrung by inadequate infrastructure”.

“In particular this is great news for boosting the resource sector potential of Cape York and the North West minerals province,” said Michael Roche, chief executive of the Queensland Resources Council.

Companies applying to the fund will have to prove that they can provide a return, but not at a level that would ensure they were fully financed by the private sector.

“Taxpayers should not have to foot the bill for the big mining companies to use up Queensland’s water supplies, damage the Great Barrier Reef and cook the planet,” said Greens senator Larissa Waters.

“Why should mining magnates like Gina Rinehart and Clive Palmer get taxpayer-funded handouts to suck up Queensland’s water for their climate-destroying mines, when we’re in terrible drought and facing El Niño?

“It’s just insane to be putting taxpayer money into propping up these white elephants, especially when 11 international banks have ruled out financing Galilee Basin coal projects.”

Adani, which is overseeing the largest of the mines, the $16.5bn Carmichael project, is currently facing two legal challenges launched by green groups opposed to the development.

Critics of the mines point out that they will hugely increase greenhouse gas emissions at a time when the world needs to rapidly decarbonise its energy supply to avoid runaway climate change.

The expansion of the Abbot Point coal port, adjacent to the reef, has also provoked ire among conservationists and tourism operators, prompting the government to scrap a plan to dump excavated seabed into the coral ecosystem’s waters.

Conservation group the Wilderness Society said northern Australia is a “graveyard” for large farming projects due to poor soils and its extreme climate.

“This budget initiative will only encourage government and foreign investment into risky, expensive and environmentally destructive mining and agriculture projects that no one in their right mind would consider without a taxpayer handout from the federal government,” said Gavan McFadzean, the Wilderness Society’s northern Australia campaigner.