On the first day of spring in 1961, Robert Menzies announced that the commonwealth government would provide the NSW government £2.65 million ($73 million in today's dollars) to upgrade coal loading facilities at Newcastle. The investment would support the then fledgling coal trade with Japan.
The investment turned out to be a decision of great foresight and it was made against some scepticism. At the time, the CSIRO warned that Australia did not have enough coal to support an export trade.
Lucky for us that advice was ignored. Newcastle is now the biggest coal port in the world. All around the world coal is quoted in terms of Newcastle 6300 kcal/kg, 1 per cent sulphur, 14 per cent ash, coal.
The Hunter Valley rail network remains in government hands, with the Australian Government leasing the network from the NSW Government 12 years ago. The Australian Government invested a further $150 million in the network.
That network provides services to large multinational companies, for a fee, and the entire trade helps underpin our second-biggest export, coal.
The proposed Adani Carmichael coal mine in the Galilee Basin is a game changer for North Queensland because it is not just about this mine. It will be the first time that a new coal basin is opened in Australia for more than 40 years. If a rail line is built from the Galilee to Abbot Point it has the potential to spur another three mining ventures at least.
The level of wealth that could be unlocked is comparable to that of the Hunter Valley or the Bowen Basin.
That is why it must be a priority for a national government that is serious about developing our nation. There are risks for any first mover so while Adani may yet decide to take all those risks on itself, it may not. Given the wider benefits to the Australian economy, it makes sense for the Government to look at its request for a loan to help build the railway.
The railway is a $2.5 billion, 388-kilometre investment, capable of carrying 40 million tonnes of coal per year. It will be the first major standard gauge railway line in Queensland. It will carry around 25,000 tonnes of coal at a time, up from the less than 10,000 tonnes per train on Queensland's narrow gauge railways.
Adani have always proposed the line as common user. Of that 40 million tonnes per year, it will use 25 million tonnes and has offered the other 15 million tonnes capacity to other mines. A loan from the Northern Australia Infrastructure Facility (NAIF) would stipulate that the rail line be open access.
Any loan has to stack up for the Commonwealth and that is why the Government has appointed an independent, skills-based board to the NAIF. The NAIF was supported by the Parliament and we should let the independent board do its job. The potential for a loan to the Galilee Basin rail line was flagged during the parliamentary debate before it was supported by Labor.
That is why it is disappointing to see Bill Shorten already dismiss the prospect of a loan before the independent NAIF has done its work. Labor's position compromises the independence of the NAIF and the wider support for northern development. Mr Shorten is also at odds with his Queensland Labor colleagues, who wrote to the Federal Government earlier this year proposing a loan from the NAIF to build the rail line.
Federal Labor's opposition is probably best explained by its ideological objection to coal. That's counterproductive because India will expand its use of coal regardless, and on current projections will almost double its imports by 2040. It would be best for the environment if India uses higher-quality Australian coal.
The development of almost every minerals province in Australia has involved government investment. The exception is the Pilbara, but the private rail lines that criss-cross there would be less than ideal for the cattle sector in North Queensland.
The Government is focused on supporting a new minerals province that will generate billions of dollars of wealth, create thousands of jobs and strengthen our ties with an important Asian country that wants the same benefits that Australians take as a given: affordable and accessible power.
This opinion article was originally published in the Australian Financial Review on 8 December 2016.