The contentious Northern Australia Infrastructure Facility, previously derided by Labor as a $5 billion Nationals slush fund, will survive under a Labor government, finance spokesman Jim Chalmers has confirmed.
Set up by Treasurer Scott Morrison in the 2015 budget, the Queensland-based facility has spent more than half a million dollars in executive salaries and travel and has yet to make an investment.
The biggest proposal it has under consideration is a $1 billion loan to a company associated with Adani Group patriarch Gautam Adani to enable it to build a 400-kilometre railway from the proposed Adani coal mine in the Galilee Basin to Abbott Point near the Great Barrier Reef.
In a speech to be delivered at the Australian National University on Thursday Dr Chalmers will commit Labor to "reform" rather than abolish the facility, saying that under Labor it would be the responsibility of the finance minister as well as the minister for northern Australia.
Labor would also establish a Manufacturing Australia Fund to help manufacturing firms transition to high value production.
"The Bureau of Statistics tells us that nearly one in three innovative businesses cite access to finance as their major barrier to investment and growth," his speech notes say. "There are many investments that are in the private and national interest that are not able to access finance."
Leveraging the Commonwealth balance sheet to co-invest in worthwhile ventures could have the twin virtues of building value and generating assets on the government's balance sheet.
The criteria that funds such as the Northern Australia Infrastructure Facility would use to decide whether to invest would be whether there was an understanding of why the market was failing and whether the pay-off from investment was clear.
The Clean Energy Innovation Fund, set by Labor and continued by the Coalition, was a perfect example of the way in which government funds could enable projects to take place that would otherwise miss out on capital.
"For every dollar the Fund invested last financial year, the private sector added more than two," Dr Chalmers will say.
"In its first four years of operation, the Fund committed $4.3 billion across 79 transactions, leveraging over $11 billion in new clean energy investment in total, helping Australia's transition to a clean energy economy.
"The answer isn't to push everything off budget or to create fund after fund. The answer is to work out where, after careful, sober and clear-eyed analysis, the market is not functioning properly and where we can make an affordable difference."
