Say it with a smile: Adani wants taxpayers to foot bill for ‘market failure’

Indian billionaire Gautam Adani, the world’s fifth-wealthiest man, is trying to convince Queensland taxpayers to kick in $1.5 billion to create insurance fund for the coal industry. Surely he can’t be serious, asks John McCarthy

May 06, 2022, updated May 06, 2022
Chairman and founder of the Adani Group Gautam Adani  Photo: Sanjeev Verma/Hindustan Times/Getty Images

Chairman and founder of the Adani Group Gautam Adani Photo: Sanjeev Verma/Hindustan Times/Getty Images

Adani has never been short of chutzpah. Such levels of audacity have allowed it to progress the development of its Carmichael coal mine when most companies would have given up, but now it is asking for taxpayer help over what it claims is a market failure.

Brazenly, Adani Australia chief executive Lucas Dow has called on all political parties “to protect the nation’s prosperity by ensuring coal communities can access reasonably priced finance and insurance services”.

“It’s time for our political leaders of all colours to step in and act where the market has failed,” Dow said.

This is either a pretty bold statement for a company that ran its own political campaign against a Labor State Government in order to get its approvals finalised. Premier Annastacia Palaszczuk – once a big supporter of the project and who even went to India to meet with Adani – has not been seen anywhere near the company since.

Her federal colleagues would feel the same way and as for other parties … well, we could presumably count the Greens out of that support as well and I wouldn’t put money on the Liberals backing it.

What Dow is proposing is a mutual insurance fund for the coal companies that would need Federal Government support in the shape of a draw-down facility. Dow claims it would be self-sustaining after it achieved a size of $1.5 billion and in the unlikely event of the funds being used they could be paid back at commercial rates.

His suggestion has some merit if you think the coal industry is still vital. As Dow points out, the Federal Government has already done something similar in creating a reinsurance pool to support home insurance in north Queensland.

Dow also points out that small north Queensland businesses who testified to parliamentary inquiry said they could not get insurance cover because they did not meet insurers’ requirements that not more than 25 per cent of their business be in or supporting the coal industry.

That’s a significant flaw, particularly in places like Mackay, Emerald and Rockhampton.

But the difference is that the coal industry is enjoying record high prices and has done for most of this year. And those prices are not just a little bit over the previous record. Billions of dollars have flowed into the coffers of the coal miners.

And let’s not forget that Adani’s chairman, Gautum Adani, is the fifth richest man in the world with a wealth somewhere north of $US100 billion.

The idea of a self-insurance fund was a recommendation from a parliamentary hearing last year that was headed by George Christensen. Who thinks anyone in the Liberal Party would back an idea from Christensen after he deserted the LNP to contest a senate seat for One Nation?

While the companies in central Queensland deserve action in relation to the issue, Adani and big coal companies are probably on their own.

Any government that was within whistling distance of credibility would have a hard time providing any financial support to a company headed by the world’s fifth richest man, although they recently gave Andrew Forrest $45 million for his electrolyser plant in Gladstone, so anything is possible.

Adani has effectively become untouchable because of concerted efforts by activists to target it and any company that supports them. That goes for insurance companies and banks who have been particularly weak-kneed.

Because its operations are opaque we can only assume that the activist campaign forced Adani to self-fund and insure the Carmichael development.

InQueensland in your inbox. The best local news every workday at lunch time.
By signing up, you agree to our User Agreement andPrivacy Policy & Cookie Statement. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Dow said that while demand for Australian coal was strong, the prosperity and sustainability of coal mining communities was at risk by the actions of banks and insurers.

“Banks and insurers denying service to businesses directly and indirectly involved in the coal and the gas sectors is an unacceptable risk to an industry that helps fund the way of life many of us take for granted,” he said.

He’s right but maybe he is the wrong one to be asking.

Dow said the answer was an unequivocal commitment from Australia’s political parties to support the introduction of a self-sustaining coal industry mutual insurance fund.

A mutual insurance fund was one of the key recommendations of the Australian Parliament’s Joint Standing Committee on Trade and Investment Growth’s Inquiry.

“The industry has done its homework and has developed a mutual insurance fund model that would be self-sustaining within five years,” he said.

“The challenge is getting the fund off the ground initially, and to do that we’d need the government to provide an initial draw-down facility to ensure fund solvency in the early years of the fund.

“Importantly this would not be a handout and would only take the form of a contingent liability in the event of potential extreme payout events. Should the drawdown facility need to be accessed, the government would be repaid at commercial rates.

“This goes beyond a lip service pledge of support for the 50,000 Australian voters and their families who directly work in the coal sector, it goes beyond energy security, it’s about backing Australians and Australian industry.

“This is real action that will secure jobs and billions of dollars in investment and taxes.

“Now is not the time for our political leaders to turn their backs on those whose hard work directly contributes to our national prosperity and way of life.”

Local News Matters
Copyright © 2024 InQueensland.
All rights reserved.
Privacy Policy