Townsville and Rockhampton councils may pay millions more if company’s bid to sew up deal with traditional owners fails

This article is more than 2 years old

This article is more than 2 years old

Two local councils are paying $31m to build an airstrip for Adani’s Queensland coalmine – and could fork out millions more if the energy giant’s bid to sew up a deal with traditional owners hits a stumbling block.

Townsville and Rockhampton councils last week announced they would spend $15.5m each on the airport – hundreds of kilometres away – in a deal to secure Adani’s guarantee of 2,200 construction jobs for their residents.

And Townsville has agreed to pay up to $18.5m if the airport is shifted to a second location outside Wangan and Jagalingou land, where Adani’s right to build Australia’s largest coalmine is tied up in a drawn-out legal battle with a traditional owners group.

Web of Australian Adani solar companies leads to offshore tax havens Read more

Rockhampton, which originally put up $20m for the airport in a bid to gain Adani’s guarantee, may also invest up to $18.5m but this has not been made clear.

Despite the Carmichael mine having broad support in both communities, there is some backlash to ratepayers providing infrastructure for a transnational corporation.

An online petition by a Townsville ratepayers group member, Peter Newey, calling for council to scrap its decision, has garnered about 3,700 signatures in a few days. Cathy O’Toole, the federal MP for Herbert in Townsville, has also flagged local concerns about “giving ratepayers’ money to a multinational”.

Councillors from both cities voted in favour of paying for the airport for Adani’s workforce in closed discussions of confidential reports, recorded in minutes that did not mention the company.

Townsville councillors voted on 4 October to create a “special purpose vehicle”, capped at $18.5m over the next two financial years, after receiving a confidential report on “economic activation opportunities”.

The report dealt with “the steps required to be taken to activate the opportunities and any associated beneficial enterprises” if “negotiations with proponents are successful”.

Paul Jacob was the only councillor opposed because he “believes there is not sufficient return to the community on the proposed opportunity to warrant council considering the matter further”, the minutes state.

Jacob told the Guardian: “On the original area, council would have had to put in $15.3m but they’ve approved the CEO of the council to go up to $18.5m if they have to shift that location.”

Media in Rockhampton have reported that airport construction would begin later this month.

But Adani will not know until next March at least whether it can register a proposed Indigenous land use agreement (Ilua) with the W&J, which it needs to complete the airport at its first-choice site. That is when the federal court will hear the objections of a traditional owner group that opposes the mine and alleges the Ilua is invalid.

Asked about the risk to ratepayer funds if the project did not ahead, Jacob said that “apparently we’ve got an ironclad guarantee” of a refund from Adani.

“That’s an Australian bank guarantee, that if it doesn’t go ahead, I believe that we’d be guaranteed to get that $18.5m or the $15.3m back from Adani,” Jacobs said.

Clinching both the Ilua and financial closure – in the form of $5bn in overseas investment backing, for which Adani has also flagged a March deadline – are seen as the miner’s last hurdles in the controversial project.

An Adani spokesman confirmed the airport site would hinge on what happened with the Ilua. The second option was less than 10km from the proposed worker’s village on W&J land, he said.

Jobs bonanza? The Adani project is more like a railway to nowhere | John Quiggin Read more

The spokesman said the airport would be operated and – he understood – owned by the councils, on land held by Adani under its mining lease.

The councils would receive no revenue directly from Adani, the spokesman said. But the airport would also be available to other future coalminers in the Galilee basin, he said.

Jacobs said it was not clear whether the investment was a condition of Townsville being named by Adani as a fly in, fly out worker hub.

But the council’s chief financial officer, Matt Thomson, has said that without the investment “Townsville would not have received a single new Fifo job”.

He cited KPMG modelling that “direct revenue from rates and services alone will be more than $1m a year” for more than 30 years, with another $90m a year indirect economic benefit to the city.

Rockhampton councillors met on 26 September for a confidential discussion about “economic development opportunities” and an update from council’s general manager of “regional development and aviation”.

The minutes make no mention of Adani but note a confidential report contained information “for which a public discussion would be likely to prejudice the interests of the local government or someone else, or enable a person to gain a financial advantage”.

Councillors unanimously voted for their chief executive to “execute the terms sheets as discussed at the meeting” but did not put a figure on the cost to ratepayers.

Neither the Townsville mayor, Jenny Hill, nor the Rockhampton mayor, Margaret Strelow, responded to a request for comment.