A former Liberal party leader says the controversial Adani Carmichael coalmine is already a “stranded asset” and the last thing the Turnbull government should be doing is lending Adani $1bn.

Dr John Hewson, a professor in economics, has criticised the Turnbull government for considering lending Adani nearly $1bn in taxpayer money via the Northern Australia Infrastructure Facility (NAIF).

Hewson said the fund should only be used to help projects become commercially viable but the $1bn would be used by Adani to build a railway to a coalmine that Australia’s major banks have refused to fund.

“If they’re going to build it, they have to fund it themselves,” he told Sky News on Sunday. “There is no way we should give them concessional finance.

“If you take a long-term view on emissions reduction, 85% of existing coal reserves cannot be mined and used in power generation if we’re going to meet net zero emissions by 2050.

“We have an imperative in our own circumstances not to do it and certainly the Northern Australia Infrastructure Facility’s mandate is just to top up to make projects that are not viable commercially viable – that’s the last thing we should be doing.

“I think it’s already a stranded asset in the terms that I’d look at many of these fossil fuel assets.”

In India last week, the Indian billionaire Gautam Adani told Turnbull his company would seek a loan of up to $1bn from Australian taxpayers to support his proposed Queensland coalmine.

Turnbull assured him that native title obstacles threatening the project would be “fixed”.

“They are enthusiastic to make an application to the NAIF,” Turnbull said.

But Dr Craig Emerson, a former Labor MP and professor in economics, said on Sunday it was “telling” that Turnbull had not said, when visiting India, that he was pleased to use taxpayer subsidies worth $1bn to support Adani’s mine in Queensland.

“He didn’t because he couldn’t, and there’s a very open question as to whether that should be allowed,” Emerson said.

In December last year, the government’s NAIF granted Adani “conditional approval” for a $1bn loan to Adani to build a rail line between its proposed Carmichael coalmine and the Abbot Point shipping terminal in Queensland.

The rail line, if built, would allow Adani to build the country’s biggest coalmine and open up the Galilee Basin to further mines by linking them to an export terminal.

Coral scientists have argued the coal needs to stay in the ground if the Great Barrier Reef is to be protected from the impacts of climate change. The economic benefits of the proposed mine are also disputed.

Last week in India, Turnbull said the Carmichael mine would create “tens of thousands of jobs” if it went ahead – larger than the previously largest claim of 10,000 jobs.

Adani claims on its website the mine will create 10,000 jobs but does not provide evidence to support the claim.

The prime minister’s office, when contacted by Guardian Australia last week, said Turnbull’s figure of “tens of thousands of jobs” had come from a Pricewaterhousecoopers report commissioned by Adani but the report wasn’t public.

The Labor leader, Bill Shorten, said on Sunday that the case had not been made for taxpayers to provide a low-concession rate loan of $1bn to a multinational mining company.

“I haven’t seen the argument that somehow this concessional loan is going to unlock tens of thousands of jobs,” Shorten said. “If this [project] is such a good deal, it won’t need the taxpayers of Australia to underwrite it.”

The Liberal Democrat senator David Leyonhjelm said on Sunday he was also opposed to the NAIF lending Adani any money.

“I wouldn’t like taxpayers’ money going to the benefit of a privately owned company,” he told Sky News on Sunday. “If the mine doesn’t stack up on its own merits then it shouldn’t proceed, it shouldn’t need taxpayers’ money to kick it along.”

The Adani board is expected to decide whether to approve the controversial project as early as May.