The sale of Manhattan Island to the Dutch is fabled as the worse deal of all time; worse even than Adani inveigling Australian politicians into paying for the world’s biggest new thermal coal mine, Carmichael.
We disagree, however. Adani is worse. While it is true that the Dutch picked up New York for just 60 guilders worth of beads and trinkets, there is reasonable evidence to suggest that the Indians who sold them the island were not the rightful property owners anyway.
The deal was struck by the Canarsie Indians who did not even live in Manhattan but liked to get over there for the occasional drinking session. When they saw a bunch of gullible white blokes in codpieces front up, they went to work.
Australian politicians from the Liberal National party coalition and Queensland Labor however are doing a deal which makes even the decision by the board of Time Warner to merge with American Online look good. At least Time Warner got $US99 billion in tax losses and didn’t tear up the environment.
What do Australian taxpayers get from the Adani deal?
1. They get to subsidise a coal railway to the tune of $1 billion thanks to the mooted loan from the Northern Australia Infrastructure Facilty (NAIF).
2. As the Carmichael project is such a white elephant and commercial banks have shied away, taxpayers may also be on the hook for billions in bank funding for the coal mine itself, via guarantees from EFIC (the Export Finance and Insurance Corporation). If, or more likely, when the mine goes belly up, taxpayers pick up the chit.
3. Australian taxpayers also get to put millions into the tax haven entities of Indian coal magnate Gautam Adani. If the mine fails, or more likely, when the mine fails, and Adani Australia bites the dust, Adani shareholders in India are exposed. As Adani family private interests stand behind the Abbot Point port and rail structures however, they clip the ticket on volumes and take no commodity risk, so they make money even at low coal prices.
4. They get to give Adani an unlimited water licence for 60 years, the most generous water deal in Australia’s history thanks to the Queensland Government.
5. Queensland taxpayers also get to subsidise Adani for their government’s royalties concession deal.
6. In the latest bizarre development, Queensland ratepayers are also on the hook thanks to a deal by two local councils, Rockhampton and Townsville, to shell out $15.5 million to Adani in return for 1,100 construction jobs.
7. And what do Australians end up with for all this largesse from their elected representatives? A thwacking big hole in the ground, contaminated water, potentially billions in financial losses, some of it leaking to tax havens, lower prices for our key coal from flooding the market, and an international environmental and political embarrassment.
If this project stood up financially, commercial banks would back it. They have walked away. The seaborne thermal coal market is in structural decline. The Indian government is on track to phase out coal imports in three years. New solar capacity is now cheaper to build than new coal-fired power plants and the carbon emissions from the mine will assist Australia in exceeding the two degree warming pledge struck in the Paris Agreement.
This deal is truly a shocker.