Senate inquiry into 'secret' $5b govt fund

Concerns of a possible conflict of interest by a board member on a $5 billion federal government development fund will be investigated by a Senate committee.

Labor Chair of the Senate economics references committee Chris Ketter and Greens senator Larissa Waters joined forces on Wednesday to instigate the inquiry into the Northern Australia Infrastructure Facility.

The facility has been plagued by allegations of conflicts of interest among its board members, with Labor calling for one director, Karla Way-McPhail, to be sacked.

Labor's Murray Watt says Ms Way-McPhail should not remain on the board because of her business interests in the mining industry, which mean she could gain financially from decisions of the NAIF.

"We have a director of a $5 billion fund, appointed by Minister (Matt) Canavan, a friend of Minister Canavan, a donor to the LNP, has extensive interests in the mining and tourism industries, which may both benefit from applications to the NAIF," told the Senate on Wednesday.

"You really have to ask yourself whether this is an appropriate person to be overseeing what are supposed to be independent decisions about the allocation of $5 billion in taxpayers' funds."

Indian resources giant Adani has applied to the Northern Australia Infrastructure Facility for a billion-dollar loan to build a rail line linking the proposed Carmichael mine to port.

Senator Waters says she will call Adani before the inquiry to grill the company on why it needs taxpayer funds.

"The administration of this $5 billion infrastructure fund has almost zero transparency, all decisions and applications are kept secret until after they've been approved," she said.

"The NAIF isn't about encouraging investment in Northern Australia, it's about creating a slush fund to prop up the dying coal industry and appeasing the Trumps within the coalition."

The inquiry will look into the governance of the facility and processes used to appoint its board members, including whether there's been assessment of potential conflicts of interest.

Opposition resources spokesman Jason Clare accused the government of "covering up" conflicts of interest.

"This is not good governance. This is a cover-up," he said.