Mr Shorten, campaigning in north Queensland where Labor is looking to hold the marginal seat of Herbert while winning the Coalition-held electorates of Leichhardt, Dawson, Flynn and Capricornia, said the fund had failed the people of northern Australia.
He said not a cent of the $5 billion earmarked had yet been spent in Queensland, and highlighted that it had spent more money on authority salaries than projects.
The NAIF would be replaced by a development fund that would look to work with private financiers and investors to deliver major projects across Queensland, the NT and WA.
“The NAIF has been an abject failure,” he said.
“Labor’s Northern Australia Development Fund will provide a financing facility and work with Infrastructure Australia to identify and support projects of national economic significance, such as gas pipelines, in Australia’s north.”
Labor will set aside up to $1.5 billion for proposed pipelines across Queensland’s Galilee and Bowen basins while another line would connect the Beetaloo basin to Darwin and across to the east coast.
Mr Shorten said opening the Beetaloo basin could help turn Darwin into a “manufacturing powerhouse” with the area holding enough gas to supply the domestic market for up to 400 years.
The new fund would also sink $1 billion into tourism projects across northern Australia.
Recommendations from the recent Auditor-General report would be incorporated into the design of Labor’s new fund while indigenous Australians would be appointed to its board.
Mr Shorten said all existing projects would be honoured with funding capped at $5 billion. This would include $150 million to upgrade airports in Darwin, Alice Springs and Tennant Creek, which while approved by NAIF have yet to be green lighted by the NT government.