31 March 2014
Australian Financial Review
Business groups including the Minerals Council of Australia have rejected billionaire miner Gina Rinehart’s push for northern Australia to be declared a special economic zone.
A think tank co-chaired by Ms Rinehart will tell a parliamentary inquiry that the massive expanse of land above the 26th parallel should be given tax breaks to stimulate investment and population growth.
Submissions to the inquiry reveal the special economic zone idea promulgated by Australia’s richest woman has the backing of the Liberal National Party in Queensland, as well as groups representing ports and airports.
But the Minerals Council said “special incentives for living, working and operating in Northern Australia are not what is required to support the development of Northern Australia”.
It is one of more than 200 submissions received by the Joint Select Committee on Northern Australia, which travels to Queensland for hearings this week before moving to Western Australia. The committee’s findings will be fed into the Coalition’s white paper on the development of Northern Australia.
Ms Rinehart’s group, Australians for Northern Development and Economic Vision, said the area’s enormous untapped potential lies in its natural resources and proximity to Asian markets.
“Activities inside economic zones should not attract corporate tax, income tax, payroll tax, land taxes or stamp duty,” the group’s submission said, adding that foreign investment barriers should be lowered in all but projects involving national security. Special visas should also be offered to attract labour.
The Coalition has committed to producing a white paper before the end of the year. It defines northern Australia as a 3 million square kilometre area north of the Tropic of Capricorn with a population of around 1 million people.
Just prior to last year’s federal election, then prime minister Kevin Rudd sought to trump the Coalition’s white paper pledge by committing to working toward designating the Northern Territory an economic zone where the company tax rate would be a third lower than the rest of the country.
Chambers of commerce and industry in Western Australia and Queensland do not like the zone idea.
“Creating an arbitrary zone that is subject to a less burdensome regulatory and taxation regime simply creates distortions across factor markets and results in inefficiencies in the allocation of resources across the broader economy,” WA Chamber of Commerce and Industry said.
The Queensland chamber said economic zones can have unintended consequences, such as tax avoidance, businesses relocating from other parts of the state without generating any new jobs, and cross-border distortions that detract from national productivity.
The Institute of Chartered Accountants said granting one area special treatment will lead to requests from other jurisdictions. Tasmania, for example, could point to having the worst youth unemployment in the country to plead a similar case.
The North Queensland Bulk Ports Association and North Queensland Airports support a special economic zone, as does the Northern Development Policy Committee of the Liberal National Party, which holds government in Queensland. It says a low tax, low regulation special economic zone is needed to drive investment and population growth.
Courtesy of the Australian Financial Review
31 March 2014