In this article that first appeared on The Conversation today, journalist Michelle Grattan outlines the Federal Government's plan to establish a Northern Special Economic Zone in the north, and the Federal Opposition's response. The National Farmers's Federation view on the announcement is added below.
Kevin Rudd has promised to establish a Northern Special Economic Zone and held out the prospect of cutting company tax by about one third for Northern Territory-based businesses.
Announcing Labor’s policy for the north in Darwin, Rudd said the government would aim to cut the company tax rate within five years, simplify investment rules to make it easier for projects to be “landed” in the territory and streamline regulation and assessment of major projects so they could start as soon as possible.
He said there were constitutional reasons why the government would begin the special economic zone in the NT, because “there is a dispute about whether you can have different tax rates between the states. Not so for the territory.”
His “personal objective” was for a one-third cut in the company tax for NT based businesses, but a re-elected Labor government would consult with the territory government and the business community and announce a detailed plan in 2014.
The aim would be to have a new rate in hand for new businesses planning their future investment decisions that would kick in by 2018.
The businesses would have to be based in the NT, not just have offices there. “I’m talking about how you grow the economy of the territory.”
Labor would also expand the Ord irrigation scheme to open up 14,000 hectares in the NT (bringing the total to 43,000 hectares. This would be done in partnership with the NT government, which needed an extra $10 million for native title negotiations to secure the land for the expansion.
Rudd said this would “unleash an enormous amount of agricultural land for the future” – economists said $150 million annually in agricultural production would come, mainly through expanded sugar production and crops.
“This is about investing in a huge new project for Australia,” he said.
The policy also includes 20-year growth plans for the regional hubs of Darwin, Cairns, Townsville and Mackay. The plans would be overseen by Infrastructure Australia.
The Darwin plan would focus on LNG and mining development, agribusiness, engineering and other services, and capitalise on the NBN.
For Townsville, with its port close to resource areas, the concentration would be on transport, as well as agricultural development, education, defence and tropical markets.
In Cairns the emphasis would be on tourism, particularly developing the tourist market from China, agribusiness, defence, engineering and medical services.
The Mackay plan would exploit its closeness to the resources of the Bowen and Galilee basins.
Talking up the development of the NT, Rudd said: “I believe in the territory, I love the territory… I see it as huge in where we want to take Australia in the future.”
Anticipating criticism of special tax breaks, he said “All we’re talking about is giving people a bit of a leg up.”
The tax plan, which does not have settled details and would not be in the current forward estimates, is not costed.
If it was constitutionally possible he indicated he would like to look at, in the longer term, tax help for North Queensland and northern Western Australia as well.
Opposition leader Abbott said Rudd was just playing “catch-up politics”. The emphasis on the territory vindicated the position the Coalition had taken for three years. But he said Rudd was “not fair dinkum” and pointed to confusion in what he had said.
The opposition has promised a Coalition would produce a white paper on Northern Australia. The review would include the consideration of personal and business tax incentives to encourage investment.
Abbott said the government had “pilloried” the Coalition’s proposal to consider zonal taxation.
Northern interest welcome, but genuine commitment needed
The Rudd Government’s pledge to expand the development of agriculture in Northern Australia has been welcomed by the National Farmers Federation, but with a warning that a piecemeal, fragmented approach will not work.
“We know it’s not an easy or quick turnaround to develop these opportunities, but in order to take advantage of possibilities in new and expanding markets, Australian agriculture does need to look at ways to become more profitable and increase capacity for production,” NFF CEO Matt Linnegar said.
“The farming community in Australia recognises the real and identified challenges in improving northern Australia, which include a range of environmental, social and economic issues. These challenges were raised in the NFF-led, industry developed Blueprint for Australian Agriculture.
“Measures such as special economic zones that encourage businesses to expand, improved taxation arrangements that attract new investment and the streamlining of regulatory impacts have all been raised by the farm sector and will help respond to the challenges identified,” Mr Linnegar said.
“However, we need to be clear – it is one thing to acknowledge that there are opportunities in the north of Australia, and there are. But there should be no illusions about the fact that it will require a cooperative and comprehensive approach for development in the region to work. A sporadic or fragmented approach to expanding agriculture in northern Australia is not going to benefit anyone and in fact will be detrimental to the industry,” Mr Linnegar said.
While the NFF welcomes the commitment of $10 million to the Northern Territory Government to help facilitate expansion of the Ord Irrigation Scheme for crops such as sugar, the farming community recognises that this is a drop in the ocean in terms of what is required.
“What is needed is significant investment to response to critical issues facing development in the north, such as infrastructure including dams, transport and processing facilities, labour availability and research and development into crops and soil types. What’s more, better coordination is needed across industry, including agriculture and mining but also with State and Territory Governments,” Mr Linnegar said.
The NFF’s 2013 Election Priorities call for governments to commit to a national northern Australia development plan, including increased agricultural production through sustainable intensification of existing industries and exploring new industry opportunities; underpinned by feasibility studies for relevant infrastructure including dams, processing facilities and transport provisions.