Royal commission into matters relating to norfolk island


The transition to the present situation



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1.The transition to the present situation

It was not until World War II that any fundamental change in Norfolk’s economy took place and this change was wrought by the construction in the Island of an air strip on land acquired and owned by the Commonwealth Government Overnight, the difficulties of access and the isolation of Norfolk commenced to lessen and as the standard of both airport and aircraft improved so the ability of people to enter and leave the Island without excessive inconvenience increased. As this fact became known in Australia and New Zealand, along with greater knowledge of the Island’s well—recognised attractions, the number of visitors gradually built up and with this growth in numbers of tourists came a concomitant growth in all those services related to tourism. Hotel, apartment and guest house accommodation burgeoned, imports to supply low—duty shops rose steadily, numbers of road vehicles and road standards were lifted to meet increasing demands, and administration requirements and public services expanded to satisfy the developing needs of a growth industry and its satellite or support industries such as horti­culture, fishing, souvenir production, meat and milk production.

Concurrently with the above changes, another less obvious but, nonetheless, equally basic change was occurring. As Norfolk’s tertiary industry of tourism grew, there also developed more efficient banking facilities and those services associated with the transmission of funds to and from the Island. Greater knowledge was disseminated of Norfolk’s peculiar tax status vis—a—vis Australia and by the early 1960s there had evolved in Norfolk Island those essential prerequisites for a twentieth— century tax haven, viz.



  1. A stable currency;

  2. Freedom and ease of currency movements;

  3. Banking facilities;
  4. An infrastructure of solicitors, accountants and residents willing to provide services and domiciles


  5. Adequate communication facilities;

  6. Political and administrative stability.

Norfolk Island lay ready to be exploited by the revenue avoider.

2.The present economy and the dominance of tourism


It is against the above background of subsistence agriculture and fishing, plus the failed attempts at commercial ventures into the export of primary industry products and the uncontrolled changes of the transitional period, that we now turn to the present. Up until 194721 when the tourist industry, with the aid of regular and reliable air transport, began to develop, the Island was virtually stumbling along in an economic sense, lurching from one minor primary industry boom/collapse to another. There was no stability nor firm base upon which to rest a balanced economy which could sustain this remote community in its genuine needs. The emergence and growth of tourism provided this stability.

By 1952, there were nine guest houses capable of accommodating 120 visitors to the Island and tourist arrivals had increased to 1500 in that year. For a whole decade, however, this was a maximum figure and it was not until the l960s that the tourist numbers began to increase perceptibly as the following table reveals:


Year Air passenger arrivals

1960—61 1,958

1961—62 2,679

1962—63 3,855

1963—64 4,275

1964—65 5,761

1965—66 7,116

1966—67 8,999

1967—68 9,933

1968—69 10,473

1969—70 12,178

1970—71 12,438

1971—72 12,853

1972—73 13,472

In addition to those Island factors already mentioned, other factors external to the Island were also operating as stimuli to tourism in Norfolk Island. Affluence in Australia and New Zealand had increased in the post—war years and facilities for overseas travel had improved, both on the accommodation and transport sides. People possessed more money for travel, there were better facilities for comfort while travelling and there was the natural reaction to years of depression and war when such travel was a financial or physical impossibility. Norfolk Island became a small beneficiary of all these factors during the l96Os.

Clear recognition of these causal factors has a certain merit, for it enables one to realise that a downturn in tourism in Norfolk Island can result from a reversal of these factors, especially those impinging on the affluence of people in Australia and New Zealand. A diminution in that factor of affluence due to unemployment and falling incomes would undoubtedly bring a reduction by such people in spending on non—essentials, and Norfolk’s economy would be adversely affected in consequence. Such a reversal could, moreover, occur with startling rapidity. At the risk of repetition it cannot be over-emphasised that the very basis of Norfolk’s present economy is somewhat fragile and very vulnerable to forces which may tend to repel tourist spending.

Several indicators of the nature of the present economy are available.

First, the latest table22 of imports and exports is set out in the following five pages.


Commerce and Trade

1. Imports for year ended 30 June 1975 (listed in accordance with the Schedule to the Customs Ordinance 1913-1973)




Item

From Australia and Pacific Islands

From New Zealand

From Asia

From Europe and other countries

Total




$

$

$

$

$

Beer, stout and cider

172 211

-

-

-

172 211

Spirits and liquor

109 724

-

-

-

109 724

Wines

64 319

-

-

-

64 319

Tobacco

2 120








1 968

4 088

Cigars and cigarettes

26 138

-

-

19 674

45 8122

Tea

7 654

266

-

-

7 920

Coffee

9 069

461

-

182

9 712

Benzine – Motor

112 577

-

-

-

112 577

- aviation

168 500

-

-

-

168 500

Kerosene - power

3 960


-

-

-

3 960

- lighting

5 832

-

-

-

5 832

Oils - fuel

107 092

-

-

-

107 092

- lubricating

11 853

-

-

-

11 853

Other petroleum products

627

-

-

-

627

Gas – other

56 436

-

-

-

56 436

Confectionery

35 334

2 978

-

-

38 312


Jams

3 688

232

-

-

3 920

Preserved fruit

11 284

8 603

-

-

19 887

Cement

2 839

34 156

-

-

36 995

Electrical goods

71 322

3 344

-

-

74 666

Glassware

2 840

192

-

-

3 032

Hardware

76 187

8 023

299


37

84 546

Iron – Galvanised

2 020

13 604

-

-

15 624

Paint and varnish

26 250

4 963

-

-

31 213

Asbestos sheeting

14 414

1 320

-

-

15 734

Hardboard

38 066

9 528

-

-

47 594

Gas in cylinders (welding)

1 720

-

-

-

1 720

Building material

260 135


114 972

978

2 788

378 873

Clocks

3 178

-

15 056

8 838

27 072

Watches

2 641

-

55 253

48 626

106 520

Machinery

48 643

11 963

5 488

2 439

68 506

Tools

11 661

3 569

-

709

15 939

Implements

7 920

7 209


4 696

-

19 825

Drapery and Piece goods

136 691

17 518

101 773

225 020

480 002

Fabric

11 428

16 451

5 035

29 486

62 400

Textile

569

250

-

205

1 024

Footwear

13 993

21 225

7 390

145 200

187 808

Coins

4 800

-

-


-

4 800

Poison

10 841

1 266

-

-

12 107

Dental

4 984

178

-

-

5 162

Medical

25 283

7 379

-

-

32 662

Drugs

984

3 957

-

-

4 941

Gas in Cylinders – medical

1 012

-

-

-

1 012

Bacon and hams

22 504

-

-

-


22 504

Biscuits

14 315

6 566

-

-

20 881

Butter

6 607

12 440

-

-

19 047

Cereal

2 902

-

-

-

2 902

Cheese

8 275

4 134

-

-

12 409

Flour

21 538

-

-

-

21 538

Fruit – dried

2 317

-

-

-

2 317


Fruit juice

8 916

2 875

-

-

11 791

Groceries

229 314

40 193

-

-

269 507

Mutton – lamb

9 538

12 309

-

-

21 847

Margarine

6 807

-

-

-

6 807

Meat – canned

5 409

-

-

-

5 409

– fresh

46 507

47 066

-

-

93 573

- Other


13 975

3 749

-

-

17 724

Milk – condensed

6 446

778

-

-

7 224

- Powder

3 291

394

-

-

3 685

Onions

2 006

824

-

-

2 830

Potatoes

10 426

-

-

-

10 426

Sugar

10 658

263

-

-

10 921

Household effects


86 730

53 805

33 744

86 761

261 040

Furniture

58 224

20 624

4 994

6 837

90 679

Earthenware

12 083

2 287

26 993

17 029

58 392

Electrical goods

27 676

6 885

6 431

8 812

49 804

Glassware

6 736

165

2 557

3 579

13 037


Refrigerators

9 120

13 855

-

-

22 975

Fodder

43 678

-

-

-

43 678

Harness and saddlery

3 933

1 018

-

-

4 951

Livestock

4 619

3 196

-

-

7 815

Fertilisers

3 757

819

-

-

4 576

Cleaners

16 260

3 027

-

-

19 287


Soaps – Toilet

3 663

-

-

-

3 663

- Household

10 228

120

-

-

10 348

Stationery and books

92 676

19 846

1 687

2 189

116 398

Personal effects

21 720

17 084

-

-

38 804

Photographic goods

42 030

2 477

172 910

14 428

231 845

Photographic films

24 740

1 523


4 079

7 757

38 099

Films – theatre

7 666

20 139

-

-

27 805

Radio accessories

9 464

1 738

421 822

69 524

502 548

Musical accessories

8 880

59 960

113 005

40 732

222 577

Plants and seeds

3 954

3 148

-

-

7 102

Wire and wire netting

15 132


30

-

-

15 162

Motor vehicles

59 390

276

145 058

83 142

287 866

Motor cycles

2 120

-

10 526

2 917

15 563

Motor accessories

59 752

10 778

18 140

558

89 228

Binoculars

3 079

-

10 286

470

13 835

Cosmetics

21 741

5 754

-


36 780

64 275

Explosives

2 351

-

-

-

2 351

Fancy goods

39 952

7 071

47 383

91 094

185 500

Jewellery

43 905

21 364

63 314

56 609

185 192

Mineral waters

53 627

153

-

-

53 780

Sports goods

24 754

1 393

8 045

47 322

81 514


Stationary engines

14 547

-

-

21 166

35 713

Typewriters

4 171

-

-

-

4 171

Ships and boats

7 998

-

-

1 446

9 444

Methylated spirits

148

37

-

-

185

Goods n.e.i

76 440

7 164

13 742

29 725

127 071

Total

3 047 534


710 907

1 300 684

1 113 049

6 172 174

2. Exports for year ended 30 June 1975



Item

To Australia and Pacific Islands

To New Zealand

To Asia

To Europe and other countries

Total




$

$

$

$

$

Agricultural tools and implements

-

670

-

-

670

Apparel and drapery

3 888

2 130

-

-

6 018

Fruit – avocado

153

142

-


-

295

Building material

3 593

1 795

-

-

5 388

Binoculars

-

-

-

-

-

Empty cylinders (returned)

24 024

140

-

-

24 164

Earthenware and crockery

-

-

-

-

-

Empty containers

10 373

60

-

-

10 433

Empty drums (returned)

4 450

-

--

-

4 450

Fancy goods

1 531


1 239

-

-

2 770

Films – theatre (returned)

50

25 070

-

-

25 120

Hardware

1 518

654

-

-

2 172

Groceries

110

-

-

-

110

Household goods

44 375

14 701

-

320

59 396

Jewellery

62 736

320

23 334

23 033

109 423


Machinery – non electric

15 985

745

-

-

16 730

Motor – accessories

6 230

501

-

-

6 731

- Cycles

4 450

1 000

-

-

5 450

- Vehicles

26 000

55 100

-

-

81 000

Miscellaneous

32 431

270

700

14 500

47 901

Musical accessories

3 816

493


-

-

4 309

Personal effects

62 994

25 900

-

-

88 894

Pine seeds

25

-

-

-

25

Palm seeds

76 074

-

-

-

76 074

Photographic accessories

6 595

554

400

100

7 649

Radio accessories

5 989

5 927

-

361

12 322

Sports goods

1 465

179


-

-

1 644

Boats

1 200

-

-

-

1 200

Stationery and books

2 200

1 000

-

-

3 200

Typewriters

690

1 100

-

-

1 790

Watches and clocks

5 730

130

4 740

4 989

621 017

Total

408 675

139 865

29 174

43 303

621 017

The predominance of gifts, jewellery, household goods, personal effects and other returned articles in the figure for exports and the overwhelming imbalance in the trade figures in favour of imports are the most significant features. For the year ended 30 June 1975 imports totalled $6 172 174, while exports grossed $621 017. The huge gap between the two figures is largely taken up by tourist spending and this serves to highlight the fundamental role which tourism plays in the present economy. The actual figures of tourists for the year 1974-75 are given here under:

Tourists from Australia 10 685

From New Zealand 5 919

From Elsewhere 2 203

Total 18 807

This represented an increase of 1739 (10.2%) over the previous year in which 17 068 tourists visited the Island.

Second, an examination of the following public finance figures for l974-7523provides a broad picture of those aspects of the economy connected with the Island’s administration.


Public Finance


  1. Revenue for year ended 30 June 1975

    Australian Government grant

    126,000

    Customs duty

    409,735

    Crown lease rentals

    5,089

    Conveyance fees

    3,684

    Profit from liquor sales

    149,453

    Public works

    7,235

    Motor registration fees and licences

    42,955

    Court fees and fines

    5,425

    Company fees

    197,961







    Agriculture inspections, pasturage and dog registration fees

    787

    Miscellaneous

    8,111

    Sale of stamps


    347,713

    Post office miscellaneous

    1,883

    Revenue from telephone undertaking

    10,019

    Timber royalty

    514

    Sale of stores

    142

    Revenue from electricity undertaking

    21,663

    Rental administration residencies

    4,817

    Sale of vehicles and plant

    1,933

    Sale of forest produce

    6,855

    Tanalith plant charges

    5,401

    Liquor licence fees

    8,557

    Revenue from lighterage undertaking

    3,443

    Interests on investments

    35,917

    Appropriations from former year


    106

    Dental fees

    2,656

    Total

    1,408,054

  2. Expenditure for the year ending 30 June 1975

Administration

239,717

Government house

8,569

Police, courts and prisons

33,033

Norfolk Island council

5,142

Printing, stationery and incidentals

21,202

Education

145,819

Health

81,234

Forestry and agriculture

32,243

Tourist bureau subsidy

5,000

Special subsistence allowances


16,376

Maintenance of buildings, roads and minor works

210,761

Post office

150,388

Capital works Buildings

35,251

Roads, public places etc

19,223

Electricity undertaking extensions

11,639

Vehicles

27,212

Liquor store working capital

30,000

Miscellaneous

4,944

Total

1,077,753

Occupations and businesses of the population serve to illustrate further the nature of the Island’s economy. They are shown in the following table taken at the last census.

POPULATION BY INDUSTRY
Census – 30 June 1971

Industry (major group)


Census – 30 June 1971

Proportion to total workforce




Males

Females

persons

Primary production

48

4

52

6.05

Mining and quarrying

4

-

4

0.47

Manufacturing

32

10

42

4.88

Electricity, water, gas and sanitary services (production supply and maintenance)

-

-

-

-

Building and construction

90

1

91

10.58

Transport and storage

26

8

34

3.95

Communication


12

4

16

1.86

Finance and property

18

6

24

2.79

Commerce

89

93

182

21.16

Public authority (n.e.i) and defence services

93

25

118

13.72

Community and business services (incl. Professional)

35

73

108

12.56

Amusements, hotels and other accommodation, cafes, personal services etc

38

98

136

15.81

Other industries

-

-

-

-

Industry inadequately described or not stated


31

22

53

6.00

Total in workforce

516

344

860

100.00
Source: Commonwealth Bureau of Census and Statistics.

If one links the classifications within the above table of commerce, hotels and other accommodation, plus community and business services — all three of which are tied to varying degrees with tourism — one sees that approximately 49.53% of the workforce is engaged wholly or largely in the tourist industry.

A fourth significant statistic to which attention should be drawn when trying to assess the vital importance of tourism to the present economy of Norfolk Island is the correlation between growth of tourist numbers and the increase in public


Increase In Tourists

Public Revenue24

1961—62

2,679

£108 466

1965—66

7,116

$406,167


1969—70

12,178

$598,653

1970—71

12,438

$671,009

1971—72

12,887

$748,923

1972—73

13,472

$873,988

1973—74

17,068

$1,036,942

1974—75

18,807

$1,408,054

A significant component in the above figures, and one which bears a negligible relationship to tourism, is that in respect of company fees which, for instance, in 1974-75 contributed $197 961 of the total public revenue. In spite of discounting that company fee figure, the parallel growth over the years between tourism and revenue emphasises still further the funda­mental importance of the tourist industry to the economy of Norfolk Island.

It has been indicated, however, that there are limits to the continued growth of this tourist industry. Evidence points to an upper limit of around 20 000 tourists per annum as being desirable if Norfolk’s ecological balances, way of life and uncrowded rural atmosphere are to be preserved. Concurrently with this upper limit on the growth of tourists, there will also be a distinct upper limit on the growth of public revenue, and both these facts require to be borne in mind in respect of future planning of expenditure in Norfolk Island. One is looking at an area to which the usual cliché of unlimited growth opport­unities simply does not apply. There are clear limits to the growth of Norfolk Islands economy.

At present the growth of the tourist industry is intended to be effectively controlled through a system of licensing of beds in accommodation centres. At 30 June 1976 the total number of authorised beds was 998 spread over a range of variously priced accommodation, most of which is of good quality A further fifty—four beds have been approved but are not yet available.

In addition to controlling the numbers of beds for tourists, there is a clear need to control the licensing of beds in those boarding houses which are ostensibly used to accommodate itinerant workers in the Island but which may be open to tourists if not checked, so lessening the effectiveness of tourist controls.

A suggestion was made in evidence that the limit of 20 000 tourists per annum as recommended by Professor But land in his March 1974 report25 be varied should average length of stay in the Island decline from its present eleven days to a lower -figure. There is a clear trap here and this suggestion needs to be carefully considered.

One of the objects of limiting the numbers of tourists is to keep in reasonable check the wear on and compaction of the Island’s roads, paths, beach areas, cliff edges, historical sites and the like. Each tourist probably visits the main trails, roads and points of historic interest at least once per visit, be that visit of five days’ or eleven days’ duration. Any increase in the absolute numbers of tourists is inevitably destined to increase wear and tear on the Island’s environment and it is that point which Professor Butland stressed, viz. the degree of usage of the Island’s resources. Understandably, traders and accommodation proprietors want as many free—spending tourists per annum as can possibly be brought to the Island, but on the other hand the Island itself needs a firm limit placed on the pounding its environment is expected to suffer. In Professor Butland’s view that should not exceed 20 000 visitors in any one year. While the Commission agrees with Professor Butland’s approach it appreciates that one cannot be too dogmatic on such an upper limit. However no departure from such expert advice should be made unless very good reasons exist to justify the change.



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