Royal commission into matters relating to norfolk island

Conclusions and recommendations


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7.Conclusions and recommendations

Including tourists, Norfolk’s future population on present planning criteria, is probably going to lie between 1800 and 2200 people at any particular time. The Island is a minute speck of some 3455 hectares in the centre of a circle of ocean of some 800 kilometres radius which isolates it utterly. It is many more kilometres distant from any significant markets. Freight to and from the Island are such as to make successful commodity trading a very unlikely proposition. The Island lacks a natural source of power in the way of fossil fuels or hydro­electric potential, and its tides or winds are not at present worth considering in so far as generation of power is concerned. Its own population and fresh water supplies are not large enough to provide a market or labour supply which would justify the establishment of any large-scale industry in the Island. Its defence significance is confined to the gathering of weather information, it lacks natural harbours, its coastline is forbidding and its back—up natural resources are minimal. Costs of estab­lishing and maintaining a defence outpost in such isolation would be high and the protection of such a post would pose further problems. Its climate demands refrigeration for bulk storage of many food commodities, but the cost of setting up and maintaining such facilities, particularly because of the power position, would not make it a feasible proposition for the time being.

It would be completely unrealistic in the light of the history of earlier commercial ventures to predict any future for commercial large—scale primary or secondary industry in or off the Island, always reserving, of course, the possibility of mineral or oil discoveries off its coast which could change the industrial scenario dramatically if they eventuated. There will always remain the possibilities inherent in high security agricultural crops, the equally high security (but industrially minor) activity of an animal quarantine station, a base for communication relays, the very small activities of pine, palm and avocado seed production and the maintenance of an information] gathering weather station.

The Island does, however, possess proved ability to attract tourists. Its main charms are the scenic beauty of its land— and seascapes, the rustic tranquillity of its environment, the historical interest of its past, its superb fishing grounds and the low-duty shopping opportunities available over a wide range of goods. Clearly, for the Island to have any economic future it must be based on this tourist industry. No other viable alternative is at present predictable. If any circumstances caused the cessation or serious reduction of the tourist industry hundreds of residents would have to leave the Island or face a near subsistence type of living. The Island would be unable to pay for its imported necessities and a large part of its essential services.

In such a precarious situation, it behoves policy makers and administrators alike to do nothing which may place the tourist industry in jeopardy or even cause its downturn. It has an obvious limit to growth and it is only necessary to provide sufficient stimulation to attain that limited capacity. The vital thing is not to take any action which may threaten that industry’s essential components mentioned above. In particular it is recommended that:

  1. The plan for the restoration and maintenance of historic building sites be maintained. The five-year program of restoring the Kingston Penal Settlement buildings, which commenced in 1974, is to involve the Commonwealth in an expenditure of 1.25 million dollars.

  2. The practice of fouling the coastline by emptying untreated garbage into the sea be terminated and replaced by a proper garbage disposal system.

  3. Cattle grazing in Government—owned pine—forested areas and on steep slopes cease, and that such areas and slopes be reafforested.

  4. Constant care be exercised in the setting of customs duties in the Island to ensure that low-duty shopping remains available.

  5. Higher standards of town planning and building control be introduced and implemented.

8.Relationship to the Australian economy

While the above sections have described the salient features a of the economy of Norfolk Island as background to those recommendations of this Report which are related to that economy, they do not treat the economic relationship between Norfolk Island and the mainland of Australia. It would be remiss to ignore that relationship for it is very relevant to final decisions which are required to be taken by the Commonwealth.

As it has now been established that Australia has complete responsibility for Norfolk Island, it is only proper that costs of such responsibility be weighed by Australia before irrevocably committing her other citizens to a burden which may be held by many in the absence of an outline of the factors involved -to be an unnecessary and unjustifiable load to carry.

From the comments in the earlier part of this section, it will be obvious that Norfolk Island’s future and sole hope of achieving any economic balance lies in the tourist industry. That industry, however, is itself completely dependent upon a transport system which requires a certain essential infrastructure — namely an airport and related facilities - to be upgraded, and the cost of which upgrading is beyond the capacity of the Island to provide and which, therefore, would be sought from Australia. Depending upon the class of aircraft to be used, that cost of upgrading could be up to 4.5 million dollars.

The capital expenditure by Australia to date, on the airport and related facilities, is approximately $892,513. To these capital expenses there must be added the annual outgoings by Australia to the Island which were assessed in July 1975 by the Department of the Capital Territory as being around 2.5 million dollars per annum. That figure can be expected to rise considerably with anticipated increases in costs of existing services alone and it would not be unreasonable, therefore, to think in terms of Australia incurring costs in excess of $3 million dollars per annum to Norfolk Island in the immediate future.

Because of the absence of necessary statistical data and records it is not practicable to make estimates in this area with precise accuracy, but the Commonwealth Treasury has attempted reasonable projections, and in its view, the receipts to Australia from Norfolk Island in the form of income taxation, death and gift duties, if these were introduced, are likely to be around $1,020,000 per annum. Australia, therefore, would face an annual deficit of the order of $1,980,000 to support Norfolk Island as part of the Commonwealth, plus the provision of money from new capital works in the near future of up to $4.5 million dollars.

However, this admittedly approximate calculation of the possible deficit must be set in the context of this Report’s recommendations. If these recommendations are adopted then amendments to the above calculations must be made. The revenue estimate, for example, will be lower if some high income earners leave the Island as is likely because it will no longer be a tax— free region; of equal importance are the expenditure estimates, which will rise if the Commonwealth assumes total financial responsibility for education, health and social security - expenses hitherto partially borne by the Administration. These factors are imponderables in the sense that they are impossible to assess precisely, but that they will exert a profound effect upon the final factual figures cannot be doubted. Weighing them up as best one can, it is the view of this Commission that the real deficit is likely to be of the order of at least three million dollars per annum, over and above further capital expenditure of approximately $4.5 million dollars.

Naturally enough, the question of whether Australia is justified in subsidising 1600 of its citizens to this extent cannot be avoided. What does mainland Australia receive in return for its outlay and can such high deficit expenditure be justified?

The Island’s only defence value for Australia lies in the gathering of weather information. It holds relics and buildings of historical interest, but it must be conceded that the history is as much British history as Australian history, even admitting that a link between the two exists. The Island offers a pleasant holiday venue for Australians and New Zealanders, but if it sank in the Pacific following an earthquake, intending holiday makers would soon find an alternative. Several suitable substitute venues for holidays exist. It is possible that the Island may attain value in the future as a base for exploitation of oil and mineral wealth in the surrounding ocean bed, but present indications point to such discoveries as being unlikely. Even if its entire 3455 hectares were restored to pine forest as a source of timber, it is doubtful if the resultant costs of the logs delivered to a worthwhile market would make such a venture profitable. In so far as tax losses are concerned, once Australia closes revenue loopholes, the presence of Norfolk Island, 1676 kilometres off shore, even as an independent nation, would pose no problems to Australia. Australian passports and currency need not be made available to an independent Norfolk Island, Reserve Bank restrictions applicable to the movement of funds externally to Australia would apply, communication facilities could be withdrawn and the tax avoidance opportunities in the Island as they affect Australia would largely vanish.

In short, the Island’s only genuine immediate value to Australia lies in its present weather research station, and at the figures mentioned above, this must be rated as expensive.

If Australia were to relinquish responsibility for the Island, and no other nation shouldered it, there is no doubt a human problem of significance would emerge. Without subsidisation by Australia or some other nation, Norfolk’s economy would collapse. Large numbers of its population would have to emigrate to live at any reasonable standard and the remainder would revert to a relatively primitive subsistence type of survival. Australia, or some other nation, could offer to accept the Norfolk Islanders as immigrants and it would be a far better economic proposition for Australia to do this than to continue to subsidise the Island in its present fashion.

This purely economic approach to the problem of Norfolk Island will no doubt be condemned by many, especially those who, for various reasons, are deeply attached emotionally to the Island. However, it is only fair that the attention of those in the position of having to make final decisions on behalf of the Australian taxpayer is drawn to the factual economic situation.

Summarised, that factual situation may be stated as follows:

To maintain the 1600 residents of Norfolk Island in the comfortable and splendid isolation to which they feel entitled, the Australian taxpayer is being asked to pay out what is probably a far greater per capita contribution than most Australian citizens the mainland receive by way of Government assistance, One suspects that if mainland Australians were asked the question do they approve of such expenditure? - The answer would be an emphatic negative.

A good case, therefore, can be said to exist on coldly dispassionate economic grounds for the physical abandonment of Norfolk Island by Australia (as Britain did on two occasions and for the same reason), with provision being made to offer to accept its inhabitants as mainland immigrants. If, however, Australia is to continue overall responsibility for the Island, then such a course can only be justified on Non –economic grounds. Whether such grounds equate is a purely arbitrary value judgment which, naturally enough will vary with individuals. These grounds will be stated and the Commission will express its own judgment in chapter 17.

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