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Monday, 15 September 2003
Page: 20063


Mr HAASE (6:04 PM) —The original intent of the taxation zone rebate, introduced as the taxation zone allowance in 1945, was to provide financial compensation to people who chose to meet the challenge of living and working in rural and remote areas of Australia. However, since 1945 the rebate, originally equal to about five weeks wages per annum, has been so severely eroded by inflation that in certain remote areas it now represents less than half a week's wage and is barely worth the effort it takes to claim it. I have proposed a concerted four-point plan to revise the current rebate system and shape it into a fair and workable taxation strategy. The reform aims to reclassify current zone areas for population increases over the past 60 years, substantially increase the taxation zone rebate amount, amend rebate eligibility to provide only for permanent residents of remote areas, and provide an effective Higher Education Contribution Scheme discount for university graduates who choose to live and work in remote areas of Australia.

An independent report on the growth of regional business—the regional business action plan—was released in August as a key initiative of the coalition government's Stronger Regions, A Stronger Australia statement. The report identified four major impediments to regional business growth: attracting investment and accessing finance; dealing with government policies and programs; recruiting and retaining skilled people; and establishing and maintaining adequate infrastructure. Among the report's recommendations for the role of government in regional Australia was an overhaul of the taxation zone rebate scheme. Proposed changes included aligning the zone boundaries with generally accepted Australian Bureau of Statistics boundaries for remote and very remote areas; introducing provisions that provide for regular indexing of the rebate in line with shifts in the CPI for regional and remote Australia; removing eligibility for the rebate from those people who are employed under a fly-in, fly-out arrangement and whose principal place of residence is not in one of the designated zones; and, finally, introducing amendments to the scheme that provide for an economic ceiling, effectively limiting access to rebates for people on high incomes.

As noted in the report, taxation zone rebate boundaries have changed very little since the introduction of the allowance in 1945. The most substantial change was the introduction of special zones in 1982. The report proposes that zonal boundaries be aligned with the ABS Accessibility/Remote-ness Index of Australia, ARIA, which divides the country into five zones: major cities, inner regional Australia, outer regional Australia, remote Australia and very remote Australia. The report recommends that only residents living in areas classed as either remote or very remote should be eligible for the rebate.

I concur with the ARIA boundaries in that, in line with my proposal, they would preclude Darwin, Cairns, Townsville and Mackay from the rebate. However, under the ARIA model, places such as Broken Hill in New South Wales, the Queensland townships of Bowen, Airlie Beach, Ingham, Tully and Innisfail, and Northampton in Western Australia would also be ineligible. As my proposal specifically calls for the elimination of cities with populations of greater than 50,000 people, I do not support the area model in its entirety.

Some apprehension regarding my proposal to remove Darwin, Cairns, Townsville and Mackay from the rebate scheme is understandable. That apprehension is nevertheless misplaced considering the following statistics in each of the cities. The Mackay City Council's most recent population estimate put Mackay's population at approximately 78,400. With a current growth rate of 1.7 per cent, Mackay's projected population in the year 2016 will be 98,700. The Darwin City Council's web site estimates the combined population of Darwin and its satellite city of Palmerston at just over 107,000. ABS statistics indicate that the combined city is `growing at pace'. According to the Cairns City Council web site, the current population of Cairns is 123,760, with an annual growth rate of 2.5 per cent—well above the state and national averages. According to the council web site, Cairns will have a population of approximately 200,000 by the year 2020. Current ABS statistics put the combined population of Townsville and Thuringowa at 145,945. From 1996 to 2001, the Townsville region grew by 10 per cent, and its population is estimated to reach 170,000 by the year 2011.

Based on these statistics, the combined population of these cities is approximately 455,000. Assuming that approximately 50 per cent of the residents of these cities are taxpayers, under my proposal we would remove approximately 227,500 people from the rebate. 1997-98 statistics put the total number of zone rebate claimants at approximately 491,700. Assuming that the number of nationwide claimants has increased since 1998, it would be estimated that roughly 45 per cent of claimants would be removed under my proposal.

The second report recommendation was for regular indexing of the rebate. Quite simply, during the coalition's time in government, this has not happened. Since the allowance became a rebate in 1975, its base rate was increased in the 1975-76, 1981-82, 1984-85, 1985-86, 1992-93 and 1993-94 financial years. However, it has not been increased since. I acknowledge that in 1975 an additional percentage amount was introduced for zone residents with dependants and that this dependant rebate component rises yearly in line with annual indexation. It does not change the fact, however, that the base rebate has remained unchanged since 1994. The fact that the coalition has been in government for most of this period merely highlights our shortcomings as a government that claims to support regional Australia. It is the need to rectify these ineffectual policies that has prompted me to call for an overhaul of the zone rebate.

The report's third recommendation was the removal of the rebate for those employed under a fly-in fly-out—FIFO—arrangement and who do not reside in a designated zone. This is an important point. There are numerous examples of the negative impact of FIFO employment on shires in my electorate. In correspondence earlier this year, for example, the Shire of Wiluna pointed to the expenses associated with trying to maintain a skilled work force and infrastructure under the cloud of a fly-in fly-out population:

The FIFO employment offered by mining companies in the area makes it extremely difficult to obtain and retain highly skilled machine operators. The Shire does not have a workforce of a similar size to that of the mining operations to support the overheads associated with the FIFO option. The only alternative is to provide housing to attract staff to live in Wiluna on a permanent basis. This is expensive, with building costs approximately 175% of Perth costs.

The Shire of Meekatharra also writes of the effect of FIFO employment on its survival and what needs to be done about securing a permanent population:

FIFO people are provided with accommodation and messing facilities, and generally are not affected by normal living costs. The attraction for professional people to move to these areas must be enhanced for the sake of our future. FIFO is not the answer, and if the Government is dinkum about a fair go, then the—

rebate—

should be reviewed for that group and passed on to the people who actually live and make their home where they work.

The common question posed to me during my travels throughout my electorate is this: `Why should someone who lives in Perth and who pays Perth prices for their goods and services be entitled to a zone rebate?' Indeed, these people are city based residents, who have all their needs catered for at the mine site during their work shift and are then flown back home to the comfort of the big city. Why are they then eligible for compensation for living in the bush? The fact is that FIFO workers do not live in the bush. In addition to making the system fairer, the removal of FIFO workers from entitlement to the rebate would free up additional rebate funds for bona fide residents of remote Australia.

The fourth recommendation of the report involved introducing provisions that would limit eligibility for people on high incomes. I disagree. All indications from the architects of my taxation zone rebate proposal point to it being revenue positive to the Commonwealth government. In fact, even in a worst-case scenario, the budgetary effect would be revenue neutral. Put simply, this initiative does not incur additional government spending, yet the benefits gained from it would be enormous. Rural and regional Australians need to be encouraged to invest their time and effort in the bush, and they deserve to see some positive outcome for that investment.

The regional taxation proposal I have put forward offers an additional encouragement to attract young professionals to remote areas through a Higher Education Contribution Scheme incentive. My proposal to offer a HECS repayment discount to university graduates who elect to live and work in remote areas would do much to ease the current shortage of professionals in rural and remote Australia, particularly in the vital areas of health care and education. This initiative would go a long way to appeasing the ever-present assertion that there are never enough doctors, nurses and teachers in rural Australia.

There are multiple benefits from such a proposal. Firstly, with HECS fees for professional university courses often in excess of $20,000, the attraction of a greatly reduced HECS debt would appeal to all but the most citycentric graduates. Secondly, the availability of more professional services in regional areas would have the flow-on effect of attracting and maintaining family residence in these areas. If we can double the population in rural Australia, then there is ample justification for ongoing investment in infrastructure and the maintenance and upgrade of existing services.

I conclude by mentioning the fact that, in rural and remote areas, consumers pay 10 per cent on goods and services that—due to distance, lack of competition and low turnover—cost considerably more than they do in the city. This results in a higher dollar value GST paid for the same provision of goods and services. It is a fact that populations in many rural and remote communities of Western Australia are dwindling due to the hardships endured by those living in the bush coupled with the lack of incentives to live and work there. I am not alone in my belief that this taxation zone rebate proposal should be taken seriously by the Treasurer and by the federal government.


The DEPUTY SPEAKER (Hon. D.G.H. Adams)—Order! The time for the grievance debate has expired. The debate is interrupted and I put the question:

That grievances be noted.

Question agreed to.