Top end tax utopia all right for Rinehart
Tony Abbott might be trying to downplay a bombshell "discussion paper" aimed at creating a tax utopia at the top end of Australia but mining magnate Gina Rinehart won't be.
The proposals detailed in the 30-page document sing from the same songsheet that Rinehart and her father Lang Hancock have been playing for decades.
The fact that the coalition has gone to such lengths to create a discussion paper speaks volumes about the growing political influence of Rinehart and her lobby group Australians for Northern Development and Economic Vision (ANDEV), which she formed in 2010, around the time the mining tax was about to be hijacked.
The notion of a special economic zone with special tax and regulatory concessions dates back to the 1950s when Hancock was trying to overturn legislation that banned exports on iron ore. It took him almost a decade to get the ban lifted and pegging rights granted.
In a recent article published in online mining magazine Australian Resources and Investment, Rinehart recalled her father's 10-year battle: "So, with this government combination of Perth and Canberra 'looking after us', the opening of the major Pilbara iron ore industry was delayed for around 10 years."
Hancock discovered one of the world's biggest deposits of iron ore and spent his life trying to turn it into an operating mine. To this end he - and Rinehart at his side - became strong advocates for reduced regulation, tax concessions and subsidies.
Hancock took the trouble of publishing the manifesto Wake Up Australia in 1979 which outlined how it could be done.
Former Queensland premier Joh Bjelke-Petersen was a big fan of the idea but most other political leaders and businesses avoided it like the plague.
But that was before Rinehart became the richest person in Australia and bought into the media, both of which gave her views more and more airplay.
Rinehart set up ANDEV in 2010 with her friend Perth businessman Ron Manners.
The aim of ANDEV is to convince Australia that it is a fallacy that most of the top end of Australia is uninhabitable.
"With the right policies, there is the potential for huge population growth and the expansion of towns and cities. Some of the most productive agricultural and resource rich soil exists in this region and yet it is largely under-developed," the ANDEV website says.
"It is our duty to leave to future generations of Australians a robust and growing economy, something all the more achievable if we unleash the potential of Northern Australia... These opportunities don’t just exist in the mining and resources sector, but in agriculture, medicine, education, tourism, communications and across the full spectrum of human activity," according to Rinehart and ANDEV.
As I outline in my unauthorised biography Gina Rinehart: The untold story of the richest woman in the world, ANDEV proposes that the top half of Australia – the Northern Territory, Queensland and the north-west of Western Australia (in other words, nearly one third of Australia) – should be treated as a special economic zone, where businesses invest in new mining regions, building towns and cities, and in return receive big tax breaks and less regulation.
"Workers should also be offered incentives, such as low personal tax rates. In this low-tax utopia, the sparsely populated region of the country would thrive because of the influx of workers and investment. The lobby group also calls for legislation to allow these economic zones to employ cheap guest workers to alleviate the current labour shortages, which are putting pressure on wages. A combination of tax breaks and guest workers would
lower production costs and enable large businesses to compete with low-wages countries."
ANDEV also calls for less red and green tape to speed up environmental approvals. Rinehart is a climate change sceptic and like her father believes environmentalists get in the way of growth. She also is a big believer in guest workers and making it easy for them to get visas - to work in remote areas.
All of this requires infrastructure and Rinehart and ANDEV believe that can be achieved through PPPs.
This is all very much what the coalition's discussion paper raises. It also goes a step further and suggests the redirection of $800 million of foreign aid to this region and relocation of defence facilities.
It is all big picture stuff which would cost hundreds of billions of dollars to implement and even more to build. To some it is visionary, to others it would represent a further divide between the rich and poor.
Abbott is careful to say it is only a discussion paper and the next step is an options paper and then policy. He forgot to mention all the internal polling that will be done to see whether or not it flies. It certainly will fly with Rinehart and her coterie of friends who will be more than happy to provide them with the blueprint.