The purpose of this letter is to share research and analysis conducted by the Institute of Public Affairs (“the IPA”) with the Joint Select Committee on Northern Australia (“the Committee”), as it conducts its inquiry into preparing for emerging industries across Northern Australia.
Northern Australia – the region encompassing northern Western Australia, the Northern Territory, and northern Queensland – represents a critical economic opportunity for Australia through its strong resource and agricultural industries, but is not realising its full potential as it remains underdeveloped,1 suffers acute worker shortages, and private investment is stifled by overregulation and high resource taxes.
These problems facing Northern Australia are reasons why the IPA has long recommended the implementation of a Special Economic Zone (“SEZ”) in Northern Australia.2
SEZs are zones within countries which have relaxed tax and regulatory arrangements that are different from the rest of the country. Successful SEZs attract domestic firms and multinational companies which contribute to business investment, local employment, and economic growth.
Examples of separate tax and regulatory rules could include allowing for: a business rate discount; a decreased flat rate on income tax; a decreased flat rate on all tax activities within the SEZ; exemption from customs duties; corporate tax holidays; or a reduced capital gains tax within the SEZ.
In addition to the economic arguments, there are also compelling national security justifications for utilising a SEZ to address underdevelopment in Northern Australia. Given the valuable resources that are present in the north, and the shifting geopolitical climate in our region, defending those resources is of the utmost importance. However, it will be implausible to defend those resources without adequate infrastructure in place, including the required infrastructure for water, food, and energy development in the region.
The first paper in The Defence of Australia: Blueprint for the Next Government series by the IPA and Strategic Analysis Australia identified that increasing the Australian Defence Force’s presence in the nation’s north is essential to adequately defending the nation.3
Given the proximity of Northern Australia to our coastal neighbours in the Indo-Pacific region, and the valuable resources that are in Northern Australia, it is vital that we improve our infrastructure in the area, which can only occur with greater investment in the region.
To maintain our national security and protect our industries in Northern Australia, the IPA recommends establishing Northern Australia as a SEZ.
