Chapter 2Issues raised in hearings
2.1This chapter examines key issues that were raised in the committee's first tranche of hearings in Northern Australia in 2023.
2.2Most evidence raised in hearings and submissions concerned housing, social infrastructure (e.g. health, childcare, education and training) and Aboriginal and Torres Strait Islander employment participation. Given the committee intends to use future hearings to canvass solutions to issues raised about social infrastructure and Indigenous employment participation, this chapter focuses on other key issues raised to date in hearings. These include:
declining populations due to interstate migration;
issues with attracting migrants;
tax exemptions and subsidies;
insurance and finance;
funding for local councils and community infrastructure;
access to transport;
flights and the cost of airfares;
the status of ports as first point of entry;
telecommunications;
crime and antisocial behaviour; and
state/territory and local issues.
2.3The chapter ends with the committee's view and recommendations on these matters.
Interstate migration
2.4Witnesses informed the committee that fewer people are choosing to move to Northern Australia while young people are leaving the region. For example, DrAndrew Taylor, a demographer at Charles Darwin University told the committee, 'there are fewer people, over time, leaving other states and territories to come to live in the Northern Territory and, indeed, Northern Australia'. DrTaylor argued that this 'indicates that northern Australia is unfortunately becoming less favoured as a migration destination for people who leave other states and territories', and suggested that a way of offsetting this decline is to improve 'the pathways for international migrants to live in and work in Northern Australia'.
2.5Demographic pressures in Northern Australia is exacerbated by younger people leaving the region and not returning. For example, Ms Kristy Gilvear, a town planner from Gilvear Planning, stated at the Weipa hearing:
No growth in remote and regional areas in locations including Weipa is problematic and creates myriad issues, as we can see from a number of rural and regional townships that are suffering from ageing populations, population decline, social issues and the inability to encourage younger generations to stay…
I've been blessed with fantastic support, education and employment opportunities in a variety of disciplines since my teenage years, which have allowed me not only to stay but to thrive, with a home, a growing business and a family. However, those same opportunities are not always available for young people in remote and regional locations. Having opportunity provides hope. Providing hope that there is an opportunity, growth and potential is vital to encourage young people to stay and even to relocate to these areas. Rounding out and improving diversity in age, heritage and skill sets for our remote and regional areas is critical to support the establishment and ongoing maintenance of vital community services, which assists and supports opportunity and helps provide hope. It's a cycle.
2.6Similarly, Mr Will Evans, the Chief Executive Officer of the Northern Territory Cattlemen's Association, noted that the pastoral industry has particularly high staff turnover:
We face challenges, especially, as you've identified, when you get people to that 33- to 35-year-old bracket, when they potentially have younger children who are starting to need to go to primary school or high school. Often we find that those members of the industry will move to somewhere like Queensland or down south to regional areas that will provide them with a higher level of service than we have available in the Territory.
Issues with attracting migrants
2.7The committee learned that parts of Northern Australia may be less attractive to overseas migrants on working visas. The Chief Operating Officer of the Northern Territory Chamber of Commerce outlined some of these challenges:
When we talk about visas and attracting people to town, unless something has changed in the last six to eight weeks, we're still on the same visa classification as the Gold Coast. Why would you come to Central Australia, Katherine and Darwin if you could go and sit on the Gold Coast, have whatever and fly in and out for 99 bucks?
2.8Conversely, the Chief Executive Officer of Tourism Central Australia (TCA), MrDanial Rochford, while acknowledging that workforce shortages at TCA was almost at 20 per cent, noted that 'not all is negative'. Mr Rochford explained:
Positively, many of our TCA members are reporting a flood of interest from working holiday-makers seeking to obtain their 88 days working in remote and regional Australia. It's been a godsend for our businesses, especially those in the hospitality sector, who are looking for lower skilled staff. In addition, many of our businesses have gained access to staff through the Pacific labour mobility program.
2.9Mr Rochford separately noted, however, that the tourism industry was struggling to attract skilled labour, such as chefs and tour guides.
2.10The committee heard that in the East Kimberley, agriculture and hospitality 'are completely reliant on unskilled migration programs such as the PALM [Pacific Australia Labour Migration] scheme and the 88-day working holiday visa'. The East Kimberley Chamber of Commerce and Industry stated that it had 'seen a lot of success' with an East Kimberley designated area migration agreement (DAMA, a formal agreement between the Australian Government and a regional, state or territory authority to provide access to more overseas workers than would be the case under a standard skilled migration program). Under this particular agreement, the Chamber had filled child care, aged care, community services, hospitality, tourism, aviation, agriculture and horticulture vacancies, increasing the capacity of external middle management to support and mentor more local staff.
2.11However, Ms Clare Smith, Chief Executive Officer of the East Kimberley Chamber of Commerce and Industry, suggested there is a 'need to look at ways to retain migrants after their permanent residency is achieved'. She noted that research indicates that after migrants are granted permanent residency, many are 'drawn to cities where their cultural groups congregate'. She called for ways to retain migrants, such as tax incentives or cultural infrastructure.
2.12Ms Smith outlined that delays in the DAMA process impacts the ability of businesses to fill skills shortages, but that there had been recent improvements in the processing times:
So, if it is aged care or child care, they're getting through fairly quickly, but other industries like agriculture, hospitality and tourism are waiting that really lengthy period. Once that's signed, the business can then nominate the employee and, presuming their skills assessments are all in and approved, the individual can apply for the visa and then be approved pretty quickly. So it's that's second stage—the labour agreement stage—which has taken a long, long time.
2.13In the Northern Territory, the committee heard that there are limitations to the knowledge and skills that skilled migrant workers can transfer to the local workforce, in part because migrants are only employed on a short-term basis:
In the Northern Territory and in Australia, we know that we need migrant workers. We just don't have the skill sets and the number of people, particularly in the Northern Territory, to be able to do the jobs at the level that's required. The designated area migration agreement has helped us. The PALM project has worked. But the key issue that we actually have in terms of a long-term solution is actually getting the skills transfer from skilled migrant workers into our local population, the local workforce. There isn't a strategy in place other than by osmosis. You're working next to someone. They're just busy working…
It's a short-term outcome. It solves the problem for industry in the short term. Long-term solutions are what we really need for the Northern Territory, and that also translates over to the regions. Where's the accommodation? Where are the support mechanisms for those migrant workers as well? Once they've actually done a term, they've gone.
Tax exemptions and subsidies
2.14Some evidence emphasised the importance of tax exemptions and rebates to encourage people to move to and stay in Northern Australia. For example, the Chief Executive Officer of the Local Government Association of the Northern Territory,suggested the 'remote area tax concessions and payments scheme is a really handy tool for our councils in attracting people to work in regional areas'.
2.15Some witnesses called for there to be more incentives and subsidies. Mr Leslie Manda, the Chief Executive Officer of the Central Desert Regional Council in the Northern Territory, called for tax incentives, either a Fringe Benefits Tax (FBT) exemption or a tax break. He proposed that in very remote areas, 'rather than paying 37 percent tax, you'll be entitled to a two percent tax break'.
2.16Chief Operating Officer of the Chamber of Commerce Northern Territory, MsNicole Walsh, noted that 'Chamber NT has actively advocated for tax breaks for people living in the Northern Territory and northern Australian region'. She stated that the Chamber also supported 'worker related financial initiatives, local assistance schemes, foreign student and skilled migration initiatives that contribute to developing the active workforce solutions that industry is calling for', as well as a waiving of Higher Education Contribution Scheme (HECS) student loans.
2.17Similarly, Mr David Hayes from Unions NT proposed that people with HECS debts who return and commit to work a certain number of years in the Northern Territory receive assistance with paying their HECS debts.
2.18The committee also heard that there are issues with existing tax incentives and subsidies. The Deputy Chair of the Weipa Town Authority called for an urgent review of the concessional tax offset to recognise the remoteness of a designated area, arguing it 'has remained virtually unchanged for many years, failing to keep pace with wage growth'.
2.19The Chief Executive Officer of Tourism Central Australia called for the Australian Government to:
…look seriously at policy levers as they relate to things like the remote zone tax offset [ZTO]. The ZTO now represents less than one per cent of after-tax income for more than 80 per cent of claimants, and it isn't really sufficient now to incentivise changed behaviours to attract people to live in remote parts of Australia.
2.20In February 2020, the Productivity Commission released a report looking into the effects of the zone tax offset, which made recommendations on whether the offset should continue and in what form. The Productivity Commission suggested that technological 'advances have helped lessen the difficulties of life in remote parts of Australia'. It found:
that the design of the zone tax offset is outdated, with nearly half of claimants living in large coastal regional cities, and inflation and growth in wages substantially eroding its value;
no evidence to suggest the zone tax offset encourages people to live and work in those zones;
no justification for a zone tax offset, concluding that higher living costs in remote areas 'do not warrant compensation through the tax system';
governments incentives to attract people to live in remote communities through tax concessions were unlikely to be effective, and 'typically result in net losses to the broader Australian community'; and
the Australian Government should abolish the zone tax offset or, if it is retained, the offset should be made available to residents of very remote areas only (as defined by the Australian Bureau of Statistics, ABS), with eligible areas updated after each census, at a flat rate of $1173 a year.
2.21The former Government rejected these recommendations.
Funding for local councils and community infrastructure
2.22The committee heard that rural and regional councils depend on Federal Assistance Grants for the funding of local services as they may have very few, if any, options for increasing own-source revenue.
2.23Mr Sean Holden, Chief Executive Officer of the Local Government Association of the Northern Territory informed the committee that the 'No. 1 issue for our councils all over Australia is sustainability. It is always going to come back to funding… [T]he biggest stressor for a CEO and a board is money each week'. He explained:
One of the big reasons is that, firstly, our councils aren't big enough to submit applications in the first place, and, secondly, we don't project manage to make sure that the project is as was suggested to the federal government or the NT government and it can be acquitted. So we in the Territory actually need enablers to do that. We need people who can write grants with and for our councils, for example.
2.24Some councils in Northern Australia are unable to generate their own sources of funding outside Federal Assistance Grants due to their location and low population base. For example, the Central Desert Regional Council derives only 6 per cent of its total annual revenue from rates. This compares to some Sydney councils that can receive up to 60 per cent of revenue from rates. Local governments also compete with other levels of government and industry (such as mining), which are able to pay considerably higher wages.
2.25The committee heard that in the MacDonnell Regional Council in the NorthernTerritory, 'communities don't have footpaths, kerbing or drainage. The roads get thinner every year, simply through wear and tear, and the major connecter roads are all dirt'. During heavy rainfall events, communities are cut off by road and airstrips are closed.
2.26In other areas, there is a lack of basic infrastructure such as roads, kerbing and telecommunications. Some councils may need to divert funds again after heavy rainfall to repair roads.
2.27Mr Leslie Manda, the Chief Executive Officer of the Central Desert Regional Council in the Northern Territory, provided further detail on issues with community infrastructure:
Regional councils inherited infrastructure from either the land trusts or the land councils and/or federal government that were built over 30 years ago. That infrastructure is not fit for purpose. It's hardly sustainable enough in itself, at the same time as being of good enough quality for a person to walk in and say, 'Yes, I'm leaving my house in New South Wales to come and work remote.'
2.28Witnesses from local councils raised concerns about the current level of Commonwealth funding for local councils. For example, Mr Manda informed the committee that:
…we only operate through operating grants, majority wise, and our rates base or own-source revenue is only six per cent of our total revenue income… Part of the conversation… is similar to what was done back in 2015 and before to set up your FBT exemption for hospitals as well as not-for-profit organisations. Surely, for regional and remote councils that are below rate base, similar exemptions can be put on the table. It's a federal government law through the ATO. Is that something that can be explored for regional and remote councils, understanding the workforce challenges as well as the own-source revenue caps? If we had flexibility like any other council to get additional income from parking meters, we would definitely be able to compete salary wise.
2.29Mr Manda noted that the Central Desert Regional Council had 'started trimming back some of our service delivery and have come up with other ways to deliver those services', including by using the Community Development Program (CDP) 'to deliver some services that are your normal, mainstream municipal services'.
2.30Mr Jeff MacLeod from MacDonnell Regional Council noted that for his council:
…the basic infrastructure in each community is the equivalent of a small council in Queensland. I've got that 13 times. My investment in asset replacement alone every year is around $2½ million a year. We then have a roads crew who has our big boys' toys, so we have our own graders and loaders. We do our own waste management facilities; we've got a 20-tonne excavator, so we do all our own waste management. We don't contract out any of our work. All of our work is done by employees, so we can create jobs… [I]f we didn't deliver the services that we deliver for both the federal and the NT governments, we would not exist.
2.31Mr MacLeod called for a 'redisbursement' of Federal Assistance Grants, arguing:
The revenue that the Sydney City Council get from parking fines, for example, is equivalent to the entire NT local government budget. Do they need another statue in a park, as opposed to people in remote communities who desperately need infrastructure and a job and things like that? That's what we'd like the government to look at: where that money goes. Do Sydney city and all those big, rich councils that make millions of dollars every year in revenue and have options about how they create that revenue really need a federal assistance grant?
2.32The West Arnhem Regional Council's Acting Director of Organisational Growth pointed to the time and resourcing councils spend on compliance, arguing that '[w]e don't have a problem with being compliant; it's just the never-ending saga of that… It's almost like it's a new industry being created—that is, the industry of "let's keep everyone compliant"'.
2.33A further issue raised in the context of local councils and community infrastructure was the limited ability of local councils to run post offices, with only small subsidies provided by Australia Post that may not cover running costs.
2.34During the site visit to the Dampier Peninsula, committee members heard that community/shire councils and Prescribed Body Corporates (native title corporations) may compete for government funding and resources for community services, as outlined in Appendix 1.
Access to transport
2.35In many parts of Northern Australia, access to transport is an issue affecting workforce development. In Katherine, the committee heard that access to transport in and between remote communities is a significant challenge due to limited public transport options and the operational problems in delivering these services across significant distances.
2.36Ms Amy Murphy, Group HR Manager of Jawoyn Association, told the committee that even when there is a local transport option, it is often too expensive or does not meet the needs of community residents. For example, in Binjari, Northern Territory, Ms Murphy said:
…we do have the bus, but sometimes that doesn't run, because we can't get drivers for it. Sometimes it doesn't run because it's $25 one way from Barunga, and it doesn't run when these fellas need to start at 6.30 in the morning and finish at six at night. It runs from 7.15 till five o'clock.
2.37Community members therefore become reliant on private vehicles, or their employer, who may incur significant costs in having to provide suitable transport options. Ms Murphy explained:
If you look at communities like Binjari, that's a good 20- or 30-minute drive out of town. There are very limited opportunities in terms of what you can do at Binjari. It's easy to say, 'Get a car,' or, 'Get a licence,' but it's not easy. You need a lot of money for a car and you need a lot of hours at work. That ends up falling with the employer as the only other opportunity, so we have to pick people up and drive them to work, which is just not realistic.
2.38The lack of transport options result in a cumulative reduction in the productive capacity of remote communities at large as it both disadvantages local businesses and encourages economic exclusion by limiting individuals from accessing local employment opportunities.
Flights and costs of airfares
2.39The committee heard that another major impediment to attracting a workforce is the cost of flights to major centres, such as Darwin, and between communities. This was the case across industries such as local government and tourism. MrRochford, informed the committee that the issue:
…that is really hurting us is the ability to get in and out of the region. We're facing down significant increases in airfare costs, which are making it more expensive to onboard staff. More importantly, it's creating a disincentive for staff to come to Central Australia and the Barkly. I'm hearing reports almost on a daily basis of those who live here in Alice Springs paying thousands of dollars for families to travel to visit loved ones around the country. As a region, we cannot compete on a level playing field against other regions around Australia from a workforce attraction perspective. If you could imagine my perspective—from a tourism perspective—[we are] finding it very hard to compete with other destinations.
2.40Mr Rochford called for 'more to drive competition', such as considering 'providing specific cabotage right exemptions to key northern Australian airports—allowing foreign airlines to land in places like Alice Springs and then being able to continue on to other domestic ports'. Witnesses from the East Kimberley Chamber of Commerce and Industry were also in favour of a review of cabotage arrangements so that low-cost carriers are able to land and depart from regional airports on their way to larger regional or capital cities.
Ports and first point of entry status
2.41Witnesses raised concern that some ports in Northern Australia have limited first point of entry status which has practical implications for the local workforce in smaller towns.
2.42The Australian Government requires vessels subject to biosecurity control to arrive at a first point of entry (FPOE) unless they have been granted prior approval to arrive at a different point of entry. The reason for this, according to the Department of Agriculture, Fisheries and Forestry, is to ensure 'vessels enter Australia at a location with appropriate facilities and personnel to manage the biosecurity risks to an acceptable level'. The Department of Agriculture, Fisheries and Forestry maintains a list of the permitted ports of entry and the types of goods permitted to be unloaded at those ports. A third of Australia's designated FPOEs are in Northern Australia (19 of 56). The Australian Government determines the eligibility of each port, depending on the biosecurity risks posed by that port's operations. At the time of writing, information from the Department of Agriculture, Fisheries and Forestry indicated that it was 'engaging with relevant operators' at ports that did not yet meet regulatory requirements, with these ports to 'receive ongoing determinations when they can comply with the regulatory requirements' that came into place with the commencement of the Biosecurity Act 2015.
2.43The Deputy Shire President of the Shire of Wyndham East Kimberley, Councillor Tony Chafer, who also appeared at the Kununurra hearing in his capacity as Chief Executive Officer of Cambridge Gulf Limited, flagged issues with the status of the Wyndham and Broome ports:
In terms of point of entry, we've got applications for first point of entry for both the Wyndham and Broome ports. It's absolutely essential that they got across the line because, beyond this emergency, that's going to affect the viability of both ports going forward. Essentially, we're now export ports, not import ports, because it's too difficult to get approvals to bring things in. It also affects our exports because some exports need to go in containers. All cotton is going to go out into South-East Asia by container. You need to bring the containers in to facilitate that. If you haven't got first point of entry status, you can't even get a price from the container company to bring containers in. They say it's too risky.
2.44Councillor Chafer explained that the region was expecting several key mining projects within the next five years that would require imports, like reagents or containers, as well as project cargo:
We've handled project cargo at the Port of Wyndham before. It's something that we can do easily. But, without a first point of entry, those projects are going to have to try to look at getting that infrastructure another way. The mining industry is definitely reliant on the port taking the next step. It's about an $11 million investment to get the FPOE infrastructure in place. I think the state government would be willing to spend that money if they were going to get the FPOE status approval at the end of it.
2.45He highlighted the importance of FPOE status to local Indigenous employment, arguing that if 'we get even a fraction of those projects off the ground through the FPOE status, we'd be looking at 30 new Aboriginal jobs over there'.
2.46Evidence from the Kimberley Development Commission highlighted the impact of a lack of FPOE status for Broome and Wyndham:
A big problem in the Kimberley is that Broome and Wyndham have been declassified as first-point-of-entry ports. That has caused enormous problems… [W]e understand it is going to be changed, and we'll keep our fingers crossed because it's been a disaster. Ships will come into Broome bringing cement or gear for offshore or for the Fitzroy bridge, and we're not allowed to unload it. They've sent the ship back to Port Hedland, and then it's got to be carried up by road, so you can imagine the problems there.
In Wyndham—and no doubt you'll hear this when you're in Kununurra—all the fertilisers for the farmers are sent back to Darwin to then be trucked down, and the roads will be closed. It's been a disaster not having Wyndham and Broome as first ports of entry, just for the quarantine and the inspections.
Telecommunications
2.47Poor, limited or non-existent telecommunications infrastructure continues to be an issue in many parts of Northern Australia. The Deputy Chair of the Weipa Town Authority noted that the western cape part of Queensland had experienced 16 outages in the last 14 years, ranging up to five days. In the event of an emergency residents are unable to contact authorities, 'which puts lives at risk'.
2.48The Chief Executive Officer of the Northern Territory Cattlemen's Association flagged the importance of internet and phone to making employment offers in Northern Australia attractive:
The reality is that these days when we're hiring people to work on a station, they want to be able to watch Netflix and they want to be able to access their internet banking. They want to be able to do these things, and, up until recently, we haven't had reliable internet. We haven't had a reliable phone service. Again, I think focusing on workforce is one pathway to alleviate some of the issues that we have around regional employment. But focusing on these ancillary services as well, around health care, education, improved infrastructure, is something that will assist in the long term… I think it's a critical focus for government now. I think it needs to remain one because we won't ever have workforce security, no matter how good our workforce programs are in northern Australia, if we don't develop the services that support them.
Crime and antisocial behaviour
2.49Some witnesses pointed to crime and antisocial behaviour, particularly 'the perception of our town and our regions' impacting the ability of employers to attract and retain staff.
2.50For example, the Chief Executive Officer of the Local Government Association of the Northern Territory explained that crime had impacted the local government workforce:
What you've seen as a fallout in particular—and this is talking about access and appropriateness—from the juvenile crime spike, if you like, over the last few years is that it has meant a lot of our frontline council workers have been exposed to a lot of this. They're feeling trauma. They are getting counselling. They're finding it hard to go back onto the front line.
And so, even amongst ourselves, that ability to retain people and attract people to come and work in our councils is really difficult. I think the one that's most acute that I hear probably more of is in fact West Daly Regional Council…That council is really struggling for staff. They're also working with them on mental health support.
State/territory and local issues
2.51Other evidence concerned issues specific to a particular state or territory, or local area.
2.52The committee heard evidence about the impact of Northern Territory Government policies and regulations on remuneration, conditions, and training arrangements to support the retention of employees in the Northern Territory. This included, for example, eligibility limitations of the DriveSafe NT program.
2.53Communities that are considered part of a township or municipality are not classified as remote under the ABS remoteness classification guidelines (also utilised by the Northern Territory government).Under the DriveSafe NT program guidelines, the individuals in those areas are excluded from the program. For example, the committee was told that individuals in the Binjari community (17.8km southwest of Katherine) cannot access the program due to Binjari being considered part of the Katherine municipality.
2.54The Northern Territory Chamber of Commerce argued that funding provided by the Australian Government for the Middle Arm Sustainable Development Precinct had no strategy attached to it, and a specific percentage dedicated to training would help with workforce development in the Northern Territory.
2.55Other issues raised in hearings across Northern Australia were local-based. For example, the Katherine Town Council raised concerns about logistical and infrastructure issues preventing large aircraft from using the Katherine Tindal Civilian Airport. Currently only one commercial airline, Airnorth, operates out of the airport. The Katherine Town Council explained that the current restrictions on access prevent fly-in fly-out and other transient workers from accessing the Katherine municipality. The Council further stated that it has had ongoing difficulty opening a dialogue with the Department of Defence to address this matter. The committee was told of practical consequences stemming from the Weipa Town Authority not being classed as a LocalGovernment Authority.
2.56The committee also heard about local issues on site visits to Lockhart River Aboriginal Shire and the Dampier Peninsula. A summary of the committee's site visits is attached in Appendix 1.
Other issues
2.57While the issues raised in hearings to date are too numerous to list here, some of these key issues relevant to the Commonwealth Government's responsibilities included:
the Northern Australia Infrastructure Facility not being 'fit for purpose', with challenges around putting in successful applications;
businesses struggling to keep up with changes to Australian Government workplace policy and legislation;
the loss of skilled workers to other parts of Australia with more competitive salaries;
the need for any regulatory body reviewing the Indigenous Procurement Policy to be Aboriginal-owned and -led; and
the need for a review of remote freight, given the reliance of some communities, like Weipa, on shipping when the wet season may close roads.
Committee view
2.58The committee recognises the complex and long-standing issues affecting workforce development in Northern Australia, on which many residents and representatives of Northern Australia gave evidence. In particular, the committee notes challenges related to interstate migration, as well as difficulties attracting migrants and workers from outside to the region. The committee also acknowledges the difficulties for local councils to access adequate funding to deliver on the essential services that the region so desperately needs, as well as the limited impact of tax exemptions and subsidies, to date. Further, evidence to the committee was clear that workforce development in Northern Australia continues to face challenges related to the costs and accessibility of transport and transport infrastructure, and that telecommunications infrastructure continues to lag behind metropolitan areas. Finally, the committee noted the impact of criminal and antisocial behaviour on staff retention.
2.59The committee will continue to examine these matters over the course of this inquiry, however, it makes recommendations for two of those issues identified in this chapter, as discussed below.
Financial Assistance Grants and funding for local councils
2.60Financial Assistance Grants are an important recurring funding source for local government authorities across Australia. The committee heard that the relative value of Federal Assistance Grants has decreased over the last several decades, and that current indexation arrangements are manifestly inadequate due to the rate of increase in the major costs incurred at the local government level (such as construction and wages).
2.61Many remote and very remote councils in Northern Australia rely on Commonwealth funding to provide services and have very few other avenues available to them. The nation's GDP is dependent on the industries found in these areas, such as the mining, agriculture and pastoral industries, which form the majority of Australia's exports. For this reason alone, Australians and migrant workers employed in these industries should have access to the same level of services that people living in other parts of Australia have.
2.62The committee considers it urgent that the Australian Government establish a review into the distribution formula for the Federal Assistance Grants, considering the effectiveness and equitability of the current Federal Assistance Grants program.
2.63The committee recommends the Australian Government establish a review into the distribution formula of the Federal Assistance Grants. The review should consider:
the effectiveness of the current system of distribution;
whether current distributions are equitable across local government areas, with a focus on remote and very remote areas;
the effect of the relative decline in the value of the Grants on the service delivery capacity of local governments; and
whether the program is meeting its intended purpose.
Zone tax offsets and subsidies to move to and live in Northern Australia
2.64Key to attracting and retaining a capable and skilled workforce in Northern Australia is incentives and offsets to encourage people to stay in/move to the region. These include the zone tax offset for residents of specified remote and isolated areas of Australia.
2.65In relation to the Productivity Commission's 2020 report into the effects of the zone tax offset, the committee acknowledges the report's finding that current incentives are not working as intended and notes the ProductivityCommission's conclusion that incentives for remote areas are unlikely to be effective. However, it is the committee's view that incentives and tax offsets should remain, and that consideration should instead be given to how current incentives and tax offsets could be improved or replaced with more effective levers. As such, the committee recommends that the Australian Government initiate a review into current tax incentives to encourage people to live in rural and remote areas, including Northern Australia.
2.66The committee also notes the Productivity Commission's views that the zone tax offset should be abolished. However, as outlined above, rural and remote areas in Northern Australia are significant contributors to Australia's GDP—particularly through the mining, agricultural, and pastoral industries. Moreover, rural and remote areas in Northern Australia contribute significantly to Australia's tourism industry and are a key part of Australia's attractiveness to overseas tourists. Further, given the housing crisis currently affecting Australia's capital cities, incentives that encourage people to stay or move to Northern Australia would alleviate housing and cost of living pressures in metropolitan areas. As such, it is the committee's view that the zone tax offset should remain.
Recommendation 2
2.67The committee recommends the Australian Government establish a review into current tax incentives to encourage people to live in NorthernAustralia. The review should consider:
the effectiveness of current incentives;
changes needed to make an incentive-based scheme more equitable and based on current definitions of remoteness; and
opportunities to improve the current system to encourage more people to live and work in remote and very remote parts of Northern Australia.
First point of entry status for ports
2.68The committee notes evidence indicating that some ports in Northern Australia have limited first point of entry status, allowing only some classes of goods to enter. This affects trade, the willingness of industry to operate in an area, and the cost of goods, as the goods may then need to be transported by road from other ports. Limitations on the classes of goods permitted to be unloaded in a particular port have practical implications for the local workforce in smaller towns, with the workforce of larger regional towns and cities employed to unload goods that may have a final destination a thousand kilometres away from the initial point of entry. It may also influence the willingness of state/territory governments to invest in local ports and industry to invest in projects.
2.69At the time of writing, some ports were permitted to receive, for example, freight containers and general goods, while other ports were more limited in their list of permitted goods. In some instances, this may be because smaller regional ports have been unable to meet the regulatory requirements that commenced with the enactment of the Biosecurity Act 2013 and the correspondingstrict eligibility requirements set by the federal government, based on the potential biosecurity risks of each port's operations.
2.70Given the impact of FPOE status on the economy and workforce development of many parts of Northern Australia, the committee encourages the Australian Government to expedite approvals processes to expand the types of goods that other ports with FPOE status in Northern Australia can take. This should involve providing ports with further support to meet regulatory requirements.
Final note
2.71As mentioned above, the committee intends to continue to canvass solutions to the other issues outlined in this chapter, where the federal government has jurisdiction, as well as other issues outlined in submissions to the inquiry. The following chapters delve into the impact of housing affordability and availability on workforce development in Northern Australia, reflecting the evidence that this is the number one issue affecting whether people stay in, or move to, Northern Australia to take up employment.