Chapter 1 Introduction
1.1
The remote island communities of Christmas Island and the neighbouring
Cocos (Keeling) Islands form Australia’s Indian Ocean Territories (IOTs). Christmas
Island is located 2650 km from Perth off the north-west coast of Western
Australia, and approximately 320 km to the south of Java, Indonesia. The Cocos
(Keeling) Islands are located 975 km south-west of Christmas Island and 2950 km
north-west of Perth.
1.2
For over a century, the main industry underpinning Christmas Island’s
economy has been phosphate mining. In addition, the Government and tourism
sectors also contribute greatly to the economy.[1] In contrast, the economy
of the Cocos (Keeling) Islands relies solely on a services industry mainly
consisting of the Government sector and a small tourism sector.[2]
1.3
Although independent of one another, the economies of both the islands
are faced with similar challenges that are unique to small, isolated
populations, which are, those of limited industry and a reliance on the public
sector for essential service delivery.
1.4
In 2007, the Commonwealth Grants Commission (CGC) undertook an inquiry
into the level of funding required to provide the IOTs with ‘state-type
services which are consistent with those in comparable communities in Western
Australia. In addition, the CGC reported on the ‘capacity of the Australian
Government to raise state-type taxes and charges [in the IOTs] and whether the
methods for deriving local government funding [could] produce outcomes
comparable to those for comparable local governments in Western Australia.’[3]
1.5
Infrastructure requirements for delivering comparable services were
considered in the context of factoring in the depreciation expenses of assets.
Future events ‘that [could] affect the demography, economic activity or
services in the Territory’ were not included in the inquiry, although advice
was given ‘on a way of updating the assessed level of funding for future years.’[4]
1.6
Taking into consideration the evidence it has received through this
inquiry, the committee has examined the current economic environment in the IOTs.
This inquiry also highlights ways in which the economic potential of the IOTs
could be harnessed into the longer term and builds on the work of the previous
committee in its 2006 report titled Current and future governance
arrangements for the Indian Ocean Territories.
Background to the inquiry
1.7
On 11 February 2009, the Hon Bob Debus MP, then Minister for Home
Affairs requested the committee to inquire into and report on the changing
economic environment in the IOTs.
1.8
The committee subsequently advertised the inquiry, received submissions
and held public hearings in Canberra, on Christmas Island and the Cocos
(Keeling) Islands.
1.9
During its visit to the IOTs, the committee also made time to inspect the
islands’ infrastructure including the Christmas Island Phosphate mine
operations and the construction of the Rumah Baru port facilities on Cocos (Keeling)
Islands.
Committee objectives, scope and key principles
1.10
The terms of reference, as listed, enabled the committee to inquire into
and report on the changing economic environment in the Indian Ocean
Territories, giving consideration to current arrangements, barriers to business
development and future need with regard to:
a.
communication services such as broadband internet, digital television
and mobile telephony;
b.
transport services and costs including passenger and freight transport;
c.
Commonwealth Government services and programs;
d.
the operation of businesses in the region;
e.
cost and availability of housing; and
f.
the impact of climate change.
1.11
Taking into account the terms of reference, the inquiry broadly focused
on examining measures for improving economic development for the IOTs by taking
into consideration the evolving communication, transport, housing and service
delivery needs of residents and business.
1.12
While the committee also received information about the possible short
term impact that the operation of the Christmas Island Immigration, Reception
and Processing Centre is having on the Christmas Island economy, this inquiry
has focused on the broader economic impact of Government service delivery on
the IOTs.
1.13
In focusing on Government service delivery for the IOTs, the committee
examined the interconnections between the IOTs economies and the Government
service delivery network taking into account: the ability of residents to
access Government services, the need and availability of theses services, and
areas where improvement could be beneficial.
1.14
To enable full social and economic participation for Australians
residing in the IOTs, the Commonwealth has a responsibility to ensure:
n The disadvantage
of geographic isolation is minimised through public policy.
n The community is
able to determine and pursue (economically and environmentally) sustainable
development.
n The unique natural
environment and its biodiversity is protected and restored.
n There is
mitigation of the negative impact of the Commonwealth’s use of the islands for
purposes other than those traditionally established or determined by the local
community.
1.15
The committee’s recommendations have sought to provide options for
economic change through existing governance structures, taking into
consideration how economic stakeholders may be affected and the level of
service delivery required to create sustainable economies in the IOTs.
Conduct of the inquiry
1.16
On 12 February 2009, the committee issued a media release announcing the
inquiry and called for submissions to be received by 27 March 2009. Submissions
were also sought by advertising the inquiry nationally in The Australian
on 18 February 2009, The Atoll[5] on
26 February 2009 and The Islander[6]
on 6 March 2009.
1.17
In addition, throughout the inquiry, the committee wrote to a number of
individuals and organisations inviting submissions or seeking information
relevant to the terms of reference.
1.18
The committee received 45 submissions and 12 exhibits to the inquiry,
which are listed at appendices A and B respectively.
1.19
The committee held 7 public hearings, the details of which follow:
Date |
Venue and place |
19 August 2009 |
Parliament House,
Canberra |
9 September 2009 |
Parliament House,
Canberra |
16 September 2009 |
Parliament House,
Canberra |
28 September 2009 |
Christmas Island |
29 September 2009 |
Cocos (Keeling)
Islands |
28 October 2009 |
Parliament House,
Canberra |
29 October 2009 |
Parliament House,
Canberra |
1.20
Witnesses who provided evidence to the committee at these public
hearings are listed at Appendix C. Transcripts of evidence of these public
hearings are available on the committee’s website at http://www.aph.gov.au/ncet
1.21
In addition, the committee conducted infrastructure inspections on both
Christmas Island and the Cocos (Keeling) Islands.
Role of the committee
1.22
The committee was first established by the Parliament in 1956 for the
purpose of inquiring into matters relating to the National Capital and was
named the Joint Committee on the Australian Capital Territory.
1.23
In 1993, the committee’s coverage was expanded to include Australia’s
external territories: the Australian Antarctic Territory, Heard Island and
McDonald Islands, Christmas Island, Cocos (Keeling) Islands, the Coral Sea
Islands, Ashmore and Cartier Islands and Norfolk Island. The committee’s name
was then changed to reflect the addition of external territories.
1.24
The current committee was established by resolution of both Houses of Parliament
on 13 February 2008. The committee’s resolution of appointment
provides that the committee is empowered to inquire into and report on the
following matters referred to it: works within the Parliamentary Zone,
amendments to the National Capital Plan (the principle planning document
pertaining to Canberra’s role as the National Capital) and any matters relating
to Australia’s external territories.
1.25
Through the inquiry process the committee’s main role is to highlight
topical issues, (relevant to the terms of reference of the inquiry it is
conducting) by reporting on its findings and making recommendations on these
issues to the Parliament.
1.26
Since 1993, the committee has produced 11 reports relating to
Australia’s external territories. Five of these reports are specific to the
Indian Ocean Territories. These are:
n Delivering the
Goods, February 1995
n Island to Islands:
Communications with Australia’s External Territories, March 1999
n Risky Business:
Inquiry into the tender process followed in the sale of the Christmas Island
Casino and Resort, September 2001
n Indian Ocean
Territories: Review of the Annual Reports of the Department of Transport and
Regional Services and the Department of the Environment and Heritage,
August 2004
n Current and future
governance arrangements in the Indian Ocean Territories, May 2006
1.27
Excluding this inquiry, the report of the most recent inquiry relating
to the IOTs was released in May 2006. This report examined the current and
future governance arrangements for the IOTs.
Findings of the 2006 inquiry
1.28
In its 2006 report titled Current and future governance arrangements
for the Indian Ocean Territories, the committee of the 41st
Parliament examined a number of elements affecting governance structures
including:
n ‘accountability and
transparency of decision-making in relation to the IOTs;
n the link between more
effective governance and improved economic sustainability for the IOTs;
n the operation of
Western Australian applied laws; and
n community service
delivery including the effectiveness of service delivery agreements with the Western
Australian Government.’[7]
1.29
In regard to the evidence it received on the economic development and sustainability
of the IOTs the previous committee was of the view that:
This summary of economic potential and departmental activity
provides a limited and flawed perspective. There is no sense of dynamism or
direction. Even the strategic plan for the economic development of the
Territories prepared by the Administrator has the feel of ‘top-down’ planning.
Addressing development on Christmas Island, there is no response to the
impending demise of the phosphate mine and undue emphasis is placed on the
economic potential of the Immigration Reception and Processing Centre, an
institution whose use is wholly dependent on the shifting requirements of
government policy, and the Asia Pacific Space Centre, a project which now
appears defunct. Much emphasis is also placed on the policy of normalisation.
Carried out for its own sake normalisation must inevitably produce a mixture of
outcomes, good and bad, and has no intrinsic merit. As part of the process of
incorporating the IOTs into Western Australia, normalisation has some value,
but the process of incorporation has stalled and there is no proximate danger
of a successful outcome. Normalisation, as a stand alone strategy, is not
viable, as it fails to take account of the particular circumstances of the IOTs.[8]
1.30
In addition, the 2006 report included a number of recommendations
specific to improving economic sustainability in the IOTs in relation to the granting
of the Christmas Island casino licence; ensuring the value of Commonwealth
land; measures to reduce air and sea freight costs; boosting passenger air
travel; and law reform, including extending Corporations Law to the IOTs.
1.31
In regard to governance arrangements, the previous committee’s
recommendations focused on providing local IOTs decisions makers with more
autonomy and vesting leadership on economic development within the IOTs communities.
1.32
With a view to improving governance arrangements within the IOTs, the
previous committee made the following recommendations:
Recommendation 10
The committee recommends that the Australian Government cease
its policy of market-testing and outsourcing to third parties, services which
it currently provides to the Indian Ocean Territories, with a view to promoting
the development of community capacity within a framework of enhanced
local/regional government.
Recommendation 12
The committee recommends that the Australian Government alter
the governance arrangements of the Indian Ocean Territories to provide the
Shire of Christmas Island and the Shire of the Cocos (Keeling) Islands with an
expanded role. The shires should have: direct representation of the communities
with the Minister for Territories; and a formal advisory capacity with regard
to applied laws and services delivery arrangements. Moreover, the shires should
be: fully funded on the basis of an agreed service delivery framework; given
adequate title to all assets required to carry out their functions; and able to
jointly enter into a regional local government type cooperation agreement.
Recommendation 13
The committee recommends that the Australian Government
undertake to develop options for future governance for the Indian Ocean
Territories in conjunction with the communities on Christmas Island and the
Cocos (Keeling) Islands, with a view to, where practical, submitting options to
a referendum of those communities by the end of June 2009. Possible options
could include but should not be limited to: maintaining current governance
arrangements with some refinement; incorporation into the State of Western
Australia; and a form of limited self government.
1.33
The previous Government did not fully support these recommendations and
the reasons for this can be found in the Government’s response of June 2007, to
the report on current and future governance arrangements in the Indian Ocean
Territories.[9]
1.34
While the focus of the current inquiry has not been to examine
governance arrangements, it has aimed to expand its scope of the economic and
social challenges facing the IOTs. This includes examination of the
effectiveness of service delivery arrangements especially in the areas of
communication, transport and housing and related issues of accountability and transparency
of decision making, and the committee would encourage a re-examination of the
recommendations of the previous committee’s report into the Current and future
governance arrangements for the Indian Ocean Territories by this Government.
Reader guide and structure of the report
1.35
This report outlines the committee’s findings and recommendations in
relation to the changing economic environment in the IOTs. Recommendations have
been listed at the front of the report.
1.36
Chapter 1 provides an introduction to the committee’s inquiry and
outlines the objectives, conduct and scope of the inquiry. The findings and
recommendations of the 2006 inquiry are also outlined.
1.37
Chapter 2 provides a brief history and background to the legal
frameworks and governance arrangements that apply to the IOTs.
1.38
Chapter 3 outlines the economic challenges facing business and future
business development. Mechanisms for handling administrative complaints are
also discussed.
1.39
Chapter 4 outlines possible emerging industries identified in the
evidence which includes: tourism, education and research partnerships, and
housing.
1.40
Chapter 5 provides discussion about the information communication
technology needs of the IOTs with a focus on the service delivery improvement
of internet, mobile and non mobile telephony, digital television and radio.
1.41
Chapter 6 outlines the transport challenges that continue to face the IOTs
including discussion on the cost of shipping and air freight, passenger air
travel and cabotage restrictions.