Tax break at odds with plans to grow north

Pilbara News - - Opinion - Lynne Craigie and An­thony Fri­day, Pil­bara Re­gional Coun­cil

It is abun­dantly clear to me that some­times the main hur­dle for re­gional Aus­tralia is the lack of co-or­di­na­tion be­tween the var­i­ous tiers or de­part­ments of Gov­ern­ment.

I have sub­mit­ted a re­port to the Pro­duc­tiv­ity Com­mis­sion, and wish to out­line one of the main ar­gu­ments we have made in our sub­mis­sion.

It’s cheaper per kilo­me­tre to travel from Perth to Lon­don than it is to travel from Perth to Kar­ratha. Why is this ac­cept­able? There is an in­her­ent in­con­sis­tency in al­low­ing a fringe ben­e­fits tax ex­emp­tion for fly-in, fly-out ar­range­ments on the one hand, and a de­sire to un­lock the north and di­ver­sify re­gional economies on the other.

The ex­emp­tion dis­torts the air­line mar­ket.

It makes FIFO ar­range­ments ar­ti­fi­cially cheaper (and thus vi­able), which crowds res­i­dents and lo­cal busi­ness own­ers out of their own air­ports.

Why, at a time when the bud­get is stretched to ca­pac­ity to de­liver im­por­tant in­fra­struc­ture, de­fence and health ini­tia­tives, would the Fed­eral Gov­ern­ment al­low min­ing com­pa­nies to avoid a tax that other Aus­tralian cor­po­ra­tions and small busi­nesses must shoul­der?

If your goal is to di­ver­sify re­gional economies, why in­cen­tivise cap­i­tal-city based FIFO work­forces over lo­cal labour?

Lo­cal gov­ern­ment has done the right thing by sup­port­ing small busi­ness devel­op­ment, ad­vo­cat­ing for bet­ter telecom­mu­ni­ca­tions, and in­vest­ing their own funds in tourism and other ar­eas of the lo­cal econ­omy.

The State Gov­ern­ment has done the right thing, too; it’s poured bil­lions into de­vel­op­ing a di­verse Pil­bara econ­omy with vi­brant com­mu­ni­ties.

Even the Com­mon­wealth Depart­ment of In­fra­struc­ture and Re­gional Devel­op­ment is do­ing the right thing.

I re­gret to in­form you that it seems Trea­sury has missed the memo.

Trea­sury’s tax con­ces­sions re­sult in air­lines charg­ing higher than nor­mal prices be­cause min­ing com­pa­nies pro­vide a re­li­able stream of pa­trons, and are freed of the FBT bur­den. This keeps the planes reg­u­lar, but half-empty.

Most ma­jor flight routes are not vi­able un­less they are more than 75 per cent full. The flights to these FIFO-heavy re­gions reg­u­larly fly as low as 50 per cent full.

This is not a fail­ure of cor­po­rate Aus­tralia. To be clear, both the min­ing com­pa­nies and the air­lines are do­ing their duty to their share­hold­ers.

The Pro­duc­tiv­ity Com­mis­sion has clearly recog­nised there is an is­sue here, launch­ing an in­quiry into tran­si­tion­ing re­gional economies.

While we wel­come this in­quiry, we also call on Prime Min­is­ter Mal­colm Turn­bull to en­sure all of Gov­ern­ment ac­tively par­tic­i­pates in this in­quiry.

Only with all lev­els of Gov­ern­ment work­ing to­gether will we be able to fully un­lock the vast po­ten­tial of the north.

Pic­ture: Ian Munro

Lynne Craigie has writ­ten to the Pro­duc­tiv­ity Com­mis­sion, call­ing the FBT ex­emp­tion for FIFO ar­range­ments into ques­tion.

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