We need full air support
An open letter to the Prime Minister.
It is abundantly clear that sometimes the main hurdle for regional Australia is the lack of co-ordination between the various tiers or departments of government.
Policy instruments and objectives designed to create jobs or growth in one place, quite often create chaos in another.
As our Prime Minister, you have a unique mandate to bring it all together, and it is because of this that I welcome your call for a Productivity Commission study into transitioning regional economies from mining booms to diversified economic bases.
It’s cheaper per kilometre to travel from Perth to London than it is to travel from Perth to Karratha. If the north is the future, and fully diversified economies are the goal, why is this acceptable?
There is an inherent inconsistency in allowing an FBT exemption for FIFO 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 where 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 and create a “workforce of the north”, why give incentives to capital-city based FIFO workforces over local labour?
The local governments of the Pilbara have experienced both the upside and downside of FIFO workforces.
They bring a wealth of investment into the region, while subsuming all other areas of the local economy under the weight of this investment.
In this challenging environment, local government has supported small business development, advocating for better telecommunications and investing 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. Western Australia’s Pilbara Development Commission is leading this charge in our region.
I regret to inform you that it seems Treasury has missed the memo.
These FIFO tax concessions put all of that investment at risk. The left hand is investing in developing the untapped potential of the north, and the right hand is giving out tax concessions that have the effect of restricting this very same potential.
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 tax burden. This keeps the planes regular but half-empty.
Most major flight routes aren’t 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. It has become the hallmark of this national handbrake on growth.
This is not a failure of corporate Australia. Both the mining companies and the airlines are doing their duty to their shareholders.
Business is fine. It’s these exemptions to the tax code that’s the impediment. The free-market economics are fine.
It’s government interference that’s the impediment.
The Productivity Commission has clearly recognised that there is an issue here, launching an inquiry into transitioning regional economies.
While we welcome this inquiry, we also call on the Prime Minister, to ensure all of government actively takes part in this inquiry. We call on him to use his business acumen to realign Treasury to the Northern Australia White Paper and its ambitious development agenda.
Only with all levels of government working together will we be able to fully unlock the vast potential of the north.
Lynne Craigie (chairwoman) and Anthony Friday (chief executive)
Pilbara Regional Council