On the brink of disaster: the impact of the Australian government reforms on Norfolk Island businesses

Economic development Economic forecasting Central-local government relations Productivity Small business Tourism Norfolk Island
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The Norfolk Island economy is in a state of crisis and on its current trajectory is heading towards a disaster in which many businesses and families will suffer substantially.

This crisis is a result of the manner of intervention by the Australian Government in the island's government and economy commencing 1 July 2016. By requiring both that Norfolk Island pay its own way and that Norfolk Islanders become like mainland Australians in terms of their obligations and expectations, the Australian Government is by its decisions crushing the island's economy in a vice from which few groups will escape unscathed. Critical factors in this crisis include:

- the imposition of Commonwealth and NSW regulatory regimes which have raised, and will inevitably continue to raise, business costs and prices substantially; 
- the planned introduction of Australia's Modern Award System for employment (which in some instances will see an overnight 30 per cent rise in small business wage costs); 
- the failure of the Australian Government to take up the responsibilities previously held by the Norfolk Island Government for the promotion of tourism on the island; 
- the loss of direct passenger airline services between New Zealand and Norfolk Island; 
- restrictions on island agricultural pursuits due to biosecurity preconditions; 
- the removal of general revenue raising powers previously held by the Norfolk Island Government; and 
- the little evidence of any "upside" for Norfolk Island's future economic development.

It is projected that the combination of these factors along with others will cause a very large increase in Island prices, a steep downturn in tourism, a slump in business, a rise in unemployment, and widespread community distress.

The Australian Government has given insufficient thought to the genuine requirements of a very small and marine-isolated economy such as Norfolk Island has. (Given that Australia comprises almost in toto one vast continent, this may not be surprising.) The "development" model currently in place for Norfolk Island is grossly inappropriate.

As a result of the analysis provided here, the Australian Government is urgently enjoined to:

- halt for the meantime any further Commonwealth or state impositions on Norfolk Island under current arrangements; 
- commission the Australian Productivity Commission to carry out research and conduct a public inquiry to determine the real financial capacity of the island and how it can survive economically, socially and culturally at reasonable cost; 
- restore some general revenue-raising powers to the Norfolk Island Regional Council; 
- specify clearly and in much greater detail than has been done hitherto, exactly what its objectives on Norfolk Island are, and specify indicators to measure their achievement.

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