Barry Haase (Kalgoorlie, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak again on the subject of taxation zone rebates. For those who are not aware, I have been a long-term advocate for change, or review at least, of the current system. Australia’s taxation zone rebate scheme needs an immediate and considerable overhaul. The current system neither accurately reflects the reality of life in rural and regional Australia in 2006 nor formally recognises the contribution made by these areas. The rebate must be substantially increased, classification of those entitled to it amended and ancillary elements such as a discount for Higher Education Contributions Scheme repayments for university graduates who choose to live and work in rural and remote areas considered.

For those not familiar with the history, the taxation zone rebate, originally known as the taxation zone allowance, was introduced in 1945 to attract city workers to more remote areas and to provide an incentive for them to make it a permanent move. Two zones were established: zone A for remote areas, and zone B for marginally remote areas. The annual rates were set at ₤40 and ₤20 respectively. These zones remain largely unchanged today. In the second reading speech for the Income Tax Assessment Bill in 1945, Treasurer Ben Chifley said:

These allowances are paid to employees as compensation for the disabilities of uncongenial climatic conditions, isolation or relatively high living costs.

This position is as relevant today as it was 50 years ago, if not more so. In 1975 the allowance was changed to a rebate. In the past 30 years it has been reviewed six times, most recently in 1993-94. However, the value of the payment has been eroded to the point of irrelevancy and provides no adequate compensation for life in rural and regional Australia. The rebate ranges from $57 to $1,173 annually for those who live or work for a total period of six months in specified areas. At its highest value, the rebate was worth five weeks wages per annum. At $57 per annum today, it is barely worth the time taken to make the claim.

A level of $5,000 to $7,000 per annum would better reflect the additional cost of living in the bush. Furthermore, it must only be available to bona fide residents. The residents of towns in remote Australia often suffer a 20 per cent surcharge on a standard metropolitan priced basket of goods. Nearly half a million taxpayers claim the rebate, at a cost of $200 million per annum. A reclassification of entitlements would greatly reduce the number of claimants. One element contributing to rural population reduction is the practice of ‘fly in fly out’. Fly in fly out workers are entitled to the rebate even though they may live in cities with full amenities. This entitlement should be removed, as there is no hardship involved—no, not these days—even in the workplace itself.

Boundaries need to be reclassified. In 1945, Darwin, Cairns and Townsville were classified as remote towns. They are now among Australia’s largest and most vibrant cities. Darwin is the capital city of the Northern Territory and has a population of 110,000, but it is currently classified as being ‘remote’, in zone A, with its residents enjoying the same meagre entitlement as the residents of Marble Bar in Western Australia, with a population of 410. Queensland has experienced a population boom, recording the largest population growth of the states and territories in 2003-04, with an increase of 81,000 people. Cairns now has a population of 120,000 and Townsville has a population of 144,000, but both are ‘marginally remote’, in zone B. Residents receive the same rebate as those in Woomera in South Australia, with a population of 300, and Corinna in Tasmania, with a population of just five.

Small towns such as these are disappearing because of general hardship. The share of the population in rural areas—that is, centres of less than 1,000 people—declined from 14.7 per cent in 1986 to 10.9 per cent in 1996. Without a change to the taxation zone rebate scheme, vast areas of Australia will be depopulated. If a tight-fisted attitude in Treasury prevents fair recognition of the need for service equity for bona fide residents of remote Australia then taxation zone rebates should be removed for those in centres with populations in excess of 50,000, which enjoy cost benefits as a result of competition.

Australia should use its abundance of land and unpolluted environment to its advantage, rather than overcrowding its urban centres. Mining and agriculture account for nearly 50 per cent of Australia’s exports, but there is a shortage of workers in both these sectors, as no meaningful incentives are in place to attract those would-be workers to reside in remote areas.

An investigation of all aspects of remote area population decline is long overdue. Innovative strategies, such as discounting HECS repayments, need to be thoroughly analysed. For graduates who are bona fide residents of remote areas a discount of 25 per cent for zone B and 100 per cent for zone A is one such strategy with the potential for great service improvement at minimal bottom line cost. The great void between suburban living, with public amenities and low living costs, and rural and remote residency must be addressed. In 1945 taxation zone rebates were successful in attracting people to remote areas. With a genuine commitment and a general revision, they have the potential to do that job again.

It is over a decade since a serious review of the taxation zone rebate system has been carried out. I am calling for a review to be approved and for the whole issue of boundaries and the value of taxation zone rebates to be addressed. We have a situation presently where those who live in leafy suburbs continue to receive the taxation zone rebate. Recall that the taxation zone rebate was initially introduced to consider the hardships of country employment in areas that were underserviced. That underservicing exists today, yet there are so many employees who receive the taxation zone rebate while living on a permanent basis in the cities and flying in and out of workplaces. That is an insult to all of those who are bona fide residents of remote areas where they suffer high prices because of the lack of competition and where they suffer the lack of amenities because of their isolation. It is time that a review was carried out to address that situation.

In calling attention to this taxation zone rebate system, I am told that I run the risk of having the whole process made redundant because there is a question as to whether or not a system of taxation zone rebates is constitutional. I have had a number of people advise me on the technicalities of the Constitution and on whether or not such an issue is unconstitutional, but no-one seems to be able to tell me and, of course, no-one is prepared to put it to the test. I say to the Treasurer and to Treasury: ‘Put the issue to the test, because, when somebody who is living in a centre with a population in excess of 100,000 is getting the same rebate as somebody who is living in a centre with a population of five, there are anomalies that must be addressed.’ If an investigation were to reveal that the system, as it stands, is unconstitutional, then those in a zone B area risking $57 a year do not have a lot to lose.