Part I. On the Ground on Norfolk Island
[This letter first appeared in The Norfolk Islander 13 August 2016, and in somewhat expanded form on Norfolk Online News: http://www.norfolkonlinenews.com/chris-nobbs.html.]
Dear Editor,
In 1979 the Australian Parliament granted Norfolk Island, as an external territory under the authority of Australia, a limited form of self-government. The arrangements were enshrined in the Norfolk Island Act 1979, and were based on the idea of partnership between the Australian and Norfolk Island governments in advancing the well-being of the island.
In recent years the Australian Government and its representatives, including the Norfolk Island Administrator, have regularly claimed that the period 1979-2015 on Norfolk Island was a ‘failure’, and this proposition has been used as one justification for the wholesale intervention of the Australian Government in the affairs of Norfolk Island under the Norfolk Island Legislation Amendment Act 2015. This claim needs to be examined more thoroughly than it has been. There were undoubted failures during the 1979-2015 period it is true: failures both on the part of the Norfolk Island Government and the Australian Government, and these need to be acknowledged on both sides. However taken overall, the evidence indicates to me that, given all the circumstances, the conduct of the people and government of Norfolk Island was a substantial success.
Politics and democracy
There is one important and fundamental sense in which the period was a resounding success. The 2015 Referendum held on the Island established that from a 92 per cent turnout of electors, 68 per cent of residents wanted (basically) the system of government that they had, to continue. And this result was indirectly confirmed by the results of the first Norfolk Island Regional Council elections held in June 2016. There is no evidence in the public domain that stands counter to these facts. This indicates that the Norfolk Island community – making their own judgement as to their own situation – were basically happy with their way of life, economy and environment (despite the need for some changes being evident). We will return to this aspect of the matter in Part II. Now let’s look at the economic aspects.
The tourism industry
Tourism has been the mainstay of the island economy for half a century, and from 1980 was run by the Norfolk Island Government (NIG) as a separate corporation. Figure 1 shows the rise and fall of tourist numbers to the island over 1980-2014 (1). Annual tourist numbers increased over the two decades of 1980-2000, peaking at 40,000 in 2001. From this high point, with hiccups in 2002 and 2006, numbers have followed a downward trend. What were the reasons for this decline?
In 2001 two airlines were servicing Norfolk Island, Flight West (a Queensland regional airline) and Norfolk Jet Express (NJE). This year saw the top of a tourist boom based on the success of Norfolk Island in attracting large seniors’ groups for holidays. In 2002 Flight West went into voluntary liquidation, disrupting the Norfolk Island market. NJE put on more seats, and Alliance Airlines entered the market briefly, raising numbers somewhat in 2003-04. In 2005 NJE ceased flying following a dispute with the NIG over a claimed debt.
At this point the NIG stepped in to charter an air service to Norfolk, before setting up its own airline Norfolk Air in 2006. It was hoped that Norfolk Air would augment tourism to Norfolk with a combination of increased points of departure, increased capacity, and a change in tourism marketing strategy. Despite good intentions, the Government investment in an airline was a very bad decision which bled the Norfolk treasury of many millions of dollars before the Commonwealth agreed in 2012 to pay out the existing contracts, close the airline down, and underwrite a service agreement with Air New Zealand. These airline disruptions and associated uncertainties with tourism marketing weighed heavily on tourist numbers over those years.
There were other issues too beyond the NIG’s control that contributed to the decline in tourist numbers after 2001. First, the early 2000s saw the rise of cruise ship holidaying which Norfolk could not access. Between 2004 and 2014 Australian take-up of cruise tourism increased from 158,000 to over a million: a year-on-year growth of over 10 per cent. Another contributor was the global financial crisis (GFC), prefigured in second half of 2007 by the collapse of US house prices. OECD data shows that in response, Australian savings as a percentage of household disposable income jumped by 10 per cent, taking over $500 million out of annual discretionary spending by households in the three eastern states (2). And data for New Zealand show a similar response. In addition, Australian interest rates slumped in the final months of 2008 putting pressure on individuals relying on fixed incomes. These changes without doubt had a depressing effect on the number of tourists visiting Norfolk Island. Thus even after consideration of the ‘airline problem’, it might be said that Norfolk Island tourism did better than might have been expected over these years.
Norfolk Island Government – revenues and expenditures
Over three decades (1979 to 2009) the Norfolk Island Government neither borrowed nor received monies from the Australian Government for recurrent expenditures. Figure 2 shows the Government’s credit/debit balance on current account for years 1990-2010 (1). The numbers show that for almost two decades – and as for the years prior to 1990 – the NIG on average, balanced its books. It is probably the case that few if any governments in Australia, state or regional, could claim a similar record. This modest and steady living does not look to me like failure.
*Dr Chris Nobbs is an economist and social commentator currently resident on Norfolk Island, where he was born.
*Chris Nobbs
