Norfolk island …

Dear Editor,

Norfolk Island Economy: the Minister, the Elephant, and seeking a Win-Win

[This letter first appeared in The Norfolk Islander and on Norfolk Online News, 16 December 2017]

On 16 November I provided the Acting Minister for Local Government and Territories, Hon Darren Chester, a copy of my report on the Norfolk Island economy entitled “On the Brink of Disaster: The Impact of the Australian Government Reforms on Norfolk Island Businesses” (1). This report was then on 18 November published by The Norfolk Islander (TNI) and Norfolk Online News. On Monday 21 The Australian carried on its front page an article over the signature of associate editor Brad Norington “Norfolk Island ‘crushed’ by takeover”. This was followed on Tuesday 22 by a response from the Minister – also over the signature of Brad Norington – entitled “Minister rejects Norfolk Island claim that takeover risks economic ruin”. On the same day The Australian carried a commentary by Matthew Lesh of the Institute of Public Affairs in Melbourne entitled “So why do we fell this independent pine?”. In response to the Acting Minister’s claims I wrote a letter to The Australian, an abridged version of which appeared in the paper on Thursday 23 November under the title “Norfolk Island’s future”.

I was pleased to see the related report that TNI carried last week from Radio NZ dated 23 November 2017 “Canberra rejects claim it’s wrecked Norfolk economy”, as it provides here a base from which to re-examine the claims made by the Minister and also to raise some broader issues. (In fact the Radio NZ report carried, to a large degree, merely a subset of the content of the article that appeared in The Australian on 22 November.)

Let us look at what the Acting Minister is reported to have said to The Australian on 22 November. First, he said the “major industry of tourism had just enjoyed its best year”. This is false, as consultation of Norfolk Island Annual Reports will show. The Radio NZ report had a slightly extended version of this, saying that Norfolk Island visitor numbers had previously reached 40,000 – which they did uniquely in 2000-01 – and that in 2016-17 tourist numbers had reached 30,000 “the best since the global financial crisis”. This numerical claim is problematic because during the year 2016-17 there has been substantial traffic to the island by Commonwealth officials, consultants, and workers contracted on infrastructure projects, and these will not be repeated in the future.

The Minister went on to say that the Commonwealth “had ‘hugely’ boosted the island’s potential visitor pool by scrapping passport requirements for Australians”. This is dubious at best as Australians are recommended to carry passports because if their aircraft cannot land at Norfolk due to inclement weather and is diverted to New Zealand, they will not be allowed off the aircraft if they do not have passports. (As has already happened.) For the Department of Immigration and Border Protection, a passport remains the preferred means of personal documentation for travel to Norfolk Island.

Then the Minister is reported saying that the government “had invested millions of dollars in subsidies to keep flights to Norfolk Island operating” and that “The government regarded Air New Zealand’s end to flights as the airline’s commercial decision”. The first claim of “millions of dollars” is unverifiable as Commonwealth subsidies to Air New Zealand are regarded as commercial in confidence. What we do know however is that Air New Zealand has a contract with the Commonwealth to provide air services from Australia to Norfolk Island which provides a “top up” to the airline if the average fare (revenue/passengers) falls below a specified level. So why is it that the withdrawal from the direct New Zealand-Norfolk Island service is of necessity the airline’s commercial decision, while it continues to fly from Australia in a subsidised manner?

Continuing, the Minister dismissed the arguments put forward in my report that the Commonwealth “had blocked Norfolk Island from its own revenue raising”, saying “Canberra had encouraged the regional council to start charging municipal rates… but it had declined.” This second statement is false as anyone living on Norfolk Island will know. And the first statement could not be maintained if the Minister had read my report. Consider the rejection by his predecessor of medicinal marijuana cultivation on Norfolk, and the more recent refusal to allow ruminant imports into Norfolk. And even last week TNI carried an announcement from the Commonwealth that the import of fresh fruit and vegetables to the island is to be permitted – a move which potentially sounds the death knell for local production, particularly if dumping by mainland producers ensues. Other examples from earlier years are also documented. (See (2), pp.129-30)

Then the Minister said he had “helped businesses by abolishing a 12 per cent GST that had applied on the island”, and that “wage rate increases were also being introduced gradually”. The first claim is selective, because although NI GST has been removed, businesses are now paying income tax. So far there is no evidence to suggest that businesses are better off under the new arrangement. The second claim is false. By far the most serious immediate concern for Norfolk Island businesses is the introduction on 1 July 2018 of the Australian Modern Award System including penalty rates, when there will be an unprecedented large jump in island wage rates across the board. The calculations given in my report of a small business servicing tourists and locals indicates that for present practice there will be a jump in wages of 35 percent.

The Minister finally claims that “Australia was investing $136 million to fix health, education and the port”. The figure is outrageously fanciful and has never been disaggregated in such a way as to appear credible, let alone be verifiable. It is unknown exactly what has been charged to the island’s account, over what period of time, how much money went into departmental travel, consultancies both useful and otherwise, or how much was money wasted – some of examples of which wastage are well documented. And furthermore, as pointed out in my letter to The Australian, the mere spending of money is no guarantee of achievement.

Norington in his article of 22 November also quotes “government agency sources” (read “DIRD” as the agency with responsibility for Norfolk Island) as claiming that “Norfolk Island’s previous administration invested little on infrastructure and repairs during 37 years of self-rule”. This is a proposition which covers many broad matters which it is not possible to deal with in detail here, but suffice to say that it is a proposition from which the Commonwealth itself does not escape culpability. (See for example (2), pp.124-34).

The “agency sources” then follow up with the gratuitous comment that “they believe protests over Canberra’s takeover are led by an ‘anti-Australian crowd’ of eight families.” This is an unacceptable statement on several grounds. First, it is fallacious in logic as “argumentum ad hominem” – you attack the person rather than the argument being presented. In that respect the statement is mere distraction and humbug. Second, the statement unacceptably conflates the ideas of Norfolk Islanders being anti-Australian – which they are not – and being anti some Commonwealth government policies – which many on the island are.

But there is an even more important issue raised by this comment. The “agency sources” appear to have chosen to interpret my report as a political statement about the Australian government intervention – which it is not – and ignored the fact that it is a commentary about the current state of the island’s economy being experienced by those on the ground – which it is. And while it is possible to lob a few claims – however compromised (see above) – into the public arena in contradiction to what I set out in my report, neither the Minister nor the “agency sources” have addressed the facts of the central issue: namely the very dire prospects for the island economy overall. In contradistinction to my detailed and factual report, nowhere is the Commonwealth’s set of alternative facts and analyses which establish the contrary case or anything like it, set out. Must the elephant in the room be forever ignored?

What is very clear from all this is that there are very different views held on Norfolk Island’s current economic position and future economic and social outlook. With sixteen months experience of the Australian Government’s intervention behind us, it seems sensible to take time out to see clearly what the position is, what has worked and what has not, to learn from any mistakes made, and make improvements for the future. The vitality and well-being of this gentle and peaceable island society require nothing less. In this context my proposal for the present imbroglio to be referred to the Australian Productivity Commission seems eminently reasonable. It would clear the air and benefit both Norfolk Island and the Commonwealth itself. That seems like a win-win to me.

Yours sincerely,

Chris Nobbs

(1) Nobbs, Chris, 2017a, “On the Brink of Disaster: The Impact of the Australian Government Reforms on Norfolk Island Businesses” (November),

(2) Nobbs, Chris, 2017b, Australia’s Assault on Norfolk Island 2015-16: Despatches from the Frontline,
Chris Nobbs