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Norfolk Island Royal Commission 1976

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REPORT OF THE ROYAL COMMISSION INTO MATTERS RELATING TO NORFOLK ISLAND October 1976 Australian Government Publishing Service Canberra 1976 1 © Commonwealth of Australia 1976 ISBN 0 642 02234 8 Printed by F.D Atkinson. Government Printer of Australia 2 P.O. Box 965 CIVIC SQUARE, A.C.T. 2608 15 October 1976 Your Excellency, In accordance with Letters Patent dated 15 May 1975, I have the honour to present to you the Report of the Royal Commission into matters relating to the future of Norfolk Island. The Letters Patent issued to your Commissioner are returned herewith. Yours sincerely, John A. Nimmoo His Excellency the Honourable Sir John Kerr A.K., G.C.M.G., K.St.J., Q.C. Government House Yarralumla Australian Capital Territory 1 TABLE OF CONTENTS Chapter 1 LETTERS PATENT APPOINTING ROYAL COMMISSIONER AND SETTING OUT THE TERMS OF REFERENCE 9 Chapter 2 RECOMMENDATIONS OF THE COMMISSION IN SUMMARY FORM 11 1. In relation to the first principal matter (Chapter l7) 11 2. In relation to the second principal matter (Chapter 17) 11 3. In relation to Guideline (b) (Chapter 9) 14 4. In relation to Guideline (d) (Chapter 11) 14 5. In relation to Guidelines (e) and (f) (Chapter 12) 15 6. In relation to Guideline (h) (Chapter 14) 16 7. In relation to Guideline (i) (Chapter 15) 16 8. In relation to Guideline (j) Chapter 16) 17 Chapter 3 PROCEEDINGS OF THE COMMISSION 20 1. Counsel assisting and the secretariat 20 2. Invitation to interested parties 20 3. Witnesses and exhibits 20 4. Hearings and inspections 20 5. Libraries and archives 20 6. Final submissions 21 7. Overseas discussions and inspections 21 Chapter 4 INTRODUCTION 22 Chapter 5 HISTORICAL OUTLINE AND CHRONOLOGICAL SUMMARY 23 1. The origin of the Pitcairners 23 2. The transference of the Pitcairners to Norfolk Island 25 3. The History of Norfolk Island 27 4. The historical outline of the various administrative and legislative arrangements relating to Norfolk Island 31 Chapter 6 THE BERWICK CASE 40 Chapter 7 GENERAL OBSERVATIONS AND IMPRESSIONS 42 1. On witnesses 42 2. On evidence 42 Chapter 8 GUIDELINE (a) - ‘The interests of Norfolk Island residents” 44 1. The identity of residents 44 2. Period of residency 45 3. Purpose of residency 45 4. Occupations or businesses of residents 46 5. The allegiance of residents 47 6. Land interests of residents 47 7. Residents’ Organisations 49 8. The main interests highlighted by residents in their evidence 50 2 9. The need for an objective approach 52 Chapter 9 GUIDELINE (b) ‘The historical rights of the descendants Of the Pitcairn settlers arising from their Settlement in 1856’ 54 1. Identification of the Pitcairn descendants 54 2. The claims relating to ownership and self—government 55 3. The right to the Pitcairn way of life 57 4. Rights open to question 58 (a) The aspect of taxation freedom 58 (b) Grazing rights 59 (c) Land rights 60 5. Conclusions and recommendations 61 Chapter 10 GUIDELINE (c) ‘Norfolk Island’s Legal Position As A Territory Of Australia’ 62 Chapter 11 GUIDELINE (d) ‘The present and probable development of the economy of Norfolk Island’ 63 1. Historical background 63 2. The transition to the present situation 67 3. The present economy and the dominance of tourism 68 4. Possibilities and problems in the development of other industries 77 5. The role of companies in the economy 80 6. Aspects of the Island’s public finance 82 7. Factors affecting the future 84 8. Conclusions and recommendations 88 9. Relationship to the Australian economy 89 Chapter 12 GUIDELINES (e) AND (f) 92 1. The present situation 92 (a) Social services 92 (b) Pensions 93 (c) Medical benefits 93 (d) Health 95 (i) Medical services 95 (ii) Specialist medical services 95 (iii) Dental services 95 (iv) Hospital services 95 (v) In-patient services 96 (vi) Out-patient services 96 (vii) Pharmacy services 96 (viii) Public health services 97 (ix) Maternal and child health 97 (x) Domiciliary nursing 97 (xi) Family planning, mental health, alcoholism and drug dependency services 97 (xii) School medical services 98 (xiii) Health education 98 (xiv) Immunisation services 98 (xv) Quarantine services 98 3 (xvi) Physiotherapy 98 (xvii) Emergency blood supply 98 (xviii) Certification procedures 98 (e) Education 99 (f) Compensation and other benefits 100 (i) Re Workers Compensation 101 (ii) Employment and employment services 101 (iii) Wages and wage-fixing machinery 102 (iv) Freedom of association and the right to organise 102 (v) Labour inspection 102 (vi) Labour Standards 102 (vii) Superannuation 103 (viii) Wage Structure 103 2. Attitudes to the above, both Island and mainland 103 (a) The Norfolk Island Council view 103 (b) Individual views of Island residents 103 (c) Department of social security 104 (d) Department of health 104 (e) Department of education 104 (f) The Department of the Capital Territory 104 (g) The Australian Treasury 105 (h) The Department of Employment and Industrial Relations 105 (i) The Department of Administrative Services 105 (j) The aspect of hardship 106 3. Conclusions and recommendations 106 Chapter 13 Guideline (g) 131 1. Introduction 131 (a) Form of this chapter 131 (b) Need for definitions 131 (c) ‘Tax evasion’ 131 (d) ‘Tax avoidance’ 131 (e) ‘Tax haven’ 132 2. The emergence of Norfolk Island as a tax haven 132 (a) Prerequisites of a tax haven 132 (b) Development of the prerequisites 132 (c) Distinction between Norfolk Island and Australia 132 (d) Effect of the distinction 133 (e) Extension by special provisions 133 (f) Background to the special provisions 133 (g) Effects on withholding tax interest and dividends 134 (h) Summary of situation which had evolved 134 3. Elaboration of some of the more important essentials of a tax haven in the Norfolk Island context 134 (a) Communications 134 (b) Freedom of currency movements 135 (c) Availability of professional and financial services 135 (d) Political and administrative stability 136 4 (e) The proliferation and diminution of tax avoidance 136 4. The uses made of Norfolk Island as a tax haven 136 (a) Means employed in tax avoidance schemes 136 (i) Basis of arrangements 136 (ii) Steps to secure ‘residency’ of companies 136 (iii) The creation of a legal fiction 137 (iv) Examples of practices adopted 138 (v) Avoidance schemes relating to dividends 138 (vi) The significance of the Esquire Nominees Case Esquire Nominees Ltd (Trustee of Manolas Trust) v. Federal Commissioner of Taxation (1973) 129 C.L..R 177 139 (vii) Examples of avoidance schemes other than interest and dividend schemes 140 (viii) Use of trusts 141 (ix) Avoidance by Australians of Australian tax on foreign income 141 (x) Avoidance of Australian tax by Foreigners 142 (xi) Avoidance of foreign tax by foreigners 142 (b) The extent of past avoidance and evasion 143 (i) Effective virtual commencement date 143 (ii) The indicator provided by banking activity 143 (iii) Estimations of tax lost to Australia 146 (iv) Indicator from numbers of service industries 146 (v) The element of publicity 146 (vi) The potential loss from tax avoidance 146 5. Additional harmful effects 147 6. Alleged benefits of using the Island as a tax haven 147 7. Efforts to counter the tax avoidance schemes 148 8. The position after the 1973 amendments 150 9. Avoidance of estate and gift duty 152 10. The anomaly in the taxation treatment of competing companies 156 11. Other activity related to taxation avoidance 156 12. Argument in favour of retaining the tax haven status of Norfolk Island 156 13. State duties – death and stamp 156 14. Criticism against the retrospective character of the amending legislation of 1973 157 15. Conclusions 157 Chapter 14 GUIDELINE (H) - ‘CONDITIONS FOR PERMANENT ENTRY INTO THE ISLAND COMMUNITY’ 159 1. Background 159 Current situation 161 (a) Temporary entry permits 162 (b) Entry permit not being a temporary entry permit 163 (c) Certification of declaration of residential status 164 2. Immigration procedures 165 3. Amendments and proposed amendments to legislation and policy 166 4. Present situation of population and holders of permits 169 5. Recommendations 169 Chapter 15 GUIDELINE (I) ‘THE NEED FOR ADEQUATE COMMUNICATIONS BETWEEN THE ISLAND AND AUSTRALIA, AND THE REST OF 5 THE WORLD’. 172 1. Introduction 172 2. Present situation 172 (a) Radio telephone and telegram services 172 (b) Local radio broadcasting 173 (c) Local telephone services 173 (d) Newspapers 173 (e) Mail deliveries 173 (f) Air services 174 (g) Shipping services 175 (h) Meteorological services 175 (i) Ingress and egress 175 3. Air services to and from Norfolk Island 176 (a) The problem merging 176 (b) Main factors involved 176 (c) The Norfolk Island airport 177 (d) Alternative air service proposals 178 (e) The Qantas position 180 (f) The position of other airlines 181 (g) The environmental considerations involved in upgrading the airport 183 (i) Effects of the actual construction work 184 (ii) Development effects 184 (iii) Noise pollution from jet aircraft 184 (iv) Effects upon fauna and flora of noise and fume pollution from jet aircraft 184 (v) Vibration effects upon buildings 185 (vi) Conclusions 185 (h) The costs involved and responsibility for them 185 (i) Attitude of the former administering department (Capital Territory) 186 (j) Decisions to be taken and recommendations in relation thereto 187 4. Other recommendations relating to communications 188 (a) Seaport possibilities 188 (b) Shipping services 188 (c) OTC services 189 (d) Local radio reception 189 (e) Delivery of mail and newspapers 189 Chapter 16 GUIDELINE (j) ‘The need for adequate law enforcement and judicial machinery’ 190 1. Present situation 190 (a) The law applicable to Norfolk Island 190 (b) The Courts 191 (c) The criminal law 193 (d) Criminal law administration 193 (e) Police Force 194 (f) Copyright and patents 195 (g) Commercial law 195 (h) Family law 195 6 (i) The Law Reform Commission 196 (j) The Australian Legal Aid Office 196 (k) The preparation of legislation 196 (l) The Weir Report 196 (m) Some Australian costs associated with law enforcement in Norfolk Island 197 2.
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