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Hon Warren Entsch MP Chairman Joint Standing Committee on Northern Australia PO Box 6022 Parliament House Canberra ACT 2600 Fax: 02-6277 2238

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Hon Warren Entsch MP Chairman Joint Standing Committee on Northern Australia PO Box 6022 Parliament House Canberra ACT 2600 Fax: 02-6277 2238 Hon Warren Entsch MP Chairman Joint Standing Committee on Northern Australia PO Box 6022 Parliament House Canberra ACT 2600 Fax: 02-6277 2238 Dear Mr Chairman Enquiry into Operations and Methods for Stimulating the Tourism Industry in Northern Australia Would you be kind enough to consider the following submission as it relates to the operations and methods for stimulating tourism on Christmas Island as part of your remit into your broader Northern Australian tourism enquiry? We note the terms of reference for your review include but are not limited to: 1. Domestic and international tourism comprising: recreational, environmental, cultural, educational, and industrial tourism; 2. The role of peak bodies, local communities, and all levels of government in developing and promoting tourism opportunities nationally and internationally, including regulations and workforce issues that may inhibit tourism development; and 3. Communication and transport infrastructure (particularly air, sea, road and rail transport and port infrastructure) which may facilitate and grow tourism. Our submission primarily deals with the role of government in developing and promoting tourism opportunities as well as transport and other infrastructure that may facilitate the growth of the industry. Our submission is in eight parts. Part one provides some background information. Part two deals with the need to have an economic development strategy or strategic plan for the island. Part three outlines why good public policy is served by government having an economic plan for the island and part four deals with planning for growth. Part five deals with one matter that inhibits tourism promotion and part six looks at some barriers to growth. Part seven deals with the complex land allocation and approvals process and part eight island infrastructure. Part One – Background Christmas Island is located in the Indian Ocean closer to Asia than mainland Australia. It is 2,650 kilometres northwest of Perth and 494 kilometres south of Jakarta. The island has a land mass of approximately 135 square kilometres of which 85 square kilometres is set aside in perpetuity in the Christmas Island National Park. The land tenure on Christmas Island is broadly divided between- National Park 63% Uncommitted Crown Land 19.2% Mine lease 13.7% Other Committed land 4.1% Through its almost total ownership of land, the Australian Government largely controls the Christmas Island economy. And where it may not be able to influence the island’s primary economic settings through its land ownership regime, it can do so courtesy of its complicated land allocation and development approvals processes. The Government’s influence over the economy is perhaps best demonstrated by the major drivers of economic activity over the last thirty years. In 1987 the Government decided to close the phosphate mine. Unemployment increased along with a decreasing island population. In 1990 the Government approved the reopening of the phosphate mine, leading to in excess of 150 direct jobs being created. In the early 1990s the Government approved a casino development, leading to the creation of a large number of jobs during the construction phase and up to 300 hotel-casino jobs until it closed some four years or so later. In the late 1990s the Government approved the development of the Asia Pacific Space Station. That project failed. In the early 2000s the Government constructed the Immigration Detention Centre (IDC). The IDC has been in operation for around ten years. This year the Government announced the IDC will close by 30 June 2018. It is clear from the events of the last thirty years that the Government plays a central role in the economy of the island. 2 Part Two - Economic Development Strategy for Christmas Island The closure of the IDC by 30 June 2018 will have a negative impact on the island economy. At this stage it is not entirely clear how severe that impact will be on local business and employment opportunities. It is unfortunate certain government agencies perceived the IDC and other asylum seeker accommodation as providing the permanent jobs required to underpin the island’s economic base. It is unfortunate because other proposals designed to bolster the economy were dismissed. The challenge for the island today is creating an alternative economic base. There has been some suggestion that tourism is capable of filling the void created by the forthcoming closure of the IDC and eventually becoming the economic mainstay of this island. However, there does not seem to be any clear plan as to how this will eventuate. Until recently, Government showed no enthusiasm towards accepting repeated suggestions that an economic strategy or strategic plan be developed and implemented for the island. Indeed, some ideas on ways to grow the island’s economic base seem to have been treated with disdain. Late last year the former Minister for Territories provided funding for the Regional Development Organisation (RDO) to develop a New Strategic Plan for Christmas Island. However, nothing has been published indicating that the government will adopt as government policy the New Strategic Plan or some other economic strategy that will articulate the future direction of the economy. We again strongly recommend Government develop and approve an economic strategy/strategic plan for the island. Recommendation – The Committee recommend in the strongest terms that the Government commit to endorsing an economic strategy or strategic plan for the island. We believe the development of an economic strategy that encompasses tourism is essential for a number of reasons. First, existing and potential tourism operators need to know in broad terms what developments may or may not be supported by government. There is little point in seeking to attract economic activity in a particular aspect of the industry if it has no chance of being approved. A casino licence is a case in point. At the moment the Christmas Island Resort and Casino is closed. Despite recommendations from your Committee, Government has embarked on endless reviews seemingly designed to put off to another day making a decision on whether or not to grant a licence. Government indecision impacts on the development of the industry as we will explain later. 3 Second, the tourism industry and the entire island community need to know if the government is serious about developing the industry. In the past a great deal of time and effort has been expended developing a plan or strategy for the island. However, the plan or strategy has never been endorsed by government. The Shire of Christmas Island produced, after extensive community consultation, the Our Future: Christmas Island Community Strategic Plan 2011-2021. Regretfully, these plans or strategies have held little weight in subsequent government decision making processes. Government departments and agencies have continued to implement their own agenda irrespective of whatever the plan or strategy provides. And as there appears to be no coherent or agreed view between government agencies as to economic future of the island, government decisions (to the extent they are made) have been confusing and contradictory when viewed through an island wide economic growth lens. It appears previous attempts to develop a strategic or economic plan capable of implementation has not been realised as a consequence of government departments and agencies not being part of the development and approval process. A major shortcoming has been the reluctance to have Cabinet endorse the plan as government policy. These weaknesses need to be addressed. Recommendation – The Committee recommends the development of the new strategic plan involve government agencies and once approved by each agency and the community, be presented to Cabinet for endorsement as government policy. There are additional reasons for government endorsing an economic policy for the island. With the forthcoming closure of the IDC, the main economic drivers on the island will be phosphate mining and government services. We have undertaken informal discussions with Government over a plan to extend the life of the mine. However, if Government is not inclined to support that proposal and perceives tourism filling the economic void created by the premature closure of the mine, it needs to be clear headed about how that might be achieved and its implications. Replacing the contribution the mine makes to the local economy will be challenging, as the following will demonstrate In the 2015-2016 financial year, the company was responsible for direct payments to the Commonwealth totalling $27,128,636, comprised of the following:- Company tax 13,961,946 PAYG (employee tax deductions) 7,177,356 Payroll tax (paid to the Commonwealth) 1,531,835 FBT 400,303 Royalties and Levies 4,057,196 4 In addition to the above, the company funded the feral cat eradication program with $250,000 per annum – an amount which otherwise would have needed to be found out of government resources. In addition also, the company paid $4,120,501 to other government authorities for utilities/services. Contribution to the Christmas Island Economy Almost all company employees are permanent island residents; not fly in-fly out. The total island payroll for the year was $23.7m. Our employees shop at the local retail outlets, eat out the local restaurants and generally provide an income source for many of the smaller businesses. As a company we also engage the services of local contractors when required. In the 2015-2016 financial year we paid $3,618,728 to local businesses. All employees are entitled to a number of flights per year for themselves and specified family members. This coupled with senior management, customer, consultant and contractor flights to the island means that we pay for up to eight to ten seats on every flight. Contribution to Island Community We operate a community grants program that provides small sums to community organisations for various cultural and other events.
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