Norfolk Island is ‘on the brink of disaster’, says an independent report on the island’s economic situation.

The report was commissioned by the island’s small community following the Australian Government’s abolition of self-government in July 2016 and the imposition of direct rule.

Norfolk Island’s 1700 residents are now subject to the same laws – and taxation – as the rest of Australia, and is expected to pay its own way.

The report, written by economist and scientist Dr Chris Nobbs says that the changes mean “spiralling costs and inappropriate regulation.” It is titled ‘On the Brink of Disaster: The Impact of the Australian Government Reforms on Norfolk Island Businesses’.

Dr Nobbs says Norfolk Island is in crisis as the direct result of flaws in the intervention by the Australian Government in Norfolk Island’s governance and economy. The report outlines the impact of substantial cost increases facing businesses, including “double-digit price rises for incoming freight, a 15 percent rise in telecommunications costs, a 12.7 percent rise in regional council fees, along with regulatory changes that will see wage costs jump more than 35 percent next year.”

The report projects that Norfolk Island will suffer significant price rises, a steep downturn in tourism, a slump in business activity, a rise in unemployment, and widespread community distress.

“By requiring both that Norfolk Island pay its own way and that Norfolk Islanders become like mainland Australians in terms of their obligations and expectations, the Australian Government is crushing the island’s economy in a vice from which few groups will escape unscathed,” says Dr Nobbs.

Critical factors the report singles out as responsible for the economic crisis include:

• the widespread imposition of Commonwealth and NSW laws and regulatory regimes.
• the planned introduction of Australia’s industrial awards.
• the failure of the Australian Government to take up the responsibilities previously held by the Norfolk Island Government, such as for the promotion of tourism.
• the loss of direct passenger airline services between New Zealand and Norfolk Island.
• restrictions placed on primary producers and agriculture
• the removal of the general revenue raising powers of the Norfolk Island Government.

The makes a number of recommendations to the Australian Government, including the halting of further impositions on the island. It says the Productivity Commission should carry out research and conduct a public inquiry to determine the real financial capacity of Norfolk Island and how it can survive economically, socially and culturally at reasonable cost.

Norfolk Island has a population of only 1750 and an area of 34.6 sq km, and a very chequered history of governance. It was part of the colony of NSW from its founding as a penal settlement in 1788, and was transferred to Van Diemen’s Land in 1844.

Van Diemen’s Land was renamed Tasmania in 1856, and in the same year Norfolk Island became a distinct British territory with its own Governor. 1897 that office was abolished and administration returned to NSW, though the island remained a separate entity. It became a Territory of Australia in 1913, under an Administrator.

Then, in 1979 Norfolk Island was granted limited self government, with a small Legislative Assembly running most internal affairs. Financial problems led to the islanders asking for special assistance from the Australian Government in 2010, which led to the recent changes.

More than two thirds of the island’s voters rejected direct rule from Canberra at a referendum, but to no avail. Elections were held for a new Regional Council, a standard Australian Local Government Area, and Norfolk Island became an integral part of Australia on 1 July 2017. Islanders can now voe in Australian elections, where they are deemed to be part of the electorate of Canberra.

But the natives are increasingly restless.

“The Australian Government has given insufficient thought to the genuine requirements of a very small and marine-isolated economy such as Norfolk Island has. The ‘development’ model currently in place for Norfolk Island is grossly inappropriate.

Dr Nobbs’ 34 page report is available here.