Norfolk on the brink of a failed state


In October last year, Australia’s Federal Minister for Home Affairs Bob Debus declared the Australian South Pacific territory of Norfolk Island was on the brink of becoming a failed state.
Acting within his federal responsibility for Australian territories, Minister Debus referred the federal parliament to past parliamentary reports which said the island government was in danger of becoming insolvent. The reports had recommended that the Australian territory be incorporated into the Australian tax regime.
Debus told parliament that “in the coming months, I will take a long-term strategic policy to cabinet which will have the aim of securing the future of Norfolk Island as a sustainable, just and equal part of Australia into the 21st century”.
He conceded the self-government of this very small place, set up under the Fraser coalition government 30 years ago, was not in a position to resolve its problems independently.
Seven months later, nothing happened; no changes have been detailed and neither has the federal government clearly articulated its plans and policies for Norfolk Island.
Mike King, former Chief Minister of the island and president of the local ALP sub-branch Norfolk Labor, has berated the federal government claiming, “All we’ve had is words; no action and no clear future”.
King said the situation in the island has continued to deteriorate and the community has been left “like shags on a rock”.
Whilst many who lived on this sub-tropical paradise have clearly benefitted from its tax-free status, King maintains that under the 30-year period of self-government, the population has stagnated while at the same time the proportion of island youth has dropped away having been replaced by oldies and outsiders.
King says the island immigration system does not adequately protect local jobs or lifestyle and after 30 years of self-government, local employees are still not guaranteed basic entitlements and access to basic health, and medical care is unequal and inadequate.
“These are shameful inequities and inadequacies on the part of modern-day Australia and they must be corrected by intervention by the Commonwealth government,” said an irate King.
The Norfolk Island government, however, does not share King’s views and maintains a defence of its self-government arrangements.
Chief Minister Andre Nobbs says balanced budgets have been the norm; that pensions and other social issues have been looked after quite well.
King says this is “bunkum and self-delusion”. “The current year will close in two months with the 5th consecutive deficit outcome and a continuation of trends showing a rapidly failing financial position.”
Figures published by the Norfolk Island Government reveal that 6 of the last 7 budget outcomes had been a deficit.
On King’s close analysis, the Norfolk Island government’s financial position has deteriorated dramatically and consistently over the past 7 or 8 years through, according to King, mismanagement, lack of financial and administrative capacity and self delusion.
Although there is paucity of official collated data, it is clear from published reports and long-term downward trends in tourism (Norfolk’s only industry) and public sector economic activity, that Norfolk Island has been in a recession for at least four years and is poorly placed to deal with the impact of the current global economic crisis.
In January the Norfolk Island Government altered its tack, blaming the global crisis and the Commonwealth for its parlous position.

Bob Debus...declared Norfolk Island on the brink of becoming a failed state.

Despite 30 years ago choosing not to be part of the federal tax system, Norfolk sought an immediate assistance package of $2.5 million and its inclusion in annual handouts from the Feds.
As at May 15, no approval had been forthcoming from the Federal government nor any statement about Norfolk’s future relationship with the Commonwealth.
King understands that Norfolk chose 30 years ago not to contribute to the federal tax coffers and should not now be drawing from those coffers.
Economic oblivion: However, the Commonwealth has an over-arching responsibility for Australians living in Norfolk Island and a duty to halt Norfolk’s slide into economic oblivion.
He pointed to Minister Debus’ statement that “Australia cannot afford to allow Norfolk island become a failed state, which is the likely outcome in the longer term if no action is taken”.
King urged the federal government not to ignore the Norfolk island situation any longer.
Adding to Norfolk Island’s precarious financial woes is the operation of its own airline, Norfolk Air, and some $300,000 of unknown 2007/2008 creditors coming to light in the tourist bureau 9 months into the following financial year.
According to the present finance minister, the airline is running at a loss with no working capital of its own. But the position is ‘not too bad’ when you take into account profits of earlier years.
According to King, the airline is not incorporated; runs on capital provided from other areas of government activities; has not retained any profits from earlier years; has drained the capital of other government business entities and does not conduct a full set of financial accounts against which its financial position can be properly assessed.