Enterprise zones for Australia?

Grass roots concern from businesses and Local Government has seen a marriage between the NSW Local Government and Shires Associations (LGSA) and the Institute of Chartered Accountants in Australia (ICAA) to promote a fundamental change in the way we think about regional economic development.

At Parliament House Canberra in April, the ICAA/NSWLGSA Enterprise Zone Working Group presented its findings, including a major report by Dr Ian Manning from National Economics to a large audience. This was followed by three days of meetings with parliamentarians and ministers.

The report was commissioned after both the NSW LGSA and the ICAA found they were working along parallel lines with their investigations of bringing the Enterprise Zone system from the USA and Europe to Australia.

Graham Apthorpe from the NSW LGSA said that rural and regional areas are increasingly disenchanted when they are told to try harder to keep up with the rest of Australia.

“There is no lack of diligence or hard work in regional areas but there is an economic system which continues to grind many regional areas down,” he said.“Our research shows a 20 year successful history of targeted government programs which have lifted performance in the USA’s regional areas and towns.

“Europe has been particularly successful and Ireland is a shining example of what can be achieved when there is good government policy.”

Graham Apthorpe explained that an ‘enterprise zone’ is a geographic area that is considered economically distressed, as measured by such criteria as high unemployment, low population growth or net out migration, and low levels and growth rates of per capita income.

Once designated as Enterprise Zones, these areas are eligible for certain benefits, usually in the form of tax incentives, investment tax credits, credits for new jobs, credits for new equipment, and credits for property taxes. There is however a strong mutual obligation on business to create new net job growth for Australia.

The benefits are available to new or existing businesses providing they produce jobs and investment.

It is a well accepted fact overseas, that in the medium to long term, Enterprise Zones are self funding in that only part of the increased tax liability is credited to the business. This is due to the fact that it has employed extra people who pay personal tax and GST on increased consumption.

The report lists some 16 recommendations. The principal one is for the Federal Government to commit to a task force with State and Local Government and business groups to take this economic development tool further.

“We have to work at creating an attractive business climate in these areas and Enterprise Zones have been the principal mechanism around the world for doing this,” Graham Apthorpe said“While the report from Dr Manning identifies some successful areas, the reality is that nearly all the rural and regional areas are performing poorly and continuing to decline.

“The mechanisms we have in place are simply not working and we need something new.”

He said that the EZ Working Group has an extremely high level of confidence that Enterprise Zones could be a substantial tool to turn regional Australia around in the long term, however, because the concept is new, it will be a difficult change for government to make.

“There are positive signs that the old thinking is changing and we aim to work with all political parties and departments to inform them of the benefits of this new idea,” he said. “Individual Councils are encouraged to look at the Enterprise Zone conceptand make appropriaterepresentations.”

Dr Manning’s full report and summaries are available under ‘Media Releases’ at www.lgsa.org.au

For further information contact Graham Apthorpe, on (02) 6340 2035 or gja@cowra.nsw.gov.au