It appears that Kevin Rudd’s industry of the future might very well be shelf-company manufacture in the Northern Territory.
Adopting a suggestion from Gina Reinhardt, Rudd has promised to make the NT a special economic zone where companies will pay a third less company tax.
Following in the failed decentralisation foot-steps of the Whitlam Government and others (Albury Wodonga anyone?) Rudd is trying to coerce Australian business into going north where there is no business.
Until northern Australia decides to produce something for which there is an international market, no “push” solutions are going to work. People, and companies, go where there is economic advantage. And when there is economic advantage, they don’t need to be coerced.
Having differential tax rates within the one country will only advantage one industry – the tax avoidance industry – with advisors and consultants springing-up to show companies how they can get this advantage.
And even then it will mostly be a benefit for private companies as franked dividends mean public companies will be largely unaffected.
So the NT will be most attractive to private and overseas companies who are looking for tax minimisation, making it a bit like Switzerland, but without the chocolate and yodelling.
The only saving grace about this proposal is that Tony Abbott was stumbling towards a similar one, and Kevin has probably pre-empted and terminated it.