Up Front

with the Editor

Some places I visit often, and others escape me for years at a time. Norfolk Island is a place that has escaped me in recent years. Around 1960 I made three visits one after another, but when I went back the other day it was my first visit in six years.

In 1964 I wrote, “Tourism here is about to hit the big time and there is a bright future ahead. The greatest land interest lately has been in the business area of Burnt Pine, which only a couple of years ago was barely recognisable as a business centre”.

As we all know, the boom boomed with a very loud noise and (see p. 16) the development of the last six years has now brought the island to a turning point.

Poor Norfolk. It has always been pushed or shuffled from one crisis to another as it struggles to find an identity for itself.

The present crisis is certainly of greater financial concern for some of the mainlanders than for most of the islanders. Under present tax haven arrangements, overseas groups form companies which lend each other money, on paper, and pay out profits on the transactions. Large sums, on paper, go through the island in both directions, because it’s free of all taxes, including a withholding tax.

These locally registered companies must have local directors, mostly nominal, and local shareholders, again nominal. Solicitors and accountants abound on the island to handle all this company work, and this is where the big money is.

Incorporation of a company costs the client something like $l,OOO, plus registration fees.

Then there are director’s fees. The professionals charge from $lOO to $l,OOO a year as directors, a common fee being $5OO. Islanders, or “amateurs”, whose names are needed as directors, are paid anything from $2O to $lOO per directorship.

There are about six professionals who divide the majority of director ships between them, and of these one or two might have over 200 director ships, and most professionals would probably have at least 100.

Probably only about 20 amateurs are getting regular director’s fees, and

they would have anything from 10 to 50 companies.

A minimum number of subscribers are also needed to hold shares in each company, and probably about 30 islanders make a practice of holding these shares. At one time there were about 100, but last year the local authorities launched a series of prosecutions on companies which had not been operating according to Hoyle, and this scared off many of the real amateurs who realised they were also expected to have a respon sibility, and didn’t much like it. These subscribers are paid anything from $lO to $3O for the use of their names. (Incidentally there is a new development on shareholder arrange ments. Some shareholders now actually pay for their shares, and are promised, and no doubt get, regular dividends to make it worth their while.) All this money is tax free.

There is a lot of envy on the island of the professionals who have such lucrative perks, but as a would-be capitalist myself, my only complaint is that I haven’t the professional qualifications or the opportunity to share in the booty. There is nothing illegal about it and so long as Norfolk Island continues to be a tax haven, God bless those who can profit from it.

These views, of course, do not take into account what the islanders want. I don’t know what the islanders want, and I don’t think the islanders do when faced with the complicated issues brought about by tax havens.

The islanders certainly want pros perity, good medical services and a good education for their children.

They also want to live in the pleasant, unhurried atmosphere that Norfolk has enjoyed since Pitcairn days.

Are they to get all these things if Norfolk continues as a tax haven?

I suspect not, and they suspect not too. (Continued p. 10)

It’s just too simple to advocate that Norfolk Island be allowed to return to that period of only 10 or 15 years ago, when nothing much was happening and the islanders were fretting no less about their lack of future than they are today.

The present crisis indicates, surely, that Norfolk Island has to do some serious thinking about just where it is headed. What is to be its political status?

Does it want to remain attached to Australia for rations and quarters, run paternalistically, or otherwise, by an Administrator appointed by the Commonwealth; does it want respon sible local government (such as it rejected 10 years ago?) Does it want virtual statehood, with the kind of internal self-government that Niue and the Cook Islands have? Does it want to be fully absorbed into an Australian state, like Lord Howe Island is, or by the Australian Capital Territory, with the same rights and responsibilities as all other Australian citizens (which means taxation, but also social service handouts)? Does it want to be unique, with some recipe of its own?

And what, anyway, is the Common wealth prepared to do for Norfolk Island?

Has the Commonwealth thought through the political problems as sociated with Norfolk Island? Has it already drawn a line over which it is not prepared to allow Norfolk Island to step? Does it intend eventually to absorb Norfolk Island into the Aus tralian tax structure?

The islanders still talk of the pos sibility of the island becoming independent, “as it once was”. It never really was, of course, unless you can call being neglected indepen dent. I thought that ghost was laid on Norfolk in 1965 in the legal case, Newbery v. The Crown, but anyway we will be hearing some more on the subject later this year when the Australian High Court hears the case of Esquire Nominees v. the Federal Commissioner for Taxation.

This is a test case in which both the tax haven professionals and the Taxation Commissioner want to find out whether the Commissioner is entitled to tax Norfolk Island.

I believe one of the submissions will be that Australia is not entitled to legislate for Norfolk Island for the benefit of the Commonwealth —that it is restricted to legislation only for the peace, order and good govern ment of Norfolk Island.

Meanwhile, of course, the Norfolk Islanders are losing their identity, and maybe it is already too late for them

to recover it.

Stuart Inder