The Norfolk Haven-Seekers

The Writing's On The Wall For

By Ken Mcgregor

When the Australian Labor Gov ernment has time to get around to it, the axe is likely to come down on Norfolk Island’s tax haven. The McMahon Government promised it last July and Labor Treasurer Frank Crean has echoed the promise with, perhaps, income tax thrown in.

The government is almost sure to use the machinery already assembled by the Liberal Government to intro duce full NSW or Federal company tax on all Norfolk Island-based com panies not genuinely owned and operated by residents, but it is not expected to tax the real island com panies, or whittle away the ad vantages of the duty-free trade for tourists.

Action over the last-named activity would be disastrous as Norfolk shops make about $BOO,OOO profit a year from selling $2.5 million-worth of duty-free goods. Company tax, how ever, is another matter.

The island has 1,452 incorporated companies, almost one company for every resident (about 1,500). But the residents are hardly company-minded.

A recent survey by the Registrar showed that 23 residents only had financial associations with the com panies. For the unofficial survey, the Registrar looked at residents in three categories: descendants of Pitcairn Islanders or early settlers; permanent residents with over five years on Norfolk; and people holding tem porary or interim work permits.

A “financial association” was quali fied as a company director, worth $lOO to $2OO per year per company, a nominee shareholder, worth $lO to $2O per company per year, or an appointment as a company secretary.

The survey found that five residents in the first category were involved, 18 in the second and 12 to 18 in the third, which adds up to a negligible direct Norfolk interest in a $25 million-plus a year tax haven business run by overseas companies, mostly Australian.

However, the small number of islanders involved in the tax haven is not the full picture of spinoffs Norfolk gets. There are three major benefits —registration fees, Fank development funds and slight employment. Company registration revenue has already topped $llO,OOO this financial year and, if the volume

continues, it will exceed $150,000 by June.

Unfortunately, this is only allowing for half the 1,452 companies paying their dues —the rest simply don’t pay and it’s impossible to collect.

Accumulated brokerage fees earned by the island’s two thriving banks— Australia’s Commonwealth and the Wales —is a second major benefit. It’s common for the banks to whiz through as big as $2 million or $4 million within 24 hours from overseas —and much of the brokerage earned stays on the island in the form of bank loans for private development.

The third benefit is employment for 10 locals with the one solicitor and six accountants now permanently based on the island. Whatever the pros and cons of being a tax haven all on Norfolk, from Administrator Air Commodore Pickherd to the most dis interested farmer, want the island’s future tax status redefined so long term planning can proceed.

This year Norfolk received a $60,000 bonus in its Australian sub sidy in anticipation that the island would lose its companies’ business and an estimated $60,000 revenue from registration fees.

Australia has lost about $3O million

a year for the last 11 years through tax haven schemes. Norfolk is still the dominant haven for Australians and when Australian Government losses peaked at $34 million in 1969 company activity on Norfolk was peaking also.

Fifteen companies were incorpo rated on Norfolk in 1961. One new company was registered in 1962, eight in 1963, 16 in 1964, 23 in 1965, 70 in 1966, 188 in 1967, 480 in 1968, 296 in 1969, 257 in 1970, 296 in 1971 and 166 last year.

Ncrfolks’ Registrar discloses that of the 1,452 companies incorporated on December 31 last year, 371 were in operative, ie defunct (no returns filed for three years) or in the process of voluntary liquidation.

Many were set up to do one series of transactions; when this was over they were liquidated or sold off.

Air Commodore Dalkin, Norfolk’s previous Administrator, left the island last year but not before he saw new company regulations come into force, requiring greatly increased registration fees of $250 per company and the divulgence of additional information.

Air Commodore Pickherd would like to see direct monetary benefits of the companies using Norfolk for convenience spread to all residents, Meantime, he feels Australia has the power to close down Norfolk as a tax haven and this will be achieved.

Subsequently, Norfolk cannot plar

on rapidly-rising registration fees

revenues as in the past three yean ($60,000, $BO,OOO estimated $150,000 as a bright light in its budget.

Australian Minister for the Capita Territory, Mr Enderby, told PIN Mr Pickherd and chairman of Nor folk council committees, Councillo W. M. Randall, at their Canberr: meeting in January that no change; would be made on Norfolk withou prior reference to the Administrate* and the council. This promise ap plies to constitutional and develop mental changes, rather than financis changes.

Mr Enderby and Mr L. Engledov secretary of the Department of th Capital Territory, visited Norfolk u late February for a two-da “familiarisation tour” and repeats this promise.

• More commerce on p 105.

111 winds blew

but Carpenters

lifted profit

W. R. Carpenter Holdings Ltd overcame a number of adverse, and diverse, factors to lift net profit by 4.65 per cent in the six months to December 31, 1972, compared with the corresponding period in 1971.

The result also reflected the shift in emphasis from Island trading to Aus tralian investment, but this was accentuated by drought and hurri cane in the Islands. Australian operations earned about 52 per cent of the net profit, compared with 40.5 per cent of the profit in the first six months of 1971-72.

The Papua New Guinea contribu tion to net profit dropped from 21.3 per cent to less than 15 per cent be cause drought caused a temporary recession in trading. There was also a reduction in tea, cocoa and copra crops, and to cap everything from that area, there was a new dividend tax.

Hurricane Bebe, which swept through Fiji in October, disrupted trading for several weeks. Fiji, like Papua New Guinea, also suffered lower world prices for produce. Re valuation of the Australian dollar caused a further reduction in profits from Fiji.

But, to put a little cream on what sounds like a cup of woe, the Car penter board expects results for the full year to be up to the 1971-72 level of about $7.05 million. The interim dividend is a steady 5c a share.

All quiet on

the dollar front

The international money scene was fairly quiet in March, allowing Pacific Islands trade a breathing space following the December re valuation of the Australian dollar and the February devaluation of the US dollar. The main produce markets changed slightly, with a buoyant demand for copra falling away towards the end of March and cocoa rising.

One of the most dramatic effects of the currency moves was what was described as a “fluctuation gain” for the company of $15,999,319 by the chairman of Bougainville Copper, Mr Frank Espie, in the company’s annual report. This flowed from the December revaluation of the Aus tralian dollar. But US dollar cash

balances held at the time of re valuation cost the company $376,257.

In Fiji the Finance Minister, Mr Charles Stinson, said that unless the imbalance of trade between Fiji and Australia changed, or if there was an Australian devaluation (both of which seemed unlikely), Fiji would have no alternative but to look elsewhere for many of her imports.

An interesting sidelight of the cur rency moves was the effect on Aus tralian visitors to Fiji. Tourists will have more Fiji money to spend there for the same number of Australian dollars and will be able to buy more.

But with the Japanese yen floating

higher and with the Australian revaluation, Fiji hoteliers and traders have to pay more for imports to cater for tourists’ wants. Hotel meals will cost more, and traders may have to put up the price of cameras, transistors, tape recorders, etc to retain their markups. The Australian tourist may be little better off. x VT TT . •. r In the New Hebrides, following revaluation of the Australian dollar, the businessmen of Vila have formed an association so that they can jointly consider financial problems and look after their own interests. The as sociation hopes to bring together 500 traders for discussions.

Fiji plans anti-strike

legislation

New laws giving the Fiji Labour Minister wider powers to ban strikes, bringing more industries into the “essential industries” net and giving the court power to gaol union leaders for inciting illegal strikes are being drafted by the Fiji Government. But the draft bill, still being considered by cabinet, was supposed to be “top secret”—until The Fiji Times ob tained a copy secretly and jumped the gun. Publication caused contio versy.

Trade unionists met to consider ways to oppose the bill and Aus tralian Waterside Workers’ Federation assistant general secretary Mr Nor man Docker accused the Fiji Govern ment of attempting to infringe the democratic rights of the Fiji workers.

He said he hoped that, in mature reflection, the Fiji Government wouid recognise that such legislation would “not only be a cause in itself of additional industrial dispute in Fiji, but would severely tarnish the image of the Fiji Government throughout the world”.

The Fiji Government planned the proposed new drastic action because of the current proliferation of wildcat strikes in Fiji, particularly in the air ine, transport, fuel supply and build ng industries. Airlines have been iverflying Nadi on occasions, thus iffecting the vital tourist industry. In tfarch, building workers throughout he dominion had embarked on a trike which halted almost all Fiji

milding operations.

Prices are increasing rapidly in Fiji, specially in imported foodstuffs.

PNG's talks

*ith Kennecott

The PNG Government is expected 3 open negotiations within the next aur months with the big American fining company Kennecott Pacific ver the mining of rich copper eposits at Ok Tedi in the Star fountains. But, first, the government ill seek advice from Peru, which as open pit copper workings and an Sreement with another US company, erro Corporation, which gives Peru large share of the profits. PNG ants to know about the possibilities, >pecially as it is not so happy about ie Bougainville agreement. Kenne )tt has spent about $l5 million on ospecting at Ok Tedi and wants isurances from the government >out profits before spending another ) million on the next stage. The ore idy is estimated at between 150 and

200 million tons averaging 0.8 per cent copper. Bougainville copper has an ore body of 900 million tons averaging 0.48 per cent copper.

Island for sale

Three million dollars is reported to be the asking price for the Fiji island of Malololailai off Nadi on which has been built the Plantation Village resort. The island was put up for sale in late March.

One of the Malolo group, the island is controlled by a syndicate which includes well-known resort owner Dick Smith, who operates the Castaway Hotel four miles away on another island off Viti Levu’s north west coast.

BP's profit rises

Estimated consolidated profit after tax for Burns Philp & Co Ltd for the half-year to December’s end com pared with the second half of 1971 rose by 6.1 per cent and group sales increased by 25.2 per cent for the same period. The company’s share of profits from the Australian and NZ operations increased to 56 per cent against 43 per cent for the same period in 1971. Return from New Guinea operations was adversely affected by the sale of 12i per cent interest in the New Guinea company to the PNG Investment Corporation and the introduction of a withholding tax of 15 per cent on dividends.