Taming the frontier

AUSTRALIANS have long viewed the north of their country the way America once regarded its West: as the last frontier. The region of red deserts and steamy coasts above the Tropic of Capricorn sprawls across the states of Queensland and Western Australia and the Northern Territory (NT), a federal domain (see map). It is the size of India, yet its population is tiny. Barely more than 1m of Australia’s 23m people live there. But the north is changing. Once a haven for misfits and fortune-seekers, it is now attracting people at a faster rate than the rest of Australia, thanks largely to a boom resulting from the sale of its iron ore, coal and gas to Asia’s resource-hungry economies. Tony Abbott, Australia’s conservative prime minister, goes so far as to call the region an emerging “economic powerhouse”.

On June 18th Mr Abbott’s government published a white paper outlining plans for developing northern Australia over the next 20 years. Such attention is long overdue. Six of Australia’s top ten trading partners are located in Asia. Darwin, the NT’s capital, is closer to some Asian capitals than it is to Canberra, Australia’s capital. Yet to succeed, Mr Abbott’s scheme must overcome other tyrannies of distance that have crushed earlier dreams to unlock the north: scorched landscapes, few roads and high investment costs.

The plan drew on proposals by the Institute of Public Affairs, a libertarian think-tank. The institute has promoted its ideas in tandem with a group in Western Australia founded by Gina Rinehart, whose iron-ore wealth from the Pilbara region, in that state’s north, has made her Australia’s richest person. Both outfits want northern Australia to become a hub for Asian investment. To encourage this, they have pressed the government to make the region a “special economic zone”. They want it to have lower business and income taxes than the rest of Australia.

The lobbyists have clout among Australia’s political leaders. Five months before he became prime minister in 2013, Mr Abbott told those attending a dinner at the institute, including Mrs Rinehart, that his support for northern Australia’s development was tantamount to a “big fat yes” to policies “you urged upon me”. Later in that year’s election campaign, Kevin Rudd, the former Labor prime minister, unsuccessfully tried to trump Mr Abbott by promising a 20% business-tax rate for the NT, a third lower than the national rate.

Now that Mr Abbott has unveiled his plan, the government has dropped the idea of a distinct “special economic zone” (a disappointment to China, perhaps, which helped to popularise the term and may have enjoyed the notion of being invited to invest in one set up by a supplicant rich country). Andrew Robb, the trade minister, says officials “looked closely” at the idea. But Australia’s constitution bans the levying of different levels of federal tax on different states. Instead, there are pledges to invest in infrastructure such as roads and dams (to trap water from monsoon rains). One aim is to boost the population, though the target for as far in the future as 2060 is still only 4m-5m. The government wants to relax visa rules to allow mining companies to recruit more overseas workers, and to abolish caps on seasonal workers from Pacific Island nations and Timor-Leste.

Potential investors face problems, however. Aboriginal Australians hold or claim much northern land under laws which recognise their traditional links to it. Other swathes of the north, known as pastoral leases, can only be used for livestock farming: a legacy of 19th-century laws aimed at stopping land grabs. The government wants to loosen rules governing both types of land. Mr Robb argues that more “certainty and flexibility” on land tenure could help “woo new investment”.

But Noel Pearson, an aboriginal elder from north Queensland, worries that such developments could leave indigenous people with “scraps”. Such views carry weight. Two years ago Woodside, one of Australia’s biggest energy producers, ditched plans to build a liquefied natural gas plant in Western Australia after a bitter dispute involving traditional landowners and environmentalists.

The scheme does have some promise. Northern Australia has already grabbed much of the foreign direct investment in Australia’s booming mining business. In 2012 alone there was A$206 billion ($213 billion) of it. China, Australia’s biggest trading partner, with which it recently signed a free-trade deal, has welcomed the latest plan. But coaxing post-boom investment in the food and service industries may not be so easy. And China’s enthusiasm is not to be counted on. As its economy slows, so too does its demand for Australian minerals. As Saul Eslake, an economist, observes, the north’s harsh landscape and remoteness are always likely to triumph over “emotional appeals” to the notion of populating vast empty spaces.