AUSTRALIA'S biggest mining entrepreneurs, Andrew "Twiggy" Forrest and Gina Rinehart, have outlined their blueprints for populating the north, with Mr Forrest urging the federal government to remove capital gains tax on people who build second homes in the north.

As powerful voices, including senior members of the Coalition and major players in private enterprise come together in a push to transform the northern frontier, the key point of common ground is that families must be encouraged to settle north.

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Andrew Forrest, whose Fortescue Metals Group has in rapid time become one of the world's leading iron ore suppliers, out of WA's Pilbara, told News Ltd the north would only grow in human terms if people were encouraged to build homes.

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Gina Rinehart prefers the idea of personal income tax breaks and creating special economic zones. She wants a mass relaxation of regulations in a model that first assists business, after which population growth will follow.

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Mr Forrest, who believes big cities will one day span the north, favours a direct bricks and mortar approach. But he said workers would not invest in northern towns because the tax department treated second homes "like a luxury property, like someone who wants to invest in a ski chalet in the mountains''.

"And so they take the Fly In, Fly Out option, whereas we should be encouraging through our taxation system everything we can to build up remote communities and we can only do that most effectively in the longer term with investment.

"Apply first home-owner benefits to people who only invest in one, two, three or four houses. These are the people who are directly for the permanence of building the communities.

"Don't look at that like a second--home luxury, look at it as a building Australia's frontier investment. Allow them the breaks they'd get on a first home. They're not going to be able to buy a place in Thredbo; these are applied to parts of Australia where the government knows you need new investment."

Mrs Rinehart, the world's richest woman, believes special economic zones, or SEZs, where regulations relating to Customs and foreign investment are relaxed, will encourage the free market economy and bring new settlers north.

"SEZs are all over the world, thousands of them, and when these are set up to encourage investment have been of considerable benefit to their respective countries," said Mrs Rinehart.

"We have vast resources in our north, but only about five percent of our population live there," she said.

"Our north is close to our Asian neighbours with their growing needs. But we cannot sit back and think that this will automatically encourage investment and opportunities for growth and increased revenue, unless we can reduce our costs and become more cost competitive.

"The North has a great spirit. Getting the policies right is critical to the success of encouraging more wealth generation in this region, and to me that means less regulation, less taxes, which are critical to being able to be cost--competitive."

Mr Forrest said he was not privy to Coalition draft papers, which propose a dramatic rethink on populating the north with dams, public servants and permanent populations to support medical, mineral and agricultural food bowl developments.

"I've got a deep knowledge of the bush, and the isolated parts of Australia, and I can only give you a personal perspective," he said.

"I'm fairly squarely in the camp that Fly In Fly Out workers are necessary when there's precisely no other choice, but I'm more deeply convicted that you do everything you can to build up the community in which you're working from or visiting.

"And you encourage your workers to invest in those communities."

Mrs Rinehart said she was excited by the Coalition draft papers.

"There's certainly positives happening," she said. "I hope they keep developing well and I hope this will give those already living in the north and those who move there, too, a much better chance."

One of the authors of the leaked Coalition papers, the shadow minister for northern development, Ian MacDonald, expressed concern about SEZs, even though it was raised as a talking point in the papers.

"Some of the special economic zones that are spoken about could not in my view happen in that same form in Australia," said Mr MacDonald, who likes more traditional notions of governments assisting private enterprise with the streamlining regulations and supporting land releases.

"There are other ways local, state and federal governments can encourage new industries in the north."

Anthony Albanese, Minister for Regional Development, did not respond to requests for comment.