Stimulus plan very similar to Coalition proposal to create special economic zones that was derided as 'crazy talk' by Labor

This article is more than 7 years old

This article is more than 7 years old

Kevin Rudd has backed a 20% company tax rate for the Northern Territory – 10 percentage points lower than the rest of the country – as part of a northern economic plan very similar to a Coalition strategy labelled "wacky" and "crazy" by Labor ministers earlier in the year.

Rudd said a re-elected Labor government would work with the territory government to reduce the tax rate by creating a special economic zone by 2018 which would also include more lenient territory-specific rules for foreign investment and "streamlined" environmental assessments.

"I think it would be great to have a company tax rate here one-third lower than the rest of the country … the explicit objective is to attract more direct investment to the territory for territory-based businesses," he told reporters in Darwin.

He said there were no costings for the policy because "we're working all this through".

Special economic zones and differential tax treatment were a key part of the Coalition's "northern Australia 2030 vision" released in February, which was condemned by Labor as pandering to the interests of mining magnate Gina Rinehart.

The then prime minister, Julia Gillard, said they were "ideas that actually don't even pass the laugh test" and the Assistant Treasurer, David Bradbury described the Coalition plan – which suggested relocating some government agencies to the north – as "an absolute disaster" and "a plan to divide the nation". The Human Services Minister, Jan McLucas, said it was "crazy talk" and the former trade minister Craig Emerson called it "wacky".

Rudd said the key difference between his plan and the Coalition leader Tony Abbott's was that his had concrete details and Abbott was proposing "a plan to have a white paper".

"Rather than just bleat about it, I think we should just do something about it … I believe in the territory, I love the territory," he said, standing next to his candidate for the marginal seat of Solomon, Luke Gosling.

Abbott said Rudd had "entirely changed his tune".

Another difference between the major parties appears to be Labor's willingness to consider more favourable foreign investment rules for its northern special economic zone to attract agri-business investors.

"The special economic zone will be able to take advantage of simpler rules on foreign investment that will make investment more attractive," a factsheet on the Labor policy says. "These simpler rules will help streamline the application process, while at the same time protect local and national interests."

The simpler rules could involve different thresholds for foreign investment screening, or for the screening of joint ventures between foreign businesses. The factsheet is clear that the rules would not apply to residential property and would not be extended to the rest of the country.

Investments in the zone would also be eligible for "streamlined" environmental assessments under the federal Environmental Protection and Biodiversity Conservation Act.

Also included in Rudd's "plan for northern Australia" is $10m to help the third stage of the Ord irrigation system by settling a native title claim and 20-year growth plans for northern cities including Darwin, Cairns, Townsville and Mackay – with strategies to increase trade, investment and employment developed by Infrastructure Australia.

The northern Australia policy comes as both the main parties are engaged in important preference negotiations with the north Queensland MP Bob Katter and Katter's Australia party, with Senate preference deals to be concluded by

Saturday.

The order in which Katter advises his supporters to number the parties on his "how to vote" cards for the House of Representatives and "below the line" list of parties for the Senate could be crucial for Labor or the Liberals in a number of Queensland seats.

Katter appeared unimpressed with the offerings of both sides on Thursday.

"We get this hot air about northern Australia every election, it's the usual guff they put out in campaigns," he told Guardian Australia.

"To be honest, I'll be judging them on their history, on what they actually done. Under John Howard we had 12 years when the north got absolutely nothing ... under Labor we've got the NBN and CopperString, which were both good, and the live cattle decision, which was very, very bad ... so I'll make my decision by Saturday."

Labor always criticised special economic zones with different tax rates as being potentially unconstitutional.

Rudd said he was proposing the lower company tax rate for the territory because it presented fewer constitutional problems than if it was proposed for the states. "If there is a court challenge I'll be the first one out there making sure we defend that in the high court," he said.

The Coalition's policy promised to consider "the efficacy and targeting of current relocation incentives and personal and business tax incentives" in an effort to attract more people to northern cities including Darwin, Cairns, Townsville and Karratha.

It also promised to "consider" asking Infrastructure Australia to "conduct a comprehensive audit northern infrastructure and to devise a 15-year rolling priority list of projects of various scales, guided by cost-benefit studies".

Rinehart has strongly advocated northern special economic zones and development plans in her book Northern Australia and Then Some.

Katter said both major parties had promised to fund his CopperString project for transmission lines, with $350m pledged by Labor during negotiations to form a government in 2010 and maintained since then, despite the original plan falling over.