Time is ticking for regional Australians to make a submission on a draft report into changes to remote area tax concessions.

Key points: A Productivity Commission draft report recommends a tax incentive to live in a remote area be abolished

A Productivity Commission draft report recommends a tax incentive to live in a remote area be abolished The zone tax offset was introduced in 1945 and those opposed to it say Australia has moved on since then

The zone tax offset was introduced in 1945 and those opposed to it say Australia has moved on since then Anyone wanting to submit their views has until midnight on Friday, October 11

The Productivity Commission's draft was released on September 4, following consultations in 11 regional locations around Australia including Kangaroo Island, Katherine, and Kalgoorlie.

Upon releasing the draft, Commissioner Jonathon Coppel said the commission would call for an overhaul of the system, so that payments and concessions could be fairer and better targeted.

The draft report recommended the zone tax offset be abolished, and stated that remote Australia had "changed considerably" since the offset was introduced in 1945.

The proposed changes could also see some areas — including Darwin and Townsville — no longer considered remote.

Attracting and keeping residents regional

Carnarvon local Janice Baird says she is not happy with the proposed changes. ( Supplied: Janice Baird )

Carnarvon Tackle and Marine owner Janice Baird said it was already a struggle to keep people in small, regional towns, and the move would make it even harder to attract new long-term residents.

Ms Baird said the draft proposals were unfair.

"Considering it is only about a $300 tax break we get, it is ridiculous that they want to reduce it," she said.

"I did actually speak to someone who was doing the review, and his words were that 'Everyone should pay their fair share of tax', and I went on to say 'Yes, I agree'.

"But when you live in the north west, we don't have a choice of which power company we can choose, every time you turn on the TV there's some current affairs program saying shop around for your power.

"We have the gas pipeline going past us, but you can't tap into the gas.

"They don't realise how hard it is, we don't have the quality of life you can get in the city.

"They do not give a damn about people in the country."

Curtin University Adjunct Professor Lex Fullarton has been campaigning to have the offset subject to inflation for many years.

In the lead-up to the commission's tour across remote Australia, he was hopeful the draft report would see regional Australians better compensated for the things that made life harder including the lack of services, harsher climate, and isolation.

After reading the draft report, Dr Fullarton said he believed the commission had missed the point about why the rebate existed in the first place.

"In the draft report, it goes into great detail of the principal and primary purpose of the piece legislation," he said.

"However they have gone back a little further than the legislation itself and they've quoted from some speeches in parliament at the time the legislation was enacted in 1945.

"There was mention made by, I think, the then-prime minister that the purpose of the zone tax offset was to encourage people into the rural and remote areas of Australia and he quotes, probably fairly, defence as a primary objective being aware that the war had only finished in August that year.

"But times have moved on and legislative interpretation has drifted away from the literal interpretation, and that's an old adage and an old system and it was changed in 1984.

"You need to look at the purpose of the legislation rather than the black letter law of it.

"The legislation itself contains its purpose, so you can't go back and look at those explanatory notes.

"It says it is for a concession in consideration of uncongenial climate, isolation, and a lack of utilities."

Fight for fairness

WA Senator Dean Smith said it needed to be easier for people to make a decision to move to remote communities.

"I think the commission does need to be held accountable," he said.

"I don't think the zone tax offset should go unless there are other arrangements to compensate for life in regional, remote and very remote communities like the Pilbara.

"Part of my job as a senator for Western Australia is two-fold, to make sure that the final report of the Productivity Commission does properly represent and demonstrate an understanding of what life is like for regional communities in Western Australia.

"And then secondly where there are findings that would be adverse for Western Australians' interests to make sure that I'm making that case known to the government and encouraging the government to continue what I think is important work in defending and standing up for regional communities."



Senator Dean Smith says the tax offset should stay unless it's replaced by some other sort of compensation for living remotely. ( News Video )

Geographic discrimination

Not everyone though is against the Productivity Commission's proposed changes.

In fact, one submission ahead of the draft report release, urged the Federal Government to remove the offset.

In his submission on February 20, before the draft report was released, Simon Kerr said the offset was "geographic discrimination".

"The zone tax offset is effectively a payment to some taxpayers who choose to live part of the year further away from most taxpayers, funded by the latter," the submission read.

"I submit that the zone tax offset is unconstitutional … The constitutionality of the zone tax offset has not yet been tested."

While the draft report acknowledged that some things were not readily available for regional and remote Australians, it said many areas once considered isolated were no longer remote and improvements in technology had helped reduce the hardships of life in remote Australia.

Final submissions to the commission are due by midnight, Friday, October 11.

A final report will be presented to the Federal Government in February next year.

The Government will then be tasked with deciding whether to accept or reject the recommendations.