Tasmania would become Australia's asylum seeker processing centre, with newcomers living and working freely in the community, under a plan developed by local leaders and human rights activists.

The Tasmania Opportunity Leaders Summit in Launceston heard that the case for making the state an asylum seeker processing centre went beyond the natural security it afforded as an island.

Speakers, including human rights lawyer Julian Burnside QC, said Tasmania offered an alternative to the Federal Government's Sovereign Borders policy, one that was more humane, better value for the Australian taxpayer and of benefit to the local economy.

The proposal included allowing people to live and work in the community, receive Centrelink benefits and live where the Government determined their money would have the greatest benefit for the local economy.

Mr Burnside, who won this year's Sydney Peace Prize, told the summit the Federal Government spent $5 billion a year on asylum seekers, and that Tasmania was a much more cost-effective option.

"If you can reduce that cost dramatically to one-tenth of what it is at the moment, and in the process avoid doing harm to frightened people and do some good for the Tasmanian economy, that seems a good thing all round," he said.

Asylum seekers could boost Tasmanian economy

Julian Burnside says asylum seekers should be seen as a resource, not a threat. ( By Wendell Teodoro )

Mr Burnside told the summit that asylum seekers should be seen as a resource, not a threat.

"They would be bringing in to the community not only their courage and their initiative but also the income that they can earn," he said.

He said there were some conditions that should be attached to any planned move to make Tasmania a refugee processing centre.

Asylum seekers would still be detained on arrival for one month only, for health and security screening.

Following that, Mr Burnside said further conditions needed to met under the plan.

These included:

The asylum seekers had to stay in touch with the Immigration Department;

The asylum seekers had to stay in touch with the Immigration Department; They should be engaged in education, training and work; and

They should be engaged in education, training and work; and They must live in a region designated by the Government - for example, Tasmania.

A summit co-ordinator, Launceston paediatrician Dr David Strong, said the plan had the potential to be "the biggest, most far-reaching project in Tasmanian history".

"It would deliver enormous economic benefit to the state in infrastructure spending, education and training and in business opportunities," he said.

"It would further enhance Tasmania in the eyes of the nation and the world as a welcoming place that warmly embraces those seeking a better life.''