Recommendations to wind down or cancel financial assistance for Australians in remote locations will be the straw that breaks the camel's back for rural communities throughout Australia, according to the Burke Shire Council.
The Gulf-based local government has sounded the alarm in the wake of the release of the draft report by the Productivity Commission into remote area tax concessions.
Attracting skilled workers in an environment where living costs are skyrocketing is already making it hard for remote councils and other employers to continue delivering services, and it is feared the recommendations, if implemented, will critically damage long-term growth aspirations for many of Australia's small communities.
The independent advisory body released its draft report into remote area tax concessions and payments in September, sending out danger signals to people such as Burke shire CEO Clare Keenan, a former economic policy analyst.
Ms Keenan said the draft report represented a major blow to rural and remote communities, adding that the recommendations made were either a "foregone conclusion" or completely ignored the submissions and reality of living and working outside urban and regional hubs.
"It's a complete slap in the face," she said.
"I see the draft report for what it is, and that's a shoddy attempt to retrofit policy to a foregone conclusion, bereft of analysis or intellectual rigour, and without any regard for the content of the submissions.
"This must bring the integrity of the Productivity Commission in delivering quality advice into question, because its proposals will do nothing more than further depopulate rural areas and the towns that service them, towns that are already battling the devastating social and economic consequences of drought and recent flood events."
The commission said the existing system was outdated, inequitable and poorly designed. The sweeping changes to remote tax concessions it has recommended would see zone tax offsets abolished and fringe benefit tax concessions for employer-provided and employee-sourced housing tightened.
Read more: No more hot air on drought solutions
According to Queensland's Deputy Premier Jackie Trad, this was economic rationalism gone mad.
The potential implications of the draft report were put to the treasurer and other Palaszczuk government ministers when state cabinet met in Mount Isa last week.
While the proposed changes would reduce the income of 288,000 Queenslanders by $55 million, or an average of $190 each, Ms Trad said the biggest impacts would be felt by frontline workers in remote areas.
"A senior constable in Cooktown would lose about $8300 per year, largely because of the FBT changes to employer-provided housing," she said. "A nurse in Mount Isa would lose $7186, a nurse in Cairns would lose $8023 and a nurse in Weipa would lose nearly $15,000."
The proposed changes would also affect the regional private sector.
Ms Trad said the Productivity Commission argued that if the FBT housing concession were cut, employers 'might' continue to provided housing.
"Queensland Treasury finds that assumption unlikely, a sentiment shared by the governments of Western Australia and the Northern Territory," she said.
The treasurer said she had written to the Productivity Commission this month urging it to scrap its "ridiculous changes", and the North West Minerals Province summit in Mount Isa on November 19 passed a resolution to lobby for an increase in the zone tax offset.
Her federal counterpart, Josh Frydenberg said the report into remote area tax assistance was only a draft, with the final report expected early next year.
"It's important to remember reports by the Productivity Commission are reports to government and not by government," he said.
Mr Frydenberg said the Morrison government's policies would continue to focus on strengthening regional and remote communities and ensuring that tax assistance remained fair and effective.
Senator Matt Canavan, Minister for Resources and Northern Australia, challenged by Deputy Premier Trad on where he stood on the issue, said he opposed the commission's recommendations.
"Jackie Trad wants to make a big deal of a Productivity Commission draft report on zone tax allowance changes and speculates on my position on it," he said. "She has my number, she could have called me anytime to find out what I thought."
Related reading: Why our abnormal cities cost us greatly
The story Productivity 'death knell' feared for remote communities first appeared on North Queensland Register.