Federal Politics

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Tax lure still an option for Libs

PERSONAL tax rebates of up to $10,000 to lure workers to northern Australia remain under consideration by the Coalition as Tony Abbott distanced himself from other controversial proposals in a leaked discussion paper sent to state premiers.

Mr Abbott tried to play down the embarrassing leak - which also floated ideas like relocating federal public servants to Darwin, Cairns and Karratha and cutting $800 million from the foreign aid budget to build new medical centres in the north.

The Coalition has ruled out the idea of zonal taxation ( different tax rates in different regions), forced relocation of public servants and foreign aid cuts - even though a discussion paper proposing the measures was circulated by finance spokesman Andrew Robb last month, with a view to releasing a formal policy early this year.

But Mr Abbott confirmed he was considering a trial of increased personal tax rebates in some remote regions, something he promised independents Bob Katter, Rob Oakeshott and Tony Windsor as he tried to win their support to form government after the 2010 poll.

Then the Coalition intended to trial rebates in five local government areas and assess whether they boosted population and economic growth. The value of existing remote-region tax rebates has eroded to as little as $57 a year.

Coalition sources also said changes to rules for temporary 457 visas were being considered, perhaps allowing workers to stay for five years if they promised to work in the north.

The policies raised immediate concerns in Liberal ranks, where some MPs pointed out that northern mining centres were already booming, while states like Tasmania and South Australia were recording lower than national average economic growth, and that high wages were failing to attract enough workers to remote towns.

Labor ridiculed the plan, calling Mr Abbott ''troppo Tony'' and accusing him of adopting a ''thought bubble'' from mining billionaire Gina Rinehart. Many of the ideas in the discussion paper have been advocated by Ms Rinehart's ''Australians for Northern Development and Economic Vision'' policy think tank.

Special Minister of State Gary Gray said 60 per cent of the federal public service already worked outside of Canberra, including 22,000 federal public servants in Sydney.