Regional tax reform needed to lure business and capitalise on tree-changers: Nationals senator Perin Davey

Regional areas across the country have reported an influx of tree-changers, as work-from-home conditions become commonplace due to the pandemic and look set to stay as a permanent fixture.

Nationals senator Perin Davey said people were now looking at the regions through a different lens and the government could make the most of the situation with changes to the tax system.

"There is an opportunity to look at some form of tax reform to encourage decentralisation," Senator Davey said.

"We need to take advantage of what's happened through COVID. People are seeing the regions as an attractive place to live and hopefully invest."

Zonal taxation is already used for the most remote parts of the nation, while the United States has successfully used economic business zones to attract companies to regional areas.

"We need to look at what they've done [in the US] and see whether we can replicate it in some way to get industry to look at the regions," Senator Davey said.

"The NSW government has special economic zones to support regional development. Federally, that's something we need to look at."

Regional Australia Institute chief executive Liz Richie agreed now was the right to investigate potential reforms.

"If we are genuine in supporting regionalisation at large, then we need to be genuine in exploring the opportunities with tax," Ms Richie said.

"It's definitely worth investigating, given there is a strong sentiment towards moving to the regions right now, but that could be vastly improved."

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Senator Davey said for too long, moving government departments was the only thing discussed in the decentralisation conversation.

"That's part of the solution, but moving a whole department without other opportunities and private enterprise, it can't stand alone, there needs to be private investment," she said.

"Alexandria and the inner-city suburbs have these massive warehouses that really don't need to be in Sydney any more.

"They could be moved to say Dubbo or Parkes, which is on the Inland Rail route, and free up land in Sydney, so it's a win-win."

The new year is brimming with opportunities for regional Australia, and Senator Davey is keen to see the government roll out its five-point manufacturing policy with a particular focus on rural areas.

"If we've learnt anything out of COVID, it's that we don't manufacture enough onshore," Senator Davey said.

"We won't get the car industry back onshore, but we ramped up personal protective equipment onshore and that's a good thing.

"We need to focus on our food value add chain and food manufacturing, we should not be exporting it to be processed offshore."

Any increase in regional manufacturing will inevitably result in an increase in freight, much of which would end up on the Inland Rail.

Senator Davey said it was important to look at the domestic freight network and "fill in the gaps" to link everything together.

"There's no point having a fantastic Inland Rail that doesn't have the flow on developments," she said.

"We need to look at how we get our produce on to the Inland Rail, and turn our freight inland rather than sending it all over the Blue Mountains."