A Solution for Refugees & Asylum-Seekers: a Free City

Why send many millions of dollars to other countries each year, for little apparent benefit, when Australians and Australian resources could be more suitably employed in providing homes and better lives for refugees, asylum-seekers, and other non-citizens here?
The Australian Government, I say, ought to purchase a parcel of land from Western Australia, on or near the northern coast, build a large, enclosed city thereon, declare it an independent Free City, with a perpetual customs union with Australia but no territorial waters, with a democratic constitution similar to other Australian cities (which the inhabitants may subsequently amend as they list, by referendum), and inform the UN that the majority of our international-aid budget in the future will be spent thereon.  Thereafter, each year, thousands of refugees and asylum-seekers from camps around the world could be invited to reside in the Free City; also, any non-citizen caught seeking unlawful entry into Australia would be, by various amendments to the Migration Act, sent thither and freely accommodated therein.  (Australia should also withdraw its support for the present, ineffective Convention and Protocol for the Status of Refugees.)
Australian citizens (who could elect to dwell in the Free City or without) would be employed, at least initially, building the modern, well-planned infrastructure, administering the city, planting orchards and gardens, farming, staffing the schools and hospitals, etc. as, gradually, more and more newly arrived inhabitants would also find work building, administering, teaching, and so on.
All adult residents of the Free City would have full voting rights within the city but, for the most part, only Australian citizens could lawfully depart the city into Australian territory freely; each year, however, several thousand inhabitants of the Free City who demonstrated their eligibility for citizenship would be invited to apply to become Australian citizens with the right to dwell anywhere in Australia.
The Government could advertise in Malaysia, Indonesia and elsewhere: instead of paying tens of thousands of dollars to people-smugglers, to risk their lives in far from seaworthy vessels, alleged refugees and other prospective citizens would more safely and much more cheaply travel directly to the Free City on official flights, and they could then afford to supplement the basic facilities granted to all residents with the money they saved.

Ultimately, I reckon, a Free City would prove far less expensive than current policies and costly proposals to impede the increasing numbers of boats, filled with non-citizens seeking illegal entry into Australia, which enter Australian waters (or which, whilst still in, say, Indonesian waters, are “intercepted” by RAN vessels).  I welcome suggestions in comments below.

UPDATE I (27 October, 2012):  see “Taxpayers’ $90 million bill for Nauru processing”, by Steve Lewis and Jessica Marszalek: 

The tiny nation of Nauru is demanding Australia pay up to $90 million over five years in special payments as “insurance” against the cost of housing up to 1,500 asylum seekers.
A spokesman for the government of the Pacific island nation of fewer than 10,000 people said the $3,000-per-migrant payment was being introduced to help pay for the cost of running the offshore processing centre, which currently has 383 detainees.  […]
The Gillard government was forced to reopen Manus Island in PNG and Nauru as it sought to stem the flow of unauthorised boat arrivals—which yesterday reached 475 since August 2008, with the arrival of another vessel carrying 26 people on board.  On Monday, Treasurer Wayne Swan revealed a $1.2 billion blow-out in immigration costs as part of the government’s mid-year economic and budget forecasts.  The costs of the processing centre on Manus Island was estimated at more than $1 billion alone.

UPDATE II (24 November):  many silly people assert that, since it is not illegal to seek asylum, it must therefore be lawful to enter Australia by any means in order to claim asylum.  Well, it is not necessarily illegal to grow opium poppies, to decapitate a dog, to set fire to a dwelling or even to offer someone a deadly poison (in some circumstances); however, you’d be much mistaken if you conclude thereby that anyone may, without further thought or delay, without fear of consequence, and without legal necessity and lawful licence, cultivate opium poppies, decapitate dogs, set fire to dwellings or poison people’s beverages.
Pertinent legislation from the Migration Act 1958, § 228B:

Circumstances in which a non-citizen has no lawful right to come to Australia

(1) For the purposes of this Subdivision, a non-citizen has, at a particular time, no lawful right to come to Australia if, at that time:

(a) the non-citizen does not hold a visa that is in effect; and
(b) the non-citizen is not covered by an exception referred to in subsection 42(2) or (2A); and
(c) the non-citizen is not permitted by regulations under subsection 42(3) to travel to Australia without a visa that is in effect.

(2) To avoid doubt, a reference in subsection (1) to a non-citizen includes a reference to a non-citizen seeking protection or asylum (however described), whether or not Australia has, or may have, protection obligations in respect of the non-citizen:

(a) under the Refugees Convention as amended by the Refugees Protocol; or
(b) for any other reason.

Article 31 of the UN Convention and Protocol Relating to the Status of Refugees
:

Refugees Unlawfully in the Country of Refuge

1.  The Contracting States shall not impose penalties, on account of their illegal entry or presence, on refugees who, coming directly from a territory where their life or freedom was threatened in the sense of article 1, enter or are present in their territory without authorization, provided they present themselves without delay to the authorities and show good cause for their illegal entry or presence.
2.  The Contracting States shall not apply to the movements of such refugees restrictions other than those which are necessary and such restrictions shall only be applied until their status in the country is regularized or they obtain admission into another country.  The Contracting States shall allow such refugees a reasonable period and all the necessary facilities to obtain admission into another country.

UPDATE III (12 April, 2013):  a commentator at Catallaxy Files, Cold-Hands, kindly offered some criticism of the solution I herein present:

it comes across as a piece of ivory tower theorising which would not survive impact with the real world.

Perhaps; sometimes, however, “ivory tower theorising” can lead to others’ providing more practical refinements.  A Free City, as I envision it, would certainly cost an immense amount of money to establish and a lot to maintain, but we’re already spending many millions of dollars anyway, without solving the problems.

we’d shortly have an overcrowded ghetto bursting at the seams […]

I should expect a site which might be two or three times the size of Manhattan, and that island safely accommodates over one and a million residents, could cope with quite a sizable number of inhabitants ere it burst at the seams.

We’ve already proved that we can not control our Northern Borders.

That our current federal government cannot control our borders does not mean that no government can control its borders.  Even during World War II, Switzerland was able to maintain the integrity of its borders.  Even Mexico, which seemingly can’t stop citizens leaving, is willing to dissuade non-citizens entering Mexico.

Policing the land borders would be a nightmare.  Like the USA you’d have people smuggling; like Gaza you’d have tunnels.

It does not follow that people would be smuggled into a Free City which would hospitably welcome new residents; it does not follow that people would want to be smuggled out of a Free City which provided basic but humane accommodation for those without funds, better accommodation for those with funds, and great scope for lawfully obtaining funds because of the multitudinous opportunities for business, employment and education.

And how long before this “Free City” devolves into a sharia law hellhole demanding more and more funds, personnel and time before the courts to maintain Australian sovereignty and values?

If the residents of the Free City were to vote democratically to become “a sharia law hellhole”, despite a just constitution which promoted equality and liberty, that would be their decision.  ‪Not all refugees who flee oppression would vote for further oppression; not all refugees and asylum-seekers are muslim; ‬not all Muslims seek to impose sharia law.‬

Your proposal would see us with our own Mexican border—ringed with razor wire, with our border guards shooting to kill—and an overcrowded population desperate to sneak into Australia to lead the good life, but ill equipped with skills or culture to do so.

I disagree. 

UPDATE IV (16 April, 2013):  in comments below, Cold-Hands helpfully provides some additional, considered criticism: 

Now it may be that you intended to withdraw Australia from the Refugees convention and make more stringent changes to the Migration Act than the simple alteration posited above […]

That is exactly what I advocate.  In order to make my position clearer, I have added to the proposal above this sentence:  “Australia should also withdraw its support for the present, ineffective Convention and Protocol for the Status of Refugees.”

Your Free City doesn’t appear to have Australian police or judges, so an imposition of sharia by force is all too likely. 

My proposal is that the Free City would have, at least initially, its own version of Australian law, as well as Australian police and judges.  Its constitution, until amended by democratic referenda, would, inter alia, guarantee equality for all before the law.  (Sharia law, of course, does not guarantee equality for all before the law; its imposition would, therefore, be illegal.)

UPDATE V (20 April):  lest some discount my proposed solution merely by its association with this site which—I freely own—contains some slight silliness and occasional satire, I have established another site specifically for discussing this proposed Free City.  Please post your comments at the Free City site.