Senate debates

Thursday, 24 November 2016


Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016; In Committee

12:35 pm

Photo of Richard Di NataleRichard Di Natale (Victoria, Australian Greens) Share this | Hansard source

I rise to speak to the working holiday-maker reform bills. Firstly let me say the government has made another mess of this. They have the reverse Midas touch at the moment. They are inept and misguided at handling anything that comes their way, and that is what happens when you are obsessed with all of these penny-pinching revenue measures. The problem here is that while the government is ignoring risks to Australian businesses that rely on working holiday-makers, and particularly agricultural producers, they are creating huge uncertainty within this industry. I speak about this now because I was denied the opportunity to do it during the second reading debate.

I just want to talk a little bit about the history of what happened here, and that was that the government first had this thought bubble of a backpacker tax in the 2015-16 budget. They did not talk to anybody about it. It came out of the blue, and of course the agricultural sector were outraged when they were confronted with this. The government did nothing about the tax for the duration of 2015-16. It was absent from the 2016-17 budget. Then, under pressure during an election campaign about what they were going to do with all of the uncertainty created, they announced a review and pushed the issue off into this parliament. Now we are here, being asked to mop up the mess.

What they have come up with is a revised backpacker tax at 19 per cent. We have sort of entered this dutch auction when it comes to the tax rate for backpackers. But what it does not do is answer the fundamental question of why backpackers should not be afforded access to the tax-free threshold in the same way as Australian residents. We have had people like the Deputy Prime Minister, Barnaby Joyce, running around the country saying we should not have backpackers taxed less than Australians. Well, there is a very simple response to that: let's just tax them like Australian residents. If you do that, everybody plays by the same set of rules.

If we were to give backpackers the same opportunity to be taxed as Australian residents, they would be afforded access to the tax-free threshold. What that would enable us to do is to maintain our competitiveness with other countries, which means that backpackers will choose Australia instead of other countries. If we do not do that, if we do not remain competitive in this area, then Australian agricultural businesses are going to lose out.

The story of Timothy Reid, the Managing Director of Reid Fruits in Tassie, was an interesting one when he presented to the Senate Economics Legislation Committee earlier in November. His view was:

Those kids come here at the moment and go away as ambassadors for our product.

Senator McKenzie interjecting—

Senator McKenzie might not care about Tasmania. The government might not care about Tasmania after they were—

Senator McKenzie interjecting—

I will take that interjection from Senator McKenzie. This is why the coalition were booted out of Tasmania, given a right royal boot up the rump. People said, 'Unless you actually start speaking out on behalf of Tasmania, we don't want you here.' If you listened a little bit more to people from Tasmania, Senator McKenzie, you would not have got the resounding electoral kick up the rump that you got.

This is what Mr Timothy Reid, the Managing Director of Reid Fruits in Tasmania, said to the Economics Legislation Committee:

Those kids come here at the moment and go away as ambassadors for our product. It is really word-of-mouth overseas from those backpackers that brings the backpackers back to us year, on year, on year. Up until now we have been getting increasing numbers of people applying for work in our businesses …

In the case of Reid Fruits we have seen a decline by 50 per cent this year in the number of backpackers who have applied for positions with us. We will scrape through this season; we have enough people to fill our positions so far. But I must say that a lot of those backpackers were already in Australia when this tax was announced, some of them on second-year visas. It is the next wave of applicants that we are worried about.

That echoes the concerns of many, many businesses right around the country.

The simple solution here is to treat backpackers like other Australian workers. Do not run this misleading campaign that somehow backpackers are getting an advantage over Australian workers—just treat them like Australian residents. Everyone is in then working on a level playing field. That way they get access to, basically, a tax rate of zero for earnings up to $18,200, just Australian residents, and then they are taxed at a higher rate thereafter. It would provide Australia with a competitive advantage and it would make sure that we have an essential source of seasonal labour for the agricultural industry.

The Treasurer himself said it: 'One of the great virtues of backpackers when they come to Australia is they leave with their pockets empty because they spend what they earn here.' This is money that is coming back into the Australian economy. It is money that helps farmers and that is spent on the Australian economy. Every dollar that a backpacker spends on meals or drinks at a pub includes the GST, so working holiday-makers are paying tax along the way, just like other Australians. Proposals from, for example, the Labor Party and Senator Lambie for a 10.5 per cent tax rate will charge backpackers at a lower marginal rate than residents for earnings between $18,000 and $37,000. On that point, we think the superior solution is to just treat backpackers as you would Australian residents.

I live in a rural community and I speak to farmers all the time. They are bloody angry. They are angry at the mess that this government has made of what should have been something that Australia should be trying to encourage. Instead, we are sending a message—and it is particularly galling that the party that says they represent farmers, that says they work in the interests of the agricultural sector, the National Party, are the biggest advocates of slugging a big tax on these workers, who help keep these farms going. Understandably, the farmers are angry, because this reform process is hurting their business. We are in very dangerous territory for some of these farmers, who face a great risk at harvest time.

And, of course, a whole lot of people who would be coming here as workers and as tourists are scratching their heads with confusion. You can see the conversations going on online. This is a community that speaks to each other through online forums saying, 'Look, we were thinking of going to Australia. It's not worth it now. Let's go to New Zealand—let's look for other destinations—and we'll give Australia a miss.' That is the danger here. We are going to hurt the tourism industry, we are going to hurt the agricultural industry and we are going to do in the name of penny-pinching. This was a mess. It was a bad idea.

Senator McKim interjecting—

That is right, Senator McKim: it was a shocking idea. It was a shocking idea handled terribly. There is a simple fix. The simple fix that the Greens promote is to treat working holiday-makers who earn an income like every other person in this country; let us tax them at the same rate.

This is a government in serious strife. It is about time it started to listen not just to big business and to its mates at the big end of town but to those ordinary people who own farms and who rely on seasonal labour for their farms to succeed. Again, I say to the National Party: you need to start to understand that it is no longer acceptable for people in rural communities to be deserted by your party because you are more interested in supporting the interests of people like Gina Rinehart than the interests of people like Mr Tim Reid from Tasmania, whose business is so absolutely critically dependent on these people, who make a great contribution to Australia.


No comments