Senate debates

Wednesday, 23 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, Passenger Movement Charge Amendment Bill 2016; Second Reading

6:27 pm

Photo of Jacqui LambieJacqui Lambie (Tasmania, Independent) Share this | | Hansard source

I rise to speak on the government package known as the 'backpacker tax' legislation, which includes the 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; and the Passenger Movement Charge Amendment Bill 2016.

The main change in this package is the government's plan to increase the income tax rate for all backpackers from zero to 19 per cent from the first dollar earned up to $37,000. When the government presents 19 per cent, I will not oppose it; I will merely amend it, should the Senate allow it to go into the committee stage. So at the very least farmers can be assured they will have 19 per cent from this week. But the problem is, and the reason I propose to amend the 19 per cent—and while it is better than the 32.5 per cent, which the government threatened the agricultural industry with for 18 months—it is not internationally competitive and not a fix for the current crisis.

If we are going to pass the legislation, let's do it once and, for goodness sake, let's finally get something right. It is a simple procedural matter that will take no time at all; legislation is amended all the time. The critical question here is: what is going to attract backpackers to Australia? We know that 10.5 per cent is guaranteed to be competitive, because New Zealand's backpacker tax is 11.95 per cent and their nominal base rate is 10.5 per cent. At the moment, that is where the backpackers are going.

The industry needs guarantees and certainty, so that the only uncertainties they need to deal with are those that mother nature throws at them—not the uncertainties that a dysfunctional government throws at them. A rate of 10.5 per cent is guaranteed to undo the harm caused by 18 months of uncertainty and the threats of a destructive tax rate of 32.5 per cent. The damage will not be healed immediately, but over time the agricultural industry will recover, as the backpackers begin returning to Australia in future seasons.

The Liberal government has pretended to be the voice of the farmers throughout this debate, hiding behind their coalition with the Nationals. But it is the Liberal government that controls the agenda in parliament and the question of the backpacker tax could have been resolved two weeks ago after the committee tabled its report. Every day the tax issue drags on, more international damage is caused to brand Tasmania. The solution to all this madness and hurt is so simple. I met with the National Farmers' Federation this week, and they admitted that 10.5 per cent would be a much better outcome and would be more than welcomed with open arms by the agricultural industry. But the Liberal government continues to peddle fear and lies, telling the public that backpackers are stealing Australian jobs. Tasmanian farmers have told me, though, that, even if every person on unemployment benefits and of working age filled the seasonal positions, the farmers would still need backpackers.

We know that hundreds of Australian jobs depend on backpackers. I hope all crossbench, Labor and Greens senators will agree with my proposal and will also agree that we should remain competitive with New Zealand, should the Senate choose to support my amendment. I hope the government respects the Senate's decision and votes for the amended legislation in the other House. The ball is ultimately in Deputy Prime Minister Barnaby Joyce's court. He has the power, but does he have the ticker to stand up against the Liberals for our farmers?

This could have been done a very, very long time ago. We could have had certainty for this season's picking of our fruit. We could have ensured that our rural and regional areas, which are doing it really tough right now, had extra income from backpackers who would have spent locally. I am putting through two amendments: one at zero per cent, and the best thing we could do is save everyone out there and vote for that. I do not think I will get the numbers for that so I will also be putting through the 10.5 per cent amendment; although, what I am hearing—which is quite disgusting—is that it does not really matter. It is going to go down to the Lower House and, because the Nationals do not have the spine and they have gone from being the blue heelers of the bush to being toxic bush rats, you know what? They are going to leave it at 32.5 per cent for 1 January. That is what they are going to do. These are the games they are going to play with their farmers out there. It is not like our farmers do not already have enough strain because you neglected them for years. They are finally waking up to that, and I say thank God for that.

What is even more disturbing is that you would rather speak about an Adler weapon that will kill than deal with a backpackers' tax that should have been done when you had the opportunity quite a few days ago. When you come back and try to put the blame on us, we are already about 10 steps ahead of you. I need you to know that. If you want to play these games and if this ends up at 32.5 per cent on 1 January then I reckon you are going to be in trouble. It is not just the farmers who will feel the effects. It is every small business in rural and regional areas. It is the tourism industry. You are hitting a lot of people at once here. You have done nothing but muck them around for 18 months because of pure incompetence. I do not know what has happened to your leadership and I do not know what has happened with the Nationals, because they have been missing in action for a very, very long time, but enough is enough. Let's get it at least to 10.5 per cent, get it down to the Lower House tomorrow and get it voted on for the weekend so that everybody can get on with their lives and, more importantly, so that just maybe we can attract a few more backpackers before the Christmas period starts.

The modelling that you neglected to do—actually, that's right, you did not do any modelling—did not model the negative impact that this is going to have on the agricultural industry, rural and regional small business and tourism. You were too lazy. What's new! It is either your way or the highway. Nothing has changed since the last parliament. The attitude still has not changed. I would imagine that the new crossbenchers and One Nation are starting to wake up to this and to become wary of you. And if they have not then give them another three or four months and they will be right there. If you want to do us all a favour, let's get this done tomorrow and let's get this vote finished off. I do not care if we have to stay here tonight. If it was important enough to get registered organisations through on Monday night then keep us all back here tonight. Let's have it out and get it down to the Lower House in the morning. Let's see how much guts the National Party actually has to fix this issue.

6:34 pm

Photo of Janet RiceJanet Rice (Victoria, Australian Greens) Share this | | Hansard source

I rise today to speak to the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, the Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016 and the Passenger Movement Charge Amendment Bill 2016, or as these bills are more commonly known, the backpacker tax.

The history of this particular reform could be used as a test case for the dysfunction of the current government. It was first raised in the 2015 Abbott-Hockey budget—that pitiful follow-up to the notorious 2014 budget that had tried to rip up the social contract only to find little appetite in either the Senate or the wider community for its wide-eyed assault on health care, education and welfare services. Instead, the government pivoted to a much more timid method of budget repair and tried to strip funding or gain review from little pockets and communities that they thought would not have the political capital to fight back. The ability of such a process to actually improve the budget is limited. The government has bullishly refused to acknowledge that, in fact, there is much more potential revenue available to pay for a world-class health, education and social services system and that there is more than enough economic rationale for productive nonrecurrent debt spending on energy and transport infrastructure.

One of the groups that the government thought they could get away with clamping down on in the 2015 budget was working holiday-makers. Historically, working holiday-makers, or backpackers, have paid little to no tax with many backpackers choosing to self-identify as residents on their tax returns and tax agents coaching backpackers to do so if they stayed in Australia for more than six months. The Administrative Appeals Tribunal recently issued a rule clarifying that the six-month or 183-day criteria was not sufficient to be classed as a resident for tax purposes, but that has not filtered out into the community as yet. So the reality on the ground is that few backpackers are paying tax as nonresidents. Then, of course, in wanders the Abbott-Turnbull government.

Blessed are the holiday-makers, went their thinking, for nobody can inherit their vote. Here is a constituency that cannot vote. Here is a constituency that will not cost the coalition marginal electorates and may be a good place to find revenue. The original budget figure that they thought they would be able to get out of backpackers was $540 million over the forward estimates. That figure pales in comparison to some of the huge revenue opportunities that are out there, such as phasing out superannuation concessions, negative gearing, capital gains concessions or fossil fuel subsidies. Of course, these revenue measures, if the government acted on them, would bring in tens of billions of dollars. But the government are focusing on the backpackers, because they thought that the backpackers were not going to complain.

The government forgot that there is another constituency that deeply relies on backpackers and the working holiday-makers, one that has deep connections with the government. That constituency is the agricultural community. It is absolutely flabbergasting that the government failed to consult properly with the agricultural community before they put this into the budget. Back in 2015, the chair of the New South Wales Farmers' Association was adamant when he said:

This seems to have been done without any industry consultation.

Emma Germano from the Victorian Farmers Federation simply called the whole process a shemozzle.

After the justifiable backlash from the agricultural community and after months of lobbying and of the government kicking the can down the road, surprise, surprise, there was a dramatic shortfall in backpacker numbers during the 2015-16 summer harvest season. AUSVEG CEO Richard Mulcahy earlier this year said:

The Australian vegetable industry faces critical local labour shortages during peak seasonal periods, and our growers rely on backpackers to harvest their crops and prevent crippling losses.

… … …

If the ongoing decline in the number of backpackers coming to Australia isn't arrested, or if these workers aren't replaced with labour from another source like the Seasonal Worker Program, we are facing a very real threat to the future of our industry.

The National Farmers' Federation, the peak body for the Australian farming community, made a pre-budget submission for this year's budget, saying:

… 32.5c in every dollar is too high. It means many backpackers will choose to go elsewhere, or stay in Australia for shorter periods. It means fewer workers on Australian farms, and more workers attracted to the cash economy.

So the government quickly shifted into face-saving mode, Minister Joyce went into hiding and the whole thing was put off for a review before the election. As always, the government retreated from making the tough decisions.

After six months of further deliberation and of the agricultural community telling the government just how rubbish their 32.5 per cent marginal tax rate was, the government emerged with the bill before the chamber today, which would tax backpackers at 19 per cent from their first dollar earned and would tax their super at 95 per cent. As many in this chamber and in the ongoing estimates and committee hearings have previously noted, Canada taxes working holiday-makers at 15 per cent, and New Zealand taxes them at 10.5 per cent. How then do the government think that 19 per cent is a sufficient decrease in their proposed tax rate in order to arrest the reductions in working holiday-maker numbers, particularly when you factor in the 95 per cent superannuation tax rate? That superannuation tax rate brings the tax rate overall to approximately 28 per cent. Have they done modelling to know exactly how the different tax rates would impact the number of working holiday-maker visas? No. It has been confirmed that the government failed to do any modelling on the impact of the new marginal tax rate on working holiday-maker numbers. Have they done modelling on the revenue difference of the different marginal tax rates? Well, Assistant Minister to the Deputy Prime Minister, Minister Hartsuyker, on ABC PM just days ago, did not know what the revenue difference would be between using marginal tax rates of 10.5 and 19 per cent. So it appears the government still do not know what they are doing or what the implications of this bill will be.

Despite 18 months of controversy and millions of dollars lost through the impacts of the uncertainty that the government has created, the government has still not made the case as to exactly why this bill in this shape is the best one for backpackers, for regional communities and for the budget. We already saw last summer what happens if the government lets this process go on: stories of hardship with fears that entire crops will be left to wither on the vine, due to growers being unable to access sufficient labour for their harvests—like persimmon grower Brett Guthrey, who came to Parliament this week to share his story. He said:

Sourcing backpacker labour is getting harder and harder - our fruit is going to rot on the trees.

He also said:

Attracting backpackers back to our sector will be difficult for many seasons to come.

Whatever the outcome in this place, the government's incompetence has already badly damaged the industry.

Growers from Orange were in this place too, talking to the government about how this tax would not only lead to a decline of backpacker numbers but that this decline might coincide with the tiny two-to-three-day window for picking ripened apples and that unpicked crops could lead to losses of millions of dollars. Is anyone surprised that the horrendous result for the Nationals in the Orange by-election has coincided with their inability to stop the Treasurer in his tracks on the backpacker tax? I think not.

The Greens, on the other hand, have listened to the community. We have listened to the peak bodies and the industry representatives, and we have listened to the local growers who are concerned about the future. They do not understand why there needs to be a backpacker tax, why the government cannot simply fix the problems that resulted from the Administrative Appeals Tribunal ruling, without slapping an exorbitant tax on backpackers and driving them away from our shores. They also want certainty, which is why some groups have resigned themselves to a 19 per cent marginal tax rate. But the government has the opportunity in this chamber today to support the Greens in making giving growers that certainty without compromising backpacker numbers or trying to gouge a pitiful amount of revenue from low-income earners. The Greens propose a very simple solution: for backpackers to be taxed the same as Australian residents—that is, for backpackers to enjoy a tax-free threshold, zero tax, up to when they earn $18,200 and then 19 per cent on up to $37,000 after that. That is the progressive tax system that we are all used to. It is very straightforward, very easy to administer and very fair.

Finally, I would like to tackle what some have said—particularly our state-based tabloids, but including some senators in this place—in regard to the concept that somehow our farming communities could cope with the shortfall in backpackers if only the lazy unemployed young people from our major cities and towns would get off their bottoms and come out to harvest instead of collecting Newstart or youth allowance. This is to fundamentally misunderstand the youth unemployment problem. Young people from Melbourne, Sydney, Adelaide, Ballarat, Launceston, Gladstone, Wollongong, Townsville, Cairns, Canberra, Newcastle and Brisbane—all across the country in big cities and regional towns—who are currently out of employment are not in a position to pick up their lives and go to the country for two months as an employment solution. Many of them have rent and tenancy agreements that they cannot break. Many of them have families that they are caring for. Many of them have specific career paths that they are on, even if they cannot currently find a position. Many of them know it is much smarter to keep searching for ongoing part- or full-time work than to spend a couple of months treading water, only to find themselves unemployed come winter. So we should dismiss this argument out of hand.

Working holiday-makers are a perfect solution to the needs of the agricultural sector, as they are, by and large, not tied down by tertiary studies, family commitments, career paths or the need for full-time employment. They are here to earn money, mostly to spend it all over the remaining months of their travels. I would note that this means that most of the tax revenue that the government was hoping to collect actually returns to the Australian community anyway. It is also well established that these working holiday-makers do not take jobs from Australians but in fact contribute a huge benefit to the economy, creating thousands of knock-on jobs in the tourism, transport and hospitality sectors across the country for Australian workers.

So, as Senator Whish-Wilson has so clearly laid out, today the Greens will move to align working holiday-maker tax rates with Australian resident tax rates. This would be a more competitive tax rate compared to our major rivals for working holiday-makers. It would be good for our regional economies both in terms of maintaining or improving on the number of backpackers working in the harvest season and in terms of building strong tourism economies in many of our transitioning rural communities. It would have very little impact on the budget bottom line compared to the 19 per cent marginal rate proposed by the government—especially compared with some of the big revenue opportunities that the government currently refuses to consider. Finally, it would put an end to the uncertainty, allow growers to have confidence in their ability to plan for harvest and put an end to this whole sorry saga.

6:48 pm

Photo of John WilliamsJohn Williams (NSW, National Party) Share this | | Hansard source

I will just make a few minutes of contributions to the debate on the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 and related bills. When the Labor Party were in government, they raised foreign workers tax from 29 per cent to 32½ per cent. It did not include backpackers; however, the Administrative Appeals Tribunal ruled that it must include backpackers—hence the 32½ per cent came along. There are some serious problems here, and I am well aware of that. We in the National Party have been informed by plenty about the problems out there, and that is why we need to fix the situation up.

Senator Rice said, 'We can't have young ones unemployed in the cities travel out to the country to pick fruit.' Why not? When I was a young fella and took up a handpiece shearing sheep, I had to travel out to the Flinders Ranges and to many areas of South Australia to get a job. We had to travel. I find it amazing, and this is the heart of the problem. There are roughly 735,000 unemployed Australians. I am sure many of them are young and in very good physical health and condition. Why can't they travel to get to work? I know that in many country towns where abattoirs exist they rely heavily on backpackers. Why aren't the locals working in those abattoirs? I will tell you why: they lack work ethic. They roll up for work and fail a grog test or a drug test, or they simply do not show up to work. It is an unacceptable attitude to me.

As I said in my maiden speech in this place on 15 September 2008, some of these people need a touch on the backside with a cattle prod to get them off their butts and to get them to work. I did not mean literally—even though TheJakartaPost quoted 'literally', that was not the case. But we need to change the attitude a bit here in Australia, where there is important work to be done, and see those people get out there and get a job, even if they have to travel. There are many people unemployed in country towns close to where a lot of this rural work we are talking about—fruit picking and abattoir work—is being carried out. It is essential work. Those people should be out there working, in my opinion, instead of staying home unemployed and not worrying about bothering to go to work or, if they go to work, not doing the job properly and eventually getting the sack, or getting the sack very quickly, or, as I said, in some businesses, failing the alcohol test or the drug test.

I think it is very unfair that, if I am shearing out there somewhere in a shed and I hit the $18,200, the foreign worker shearing alongside me would pay less tax than me. I do not think that is fair, and some are proposing a 10.5 per cent tax. I think it is very unfair that I would be on one downtube shearing sheep and that the bloke from South Africa alongside me who has been there for six weeks and has made the $18,200 bracket—which you would do in about six weeks if you are a good shearer—would pay less tax than me. Why should that shearer from South Africa pay less tax than me? Why should I do the same work, work just as hard, shearing the same sheep in the same conditions, and pay more tax to the Australian government than that foreign worker? That is simply not fair. Life is about fairness.

So we need to sort this out. It has certainly caused some problems in the industry. I know many of my colleagues in the National Party have pushed hard for these changes and this review. Hopefully we will get it settled in the very near future. If we do not get it settled in this place, come 1 January they will all be paying 32.5 per cent tax, and the last thing we want to see is people deferring to other countries. Sure, 19 per cent is higher than Canada, New Zealand and the UK, but the fact is that wages are also higher. People are not mentioning that. The tax is a bit higher but the wages are also higher. It is good to see the NFF and many of those industry bodies now saying: 'Yes, 19 per cent. Go for it. Get rid of the uncertainty, and let's get on with the job.'

6:52 pm

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

I rise to support the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, the legislation associated with the proposal for the backpacker tax, and urge my colleagues to do the same thing. Let me follow on from the comments of Senator Williams a few moments ago and put to bed some of the myths we are hearing about the 19 per cent income tax rate.

The take-home figure for overseas backpackers working in Australia in agriculture, horticulture, hospitality and tourism is higher compared to the figure for backpackers going to Canada or New Zealand. Let me repeat that to Senator Whish-Wilson: the take-home figure is higher than it is for a backpacker working in Canada or New Zealand. It is so structured for two reasons: (1) the hourly rate of pay is higher than it is in those two countries; and (2) the Australian dollar is stronger than it is in those two countries. So let us put to bed the nonsense and the myth that backpackers coming to Australia will be disadvantaged by the 19 per cent tax rate.

The best point to make about this is that backpackers with whom I have communicated are happy with the 19 per cent. Most people in agriculture, horticulture, fisheries, tourism and hospitality that I have spoken to and dealt with are happy. I for one reject the nonsense that has been put to me that we have only listened to farmers groups et cetera. Do not insult me with that. I spend a good deal of my life in rural and regional Australia and I have a very, very close link with those people.

Let me also put to bed the myth about the 95 per cent of superannuation money that is apparently being taken back from these backpackers. To those who might be interested in this discussion, the fact is that neither New Zealand nor Canada offer an employer based superannuation fund. Therefore, where is the logic in a person coming from overseas expecting to take home superannuation money, firstly, to which they are not entitled and, secondly, when they would not receive a dollar if they were working in Canada or New Zealand or South Africa? We did not bring in the superannuation scheme for young people going home to Switzerland, to Scandinavia, to the UK, the US or France. It was introduced for Australian retirees.

Let me make the point if I may, equally, with regard to the tax-free threshold. We all know that, until relatively recently, the tax-free threshold was $3,500 or $4,000. It was increased to $18,500, as Senator Whish-Wilson said in his contribution earlier in the day, to provide a fillip for low-socioeconomic Australians, and it is a good scheme. But it was never designed for overseas workers coming into Australia. They would not and do not expect—and have not asked—the Australian population to provide them with the sorts of protections that we expect as Australians: policing and all the other activities that go on.

Senator Whish-Wilson interjecting

Many of us have worked overseas, as indeed Senator Whish-Wilson has. Name me one young Australian going overseas to work who expects to get a tax-free holiday in Europe or America or New Zealand. They do not. So what is this nonsense that we are hearing about the opportunity for young people from overseas, who do not want a tax-free environment, who actually want to come here to work—

Senator Whish-Wilson interjecting

You can interrupt as much as you like, Senator Whish-Wilson. The unusual circumstance is that I do not interrupt the Greens. Yet I cannot have a view different to yours, Senator Whish-Wilson. I am not entitled to a view separate to yours. Offer me the courtesy, if you would, of listening in silence, learning and taking notes, and you yourself might be the better person for it. Let me summarise. Nineteen per cent is totally appropriate; it is a better deal than somebody who is going to New Zealand, to Canada or to South Africa will get. Superannuation is irrelevant, because those other countries do not offer it.

Let me come to the tourism and hospitality industry. It is a bit of a dig for that industry to be complaining about the slight increase in the levy, because which is one of the biggest industries to gain from a good backpacker program in this country? The tourism and hospitality industry. Those of us who move through the bush, which many in this place do, know that you do not hear an Australian accent in the hospitality and tourism sector in rural and regional Western Australia. Therefore, the tourism industry needs the backpackers. For them to complain about a slight increase in the levy for people leaving our country or returning to our country is a little bit beyond the pale.

Many Australians go and work overseas. I do not recall having a tax-free threshold when I worked in the United States. My son did not get a tax-free window when he was working in the UK, working in Scotland. Neither did my son working in the United States, nor my daughter working in Singapore, the United States or Panama. They all pay their tax. What are we considering the question of providing a tax-free threshold for? As the point was made earlier today, the 32½ per cent was not introduced by the coalition government at all; it was introduced by the last Labor government. We are trying to move it to 19 per cent. Nineteen per cent makes it competitive. Nineteen per cent gives Australia a reasonable return.

In response to Senator Rice's point about people not being able to move away to work seasonally, I will make these observations. At the end of seeding, I was in the eastern wheatbelt town of Kellerberrin. The crop had just gone in—the biggest crop in history. I was having a yarn with the shire president, having a yarn with local farmers, asking them who was on track to put in the biggest crop for the season. Backpackers. I said to them, 'Surely there are a few locals in Kellerberrin and Merredin and Cunderdin and Kununoppin?' They said, 'Yes, there are, Senator, but we couldn't get one of them.' They are not coming from the city, Senator Rice; they are not giving up rent.

Photo of Peter Whish-WilsonPeter Whish-Wilson (Tasmania, Australian Greens) Share this | | Hansard source

Senator Rice is not here.

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

They live in Kellerberrin. But Senator Rice is listening avidly, and just in case she is not, I know that Senators McKim and Whish-Wilson are going to rush back so that Senator Rice is fully informed in her mistaken view that people cannot leave cities and cannot leave regional towns to work.

My second example comes from the Australian Hotels Association. I know that you, Madam Acting Deputy President Reynolds, as well as the minister sitting there, Senator Nash, and Senator Fawcett move through rural Australia and do not hear Australian accents. We recall, in a formal meeting, where Senator Smith I think was present, that the CEO of the Australian Hotels Association in WA, responding to the question of why there were so many non-Australian accents in hotels and hospitality around WA, said, 'We cannot get young Australians to work in our hotels.' Was this at Kununoppin? Was this at Wubin? No, no, no: this was Steve's hotel, it was the Nedlands hotel, it was the students' watering hole on the Swan River, it was the Ocean Beach hotel, one that I believe Senator Whish-Wilson—legally or illegally—may have frequented as a young man. These are the hotels that we cannot get young Australians to go and work in. Is it because they cannot pay their rent? Is it because they are in such enormous need? Of course not. The simple fact of the matter is that they do not want the work.

So yes, we have engaged actively with agriculturalists, with horticulturalists. The member for Forrest, Ms Marino, and the member for O'Connor, Mr Wilson, and I were in Manjimup in the winter for a forum with 80 or 90 agriculturalists, horticulturalists and small businessmen. Just so that people understand the scale of this operation, somebody said, 'I'm going to ask who has had more than 100 backpackers on their farm tonight', and there were five—in May, in Manjimup in the winter; five had more than 100 backpackers on their farm that night.

We know the scale of the problem. The shire president of Manjimup—himself hopefully to become a wonderful contributor through the upper house of the state parliament after March—said that $20 million worth of avocados were harvested last summer in the Manjimup area and not one was picked by an Australian; they were all backpackers. We all know the size and scale of this issue. But we also know that 19 per cent is fair; 19 per cent is slightly better in terms of take-home pay for a backpacker coming to Australia than for one going to New Zealand or Canada. And superannuation is irrelevant, because it is not offered to backpackers from other countries. The final point I want to make is that, when they have been canvassed, farmers, horticulturalists, fishermen and backpackers all believe that 19 per cent is appropriate.

In concluding, I want to catch up with Senator Watt, because I listened to Senator Watt this afternoon telling us how he had been to Rockhampton, bucketing the local member, the wonderful member for Capricornia. One would not have thought that only recently in the federal election she subjected herself to the will of the people of Capricornia and got an increased margin. You would not have thought that from listening to Senator Watt's commentary this afternoon. I just want to tell you about when I visited the seat of Murray with Dr Sharman Stone. It was in relation to abattoirs. Senator Watt was talking about abattoirs today, and how Australians could not get jobs in the abattoirs. Dr Stone took me to an abattoir just outside Shepparton. The manager of that abattoir was telling us he had an urgent need to increase the number of shifts in the meatworks. Because of the live export ban, cattle were coming south and they needed to process more. He had no fewer than 50 permanent jobs available for young people in what is the highest youth unemployment area of Victoria—permanent jobs, no skills required. They would be trained according to Australian certificates of competence and have permanent employment. But he got no Australians successfully applying. Do you know why? Because they needed to be drug free, and not one of the Australians could meet that criterion.

That is where I leave my contribution. Please support the legislation as presented by Senator Cormann.

7:05 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I indicate that I and my colleagues Senators Griff and Kakoschke-Moore will be supporting the second reading stages of the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016. We believe that this bill has merit. It is by no means perfect. The backpacker situation is a mess at the moment. We need to fix it, because the fear is that literally thousands and thousands of tonnes of fruit will be left rotting on the ground. I respectfully suggest to the opposition, to some of my crossbench colleagues, that what they are proposing is really not going to be productive. What they are proposing could lead to an impasse that will leave us with the worst of both worlds. We will have a situation where, for backpackers, there will be a 32 per cent rate left. There will be a real disincentive for those backpackers to come here.

And there is an opportunity here, with the good-faith negotiations I have been having with the government, to make a very real difference to young and older unemployed Australians, for them to have a chance, really for the first time, to participate in seasonal work without the massive penalties in our current welfare system. I am grateful for the discussions I have had about this on a number of occasions with the Treasurer, and I want to acknowledge the tremendous work that the member for Mayo, my colleague Rebekha Sharkie MP, has done in relation to this. She has worked in the past in the youth unemployment space as the CEO of a major organisation helping disadvantaged youth, and she understands the challenges facing young Australians in terms of unemployment.

This bill is by no means perfect. But, as they say, I do not want the perfect to be the enemy of the good. This is a case where others want to move various amendments to this bill, but I think that what the government is proposing—subject to commitments from the government and subject to implementing some of the changes for young and older unemployed Australians—could really work. The imperative here is that we need to have enough workers to work in this coming season and in the next two to three years in terms of our fruit picking, in terms of the seasonal work, in terms of working in the pubs, particularly in regional areas, at peak tourism hospitality times.

On 20 September of this year at Ceravolo's Ashton Valley Fresh premises I, along with Rebekha Sharkie, the member for Mayo, met with Susie Green from the Apple and Pear Growers Association of South Australia and the Cherry Growers Association of South Australia; Adelaide Hills fruit producer Joyce Ceravalo of Ceravolo orchards; Andrew Flavell of Flavell orchards; Ashley Green of Lenswood orchards; and Tony Hannaford of Torrens Valley Orchards. We spoke to them and we spoke to the media. We want to see an urgent change to the inflexible and punitive welfare rules that are currently discouraging many Australians, particularly young unemployed Australians, from doing seasonal work on farms.

Farmers across the country are concerned that fruit will be left rotting on the ground because there just simply is not enough seasonal labour to pick it—and the backpacker tax amendments may have discouraged some backpackers from coming here in the first place. We think this is a sensible supplement to the issue of seasonal shortages. We want there to be greater flexibility to current welfare rules. Presently, under Newstart, recipients can only earn $104 a fortnight before being hit with a reduction of 50c in the dollar for extra dollars earned and before benefits cut out at $1,023 a fortnight for a single person. A credit system for seasonal work under current Newstart rules only allows recipients to accrue 1,000 credits or 3½ thousand Newstart credits.

What we have put to the Deputy Prime Minister and Minister for Agriculture and Water Resources, Barnaby Joyce, the Minister for Social Services, Christian Porter, and Treasurer Morrison is that jobseekers be able to work on seasonal work for up to $5,000 without any penalty; that Job Services providers have a small incentive to place jobseekers; and that jobseekers having to travel more than 100 kilometres and having to relocate temporarily receive a small relocation allowance in the order of $300.

There are those that say Australians do not want work. I find that offensive. The current welfare rules have massive disincentives in the system. The government has, for the first time, been prepared to talk to us in good faith and negotiate in good faith to give young and older unemployed Australians an opportunity to do the seasonal work—in addition to backpackers. This is what we need to do. Obviously, it will involve a change in the rules. It needs to be implemented appropriately and without any hitches.

We are prepared to support this legislation on the basis that we give unemployed Australians a fair go instead of the punitive welfare rules that currently exist. That is the nub of our support for this bill. We are still negotiating with the government. We will support the second reading stage of this bill. We believe it has a lot of merit, so the sooner we can get on with this and resolve this one way or the other, the better. Our agricultural sectors desperately need certainty, so we need to get on with it. I am sure, if this bill gets through—

Senator Whish-Wilson interjecting

Senator Whish-Wilson, who I have enormous regard for, says: 'We are not going down the right road.' What is wrong with giving Australians who are unemployed a chance to work instead of being hit with punitive welfare rules?

Senator Whish-Wilson interjecting

Well, they are—50c in the dollar for everything you earn after $52 a week, and it cuts out at $1,023 a fortnight for a single person. Our current welfare rules basically allow people to fail. The government is prepared to deal with that in a constructive way. We support the second reading stage of this bill. I know the Minister for Finance, Senator Cormann, is itching to say something. I will sit down and shut up, but I hope we can pass the second reading stage of this bill.

7:12 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Minister for Finance) Share this | | Hansard source

I would like to thank those senators who have contributed to this debate. This is an important package of bills that delivers on the government's commitment to get the policy right for working holiday-makers, a critical source of labour for the agriculture sector. (Quorum formed)

As I was saying, this important package of bills delivers on the government's commitment to get the policy right for working holiday-makers, a critical source of labour for the agricultural, tourism and hospitality sectors. It is important that Australia remain a competitive jurisdiction for working holiday-maker visitors, and this package achieves this by simplifying the income tax schedules that apply to working holiday-makers and reducing visa fees. Importantly, this package achieves this without adversely affecting the budget bottom line, consistent with the government's commitment to arresting debt and deficit. I commend these bills to the Senate.

Photo of Linda ReynoldsLinda Reynolds (WA, Liberal Party) Share this | | Hansard source

Senator Gallagher has requested that the Passenger Movement Charge Amendment Bill 2016 be dealt with separately.

Photo of Stephen ParryStephen Parry (President) Share this | | Hansard source

The question is that the Passenger Movement Charge Amendment Bill 2016 now be read a second time.

7:22 pm

Photo of Stephen ParryStephen Parry (President) Share this | | Hansard source

The question now is that the Income Tax Rate Amendment (Working Holiday Maker Reform) Bill 2016, the Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016 and the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016 be read a second time.

Question agreed to.

Bills read a second time.