David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and the Minister representing the Treasurer, Senator Cormann. Will the minister update the Senate on the importance of a fair and competitive tax rate for working holiday-makers in Australia?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I thank Senator Bushby for that question. It is, of course, very important for Australia to have an internationally competitive tax rate for working holiday-makers, and the Turnbull government is absolutely committed to delivering an internationally competitive income tax rate for working holiday-makers.

The choice, of course, that the parliament has is not a choice between 10.5 per cent and 15 per cent. The choice the parliament has is a choice between 15 per cent and 32.5 per cent, because 32.5 per cent is the internationally non-competitive tax rate which has been in place since 2012-13, when the former Treasurer, Wayne Swan, put it in place. Of course, non-resident foreign workers in Australia have paid tax from the first dollar earned in Australia since 1983-84. Initially, the tax rate was 29 per cent. Wayne Swan increased it to the internationally non-competitive rate of 32.5 per cent. The government, having consulted with stakeholders—and Liberal-National Party senators, having consulted with stakeholders—and having worked closely in particular with the farming organisations, has said we are prepared to ensure that our tax rate for working holiday-makers is genuinely competitive internationally, and so we are prepared to bring it down.

The tax rate would be competitive internationally at 19 per cent. It is definitely competitive at 15 per cent. Now, why is the government not prepared to go any further? Because we do have a responsibility to the Australian people not to impose further unnecessary burdens on them when it comes to repairing the budget. The policy the Labor Party is pushing would blow a $240 million hole into the budget. But they do not care about wasting money and not figuring out how they can pay for it. We are saying that we do not want to increase taxes on Australians to pay for lower tax rates for foreign workers.

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Bushby, a supplementary question?

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Can the minister advise how Australia's tax rates for working holiday-makers compare with the tax rates in comparable countries?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I thank Senator Bushby for that supplementary. At a 15 per cent tax rate backpackers working in Australia would have higher after-tax incomes than their counterparts in New Zealand, taking into account higher minimum wages in Australia, the tax rates, the exchange rates and cost of living arrangements in those various countries—for example, New Zealand's minimum wage of $13.74 is much lower than Australia's minimum wage of $17.70 per hour.

Our package for working holiday-makers is also fully funded, whereas Labor has a $240 million hole in their budget plans. Our package also includes other attractive measures: lowering the application charge for working holiday-maker visas; allowing those visitors up to 12 months with one employer; better protection from exploitation by registering employers; and a global advertising campaign to tell the world how good we have it here. People will continue to want to come to Australia because of what a fantastic country we are, and the tax rate the government is proposing is internationally competitive. (Time expired)

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Bushby, a final supplementary question?

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I do have a further supplementary. Is the minister aware of any alternative policies?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The alternative policy of the alternative government of Australia is to impose a 32.5 per cent tax rate on any working holiday-maker coming to Australia, because that is the effect of what Labor is promoting. They know that there is no choice between a tax rate of 10.5 per cent and a tax rate of 15 per cent. The choice is between a tax rate of 15 per cent or 32.5 per cent. If Labor genuinely wants a lower tax rate for foreign workers, Labor can have 15 per cent today; the Senate can have 15 per cent today. You can have 15 per cent tomorrow; you can have 15 per cent at any other point in time. But until such time as the Senate accepts 15 per cent, it will be 32.5 per cent—the tax rate put in place by none other than the Labor Treasurer, Wayne Swan. That is the law of the land today. If Labor wants to go out and explain why they want a 32.5 per cent tax rate, that is up to them. (Time expired)