Backpacker tax progress stalls

Many industry stakeholders hoped parliamentary debate over changes to the Working Holiday Maker Reform Package would have taken place last week, however it did not eventuate.

This week is a non-sitting week for both houses which means another week of uncertainty for growers trying to sure-up labour for summer fruit and vegetable crop harvesting.

The delay comes despite a Labor-requested Senate Economics Legislation Committee report (tabled on November 9) recommending the proposed 19 per cent tax rate on Working Holiday Makers (WHM) go ahead.

"The committee is satisfied that a 19pc tax rate represents a good compromise from the original proposal of a 32.5pc tax rate for all WHMs, and notes strong support for the measure from a broad range of business and industry organisations in sectors that rely heavily on WHMs as a source of labour," the report said.

"The committee is also satisfied that a 19pc tax will ensure Australia remains internationally competitive in attracting WHMs to travel and work in Australia."

It also recommended the government conduct a review of taxation and other policy settings in relation to WHMs, including the impact of the changes in the reform package, after a period of time.

But the Labor Senators' Dissenting Report within the same document recommended lowering the proposed tax rate to 10.5pc.

That suggestion sparked further slinging matches between the major parties, while also drawing outrage from grower groups.

Federal agriculture minister, Barnaby Joyce, said the government's tax position was fully funded and internationally competitive due to high wage rates.

“Not only does Labor’s blatantly political game-playing add more delays that could see fruit left unpicked on the trees over Christmas; and not only does Labor’s proposal leave a $500 million hole in the federal budget, but Labor plans to slap a higher marginal tax rate on Aussie workers than it does on foreign backpackers,” Mr Joyce said.

“There can be no more debate or misinformation about what happens if this reform package is not passed.

"It was Labor who referred the reform package to the Senate Economics Committee for review; the committee has reported and it is now up to Labor to stop picking at the scab and playing games with peoples’ livelihoods."

Labor agriculture spokesperson Joel Fitzgibbon bit back at suggestions Labor wanted backpackers to pay no tax.

"Under Labor’s proposal, foreign backpackers will always pay more tax than Aussies. They will pay tax 10.5pc tax from the very first dollar they earn," Mr Fitzgibbon said.

"Australian workers’ pay no tax at all up to $18,200 in earnings. With a 10.5pc tax rate for backpackers from the first dollar they earn, there is no level of income at which Australians will pay more tax than working holidaymakers.

"It’s time for both Barnaby Joyce and Malcolm Turnbull to stop using the backpacker tax as a political football and to reassure regional communities that they have listened to those on the ground and will work to resolve this matter when Parliament returns next week.

"Unlike the Government Labor truly understands the urgency of this legislation and the need to provide certainly to our farmers and tourist operators before heading into Christmas.

"Sadly, they will have to wait another week and this will compound the stress felt in rural and regional Australia on this issue."

Growcom chief advocate Rachel Mackenzie said the clock was ticking towards the January 1 deadline when, if no amendment to the legislation is made, the 32.5pc backpacker tax rate will pass into law.

“Why are our politicians wasting time with blame shifting and not negotiating to reach a compromise position for our industry?" she said.

"This is politicking at its worst and there are real people and their livelihoods at stake who won’t forget how they have been treated by out of touch Canberra politicians."

She urged growers to get on the phone to their local Senators and members of parliament and demand an end to the current politicking over the backpacker tax.

National Farmers’ Federation president, Brent Finlay, said next week’s parliamentary hiatus should be used by all politicians to turn politics into statesmanship and find a fix to the backpacker tax mess.

“Amongst the farming community, anger is replacing frustration. Our livelihood is not some football for the political establishment to kick around," he said.

"I hope that out of the Canberra hotbed of intrigue and power plays, our politicians will find a way to break the backpacker tax impasse.

“Australian farmers' efforts to feed the nation in support rural businesses, families and communities deserves more than a rabble response.

“We know that any outcome will be an imperfect one, but this is better than 32.5pc which, despite those looking to play spoiler on this issue, is exactly what backpackers – the shrinking numbers of them that is – will pay from 1 January next year.”

It was similar line from the Queensland Farmers Federation which called on both the Government and Opposition to stop playing politics with farmers’ futures.

QFF president Stuart Armitage said with only two parliamentary sitting weeks remaining in the year, time was running out to resolve the issue.

“The Senate Inquiry into the Working Holiday Maker Reform package, the third inquiry into this issue, has recommended that the Coalition Government’s legislation to provide a 19pc tax rate be passed,” he said.

“QFF has continually supported and advocated for an internationally competitive tax rate that ensures Australia remains an attractive and competitive destination for backpackers to work and play.”

“The proposed government superannuation reforms remain a separate and continuing issue for farmers and is well overdue for a comprehensive review.”

Victorian Farmers Federation horticulture vice president Emma Germano said it was incredible the industry had been talking about the impacts of the tax on the agriculture industry for 18 months and there was still no resolution.

“All sides of politics have shown complete contempt for our nation’s food producers by refusing to agree to an equitable tax rate for backpackers,” Ms Germano said.

She said the deadlock over the backpacker tax had already led many WHMs to look at alternative destinations.

“We have seen a decline in backpacker numbers to Australia since the tax was announced in last year’s budget and some farmers who rely on working holiday makers as a vital source of temporary labour are starting to panic,” she said.

“The Senate needs to find a compromise position before time runs out to give confidence to the agriculture sector.”