Rick Wilson (O'Connor, Liberal Party) Share this | Hansard source

Mr Speaker, I add my voice to the many accolades that you have received over the last few days—well deserved. I rise to discuss the government's ongoing review of working holiday visas 417 and 462, a process that is being very closely watched within my electorate of O'Connor. Horticulturalists, farmers, tourism operators and small businesses in O'Connor are concerned about the future supply of seasonal labour, which is a core component of their business model, and are looking to the government to provide some clarity.

In 2011 the previous government raised the tax-free threshold to $18,200. The effect of this tax-free threshold is that an overseas visa holder working in Australia can access services provided by the taxpayer but not pay a cent of tax on their first $18,200. A visitor arriving in January, for example, could earn $18,200 to the end of June and then as the new financial year begins earn another $18,200 without paying a cent in tax.

Existing tax laws stipulate that anyone who is not an Australian resident for tax purposes is required to pay a flat tax rate of 32.5c in the dollar. Working holiday makers fall into this category. Visitors with a 417 or 462 visa can stay in Australia for up to 12 months, they are eligible to work for up to six months with a single employer and they can study for up to four months.

It is important that we acknowledge the critical role overseas workers play in regional Australia. My electorate is a perfect example. Some industries in O'Connor cannot attract workers locally and they rely on backpackers to meet seasonal labour demand. Without a steady supply of overseas workers, the viability of many businesses would be threatened. A measure that reduced labour supply and decreased output would be counterproductive.

I attended a forum in Manjimup recently to hear from stakeholders in O'Connor. The consensus from those who spoke—some of whom run very large operations and employ up to 200 backpackers during peak periods—was that some taxation on working holiday makers was fair. A flat rate of 32.5c in the dollar from the first dollar, however, was unanimously seen as a deterrent for overseas workers. Anecdotal evidence suggests that the proposed measure is already having an effect on labour supply.

Industry representatives also raised the issue of paying superannuation on behalf of working tourists. Employers are required to establish a super account and make contributions over the backpacker's tenure. However, those funds are simply released to the visa holder once they leave the country. It is all but guaranteed that that money will be spent outside Australia, with no local benefit.

In response to the community's concerns and the varying need for seasonal labour in different parts of the country, the government has announced the working holiday maker visa review. A comprehensive and rigorous review is an appropriate process to undertake and so is the need to ensure that the government legislates and enforces a fair and equitable taxation policy. Industry representatives from O'Connor were adamant their voices be heard on this issue, and the government has invited all stakeholders to comment.

My personal view is that local tax rates from the first dollar earned would be a fair and reasonable impost on working holiday makers. This would bring them in line with Australians in the lowest tax bracket, although Australian residents are eligible for the tax-free threshold and they do not start paying tax until they earn $18,200. This would ensure that backpackers pay a rate that reflects their income, without affording them concessions reserved for low-income residents, while reducing the damaging effect of a 32.5c rate.

I support the 9.5 per cent superannuation contribution for those on working holiday visas being rolled into an employee's aggregate take-home pay, eliminating the administrative burden of employers making super contributions offering no real benefit to either party. The employer would be relieved of the administrative task of establishing the superannuation fund for the backpacker, and the employee would benefit more fully from the 9.5 per cent. The visa holder will pay tax on the 9.5 per cent superannuation contribution as part of their take-home pay. They will, however, have the balance in their pocket and that cash will be available to be spent while they are visiting here.

I also support the broadening of eligibility criteria for visa extensions to more accurately reflect the need for labour in rural Australia. Currently visitors on a working holiday visa can apply for a 12-month extension after their first year if they have worked in regional Australia on a specified list for at least three months during that year. Those backpackers working in tourism or hospitality, however, are not eligible for an extension. Those industries are not included on the list of specified work in Australia. This inequity should be rectified.

Public consultation ends this Friday. I am pleased with the minister's decision to prioritise this part of the review. I encourage stakeholders and industry figures in O'Connor to offer their input. The review will of course upon its completion become a matter for cabinet. I urge the government to carefully consider the need for seasonal labour in rural Australia before implementing any policy changes from 1 January.

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