Nola Marino (Forrest, Liberal Party) Share this | Hansard source

I welcome the opportunity to speak on the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, and to thank the government for implementing the changes we needed to ensure that this vital labour source will still be available to the cultural, hospitality and tourism industries that so need it, especially those in my electorate of Forrest, in the south-west of Western Australia.

The Turnbull government recognises that working holiday makers are an important part of Australia's $43.4 billion tourism industry. They are also a key source of labour—a key source of labour—in the agricultural, horticultural and hospitality sector. Industries in the south-west of Western Australia simply could not survive without the labour input from working holiday makers, the so-called backpacker community.

Look at businesses that I have visited recently, such as Capel Farms, who grow amazing broccolini. It is a very labour intensive industry, and that is why the backpackers are so vital. I look at Neil Delroy; as an avocado grower he is in the same position. I went down to Augusta and talked to the Augusta Hotel; they rely on backpackers to work in the hotel, in hospitality. There are vegetable growers and fruit growers around Donnybrook and Myalup. Of course, without backpackers often what we see is the fruit rotting on the trees and on the ground. The vineyards of Margaret River and the hospitality sector rely so frequently on backpackers. They are needed by the olive farms around Yallingup. Dairy farm hands are required, as are workers for abattoirs.

The program has grown significantly since its inception in 1975. There have been over 200,000 working holiday makers coming to Australia each year since 2011. In the early days of the program, the south-west attracted most of its working holiday workers from Britain and Ireland. Then, in the eighties and nineties, we saw an increase in European visitors, especially from France, the Netherlands, Germany and Italy. In recent times, working holiday visa holders have arrived predominantly from Asia, especially Korea, China and Japan. All of these groups have added to the cultural experience and growth of the south-west. There were 2,114,583 working holiday maker visas granted in 2015-16.

It is obviously essential—absolutely essential—that the workers keep coming, so it is vital that the decision on this bill takes place now. If you are a grower of any sort and you are planting and picking, you need to have confidence that you will have the labour to not only plant but also harvest the crop. That is why Labor's amendment is so fraught for the industry. If this reform package is not passed, the ATO will tax many working holiday makers as nonresidents at the 32.5 per cent tax rate. This means that many of them will simply not come to Australia, choosing instead to travel to lower-taxing destinations. The Administrative Appeals Tribunal has ruled that backpackers can be taxed as nonresidents under the current law, which was implemented by Labor when last in government. Labor's plan to refer the working holiday-maker reform package to the Senate Economics Committee will cause great uncertainty and confusion for our farmers and the seasonal workers as we enter the peak harvest season. I am not sure what about this those on the Labor side do not understand, but clearly not enough of them live in, work in and represent rural and regional electorates and the farming, growing, hospitality and tourism sectors.

Farmers across Australia have made it crystal clear that it is a vital to have these bills passed as soon as possible, but Labor is not bothered by that at all. Labor's plan to refer the bill to the Senate committee is absolutely reckless and destructive. The National Farmers' Federation has made the position of the agricultural sector very, very clear, but Labor is ignoring this. The National Farmers' Federation said:

Farmers can't wait until the end of the year, or even next year, for a resolution of the issue.

They went on:

After refusing to declare its hand on the backpacker tax all year, Labor decides to intervene at the eleventh hour to block a solution that would see an extra $2000 in every backpacker's pocket.

This is unacceptable and we call on Labor to respect all the decent hard working Australian farmers who feed and clothe us every day by passing the 'backpacker tax' bills in the Parliament.

There is no justification for any further delay.

I repeat that there is no justification for any further delay. But, of course, that is not going to stop Labor from delaying this.

We, as a government, also recognise—as do the stakeholders we have repeatedly consulted—that while working holiday-makers should pay fair tax on their earnings, this should not provide a massive disincentive for them to come to Australia. From 1 January 2017, the government intend under this bill to set the tax rate applying to working holiday-makers at 19 per cent on earnings up to $37,000, rather than the 32.5 per cent announced previously. The government will also reduce the application charge for working holiday-maker visas by $50 to $390. These changes will lower the cost of coming to Australia for working holiday-makers and leave them with more money in their pockets to spend while here, which stimulates regional economies and supports regional businesses.

When I had a meeting with a group of businesses it was interesting that one of them ran a local gymnasium and exercise area and so many of the backpackers who were in the local area were his clients and his customers. So they involve themselves in many parts of the community, and their dollars often circulate within the community that they are living and working within.

We will also seek to boost the arrivals of working holiday-makers, which have been in decline since 2012-13 as a consequence of factors including exchange rate variations and changed economic conditions in source countries. We will introduce more flexible arrangements that will benefit working holiday-makers and industry. This will involve allowing an employer with premises in different regions to employ a working holiday-maker for 12 months, with the working holiday-maker working up to six months in each region. We will also task Tourism Australia to promote Australia to potential working holiday-makers through a $10 million global youth targeted advertising campaign. It is a great initiative.

The government is also keenly aware of concerns about exploitation of working holiday-makers. To generate more accurate data and boost integrity of the scheme, employers will be required to undertake a once-off registration with the Australian Taxation Office—a good check and balance. This simple and easy registration process will help provide valuable data on the employment of working holiday-makers. Employers who do not register will be required to withhold tax at the 32.5 per cent rate. Working holiday-makers will be made aware of registered employers via the publication of a list on the ABN Lookup. I am sure that this will appear on a range of online sites that promote backpacker opportunities in Australia.

The Turnbull government's package of reforms to working holiday-maker arrangements will therefore not only ensure working holiday-makers pay fair tax on their earnings but also increase Australia's attractiveness as a top destination for backpackers. The government's strict budgeting rules have applied to ensure the budget impact of these measures and changes is fully offset. We will increase the tax on working holiday-makers' superannuation payments when they leave Australia to 95 per cent, which is consistent with the objective of superannuation, which is to support Australians in their retirement not to provide additional funds for working holiday-makers when they leave Australia. There will also be a one-off increase of $5 to the passenger movement charge from 1 July 2017.

The decision to reduce the proposed tax rate from 32.5 per cent to 19 per cent maintains Australia's status as one of the most competitive destinations for working holiday-makers, whilst also ensuring that they pay a fair level of tax—something equally important on this side of the House. This year, the coalition committed to review a wide range of issues affecting the supply of seasonal labour in the agricultural and tourism sectors. The review was duly completed, and this reform package is the result of a very significant consultation process. The government has listened, acted, and delivered on this important issue.

For the sake of the coming year's harvest and the impending tourism season, Labor must support the swift passage of the entire reform package through the parliament. Agriculture and tourism make a fundamental contribution to the local economy of the South-West and to so many other rural and regional communities right around Australia—something that Labor obviously does not value. This bill is a win for South-West farmers, who will be able to get their fruit off the tree, off the vine and off to market. It is one more way that we are working to ensure the South-West remains a vibrant hub of industry and employment into the future.

Many regional members of parliament, like me, have been fearless champions on behalf of their electorates, their agricultural stakeholders and common sense on this issue. The bill before us today is a direct result of our hard work and persistence. It means that local businesses can continue to rely on strong seasonal labour support. The peak tourism and harvest season will be with us soon, with thinning of fruit and vines giving way to harvest in the New Year. There is a great sense of urgency that we need to get this sorted now. Backpackers planning to travel to Australia from a range of countries are already making decisions about where they will go, and they need certainty about the tax treatment in Australia now, not at some time in the future, as Labor says. If that certainty is delayed for weeks and months, those vitally needed backpackers will likely start choosing to go elsewhere. They will go to New Zealand or Canada instead of coming here, and that will be disastrous for our industries. We need to act now.

I thank all those regional members of parliament who advocated so passionately for their constituents and their business communities. Although he is no longer in the parliament, I include former Senator Richard Colbeck in those thanks. Richard was a passionate advocate for rural and regional industries and communities, and his position on this issue was a great demonstration of his capacity and leadership.

This was a significant issue for many regional coalition MPs during the recent election and still is significant. By holding the line and acting as a team we have achieved the outcome that was desperately needed. It is now time for regional Labor MPs to step up to the plate and get this through the parliament and into practice. Our regional economies are relying on it.

See this speech in context