George Christensen (Dawson, National Party) Share this | Hansard source

With your indulgence, Mr Deputy Speaker, I just want to recognise my good friend in the gallery, Nathan Ell, who has come all the way from Dubai to hear me speak. He probably needs to get out more!

I rise to speak on 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. When the so-called backpacker tax was originally announced by the then Treasurer Joe Hockey, most people, I think, thought that that was pretty innocuous. The Treasurer would have thought so at the time as well, given that he was acting on advice from Treasury.

But there is a hard lesson to be learnt there—indeed, several lessons to be learnt. The first is that any advice coming from Treasury needs to be well and truly road-tested before being acted on. But there are more lessons to be learnt from how the impact of this measure came to be underestimated in the first place. This is no criticism of Treasury, or anyone else for that matter, because the underestimation of impacts was based on sound reasoning. But there is a flaw, and I will come to that shortly.

The most important and most debated element of these bills was the imposition of a 32½ per cent tax on the earnings of Working Holiday visa holders from the first dollar they earned. There was a very logical reason why such a change was necessary—and that is because when Labor raised the tax-free threshold, it meant that most backpackers, who worked for only part of the year, would no longer pay tax at all. That situation, I have got to say, was pretty disheartening for Aussie workers who worked all year round and took home less money for their day's work. They could have been working alongside someone from overseas doing the same work in the same conditions but taking home less money on a daily basis.

While the 32½ per cent tax rate from the first dollar was high, it was only applicable to overseas workers, and I must say that, when it first came up, I did not fully understand the implications that such a high tax would have on certain industries, particularly tourism and agriculture. But I spent a lot of time talking with farmers in my electorate about their workforce and how they sourced that workforce. I spoke with tourism businesses who faced similar problems securing workers when they needed them.

Although Bowen, in my electorate, is only a small town on the Queensland coastline, it is home to an extraordinarily large backpacker workforce. Bowen farmer and President of the Bowen Gumlu Growers Association, Carl Walker, wrote to me about the backpacker tax, outlining the importance of the produce from that region. He wrote:

During the peak of our season, up to 95% of Australia's fresh tomatoes and capsicums come from the Bowen and Gumlu locality.

Without this link in the seasonal supply chain, we would see much more produce imported from overseas and fewer local jobs sustained—fewer jobs for backpackers, but also fewer jobs for Australians. Mr Walker went on to say:

With the sheer magnitude of roles that need to be filled each season, to maintain the picking and packing volumes it is near impossible to locally source. As a region of a small permanent workforce population, we prefer to employ locals wherever possible but rely heavily upon backpackers and the seasonal worker programme to fill these very short-term and arduous roles. With the proposed tax increase for backpackers, this leaves a large tax gap between the two employment sources.

And Mr Walker, I have to say, is a very straight shooter and a smart thinker. He put forward suggestions for a compromise. We did not go as far as that, but his compromise was this:

All foreign workers should be on a 15% flat tax rate, with no tax-free threshold and no superannuation payments or tax refunds returned to their pocket.

He further suggested employers should:

… have to pay 9.5% superannuation to every employee, Australian or not. It should be considered that the foreign workers' superannuation could go into a fund which could then be utilised for training and upskilling a younger generation of Australian agricultural employees, helping to relieve pressure on the budget deficit.

Chairman of Tourism Whitsundays, Allen Grundy, also wrote to me, voicing concerns about the drop-off in backpacker visitor numbers. He wrote:

The latest international visitor arrival stats are mixed, showing continued growth to the Whitsundays of 6.2% to Year End June 2016. However, this result is somewhat tempered by the big declines in youth / backpacker arrivals.

Mr Grundy reported that backpacker nights and visitor numbers were down across centres on the east coast. In the Whitsundays, visitor nights, or length of stay, were down 23.5 per cent and visitor numbers were down by 6,000. Mr Grundy wrote to me again—just today, in fact—pointing out that backpackers working overseas was a two-way street. He says:

There is a lot of discussion suggesting that Backpackers take the jobs from young Aussies. It is important to note that the reciprocal arrangements for Working Holiday Visas mean that there are plenty of young Aussies overseas working on a gap year, just like those Backpackers coming to Australia. The community benefits when these young Aussies return home with new skills, they have had to fend for themselves and quickly learn to be responsible for basic life skills, for example, finding accommodation, buying food, paying the bills, budgeting etc. The skills that they learn by being away from home set them up to be more versatile, self-sufficient, confident and very employable.

After many meetings with businesses across my electorate, it became clear that some North Queensland industries would indeed have been smashed by that tax rate of 32½ per cent. There would have been a great deal of damage to the sugar industry around the Burdekin, to horticulture in the Burdekin and Bowen and to tourism in the Whitsundays. When the increased tax rate was first raised, my view was that Australian workers should be filling these positions. Around Bowen especially, where the unemployment rate is around 15 per cent and the youth unemployment rate is much higher, you would expect that there would be plenty of workers available to sustain the horticulture industry—and this is where more lessons need to be learnt from real life in this exercise. We cannot assume that the number of jobs available and the number of unemployed locals will cancel each other out. In reality, this does not happen—not even close.

When I was speaking with farmers they told me reasons why there was a greater reliance on backpacker labour than there otherwise ought to be. We know that the volume of workers needed will always outstrip local labour capability and availability, so at least some workers will always need to be sourced from elsewhere. But local unemployment remains high even during the peak harvesting season in Bowen, simply because many locals do not want to do that work. The farmers tell me that some locals will put in a token effort; they might have been forced to take the job through one of the jobactive providers. They turn up late or hung over. Some will deliberately work slowly. Some even go to the effort of breaking things on farms so they can get fired.

Given a situation where Australians prefer social security and welfare over actually working, we can do one of two things: we can accept that Australians will never ever do that work and just carry on; or we can do something with the welfare system to make sure those people are not turning down available jobs. To take the second option will be a long-term project and a difficult road to negotiate—a tough row to hoe. But the longer that row is left the worse the weeds will become and the harder the job will become.

I remember when the union movement brought their China free trade agreement debate roadshow into my electorate. They thought I would not turn up to debate it. But I did. And all the mouths were agape when I turned up. They said I was a terrible member of parliament because there were thousands of foreign workers in my electorate picking fruit while there were thousands of unemployed youth. If only it were that simple. In the short term, however, the immediate fix to this problem is to make a compromise on the backpacker tax to ensure backpackers continue to meet the labour needs of those industries—and finding a sensible compromise is, I believe, what we have done.

The bills we are debating here today are the kind of outcome I was confident we would achieve when during the election campaign a local reporter asked me what would happen if the backpacker tax remained at 32½ per cent. I assured her it would definitely change, but she remain unconvinced—as did some of the local farmers. I said I was so confident of that change that I would quit the party if it did not happen. I said that not as some kind of threat but as a demonstration of how confident I was that such a change would be made. I said that knowing it would be fixed because the Deputy Prime Minister understood the need for it to be fixed. I must congratulate the Deputy Prime Minister and Minister for Agriculture; the Assistant Minister For Employment, the member for Cowper; and also the Treasurer for listening to the concerns of backbenchers, for listening to the needs of industry and working hard to resolve this issue. I want to acknowledge the work put in by groups such as Tourism Whitsundays, the Bowen Gumlu Growers Association and Canegrowers. These groups got their message across clearly and professionally and, to their credit, always with a view to finding the best solution not just for the industry but for the country as a whole.

I note there are some voices that are calling for a zero tax rate on backpackers. There might be some good rationale behind that, but I want to state my view as to why it should not happen. As I said, the Labor Party essentially delivered a zero tax rate for these backpackers when they brought in the higher tax free threshold—a good thing. They increased the tax free threshold to $18,000. But that move, resulting in foreign workers paying nothing, was really a slap in the face for Australian workers who do pay tax. Representing one of the country's biggest tourism centres, I very much appreciate the need to make visitors to our country feel welcome. But I think we should draw the line at elevating backpackers to a more privileged status than working Australians. We must remember that these backpackers are coming here and using services—our roads, our public transport and on and on it goes—and it is only fair that they pay some level of tax for the usage of those services.

Another measure contained in these bills is to increase to 95 per cent the tax on working holiday makers' superannuation when they leave Australia. I think that is a fair income. I will explain why. It is consistent with the purpose of the superannuation system and the need for equity in the workforce. It is important to note that all workers must be paid their super entitlements regardless of whether they are Aussie citizens or working visitors. But exempting foreigners from the superannuation guarantee would have made it a disincentive to employ Australians—and I know there were some proposals out there to do that. However, the super system is designed to support Australians in their retirement—it is for workers retirement. Allowing working visitors to cash in their super simply allows them to go and blow it in Bali, Taiwan or someone else on their home. That is not the intention of the superannuation scheme whatsoever.

That is why Carl Walker was saying we should take the super and put it somewhere else. So we have taken the super and put it into savings to enable the repeal of the backpacker tax. So while I am pleased that this labour force issue has been resolved, we expect the affected industries—that is, agriculture and tourism—to return to normal. I am hopeful there is going to be a significant uplift in backpacker numbers, particularly into the Whitsundays. It is almost a perverse outcome. It is a great outcome. Bringing this tax in scared some from coming. But, now that it has gone, a whole heap of them will come to the Whitsundays, and I suspect that there will be a bit of a boom over the next year.

But just as I was concerned about the tax implications of the backpacker tax I have to say I am also concerned about the increase in the Passenger Movement Charge. While I acknowledge that the $5 increase might be small, it worries me that, into the future, the Passenger Movement Charge might be viewed as something like tobacco excise—a cash cow that government can continue to raise and raise and no-one wall complain about. We are doing it. The Labor Party have done it in the past. I think that trying to treat that charge like an ATM to fund spending, because it can just be raised higher and higher, and then trying to justify it by claiming people who travel internationally are rich is beyond the pale. I am going to be keeping an eye on that change to see if it has a detrimental effect on the tourism industry, and I will be taking that issue up with the relevant ministers.

In closing, I note that Labor wanted to refer this reform package to the Senate Economics Legislation Committee. I must stress that that is a reckless act and it will cause a disaster in agriculture. Farmers have made it clear that that will be destructive. Labor's plan would create a great deal of uncertainty and confusion for farmers. The farmers have made it clear that the changes need to be passed as a matter of urgency. That message was delivered during the review process.

They on the other side might have missed it because they were too busy doing a victory lap after losing the election, but the government committed to reviewing a wide range of issues surrounding seasonal labour supply. The review has now been completed, and this reform package is the result of that consultation process. The National Farmers' Federation made their view clear with a statement that said:

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

"After refusing to declare its hand on the backpacker tax all year, Labor decides to intervene at the 11th 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 agree with the sentiments expressed by the National Farmers' Federation: there is no justification for any further delay. I hope the Labor Party will see that and get on with it.

One of the additional measures in this reform package is that we are now going to regulate who employs foreign workers, and I think that will also be very good in the future for cleaning up some of the nasty stuff we see going on within the backpacker industry. I do commend these bills to the House.

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