Damian Drum (Murray, National Party) Share this | Hansard source

This is an incredibly important debate for the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016. This issue first raised its head in the Murray electorate during the campaign of the last election. Once it was out there in the public, it certainly raised an awful lot of interest by the horticulturalists of the Goulburn Valley. I was able to meet with a large number of the horticulturalists in the Goulburn Valley and it certainly did not take long for the impact and the consequences of this issue to be put front and centre. So it certainly was with a large degree of relief, and with a fair amount of badgering, that we were able to announce two weeks ago that the coalition had found a solution to the issue—that was going to be fair to everyday Australians who also work in some of these fields—to see people coming from overseas and paying a degree of tax. It was also going to be fair in relation to the amount of tax that we were going to ask these overseas workers to pay when they come here. Obviously, the issue was so important because of the critical nature of this labour force. We certainly did not want to even countenance the idea that we would go too hard with our tax percentage that we would scare the overseas labour force away, because the consequences of that result would have been substantial.

Before I talk about where we have landed, I would like to acknowledge the way in which we went about the review. Firstly, it was the National's leader, Barnaby Joyce, in concert with Treasury, who was able to give the industry a six-month delay on the implementation of the reform and pushed the implementation out to 1 January 2017 with the rider that, by the time that date came around, we would have found a solution for the backpacker tax that we could all live with, and that would be a positive outcome for everybody. We put in place a program and a process that was going to arrive at a sustainable level of tax so that the industry could go forward with some security, and that was with a full-blown review under Luke Hartsuyker. His work in the full-blown review into this issue was initially set to report in mid-October. Once the consultation process was under way it became abundantly clear that one of the great issues about the backpacker tax was the timeliness of it and the urgency of reaching a resolution. The evidence came to the inquiry.

Apart from finding a percentage that the backpackers could live with and the Australian government could live with, with the impost on the roads and the amenities that our foreign workforce friends enjoy, there was the need to find a point they could accept so that they would keep coming back. The inquiry was to report back to the government in mid-October this year. As I said earlier, it was with fantastic relief that we were able to bring that process forward by around three weeks because the evidence was so clear. As I said, one of the most important things with this issue is the time-critical nature of the entire resolution that is needed. In late September, we were able to announce that, with all of the conversations and consultation with the horticulture industry, backpackers, supply agencies and labour agencies, we were able to land on 19c. As many people would know, a large portion of backpackers are not all that concerned. They are young by nature and they are not all that concerned with their superannuation. Quite a large proportion of them leave that super here in Australia anyway.

I understand that it is a 95 per cent impost on superannuation that is earned, but, again, it lets all of the backpackers know exactly where they stand with this issue into the future. Indications are that, providing we arrive at this resolution early enough, then we were going to put confidence back into this labour force. They are overseas right now making their decisions about which country they are going to visit so that they can enjoy this trip of a lifetime, work for the first six months or so to get that additional time on their visa and then have the experience of a lifetime. All of this workforce that are going to be here in the next few months are overseas right now having conversations with their friends about which country they are going to go to. The 19c was a good reflection on the value of the wages that are available here in Australia and the quality of life that you are going to be able to experience by coming over here with not much money, earning a $10,000 or $15,000 or $20,000 nest egg and then, as most backpackers invariably do, dropping that money somewhere else in Australia. That is the critical nature that we need to understand about how this money is filtered and shared around Australia.

We were able to resolve this in late September and bring it into the parliament in the lower house last week, but now we understand that it is being held up in the Senate because Labor, the Greens and the crossbenchers want to have a review into the backpacker tax arrangements. Mr Fitzgibbon mentioned this morning that he was more or less accepting that he would make sure this work is done by Christmas. A statement as straightforward as 'We'll have this done by Christmas' shows a clear understanding of the time-critical nature of this issue. Backpackers do not just decide where they are going to go one day and book their flights and turn up two days later. They take months to plan their entire trip. They take months to research the best areas to work and enjoy themselves and where else they are going to travel after they finish their work to look at some of the other great parts of this country. But that planning process takes months. We are already being clearly warned by the horticulturalists in the Goulburn Valley and elsewhere that we do not want to muck around with this issue, that we need to make these decisions quickly.

The coalition has done that. We have upheld our end of the bargain to resolve this issue quickly. What we are now faced with is the consequences of Labor and the Greens and the crossbench wanting to play games and do some chest beating in the Senate. I am all for politicians that want to play games and increase their notoriety and have everybody look at them and see how important they are—I am happy for you to do all that stuff, but do not do it when you are going to impact on all the mums and dads businesses around Australia. In the Goulburn Valley you are going to be impacting in a negative way some of the biggest industries that we have in the entire Goulburn Valley.

It is not just the horticultural industry. They are going to be the first to be hit if these backpackers choose to go elsewhere because of the uncertainty about what the Labor Party and the Greens are doing in the Senate. But there are so many other industries that are hanging right off the back end of the horticultural industry, such as the food processing plants. SPC, one of Australia's iconic industries, has well over 500 people employed. They will be directly impacted by any downturn in the backpacker labour force turning up. Then, moving past the processors, you then move into the transport industry and the packaging industry, all of whom are setting up real hubs and gigantic companies and businesses in the Goulburn Valley, which, again, are all riding on the back end of the fruit and horticultural industries. Once you move away from that, you then go into the retail aspects of the fruit industry. It is a matter of understanding that this is critical and if we get it wrong there will be severe consequences. It is not just the fruit—it goes right through the entire community.

The consequences of gamesmanship on this issue are going to be severe. In the Goulburn Valley we have over 10,000 backpackers that are there for anywhere from around three to six months. Some of them stay longer. However, it is a significant workforce that plays a significant role in the fruit industry. They have not been paying zero tax. There has been an agreement in place which has probably been acting as a withholding tax. Historically the fruit pickers that come in from overseas pay 13c and have been paying 13c in the dollar for many, many years. An agreement was reached—I think the shearers were also brought into that agreement and into that accord. So the backpackers in the Goulburn Valley region have already been paying 13c in the dollar, and that has been an accepted amount to be paid by our overseas workforce. It has been understood that an extra six per cent is not going to be substantial enough to have them veer away to another country, simply because of the better wages that are on tap in Australia and also the better quality of life and better amenities that are provided by the relevant tiers of government here in Australia.

So my plea, very, very clearly, is that the government has done its part. What we need to do is put the message out there very clearly to the Senate that this is time critical and there are going to be an awful lot of mum-and-dad Australian businesses that are going to be impacted if these games continue any longer than another week. We are going to need to send a very clear message overseas, and there is a $10 million package for advertising in the tourism sector of the countries that generally provide this workforce. We need to send the message loud and clear that Australia is open to the backpackers, that we are welcoming backpackers and that we have set a 19c in the dollar tax rate. Most backpackers, when they sit down and do their sums with their friends in their planning for their upcoming trip, are going to see Australia a fantastic opportunity and a great destination.

The other aspect of this which was not also taken into account is the impact this is going to have on the tourism sector in two ways. Firstly, there is a large percentage of tourist operators that use backpackers as part of their business in the same way that the horticulture industry, the viticulture industry and even dairy industry do. Secondly, of the money that is earned in agriculture by the backpackers, nearly 100 per cent of that money is turned around and dropped here in Australia at other tourist ventures right around the country. So there is going to be an enormous impact felt not only in horticulture but also in tourism if these backpackers are deterred from coming to Australia because of some games that people want to play in the Senate.

Sometimes I look at this place and say, 'Yes, sure enough, if the Labor Party want to play games, well, good on them. If the Greens want to sit with them and play games, that is fine.' But in the Senate there are enough Independents and crossbenchers apart from the Greens and Labor to all get on board together and make the Labor Party and the Greens irrelevant. It adds further fuel to the bewilderment of the Senate when those minor parties cannot see the common sense with where we have landed on this one and cannot see the time-critical nature of creating a resolution that is going to let everybody go forward.

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