Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Minister for Agriculture) Share this | Hansard source

The chaos and dysfunction continues, and the special incompetence of this government remains in play. Come March, I will have been here 21 years and this is the first time I have been asked to debate and vote on a bill that does not exist! It is certainly the first time I have had to sit idle, the first time I have seen the House stall for 10 minutes or more, while the government gets its act together. This is dysfunction writ large.

Let us go through a little history here. This is not the first iteration of the backpacker tax, it is not the second iteration and it is not the third iteration: this is their fourth attempt to get this right, and they still cannot get it right. It takes a very special genius for a government to decide that the best way to stem the bleeding of backpackers from a country is to put a tax on them for the first time. 'Oh, we're losing backpackers. Our growers and farmers and tourism operators can't get backpackers. I've got an idea: we'll slap a 32.5 per cent backpacker tax on them.' That takes a very special sort of genius. It also takes a special sort of genius to impose a 32.5 per cent backpacker tax without any consultation with the sectors affected and without any modelling of either the impact on backpackers, on farmers and on tourism operators or, indeed, the second-round effects and, therefore, the impact on the broader economy. Why was all this so? It was so that this government could rake an additional $540 million over four years out of our backpackers—at a time, as I said, when we were losing backpackers at a rate of knots.

Today we saw an even more special act of genius from this government: we are going to have a higher, more uncompetitive backpacker tax headline rate in this country. It will be 15 per cent rather than the 13 per cent or, indeed, 10.5 per cent that it could have been. But they are going to raise less money, with the commitment to Landcare. By the way, they are saying they are going to put an additional $100 million into Landcare, but since the 2013 election they have ripped at least $300 million out of Landcare. That takes a very special sort of genius as well.

The important thing about the backpacker tax is the headline rate. This fiction that a backpacker sitting in Ireland is going to look at the tax rate, get his calculator out, look at the award wage in Australia and then have a look at the award wage in New Zealand is just that: it is a fiction. But I make this very important point: yes, the wage rate is lower in New Zealand, but so too is the cost of living. This is the part of the equation which those on the other side conveniently decided to leave out of the report. They included the headline tax rate. They included the wage rates in Australia and New Zealand. But they failed to mention the cost of living—and they failed to include that for a very good reason, which is that it would have run against their case.

While the Deputy Prime Minister is here, I will remind him that the savings they were attempting to make in this package are less than he is spending to pork-barrel by moving the APVMA to his own electorate. He should scurry out of the House as I speak. He should be ashamed of himself. He is wasting taxpayers' money for his own electoral fortunes in his own electorate of New England. What a disgrace! Let me talk for a moment about the impact that is going to have on our farming sector. We have a double whammy here today. We are going to get a higher headline backpacker tax rate, which is going to render us uncompetitive. At the same time, he is spending nearly $30 million moving the APVMA to his own electorate, which is going to decimate that organisation and cost our farming community at least $190 million every year thereafter. That is the priority of this Deputy Prime Minister. That is the priority he gives to our farmers and farming communities. He must know that this backpacker tax is going to hurt those farmers and those communities.

There is one element of this package that has not yet been discussed in this place. When the government belatedly announced what I will call the 19 per cent package, it also boasted that there would be a new integrity measure. 'Don't worry. We've got a new integrity measure which enhances this package.' What was that integrity measure? The government was going to require all employers engaging backpackers to register with the Australian Taxation Office.

This was a good idea, because backpackers, when they came to Australia, were going to be able to check the ATO register and see whether the prospective employer was registered, which would give an indication that that was a reputable employer who was going to pay them correctly, tax them correctly and, of course, not exploit them in any way. But, in the dirty deal the government did with Senator Leyonhjelm, that register will now be a secret. That register, designed to be a guide for backpackers, will now be a secret. What a disgrace that is! They have just thrown the integrity measure that they boasted about completely out the window.

Now let me deal with this fiction that they keep peddling in this place about the member for Lilley. Forever and a day we have had a tax rate for non-residents in this country. For a long time it was 29 per cent and at some point—I think in 2012—it was increased to 32 per cent. I think that was because the tax-free threshold was dramatically increased by the Labor government. But the 32 per cent never applied to backpackers. It has never applied to backpackers. As the shadow Treasurer pointed out during question time, no revenue from that measure was derived in the 2012-13 years because, when we were in government, backpackers did not pay tax. There is only one government in the history of this nation that has applied a tax on backpackers, and that is the government of those sitting opposite.

I remind the House that when Joe Hockey delivered his budget speech in May 2015 he boasted about this measure. He said, 'I'm announcing tonight a great new initiative which will see Australian workers put on a level playing field. We're going to tax backpackers 32½ per cent. And we are such good economic managers, it is going to raise $540 million over four years'—without any concern whatsoever about the impact that would have on our farming communities and our tourism sector. It was a little bit slow gaining some traction—something I might go into a bit later—but, by mid-election campaign, the government realised that they were in trouble. They realised that the 32.5 per cent backpacker tax rate was not sustainable and would cost them the election.

So what did they do? They announced, 'We'll have a review. Don't worry; we're going to have a review,' sending a false message to farmers: 'Don't worry; there will be no backpacker tax after the election. Trust us; we'll fix it'—and I see the fixer here with us. They said, 'We'll fix it; don't worry about it.' But they kept spending the money. They kept spending the $540 million—no, it was $500 million actually; they forwent the $40 million because they deferred the tax from 1 July 2016 to January 2017. In other words, they were walking both sides of the street: sending a message to farmers and tourism operators that they would abolish this tax post-election but spending the $500 million of revenue from it during the election campaign—partly to pay for some of the Deputy Prime Minister's boom dollars.

I am not making this up. We have Senate estimates transcripts which show the reason the Deputy Prime Minister was so wedded to the 32.5 per cent tax. He gave it a huge rap post the 2015 election. I remember him talking to Leigh Sales about putting Australian workers on a level playing field and what a great idea it was. But, of course, that attitude changed. Then of course the 19 per cent was a great idea—'We're going to be internationally competitive.' Mathias Cormann, the finance minister, was backing it in as late as Monday, saying, '19 per cent is as far as we will go. That is our last bid; no changes.' But now Barnaby Joyce, the Deputy Prime Minister, tells us that 15 per cent is the right rate. But we have Senate estimates proof that the Deputy Prime Minister has been hooked on this revenue because he wants it to pay for his boom dollars in his white paper, including one that I have already spoken about; the move of the APVMA to Armidale—again putting at the fore the interest of his own electoral fortunes.

I remind members that, when the Deputy Prime Minister announced this APVMA move, he was in deep trouble in his own electorate. Tony Windsor was running against him. He knew that Tony Windsor was a threat and he also knew that, while Tamworth is a stronghold for him, Armidale is a completely different story. Armidale is a university city and a very progressive city. Barnaby Joyce, the Deputy Prime Minister, knew that he could not beat Tony Windsor without doing something special in Armidale. 'I've got an idea,' the Deputy Prime Minister told himself, 'I'll uproot this agency, spend $28 million of taxpayers' money and move it to Armidale, in my electorate'—a stroke of genius on his part.

When the Deputy Prime Minister began to come under pressure from the Prime Minister about the controversy of this move, he agreed or the Prime Minister forced him to have a cost-benefit analysis done on the relocation of the APVMA. We know when that cost-benefit analysis was delivered to the government, but for months we had to fight for it. The Deputy Prime Minister refused to release that cost-benefit analysis—and, having finally secured it, we know why. We know that it shows that the costs of the move far outweigh any benefits, and the benefits are miniscule and the benefits are only in Armidale. There is no benefit to Canberra; there is no benefit to our farmers; there is no benefit to the broader nation; the only benefit is in Armidale. Despite the fact that it is going to cost farmers so much every year, he is clinging to it. He is determined to do it.

Let me tell you something about the APVMA. The APVMA regulate the chemicals and veterinary medicines our farmers use—crop sprays are the best example. Farmers need their chemicals. It is all about their productivity. They cannot do their work without crop protection. The APVMA are an organisation already under pressure, like any government agency. They are always under pressure and can never keep pace with the work of approving, re-approving and auditing farm chemicals et cetera. Their almost 200 staff are highly trained professionals—regulatory lawyers and regulatory scientists. They are people who live here in Canberra and have their children in Canberra schools. The staff were surveyed. They were asked how many were prepared to move to Armidale. Ten per cent are prepared to move to Armidale. How long will it take to rebuild this workforce? This is not a job for someone who has just passed their undergraduate degree. These are people who have done serious postgraduate work and trained on site in the APVMA for this very specialised regulatory work. So the workforce is just going to collapse, and that is why the government's own cost-benefit analysis concluded that this is going to cost our farmers a couple of hundred million dollars, not just in one year but every year from here on in, until they rebuild that workforce, which Kareena Arthy, the CEO of the APVMA, has suggested will take seven years. The minister's own cost-benefit analysis says it will take at least five years. That is a long time for farmers to be waiting.

Here is a very important point. The government keep going on about their free trade deals—their preferential trade deals. We began all those trade deals. The Labor Party own those trade deals, but what we would never have done is overreach on their benefits. The Deputy Prime Minister stands at this dispatch box most days and says, 'Our food exports are growing.' What he does not tell you is that our food imports are growing faster as a result of those deals. That is the fact of the matter. The benefits of those trade deals have indeed been modest, largely because of all the technical barriers that remain in place. It is all right to get the tariff down over time, but, if you cannot get the health protocols and you cannot deal with the technical barriers, you do not have a hope. You are not going to get the benefit you were anticipating.

But there is something else the APVMA does—and this is why I am making this point about these preferential trade deals. The APVMA plays a role in the data provided to determine the maximum residue levels in our food products. In other words, if you are spraying some apples with a chemical and you are exporting them to China, the Chinese want to make sure that they have not been contaminated by the chemicals. If you cannot get that data to the Chinese process then you do not have any exports. The undermining of the APVMA is going to severely impact on our food exports in this country, more so than any benefits that would be accrued from the free trade agreements. These are the priorities of this government.

I go back to 19 per cent. It was going to be it. It was going to make us internationally competitive. It was the answer to all these problems. We were inundated with the national farmers federations of the world saying: 'You have got to wave through 19 per cent; the deal has been done.' If we had taken the NFF's advice, the backpacker tax would now be 19 per cent. I have to say, I have been disappointed with the performance of the National Farmers' Federation in the course of this debate, being the flag bearer for a 19 per cent tax which was clearly not competitive. Again, the headline rate is what is important here. When backpackers are thinking about the long haul ride to either New Zealand or to Australia, they look at New Zealand at 10 per cent and Australia at 19 per cent. It is pretty obvious what decision they are going to make. But the National Farmers' Federation not only championed 19 per cent but attacked the Labor Party for not waving it through.

Then of course the coalition decided in another stroke of genius that they would insist on making the 19 per cent package budget-neutral. This is the way they do policy over on that other side now. They say, 'We need $540 million so we will have a 32.5 per cent backpacker tax. But when we back down on 32.5 per cent and go to 19, we will have to find another way of raising some money.' So they do two things. First of all, they rape and pillage the superannuation accounts of backpackers. We now have a system in this country where the employer pays nine per cent as super into an account for a backpacker and the Australian Taxation Office—it has changed today and I will get to that—takes 95 per cent of it back. It is a tax on farmers, a tax on employers. What was the other measure? 'Contrary to all of our promises, we will increase the passenger movement charge, the old departure tax.' The link between the two, I do not know.

Mr Albanese interjecting—

I thank the member for Grayndler. As the member for Grayndler says, there just is not a link. So what do we say? Those opposite are proposing to bring a bill to parliament with not one backpacker tax measure in it but three tax measures—one to rape and pillage the superannuation accounts of backpackers and another to increase the passenger movement charge. So of course we say, as we always say in this place, 'You have got a bill with three taxation measures in it so we will send it to a Senate committee.' Of course we would. 'No,' they said, 'You cannot do that. This has been going on for 18 months.' Yes we know. The backpacker tax debacle of those opposite has been going on for 18 months. But now, having announced a review during the election campaign and delivering a final outcome not until October, they tell us that it has got to go through both houses of parliament in a week. Everyone in the this place knows that that just does not happen here. Unless there is some national security bill, a measure important to our national security, that just does not happen here. So we reasonably said, 'No, we will study this in a Senate inquiry.' But we made the important commitment that whatever the outcome, we would have this bill done and dusted before we leave this place for Christmas and of course that is what is exactly what is happening here today.

But we now know why they did not want us to have a Senate inquiry. They did not want us to have a Senate inquiry, because they knew two things. They knew that Treasury officials would be forced to admit that no economic modelling whatsoever was done on the backpacker tax. The other thing they knew is that growers in particular would line up to tell senators that 19 per cent is too high, and line up they did, particularly in Tasmania, where they have been screaming about the impact of this backpacker tax on their businesses. So we now know why they did not want a Senate inquiry.

They had their Senate inquiry, and of course, as I said, we got here this week and it could only be 19. They said the modelling showed that we can be internationally competitive at 19. And then of course, on Monday morning, it suddenly became 15 per cent. No logical reason was put forward as to why it should be 15 per cent, as was the case at 19—except one; that is right. It is the same rate as the Seasonal Worker Program—that is, the program that allows Pacific islanders to come here to work and repatriate that money back to the people in their homes.

Just let me address that for a moment. Comparing them, if you will excuse the pun, is like comparing apples and oranges. The Seasonal Worker Program is a foreign aid program. It is a way for Australia to assist those people living in those Pacific islands. We give them, in effect, a subsidy to come here, an opportunity they would not otherwise have, to work.

The backpackers are a much different thing. In that market, we are competing globally for the work of those backpackers. There is one thing that has not been contested in this place by anyone—which is a good thing—and that is that, because of the seasonal nature of the work, the surge nature of the work, we need backpackers to get the fruit off those trees and those grapes off those vines. So we are competing for backpackers. It is much different than the Seasonal Worker Program. And, by the way, the superannuation arrangements for those under the Seasonal Worker Program are completely different. In some cases—I think in PNG and Kiribati—the tax rate is actually zero.

The government has not given any explanation or any rationale as to why it is going to 15, but we did give a rationale for the new rate we were prepared to strike this morning. Why were we prepared to move? It was apparent, given the Treasurer's press conference this morning, that he was digging in, and someone had to show some leadership. We certainly did that. Why 13? It aligns with the withholding tax rate used in the harvesting award. Horticulturists been telling me for many months now: 'Fight for 13 because 13 is the withholding tax we take from Australian backpackers who may or may not get through the tax-free threshold, so align it with that.' Given that it was apparent that we needed to move this morning and we needed to show some leadership, and given that a number of horticulturists again this morning rang me to say, 'Look, we're really worried that the government's digging in on this; go for 13,' we decided that the appropriate thing to do would be to fill the vacuum, show some leadership and back a 13 per cent backpacker tax.

That was entirely rejected by the Treasurer. Why was it rejected? Why was it rejected when we could have had a 13 per cent headline rate, which is obviously more competitive internationally than 15 and which would have cost less? This is appalling. What the government are saying is that they would rather get into bed with the Greens than be seen to agree with the Labor Party. More particularly, they would rather leave a higher headline rate than admit that once again they got it wrong. They are putting their own pride in front of the interests of farmers in this country.

This will not be forgotten by people in the horticulture sector in particular, and the members for Dawson, Mallee, Capricornia, Flynn, Gilmore, Page and Barker, as well as many others, will find themselves having to explain themselves in the coming months and, indeed, the coming years, as I fear farmers will continue to struggle to secure backpacker labour. Why do I fear that? I will go back to where I began: backpackers were falling off even before Joe Hockey announced his 32.5 per cent tax. Our reputation has been damaged. The word has spread: 'The Aussies don't want us. They've put this big tax on.' It will take a long time for that to filter back out of the system, a long time for that damage to be undone. They were falling off before then; they will continue to fall off. The word will be that the tax is still in place, regardless of the headline rate, and there will be ongoing problems. I will be reminding the members, including the member for Mallee, that their farmers will be holding them to account for that.

Another point that no-one has really made in this debate is about consumer food prices. We are going into Christmas, and the growers cannot get their product to market. Why? Again, because this has been going on for 18 months. Even if we fix this problem today, it will be many, many months before it has any effect. But the problems we are experiencing now began 18 months ago, so what happens? I am sure the member for Riverina understands the concept of supply and demand.

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