Cathy McGowan (Indi, Independent) Share this | Link to this | Hansard source

My question, about the backpacker tax, is to the Treasurer. Treasurer, overseas workers in Australia will be stung with a higher income tax bill from July 2016 under the government's new backpacker tax. This change will have major negative impacts on agriculture and tourism in Indi and around Australia, where producers, growers and tourism operators rely on overseas workers. Can you please tell the House what the government will do to answer the call from my colleagues in the National Party, the VFF and the NFF to stop this tax change?

Scott Morrison (Cook, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for her question. It is important to have some context in the changes that have taken place in relation to this measure. Those in this chamber may be familiar with the fact—though the shadow Treasurer may not be familiar with the fact—that they increased the tax-free threshold from $6,000 to $18,200, and what that meant was: those who were previously coming as backpackers and working in this country actually used to pay tax on their earnings, but those opposite decided that those who are coming on working holidays should be getting a tax holiday and they should be able to come and work and not pay tax. So what this government have done is—

Mr Bowen interjecting—

Tony Smith (Speaker) Share this | Link to this | Hansard source

The member for McMahon!

Scott Morrison (Cook, Liberal Party, Treasurer) Share this | Link to this | Hansard source

we have rectified the error of those opposite—

Mr Bowen interjecting—

Tony Smith (Speaker) Share this | Link to this | Hansard source

The member for McMahon is warned.

Scott Morrison (Cook, Liberal Party, Treasurer) Share this | Link to this | Hansard source

who sought to put in place a compensation mechanism for the carbon tax, and one of those they sought to compensate was actually foreign backpackers working in Australia so they would not have to pay tax. On top of that, where some tax is actually withheld for backpackers, they are able to claim that back when they go home, and so they get that money back when they go back and they spend it in their own country.

So what we are dealing with in this measure is to ensure that we rectify what may have been an unintended consequence—or maybe it was an intended consequence, that those opposite wanted to give working holidaymakers a tax holiday when they came to Australia; maybe that was their actual plan. But what we have done is to seek to rectify that anomaly to ensure that, when people come and work in Australia and they come and enjoy the best country in the world in which to have a holiday—and there are 160,000 of them here at any one point in time and over 200,000 will come over the course of the year, and that is a good thing for the Australian tourism industry; there is no doubt about that—they are coming here for a holiday, not a tax holiday. When they get the opportunity to come and work and spend their money here, that is fantastic. But people should pay their fair share of tax in Australia, whether they are a multinational, whether they are Australian or whether they are a foreign backpacker or anyone else. We should pay our fair share of tax.

We are cognisant of the challenges in regional areas in finding these workers. Just this week there was an expansion of the Seasonal Worker Program that was announced by the Minister for Employment and the minister for agriculture. So we are conscious of those needs. But, at the same time, we have to clean up the mess that those opposite left. When they went and put this in place, they went and gave foreign workers a tax holiday in Australia.