Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

The bill before the House, the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, represents the latest stage in an 18-month fiasco at the hands of this incompetent government and this incompetent Treasurer—an 18-month fiasco which started with the former Treasurer announcing a backpacker tax in the 2015 budget. We have seen uncertainty, we have seen poor policy and we have seen an utter lack of consultation of affected sectors by this government. And now the government expect praise and congratulations for having fixed a mess that they themselves created. Well, this government deserves no congratulations when it comes to the backpacker tax. The Liberal Party is meant to understand business, and the National Party is meant to understand regional Australia. This policy imbroglio just underlines that these parties do not fulfil those core expectations of them.

We know that the original proposal for this was made with absolutely no consultation. When we responded to the 2015 budget, we said at the time, 'We trust that the government has thought through all the implications and has conducted adequate consultations.' Now we know that that simply was not the case.

The government are fond of saying, 'If you want to reduce an activity then you tax it more; if you want to stop something, then tax it.' They say that about many things. It appears that the government want to stop backpackers coming to Australia by virtue of imposing a tax which was unworkable at 32½ per cent. That was designed to raise $540 million in revenue. But, now the government has been forced into this backdown, there is a $300 million hit to the budget. And the government have not taken that hit to the budget. What they have done instead is increase the passenger movement charge by five dollars per movement, and change the taxation treatment of superannuation payments to working holiday makers in Australia.

Now, it was only a couple of weeks ago that we sat in the chamber at question time while the Minister for Trade, Tourism and Investment talked about how bad increases in the passenger movement charge are and criticised previous changes to the passenger movement charge, saying that was not the way that the Liberal-National party do business. This alleged member of the cabinet has been forced to defend things he was condemning just a couple of weeks ago at that dispatch box. So I wonder what consultation by the Treasurer with the minister for trade and tourism occurred when it comes to increasing the passenger movement charge.

Now, $5 might not sound like much if you think of it as part of $1,000 or $2,000 airfares to Europe et cetera. But when you consider how many Australians take the cheaper flights, to New Zealand, Indonesia, Bali, the Pacific Islands—and one of the things we have seen in recent years, of course, are budget airlines and much cheaper flights as a result of airline deregulation—then this is something that is worthy of some scrutiny and some consideration by the parliament.

The approach that the Labor Party are taking to this matter is not to oppose the passage of this legislation through the House; rather, we will ensure in the other place that affected sectors—horticulture, agriculture, tourism and hospitality—are given the chance to be consulted and to have their say in a way that they have not been by this government.

We know that, just as the previous Treasurer did not consult affected parties, this Treasurer has not consulted them either. He rang the airlines to tell them the change in the passenger movement charge was happening on the day he announced it. It was not consultation to ask, 'What do you think?' It was: 'This is what I am announcing today.'

This Treasurer is also someone who, when he sat on this side, condemned increases in the passenger movement charge. When he sat in opposition, he also condemned increases in the passenger movement charge—what used to be called the departure tax in Australia—and said it was bad for tourism, bad for Australia's reputation and bad for Australia's competitiveness. Now that he is Treasurer, he has found himself with this terrible mess on his hands, an imbroglio of this government's own making, and he expects us to say, 'That's okay, then. We won't provide any scrutiny.'

We on this side of the House have shown we are prepared to facilitate, in good time, savings measures that are worked through in a proper fashion. We have shown we are up for budget repair. We have shown we are up for facilitating this bill through both houses of parliament. The Treasurer had the temerity to demand that we pass this legislation last week because of certainty. He said it was important for certainty for the affected sectors that this legislation pass the House last week. After 18 months of uncertainty from that side of the House, they finally get their act together and come up with what they say is a more palatable plan, and then they demand that this parliament—not just the opposition but the crossbenchers and the other place—pass the legislation as a matter of urgency.

What we will be doing is providing the appropriate degree of scrutiny for a government which has got this so wrong at every turn. Why would we expect a government which has got this wrong at every opportunity to have suddenly got it right and pass its legislation without scrutiny? It is right that affected sectors and affected people have the opportunity to make a submission through a Senate inquiry, at which point the opposition will determine its final votes in the other place.

There will be other contributors to this debate. The shadow minister for agriculture, the member for Hunter, will examine the issue of our agricultural competitiveness and the impact of a tax on working holiday-makers—particularly when we know that the number of working holiday-makers coming to Australia is already on the decline and has been declining for several years. Of course, the member for Grayndler, the shadow minister for tourism, will look at issues around the passenger movement charge and, of course, the hypocrisy of the government and the Minister for Trade, Tourism and Investment in particular. The shadow minister for employment and the shadow minister for immigration will also be raising issues about the working holiday visa system. They will also take the opportunity to reiterate Labor's position, as announced during the election campaign, of ensuring that we have the policy settings in place around working holiday visas and other important labour market and non-labour market immigration programs which have an impact on the labour market, to ensure that those policy settings and the balance are right.

In that instance, I note that just last week there was a report released by the Fair Work Ombudsman detailing exploitation of working holiday visa holders, including: underpayment and/or non-payment of wages, workplace health and safety issues, and other exploitation. This comes as little surprise for those on this side of the House, who had a long interest in ensuring that the visa policy settings are correct when it comes to temporary workers in Australia. There is a place for temporary workers in Australia. Everybody acknowledges that. Everybody acknowledges there are good and genuine employers who have had trouble attracting employees—particularly in regional Australia, whether it be in horticulture or whether it be in tourism. So it is right that the parliament provides that scrutiny. This government, as I said, deserves no thanks, no congratulations and no credit for these 18 months of imbroglio. The Treasurer seems to think he should get a pat on the back, just as he claims on other matters, for attempting to fix what has been a shambles of a process.

I will move the second reading amendment that has been circulated in my name. Based on recent form, I can see no reason why it would not have unanimous support of the House, because this government should acknowledge that it has been a shambles. It should acknowledge the uncertainty that has been created for the agricultural and tourism sectors. It should acknowledge that the passenger movement charge increase comes despite the government only weeks ago criticising increases in the passenger movement charge. It should acknowledge that concerns have been expressed around changes to arrangements for working holiday-makers, given the rorting, abuse and exploitation that have occurred in some sectors and by some employers. So I move:

That all the words after “That” be omitted with a view to substituting the following words:

“while not declining to give the bill a second reading, the House notes:

(1)the Government’s handling of the backpacker tax has been a shambles;

(2)the uncertainty that has been caused to the agriculture and tourism sectors;

(3)the Passenger Movement Charge increase comes despite the Government only weeks before criticising an increase to the Passenger Movement Charge; and

(4)concerns have been expressed about the changes to the arrangements for Working Holiday Makers given the rorting, abuse and exploitation that has occurred.”

The Labor Party will not oppose the passage of the legislation through the House. We will reserve our rights for a Senate inquiry to have a proper examination of the issues that get raised.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Pat Conroy (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable for McMahon has moved, as an amendment, that all words after 'That' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form that the amendment be agreed to. The question now is that the amendment be agreed to.

Keith Pitt (Hinkler, National Party, Assistant Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

Mr Deputy Speaker Georganas, I welcome you to the chair and, of course, to the parliament. I rise today to speak on the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 and its supplementary bills in the original form.

What is being presented today with this reform package is a workable solution that provides certainty for both agriculture and tourism stakeholders. Concerns around the tax payable by working holiday-makers were comprehensively reviewed by the coalition with consultation and input from multiple stakeholders from both the tourism and agricultural sectors. How do I know that? I was there. I was part of the consultation process. It was certainly extensive. Stakeholders have had ample opportunity to put things forward. The coalition government have listened, we have acted on the concerns and we have come up with a workable solution. So we are delivering on exactly what we said we would.

The Labor Party want to delay the passing of the legislation in the Senate by referring it to the Senate Economics Committee. They failed to commit to any options that were put on the table originally. They failed to come up with a proposal of their own. They failed to effectively engage with industries. In fact, on 23 February 2016 my good friend, the shadow minister for agriculture, Joel Fitzgibbon said:

Labor calls on the Government to take evidence based approach to the redesign of its working holiday maker taxation policy, in close consultation with the tourism and agriculture industries.

We did that. In fact, we have done it a few times. On 16 March Mr Fitzgibbon said:

The Government needs to ensure that the agriculture sector has the supply of labour it needs and the visa system is not open to exploitation.

We are doing that and we are making substantial changes. On 11 October 2016, Mr Fitzgibbon said:

Labor will finalise its position once we've heard from effected stakeholders and explore how the Government's proposed new regime compares globally.

I think there has been adequate time—more than sufficient time. This is a matter of some urgency. Certainly, the people in the industry who I speak to tell me that we need to get on with it. We have a position put forward and the Labor Party are holding it up in the Senate.

Stakeholders in agriculture have made it abundantly clear that the reform package must be passed. Many growers are coming to the peak harvest season, labour force demand is very high and they need certainty. In fact, they need that certainty right now, because people who are in the tourism industry, who are working holiday-makers who are applying visas and who are planning what they will do in the next 12 months, are making decisions on where it is they intend to go, and they are making those decisions now.

The key points of this bill include that employers of 417 and 462 visa holders will need to register with the Australian Taxation Office. This is a change and it is something new. Only if they are registered will they be able to withhold the 19 per cent flat rate. I think this is a good change. As someone who pushed for the establishment of Taskforce Cadena and who has spoken in the press over a long period about the exploitation of foreign workers in this nation, I think this is a substantial change which will allow our enforcement agencies to identify just who is employing 417 and 462 visa holders. If they are not registered, the tax rate will remain as it is at 32½ per cent, which, of course, is the flat rate for non-permanent residents of Australia. A list of registered employers will be available on the ATO website, and people will be able to look them up with ABN Lookup. Most of the people working in this industry who come from overseas and are 417 and 462 visa holders are highly skilled and highly educated. They are here fundamentally for a holiday. They do some work while they are here, they make a few dollars and they tend to spend all of that money in regional Australia in particular. In my view this is an important step to making it easier to identify employers and ensure the integrity of the working holiday visa program. This is an important program; there are over 200,000 people in this country on those visas at any one time.

Tourism Australia will promote Australia to potential working holiday-makers through a $10 million global youth targeted advertising campaign. But, may I say, the best form of advertising, in particular in this market, is social media and word of mouth. These people talk to one another and they certainly advise one another about their experience and how great it has been. We want them to leave Australia with a view of what a fantastic country it is that we live in. We are making other changes to working holiday-maker visas to boost the supply of working holiday-makers and make it more attractive to visit Australia. Separately, we are extending the age of eligibility for working holiday-makers from 30 to 35. This will increase the pool of potential working holiday-makers. We are dropping the price of a visa application by $50 to $390. And we are increasing the rate of the departing Australia superannuation payments tax to 95 per cent for working holiday-makers.

During the election campaign the coalition government announced the migrant workers task force, and we are delivering on that commitment. The task force will be led by Professor Allan Fels, who is very well known to the people in this place, and will provide expert advice on measures that will deliver better protections for overseas workers. We are also increasing funding to the Fair Work Ombudsman to assist with its capabilities and its workforce—an increase of some $20 million—and there will be increased penalties for employers who underpay workers and fail to keep proper employment records. A new higher penalty category of serious contraventions will be introduced. These will apply to any employer that has intentionally ripped off workers, regardless of the employer's size. As someone who has been involved in this for a long time and who comes from an agricultural background and electorate, I can tell you that the biggest difficulty with this matter is enforcement. We are talking about large groups of people who are transient, who leave the region after perhaps two days, two weeks or two months and who work in a number of different locations with different work hours and start times. It is incredibly difficult to identify just where they are, because the crop shifts. If you are picking zucchinis you might pick twice a day; if you are picking onions you might need 300 people for the morning—it just depends on the crop, its location and what it is that needs to be done.

We will also introduce new offence provisions that will capture franchisors and parent companies who fail to deal with exploitation by their franchisees. We will strengthen the powers of the Fair Work Ombudsman so that it can deal more effectively with employers who intentionally exploit workers by compelling them to produce information and answer questions. There are some very bad habits out there in this area and we need to ensure we address them.

Taskforce Cadena is something that I think is kicking some goals. I was very pleased to see it formed. It was something I had called for. In fact, at the Federal Council in August 2014 the Nationals voted unanimously to seek a multijurisdictional task force to address this issue. The exploitation of foreign workers is something which predominantly impacts regional farming electorates, and atypically they are held by Nationals MPs. We are very well aware of this issue. It is something that needs to be cracked down on and stopped. The allegations and complaints—and we have all received them, on both sides of the House; I am sure my colleagues on the other side of the table will agree—range across underpayment, sexual exploitation of workers, tax evasion, visa breaches, racial discrimination, the intimidation of farmers and overcrowding in private residential dwellings. In fact, I clearly recall a farmer who was bundled into a car and forced onto the road to Brisbane. He managed to escape on the highway when the car pulled up at roadworks. These are the types of issues we are dealing with regularly.

Taskforce Cadena takes real action. This government is getting on with the job of targeting unscrupulous labour hire contracting firms, who should be under no illusion: if you are breaking the law, you will be caught and prosecuted; you will lose everything you have because you are doing the wrong thing and exploiting people who are at their most vulnerable. Taskforce Cadena will make these firms accountable and provide a level playing field for all Australian businesses, targeting those exploiting workers who really have no other option. Cadena was launched in May 2015. It is led by the Department of Immigration and Border Protection and the Fair Work Ombudsman. It works with the Australian Federal Police, the Australian Securities and Investments Commission, the Taxation Office and various state and territory agencies to ensure incidents involving exploitation and visa fraud are appropriately investigated. The reason for Taskforce Cadena is that we need better coordination and intelligence sharing between agencies at the various levels of government to ensure seasonal workers are protected from unscrupulous employers. I should be clear: the overwhelming majority of Australia's farmers are doing the right thing—they absolutely are—but we have these bad seeds in the industry who are giving Australia and the industry a bad name.

I am very pleased that Cadena will continue to operate nationwide and across a range of industries. Organised criminal networks and people who are seeking to profit by exploiting both illegal and legitimate workers should be under no illusion: Taskforce Cadena is targeting you. Not only do these people, through their actions, disadvantage employers who are doing the right thing; they are thumbing their noses at the hardworking Australian taxpayer. I see from the Fair Work Ombudsman's report of its review, released over the weekend, that of some 4,000 working holiday-makers who were interviewed, 27 per cent of respondents had been paid in cash.

Taskforce Cadena, within a month of operating, was successful on a number of raids, catching 38 illegal workers. Following investigations by Cadena, the Fair Work Ombudsman was able to pursue one Emmanuel Bani—whom I am very well aware of—who was accused of underpaying 22 workers from Vanuatu to the tune of $77,649 for fruit and vegetable picking jobs in Queensland. I met with a number of these workers and heard firsthand about the appalling way they had been treated. I referred the matter to the Department of Employment and the Department of Immigration and Border Protection, who intervened to recover the men's passports and secure them work with a reliable employer. This gentleman had absconded with their passports and basically left them on the side of the road. It was an outrageous thing to do.

The unskilled Seasonal Worker Program is closely monitored and there are safeguards in place to ensure agents know their obligations and workers know their rights. Agents must be registered. Where the real exploitation occurs is in cases where people have overstayed their visas or are working here illegally and the agents are not properly registered.

Working holiday-makers are not just a travelling workforce; they are a vital component of our tourism industry. In fact, I would say they are an essential part of our tourism industry in regional Australia. In my electorate of Hinkler, growers require a large labour force of unskilled workers for short periods of time and they need them at short notice. Otherwise the crops would sit there and would not be picked. As a former farmer, I know there is nothing worse than seeing a perfectly good crop which you have expended a lot of time, effort and money on that you cannot get off the ground. Until it is sold and the money is in the bank, it is never finished. The whole season's income could be lost and possible future agreements with buyers could be put in jeopardy if they cannot pick those crops.

This issue has been around for a long time. This is not new. In fact, it was raised some 15 years ago by Philip Ruddock, a former member of this place, in 1999. It has been the subject of numerous inquiries, numerous Senate reports and various other activities within government. I wrote to the then Treasurer, Joe Hockey, after the change to 32½ per cent for the backpacker tax was announced in the 2015 budget. I outlined that it would have a significant impact on stakeholders in my electorate.

We need to ensure that Australia continues to be competitive, because there are other countries that are looking at the same market. The changes that we have put forward will ensure that we continue to be competitive. We also need to remember that backpackers or working holiday visa holders who work in this country are still utilising our infrastructure and services. They use our health systems, they use our roads and they use a number of other things which are provided by the taxpayer. So they do need to contribute to the taxation system.

Many of the issues that were identified in the Fair Work Ombudsman's report into 417 visa holders are already being worked on. As I said, we have committed $20 million to Fair Work. We have established the Migrant Workers Taskforce. We have established Taskforce Cadena. We are putting forward proposals to ensure that the legislation is sufficient and the penalties are sufficient to crack down on those who are doing the wrong thing. So we will ensure that we provide those additional resources and we will ensure that we continue to provide the enforcement that is necessary.

In closing, I would like to go to a quote by good friend the shadow minister for agriculture, Mr Joel Fitzgibbon, today. He said:

This debacle has now been going on for 16 months …

I would put to the shadow minister right now that Labor needs to get on with it, not push it out to a Senate inquiry, not extend it any further. Clearly the industry has been consulted over a long period of time. It is not that difficult. We are coming into another harvest season. It is important that people have certainty. It is important that they can be sure that they can get their crops off the ground. In my region, where they produce some $1½ billion of produce every single year, they need to have certainty because it is absolutely invaluable to our local economy. Jobs in my electorate rely on our farmers doing well. We rely on agriculture to be a major producer and we need to ensure that that continues. With that, I commend the bill to the House.

Anthony Albanese (Grayndler, Australian Labor Party, Shadow Minister for Infrastructure and Transport) Share this | Link to this | Hansard source

I rise to support the amendment that has been moved by the shadow Treasurer in debate on the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, which is the next step in the farce that has been the government's handling of this issue. I give the member opposite, the member for Hinkler, a bit of credit for chutzpah—standing in here in October 2016 with legislation arising from the May 2015 budget and saying, 'Why don't we get on with it?'

There has been 18 months of uncertainty under this government's policy, because on budget night 2015 they made the announcement of the new backpacker tax without any consultation, without any economic modelling, without any idea of what the impact would be. Then in the so-called solution, raised just a couple of weeks ago, we had a repeat of the same flawed process, with an increase in the passenger movement charge without any consultation with the tourism sector, without any modelling whatsoever, and they expect us to just wave it through. Well, we will not be doing that. We will be providing proper scrutiny of this legislation through a Senate inquiry and we will be making sure that the government are held to account for their extraordinary incompetence and for the consequences of their own legislation.

It does appear that they have the solution wrong, because the so-called solution, which includes the $5 increase in the passenger movement charge, comes in direct contravention of the commitment that they gave that there would not be any increase in the passenger movement charge. This has been a shambolic mess from a mob who had a plan to get into government but no plan to actually govern. It began with the 2015 budget from Joe Hockey, the then Treasurer. There he announced the government's decision to treat working holiday-makers as non-residents for tax purposes, taxing them at 32.5 per cent from their very first dollar of income.

It does not take a genius to work out the serious flaws in this decision. This impacted particularly on the tourism and agriculture sectors. Backpackers, of course, come to Australia and in the short term assist farmers with the seasonal work, including the picking of fruit and harvesting of crops, that farmers cannot get a regular workforce located in their local communities to do. They also particularly help in the tourism sector, which is very seasonal. Places like Broome, Darwin and Cairns in northern Australia have particular on-seasons. At the same time, when it is their off season, of course, it is the on season in places like Tasmania in southern Australia. These sectors rely upon backpackers to do the work.

Previously, backpackers were able to work tax-free. That was part of the conditions attracting them here compared with other potential destinations like Canada and New Zealand.

As to the impact to the government's bottom line, we know from analysis that backpackers spend far more than they earn. That is, they come here with a portion of money; they supplement the money that they have. But there is something in common between the money they earn and the money they bring here: they spend it in the local communities, particularly in regional Australia, providing a boost to job creation in those local communities—something that those opposite, when they came up with this appalling plan, did not seem to get. It is something that the government, through this legislation, is admitting they got wrong in the 2015 budget, because less income for backpackers means less income for local economies.

Despite those facts, the coalition pushed on. First, they delayed any commencement of the tax for six months. Then they announced they had launched a review, creating even more uncertainty—particularly across the agriculture sector, with some farmers saying they would not plant crops because they were not sure that they would be able to have them picked at the end of the process. The review spanned the recent election campaign, during which the coalition did not provide the electorate with any idea of its position, creating even more uncertainty.

Finally, today, this messy process culminates in legislation which includes, amongst a number of measures, a lower rate of 19 per cent from the first dollar of income up to $37,000. Above this level, marginal tax rates will apply.

But they did something more with this semi-backflip. The Treasurer devised a new plan to raise the passenger movement charge by five dollars—proposed without any consultation whatsoever. When we met with the officials from Treasury and from the Treasurer's office, we asked, 'Have you done any modelling of what the impact of this would be?' And we had declared at the beginning of the meeting that we would disclose the outcomes, so I am not breaching confidences here. The modelling that they did was zero—nothing whatsoever. Indeed, in the backpacker tax changes, they assumed that it would stay the same in terms of the impact on backpackers.

So we are supporting an amendment to the legislation. And we are acknowledging that the Senate inquiry will be an opportunity for the sector to actually get some scrutiny—an opportunity to get some rigour into the policy process that the coalition government seemed to think should be thought about when problems are raised.

The most recent International Visitor Survey showed that Victoria, Queensland and the Northern Territory have experienced a decline in the number of backpacker visitors. All three of these, in addition to New South Wales, South Australia, Western Australia and the ACT, have also shown a serious decline in the number of backpacker visitor nights. This should not come as news to the coalition. The World Economic Forum's travel and tourism competitiveness index in 2015 ranked Australia 127th on taxes and charges and 49th for visa requirements.

We know that, over 2014 and 2015, the number of working holiday-maker visa applications had already started to fall. The government need to pay for the compromise that they have put up—this deal behind closed doors with the courageous people from the National Farmers Federation, who said this was all bad and then completely rolled over. And we will bear that roll-over in mind the next time the National Farmers Federation say, 'We want to have a strong campaign.' You would not want to be in a trench with the NFF, I tell you! They folded their tent, having said that it should go back to the original proposition. But that is a matter for them to justify to their members, frankly, because their members are still complaining about the proposition that was put forward in this legislation.

The government is also increasing the tax on the departing Australia superannuation payment to 95 per cent. They think no-one will notice that this little measure has slipped in.

When you put it all together, the government is actually gaining more revenue than they would have originally. This is just another grab—the so-called washing your face nonsense, that the Treasurer said does not stack up at all. Indeed, the Tourism and Transport Forum CEO Margy Osmond had this to say on 27 September, as to the increase in the passenger movement charge:

At no point was it flagged in any discussions in which we took part …

Indeed, the new minister for tourism—they have finally got one—said, in his first Dorothy Dixer in this House in this parliament, just weeks ago, that previous increases in the passenger movement charge were:

… choking the golden goose that is Australia's tourism industry.

Well, I say that poor old Minister Ciobo made a goose of himself in making that statement. But of course not even he was consulted. He was on a plane to the Middle East. He was in Doha when this went through the cabinet process. He was not even consulted about the increase—he was treated with contempt. And he expects us to take him seriously!

The TTF said this about it:

Prime Minister Turnbull has said during the election campaign 'If you want less of something, tax it more', and that is exactly what the Government's current policy of viewing tourism as a 'cash cow' is going to deliver.

We know that, from August to August, the latest figures showed that there were eight million international visitors, a 10.9 per cent increase year on year. And yet what the government is doing here is trying to chuck more tax on, without any justification. What is the link with the backpacker tax fiasco that the government has presided over? There is none whatsoever. And Scott Morrison has form on this as well. This is what he had to say about increases in the Passenger Movement Charge in this parliament in 2008:

This tax is a pernicious impost on our aviation and tourism sectors, which are already under pressure. Tax increases are designed to discourage consumption, so placing a tax on travel is, I therefore assume, designed to discourage business activity in the travel sector.

That is what he had to say.

We have, with the exception of the UK on business travel, the highest charges in the world. When we talk about $60 on a ticket, it is not just $60 on a first-class ticket to Europe; it is $60 on a ticket to New Zealand, which you can get online for about $120, or a ticket to Bali. This tax can be to 50 per cent of the actual price of a ticket—and they are saying they will increase it. That is why in the election campaign Labor—as well as, it must be said, the coalition—said we would not increase the Passenger Movement Charge. We released a tourism policy in the election campaign. That is more than the government did; it did not get through; they did not have a tourism policy. But what they did very clearly do was say they would oppose an increase in the Passenger Movement Charge. That is why there is such anger in the tourism sector when it comes to these changes.

Labor set out a comprehensive plan for tourism in the election campaign: protecting our natural assets; building skills and career pathways; using government to attract more major events and exhibitions; and re-engaging the federal government with the tourism sector both domestically and internationally. The tourism sector delivers some $94.5 billion in economic activity every year. It employs, directly and indirectly, one million Australians. Those one million Australians rely on tourism, particularly in rural Australia. That is why Labor will not rush to failure like the coalition seems eager to do. The government needs to satisfy the sector that it has done any modelling whatsoever—or else Minister Ciobo's comments about the golden goose certainly apply to this government. (Time expired)

Luke Hartsuyker (Cowper, National Party, Assistant Minister to the Deputy Prime Minister) Share this | Link to this | Hansard source

I welcome the opportunity to speak on these bills. The government recognises that working holiday makers provide an important source of seasonal labour for both the tourism industry and the agriculture industry. We are also fully aware of the importance of expenditure by backpackers when they come to this country—a very important source of tourism income. This package of measures addresses the significant concerns expressed by regional employers with seasonal labour demands and the concerns of many people in the tourism industry who have made representations to me.

We have heard a lot of bluster from Labor's spokesman on agriculture, but we are dealing with a problem that has come about largely because of changes Labor made to the tax free threshold. Under laws introduced by Labor, nonresident workers in Australia are taxed at 32.5 per cent from the first dollar earned. Recent Administrative Appeals Tribunal decisions have made it clear that, in many cases, working holiday makers are not residents for tax purposes, even though it seems to be standard practice for backpackers to claim residency on their tax forms.

Farmers and tourism operators with seasonal labour needs have expressed concerns that this tax situation will discourage working holiday makers from coming to Australia and will give an advantage to our competitors such as New Zealand and Canada. The government listened to these concerns and before the election gave a commitment to conduct a full review of this issue and the broader issues around seasonal labour supply. We also gave our commitment to the implementation of a resolution to this issue by the start of 2017. We intend to totally comply with these commitments.

I am grateful to the Deputy Prime Minister for asking me to lead the interdepartmental review in this matter. Representatives from several federal government departments were seconded to participate in the review. The public servants from my Department of Agriculture and Water Resources led the review with dedication and skill. I place on record my gratitude for their hard work in this project. The review received submissions from about 1,700 stakeholders, including working holiday makers, employers, representative organisations and state and local governments. Deloitte was contracted to hold face-to-face consultations, which were held in every capital city, with regional stakeholders being offered the opportunity to provide feedback by phone. The consultations were attended by dozens of key industry stakeholders in the agriculture and tourism sectors. I thank all parties who took the time to engage with the review.

I found it curious that the shadow Treasurer, in his speech earlier, accused us of failing to consult with industry. We did a significant amount of consultation—and then, on the other hand, they accuse us of consulting too much! The review confirmed that most Australians think it is appropriate for working holiday makers to pay some level of tax. It is also clear that the tax rate of 32.5 per cent is not competitive with New Zealand and Canada despite Australia's high wages. Stakeholders also made it clear that a solution is needed soon and that further delays will only create more uncertainty, which really does beg the question: why would members opposite refer this off to a Senate inquiry and delay the process?

The government has responded decisively. The measures contained in these bills address the concerns of the agriculture and tourism sectors. We recognised that the tax rate for working holiday makers is not the only factor affecting the supply of seasonal labour, so we have also made changes that will help improve the availability of seasonal workers in Australia. Importantly, we have fully offset the costs of these measures to ensure that there is no further erosion of the budget position—unlike Labor, who always act irresponsibly when it comes to budget measures.

At the centre of the package is a new tax rate for working holiday makers of 19 per cent per earnings up to $37,000. Ordinary marginal tax rates apply thereafter. This new rate of 19 per cent is internationally competitive. After-tax income for working holiday makers will still be amongst the highest in the world. Importantly, this new tax rate will apply from 1 January 2017, just as we promised during the election campaign.

Employers will be required to register with the ATO if they want to offer the 19 per cent withholding rate to working holiday makers that they employ. There will be a register of employers that will be publicly available, so that working holiday makers will be able to quickly identify which employers are properly registered.

Employers that do not comply with their legal obligations may have their registration cancelled. This possibility will become an obvious disincentive for employers to flout their obligation to pay their staff properly. Working holiday makers employed by an unregistered employer will have tax withheld at the non-resident rate of 32.5 per cent, but they will be able to access the 19 per cent rate when they lodge a tax return.

To address concerns about the exploitation of workers, the package also includes $10 million to support compliance activities by the Fair Work Ombudsman and the ATO. This investment in compliance is timely, given the Fair Work Ombudsman's report into the treatment of 417 visa holders, which was released on Saturday. Unfortunately, there are some employers who refuse to comply with their legal obligations, and these new arrangements will give the authorities another tool to discourage illegal behaviour.

We recognise that the number of working holiday makers visiting Australia has been in decline since 2012, but this is due to a range of factors. Even the shadow Treasurer admitted earlier today that the number of working holiday makers has been declining due to that range of factors. This admission is another demonstration that Labor's scare campaign on this issue should be put in the same category as the old Mediscare campaign. Labor know the facts, but they would prefer to play political games. That is just same old Labor.

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

You have a riveting speech there.

Luke Hartsuyker (Cowper, National Party, Assistant Minister to the Deputy Prime Minister) Share this | Link to this | Hansard source

Mate, I know you love it! I know you love it! The package encourages working holiday makers to visit Australia by reducing the application charge for working holiday maker visas by $50, and $10 million will also be made available for Tourism Australia to market Australia to potential backpackers in key overseas markets. We are also increasing the eligibility age for 417 and 462 visas from 30 to 35.

Mr Fitzgibbon interjecting—

Hang on! There's more, Joel. This increases the pool of possible working holiday makers and brings us into line with our competitors. We have also responded to industry feedback by introducing more flexible working arrangements.

Working holiday makers are currently permitted to work for one employer for a maximum of six months. Some employers, particularly in the hospitality and meat processing industries, have argued that working holiday makers should be able to work for the same employer in different locations over a longer period of time. The government has listened to those concerns and will allow working holiday makers to work for one employer for up to twelve months, with six months in a single location. This will provide more opportunities for working holiday makers to put newly-learned skills to good use.

I mentioned earlier the issue of lack of budget responsibility by our friends, the Australian Labor Party. These measures will, importantly, be budget neutral. It is important that the costs of the measures that we put in place are balanced with additional revenue to cover them. These measures have a cost to budget of around $350 million over the forward estimates. These costs must be fully offset. Offsets are not easy to find, and they are not always popular, but we are up to the task of repairing the budget. We do not shirk our budgetary responsibility, as those opposite do. Labor spent six years avoiding the hard decisions. We cannot repeat their mistakes.

To offset the costs of these measures, the government will be modestly increasing the passenger movement charge by $5 from 1 July. This is broadly in line with inflation and will be the first increase in that charge since 2012. The government will also increase the departing Australia superannuation payments tax for working holiday makers to 95 per cent. Working holiday makers can withdraw the balance of their superannuation when they depart Australia and their visa expires or is cancelled.

These funds are typically spent offshore and not to the benefit of the Australian economy. Superannuation is intended to support Australian workers in their retirement—not foreigners. So, using the working holiday makers' superannuation to fund their lower tax rate is, I believe, good policy. It puts money in their hands while they are in Australia, so that they can stay longer and see more of this great country. Importantly, this measure does not place any additional burden or red tape on employers. Foreigners also remain equivalent to locals with regard to employment, and the superannuation is preserved for those working holiday makers who may go on to become permanent residents.

The peak tourism season and the main harvest period is just around the corner. The coalition gave a commitment to have a resolution to this matter in place by 1 January. Prolonging the uncertainty about this issue would let farmers down, and that is why Labor's decision to refer this to the Senate Economics Legislation Committee is utterly reckless.

This is yet another example of Labor playing politics with a serious issue. They have done it with same-sex marriage; they have done it with Medicare; they have done it with renewable energy—and now they are using our farmers as political pawns. If these bills are not passed, the ATO will tax many working holiday makers as non-residents. That is the law as it stands. Continuing with the status quo is not an option.

The National Farmers Federation made the position of the agriculture sector quite clear when they 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 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.

These bills need to be passed as a matter of priority. The shadow Treasurer confirmed that Labor is trying to walk both sides of the street on this issue. They want to keep the $540 million from the 2015 budget measure in their costings, but they do not want to make the hard decisions to offset the cost of the reform package. Despite talking a big game on budget repair, Labor refuses to make the difficult decisions.

Labor's recklessness will have real consequences in my electorate. We have a vibrant and growing horticulture industry on the North Coast of New South Wales, with the blueberry industry growing rapidly. Blueberries are a particularly labour-intensive crop, as they must be picked entirely by hand. With the rapid growth of the industry, the demand for seasonal labour has been increasing to a dramatic extent. Of course, our tourism sector is also heavily dependent on seasonal labour and the influx of backpackers during the blueberry harvest. Labor's plans to delay this package of reforms will just create uncertainty for farmers, processors and tourism operators throughout the Cowper electorate. I call on Labor and the crossbench members and senators to pass these bills for the sake of our farmers, our tourism industry and the national economy.

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

I often feel for the member for Cowper in this place, but particularly today for three reasons. First of all, as the minister responsible, unlike the members for Lyne and Leichhardt, he had no choice but to stand at the dispatch box and support this insidious tax. That is the first point. Unlike the members near him, he had no choice but to speak. Second, he of course drew the short straw by being given the task of going out there and surveying the sector and conducting an inquiry—the third inquiry—to determine how the government might wiggle its way out of this tax proposal. Third, the member for Cowper represents one of those electorates most affected by not only the backpackers tax but the other impositions this bill puts on the tourism sector. So I wish the member for Cowper all the best in his electorate as he goes back to his constituents and constituent businesses, in particular, to explain to them why it is that he is imposing this tax on their businesses, notwithstanding the fact that his own Treasury modelling says that 19 per cent is going to drive backpackers away. Indeed, Treasury modelling shows that the fall off in backpackers will be no less at 19 per cent than it would have been at the original 32.5 per cent.

Talking about people who have not been prepared to come in here and stand up for the Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016 and related bills, I ask, having had a look at the speakers list: where is the member for Capricornia? She was going to be fighting hard for her people on this backpackers tax before the election? Where is the member for Flynn? He was going to stick up for his growers in Biloela. These members have completely gone missing. They are lions in their electorates and cowards here, when they arrive in Canberra. I do give the member for Mallee credit. I remember standing at this dispatch box giving credit to the member for Mallee, because I followed his first speech in this place and I thought it was a very fine speech. I could tell he was a person—I thought he was a person—who was prepared to stick up for his electorate. He has had some pretty harsh things to say about the backpackers tax, not unexpectedly, in his electorate over recent months. In fact, at one point, he said that he was confident this tax was dead. Yet, he has the courage to at least come into this place today and I assume—I should not pre-empt what he is going to say; he might give us all a pleasant surprise, having been so critical of the tax—defend the tax.

Let's just go through a little bit of history here so that we know what we are talking about. For a number of reasons, the ATO commissioner had concerns about the validity of those ticking the box which declares them residents for tax purposes and therefore providing them with a tax-free threshold. He took it to the AAT and had a ruling and decided that he would deny that significant number of people. The government at the time, the Abbott government, could have said: 'We reject that. We'll fix this. This is going to be too bad for the tourism and agriculture sectors. We will quickly move to legislate to make the tax zero or to somehow reinstate the threshold for these backpackers'—but, no. That was not the plan for the coalition. They saw an opportunity to rake in $540 million over four years out of this decision—and, make no mistake about it, they made their choice. They took the money and ran, without any concern for those in the agriculture sector and the tourism sector that were going to be adversely affected.

So what happened then? They were very brave for a while, very bold, very courageous. They stood their ground until an election came along and—surprise, surprise—the pressure came on. What did they do then? They said they would review the policy, but they kept booking the $540 million all the way to election day. In other words, they walked both sides of the street. They wanted people to think that post election they would review this tax and get rid of this tax—but, no. The sectors affected were sadly and sorely disappointed. That is not what they got at all. They got another survey, which is what the member for Cowper was going on about. I have read the Deloittes report. I have seen the assistant minister's report. It is no more than a survey. We have a divided parliament and a divided community over this issue. Yes, the NFF are saying, 'We're happy with 19 per cent.' And why wouldn't they? It is because every day Barnaby Joyce rings them and says, with a gun to their head, 'You back 19 or you'll get 32.5.' Remember, if we do not legislate, it goes back to 32.5. He has a got a gun to the head of the NFF and other groups. This is the disrespect with which he treats farmers in this country. It is disrespect. This is a hopeless situation.

The member for Cowper went on and on about the opposition's position. We have a very clear position. Like on so many matters brought to this place in this era in which budget repair is important, we have said we will work with the government. We have only one condition and that is: whatever the government does, it restores the international competitiveness of Australia. We must be able to compete. We were losing backpackers before this tax came into effect, and what did the government do? Did it address the labour market issues? Did it address employer exploitation so that potential backpackers in Europe and elsewhere were not getting the wrong messages about what it is like to be a backpacker in Australia? No. Rather than address the decline in backpacker numbers, it made it worse by putting a tax on it. What sort of genius would decide that you would address the fall-off in backpacker numbers by taxing them? It takes a particular sort of genius to come up with that solution.

Again on Labor's position, the government is accusing us of delaying this bill. Excuse me? We made a sound commitment to give this bill expeditious passage through the House of Representatives. What was their response? They introduced it last week and parked it. They could have had this debated in this House last week and this bill could be with the Senate committee as we speak. They did not bring it on for debate. It was so urgent that they decided to leave it until this week, and if we had not said something I suspect it would not have been this week either. We have also said that, whatever the outcome here, this bill will pass the parliament by Christmas, making sure that it meets the deadline of 1 January, which the government has now set.

It was not the Labor Party that decided to tie the backpacker tax to an increase in the passenger movement charge—a very substantial increase which has the tourism sector nothing less than ropable—or to tie it to a cash grab, which is the increase in the taxation on the employer superannuation contribution. To be sure people understand that, the employer will now pay nine per cent of salary and the government will immediately take 95 per cent of it back. For backpackers who do not claim the remaining five per cent, that will go into government coffers as well. This is partly, with the passenger movement charge, how they are offsetting the loss between 32.5 per cent and 19 per cent. They are reducing the backpacker tax and slugging other people, including employers—hardworking farmers in this country and tourism operators. That is the scandal of this proposition.

This government has become serial. The dysfunction of this government, the division within this government and the failure of leadership in this government is becoming palpable. There could be no better example than this backpacker tax. We see it with the APVMA, the Australian Pesticides and Veterinary Medicines Authority. The Minister for Agriculture and Water Resources wants to move it to Armidale, in his own electorate. You will recall he was under considerable pressure in the last election campaign for putting his own political interests ahead of the interests of Australia's farmers. In case people do not understand, the chemicals regulator approves crop sprays and the like and veterinary medicines for our farmers. If farmers cannot get those in a timely manner, productivity falls and the farmers go down with it.

I had a gentleman on the phone this morning who is trying to get approvals for a rodent control, which farmers need so desperately. It usually takes 10 weeks, on average, to get something like that passed by the APVMA so it can be moved on to our farmers. He has been told it will be April next year. Why? Because the staff are already deserting the APVMA. They are running for cover. Of the 170 staff surveyed, 14 said they would be prepared to move to Armidale. Minister Joyce is destroying the APVMA and the impact is already being felt. The rodent protection is the perfect example of the impact that is having. I could go through the list: the failed white paper disappeared; there is no support for the dairy industry; a failed drought policy. The list goes on and on. He comes in here every day and takes credit for prices when they are high—

Mr Pasin interjecting—

I thank Mr Pasin for the interjection. He comes in every day and takes credit for drought induced beef prices, but we never hear him talking about commodity prices that have gone down. It is magic. He takes credit for everything that goes up and no credit for anything that goes down.

It was not Labor's idea to introduce a backpacker tax. It was not Labor's idea to reduce it to 19 per cent, even though that will make no difference. It was not Labor's idea to tie it to a superannuation tax charge and a hefty increase in the passenger movement charge. This is a problem of the government's making and we stand ready to help fix it. I do not know what the good rate is, if we have to have a backpacker tax. I do not have the Treasury machine to grind through the numbers. We know it is not 19 per cent. I do not know whether it is 10½ per cent. It could be seven per cent, it could be five per cent or it could be two per cent.

Meryl Swanson (Paterson, Australian Labor Party) Share this | Link to this | Hansard source

They do not know either.

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

I thank the member for Paterson. They do not know either. This is one of the important points we will make in the understandable committee process in the Senate. What bill of this nature does not go to a Senate committee? The mob over the other side know every bill like this goes to a Senate committee. To suggest that we are delaying is just ridiculous. This is one of the questions we will be asking Treasury: is there a sweet spot; is there a point at which Australia can restore its international competitiveness, notwithstanding having a backpacker tax? It will be an interesting exercise. We know that in, for example, New Zealand it is 10.5 per cent. There is the folly: 'The wage rate is higher here, so we can be competitive.' Do not tell us that, because your own modelling says it is not going to leave us competitive. That is the Treasury modelling. What they are doing on the other side is introducing a tax on backpackers, even though they know it is going to damage the agriculture and tourism sectors. Do I have to repeat that? Can you believe that? I have been here 20 years. I do not believe I have ever seen a government impose a tax on a sector knowing that it is going to further damage those sectors. In the case of the tourism sector, it is a double whammy: a tax on backpackers and an increase in the passenger movement charge. Again: what sort of genius does it take to come up with that proposal?

Fifteen minutes is nowhere near long enough. I could go through all the impacts, but I will say this. The National Farmers Federation, in a very good report only a year ago, talked about where we want Australian agriculture to be in 2030. It was a very good publication. It talked about a whole range of things we needed to do, from productivity to market access, et cetera. What that tells me, having looked back at it, is that we are doing nothing to pursue the ideas in that report—the ideas that ensure that we fully capitalise on the opportunities in agriculture for us. But it also said this: by 2030 we can have a horticulture sector more than twice the size, in value, of what we have today. But this is not how you get there. We are as one on one point in this place: that is, that the horticulture sector, in particular, is absolutely dependent on backpackers. In Tasmania, as we speak, people are concerned about fruit rotting on trees. I heard Minister Joyce saying that there are towns in his electorate where the population can be nowhere near what they need for the workforce.

I will finish with this: who owns this backpackers tax? Who was its greatest supporter? The answer is Minister Joyce. In Senate estimates—and I will table the transcript—officials told us that Barnaby Joyce wanted this money, the backpacker tax revenue, to pay for some of his more interesting white paper initiatives—failed white paper initiatives, I say—let me be in no doubt about that. In addition to that, Barnaby Joyce told Leigh Sales that he found it a bit insidious:

It does seem a little bit incongruous that someone can work four months, five months, six months and get a tax-free threshold because that actually puts them at a strategic advantage on two levels to their other Australian workers.

Wrong! Australian workers get a tax-free threshold. But it shows what was in Barnaby Joyce's mind at that point. He loves the backpacker tax. It is his backpacker tax, and here is introducing it notwithstanding the fact that it is going to hurt the agricultural sector. (Time expired)

Andrew Broad (Mallee, National Party) Share this | Link to this | Hansard source

I rise to speak on the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016. I love the passion of the member for Hunter, the shadow minister for agriculture. It is refreshing to see someone on the other side of the chamber who has such a passion for agriculture. I will commend him for that. I think back to the time, as a young farmer walking around my farming 2007, when the Labor Party failed to even introduce a pre-election commitment around agriculture at all. In 2010 the agriculture minister at the time put together an A4, one-sided page—he did not even use both sides of the paper when it came to their agricultural policy. So I commend the shadow minister for agriculture, because I genuinely believe that he cares about the portfolio and has a passion, which is something that we have not seen in the past.

If I look back at the great achievement over the last number of years that has really created wealth in my patch, it has been the free trade agreements with China, Korea and Japan. To give you an example, it was not that long ago that we were getting $18 for box of table grapes. Last season we were up to $46 because the Japanese and Chinese fought with one another over trying to buy our great products. In a week and a half's time I will be in Beijing at the Beijing fruit and veg festival, launching nectarines into China, which has been fantastic, with some really good stuff.

But there are things that need to happen if we are going to capitalise on the free trade agreements. The free trade agreements are simply an opportunity. The decisions we make are whether these opportunities become a reality and become wealth for the country.

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

Is this about the backpacker tax?

Andrew Broad (Mallee, National Party) Share this | Link to this | Hansard source

I am leading there. He is listening. I have to say that at least the shadow minister for the agriculture is listening. I must say I will give credit to that. He might even learn something.

The free trade agreements are an opportunity. Water is ultimately the lifeblood of my irrigation community that needs to be addressed if we are going to capitalise on the free trade agreements. Unfortunately, the world's worst water minister, the worst water minister in the history of the Australian Commonwealth, was Penny Wong. In my patch she bought irrigation blocks, took the water off, made them pull off that infrastructure and take that out of production for five years. In contrast, Barnaby Joyce, when he was shadow water minister, made an election commitment that we were going to modernise the irrigation scheme in my area with $103 million of federal funds. It has now been built and the confidence is back. We are seeing that people are buying and expanding their horticultural products. That is from water infrastructure.

We all know that we need to get our product from where we grow it to the market place. The federal government has committed $220 million to upgrading the railway tracks to get our product to the market. I must say that in the history of the Commonwealth biggest contribution to the Mildura line has been $25 million. We have now put $220 million into it.

But labour is the part that we are going to need, because of course when you pick fruit it does not make its way from the vine to the box by itself. Someone has to do that. The tax ruling that said that a foreign worker, for taxation purposes, needed to be charged 32.5 per cent, with impact on our backpackers, simply was not fair. There is no way you can say to someone they are going to work in 42 degrees heat or hotter in Mildura and you are going to take a third of their proceeds. 32.5 per cent was not fair, so I launched strong advocacy with my coalition partners to see how this could be looked at and in a more fair way. I have to pay tribute not just to members of the National Party but to backbench members of the Liberal Party, who took a very strong position on this and assisted as we looked for a solution. That is in contrast to the shadow minister for agriculture, who offered no solution. He was happy to say nothing, and here we have just listened to 15 minutes of his diatribe, in which we still did not hear any solution—no answers.

I had a four-point solution. That is, a foreign worker should pay tax. It is very hard to argue that a backpacker should not pay any tax. A foreign worker should pay tax. They do draw on our services by driving on our roads and using our health system while they are here. It is appropriate that 417 or a 462 workers should pay a level of tax; 32½ per cent was clearly not fair and we made that point. An Australian worker must pay tax; therefore a foreign worker should pay at least as much tax. The burden and the onus on the employer must be simple to administer and it must ensure that the workforce continues to come. As I said, there are three things that are important if we are going to capitalise on the free trade agreement. They are water, infrastructure and labour—it is very important that the workforce continues to come. I believe where we have landed on this pretty much hits every one of those three points.

An Australian worker would normally pay about 13 per cent on a casual rate—pretty easy to administer. So of course we could have the discussion: why do we not land on 13 per cent? Thirteen per cent would be pretty simple. It would mean that because an Australian pays 13 per cent then a backpacker would pay 13 per cent. However, there are some snags as we work this through.

We, in the well-meaning intention of our foreign aid policy, have said to the Pacific Islanders that we will as part of our aid package allow them to bring their workers into Australia, particularly to work in horticulture, and we will charge them a 15 per cent tax rate. It does not work for every horticultural field but it has been very successful, and we hope to expand and grow that.

I have examples in my electorate of farmers who bring in Pacific Islanders and then also co-match additional funds so when that Pacific Islander returns to their village, they put that into infrastructure projects. So it actually not only supports our aid program but also allows well-meaning Australians and our horticulture sector to partner with Pacific Island towns and villages to contribute, to put in electricity and plumbing.

However, it is very difficult to then argue that a backpacker from a country like Germany, for example, also deserves the same taxation rate as a Pacific Island nation—under 15 per cent—so the figure landed at was 19 per cent. Nineteen per cent has some merit behind it because we are quite aware that one of the most important parts of the scheme is that the workers would continue to come here. Australia, of course, is a great country. We think it is; otherwise we would not be here. And I am sure that people who come and visit Australia have a positive experience. However, the take-home wages here need to be more than what workers can earn in Canada or what they can earn in New Zealand—our competing countries. And because the wages in Australia are reasonably high, with a 19 per cent tax rate, a backpacker who works in Australia is going to put more money in their pocket than if they went to New Zealand or if they went to Canada. Even though the tax rates might be lower there, the take-home pay, the standard of living and the opportunities that come from working as a holiday maker in Australia are going to be substantially better. So that certainly ticks that competitive box.

The other thing is we realise that some of our backpackers are working now in quite highly skilled jobs on our farms. I know a lot of our grain growers would be quite excited about the forthcoming harvest. There is a harvest coming and if it will stop raining, we will be able to get it. We are hoping that it will not rain too much more. There would not be many times that I would say that in the Australian parliament but, with 15 millimetres at my farm overnight, I am hoping the paddock will dry out. However, sitting on those harvesters does require a great deal of skill; you are not going to just put anyone on a $450,000 harvester. If it is a John Deere harvester, it is probably a $600,000 harvester, which is why I could never afford a John Deere. Increasing the age range to 35 brings more people into that labour catchment so that people can come in and contribute to our horticultural industry.

The Working Holiday Maker Reform Package is important. A harvest is getting close. I will concede that it has taken us too long, in my personal opinion, to find a landing on this bit of policy. However, I am pleased to hear that the shadow minister for agriculture has at least pointed out that this will be sorted out through the parliament and done and dusted with a satisfactory outcome before Christmas. But I would like to say to the shadow minister for agriculture: if you could, please ask your senators not to hold this up any longer than it needs to be because it is important that not only is it done and dusted by Christmas but that it is well communicated so that those backpackers continue to come.

I will add something else that I think is worthy of discussion and needs to be added to the Hansard around this issue. Backpackers are only a part of the labour force. With the great confidence and opportunity that have come through the free trade agreements, we are seeing additional plantings going on right across my patch. Just think, if everyone expands by an additional 10 per cent then that is going to put pressure on the labour market. We have older Australians, we have unemployed Australians living in my patch. I think one of the things that inhibits them from becoming involved in very short seasonal work is the impact it might have on the benefits that they are receiving. If they work in a full-time capacity for eight weeks, which might only be the time that the season runs for, they would lose their unemployment benefits or lose their pension benefits. I think there would be value in allowing, for that eight weeks of intense seasonal work, the money they earn to be averaged over a 12-month period so that it does not impact upon their benefits.

The long-term argument for this would be that it would get them involved in the workforce, even if it is short-term. They would get all the benefits, the health benefits as well as the stimulation and personal satisfaction, from being in work and it would assist them to essentially move into the workforce full-time. I think we need to be quite open to the idea of seasonal work for people who are receiving benefits as another means to complement the workforce within our horticultural industry.

The backpacker tax, I hope, at 32 per cent is dead and buried. I think the Working Holiday Reform Package that we have got here is a satisfactory outcome. This really is about securing three things—water, infrastructure and labour force—so that we can capitalise on the great achievements of this government, which are the free trade agreements with China, Japan and Korea. Ultimately, in doing that, we will grow wealth and create more opportunities for every Australian.

Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Link to this | Hansard source

I find it interesting that coalition members cannot bring themselves to change their perspective and position in relation to the marriage equality plebiscite but are quite happy to change their position on this package of bills, the Income Tax Rates Amendment (Working Holiday maker Reform) Bill 2016 and cognate bills, to that which they campaigned on in the last federal election. The coalition are very flexible and malleable when it comes to their positions. Their position on this has been a complete farce and shemozzle ever since it was announced in the May 2015 budget. And yet they have the chutzpah and gall to demand that we roll over and pass this legislation without a Senate inquiry.

That mob opposite could not get themselves together for 16 to 18 months to work out what their position was. We had a situation where, I think it was in the adjournment speech last Thursday, the new member for Murray demanded that we pass the new legislation straight away, before we even had a debate on the second reading in the chamber today. This legislation is particularly important position because there are 272,400 young Australians unemployed. There is a youth unemployment rate of 12.8 per cent. Labor supports the integrity of the 417 visa, 462 visa and 457 visa schemes. It is indisputable that backpackers make an important contribution, including in my electorate, in the rural parts of Ipswich and also in the Somerset region. They are particularly important.

I am going to concentrate on issues that are germane to this debate, particularly on those that relate to my shadow portfolio of immigration and border protection. The legislation covered by this cognate debate deals with issues relating to backpackers and the 417 visa scheme. We have seen in the media reports of hardship, exploitation and sexual harassment happening, sadly, in relation to people working on these visas. The overwhelming evidence of exploitation of these vulnerable workers dictates that any changes to the working holiday visa scheme must offer better protection. The government has spent a long time talking about these issues in this chamber and within the Liberal and National parties, but very little of that time has been spent talking about the need to protect workers—particularly in the horticulture and cattle industries and the like, and in regional and rural areas—who are being exploited and taken advantage of. We saw evidence of that in A national disgrace: the exploitation of temporary work visa holders, the report of the inquiry by the Senate Education and Employment References Committee in March 2016.

We are of course going to send this to a Senate inquiry because it is particularly important for this legislation. Among other things, the bills require the Commissioner of Taxation to give the Treasurer for presentation to parliament a report on working holiday visas, including statistics and information derived from a register that is being established; increase to 95 per cent the rate of Australian superannuation payments for working holiday makers; and also reduce the visa application charge by $50. It is important that we get this legislation right. It is important that the Senate look at this legislation.

Through registration, businesses can be listed on the Australian Business Register as an employer of working holiday makers. If the business fails to register for listing then working holiday makers will be taxed at the higher rate of 32.5 per cent, effectively cutting their day-to-day pay packet until the end of the financial year when the working holiday maker can lodge a tax return and access the 19 per cent tax rate.

Many working holiday makers travel around the country. They invest their hard earned money in our small rural towns and in big tourism hubs. We think that is particularly important, because it is a driver of economic growth. I know it is important in my own electorate. The Migration Institute in their submission to the Education and Employment References Committee inquiry made the point that 'student and working holiday visa holders are often very reliant on any income they can get for basic living costs.' I am concerned that working holiday makers, in order to determine the level of tax they will pay, will be expected to log-in to the Australian Business Number web site to check whether their employer is registered.

The bills give the Commissioner of Taxation the power to share information with the Fair Work Ombudsman for the purpose of ensuring that an entity is compliant with the Fair Work Act. Why is that important? It is important because we have seen some egregious breaches of industrial relations legislation enterprise agreements. We support the sharing of information between agencies, because it is important to protect vulnerable working holiday makers. The commissioner will report annually to the minister about the employment of working holiday makers, including statistics, information about the regions and sectors working holiday makers are employed in and other information derived from the employment register.

The Fair Work Ombudsman is empowered to investigate cases that are taken to it, but working holiday makers need to have the knowledge and confidence that their issues will be taken seriously and investigated and that the Australian government will act in their best interest. I will be very interested to hear, as part of the Senate inquiry process, what the unions and other stakeholders have to say about exploitation in these industries.

We saw the Four Corners program 'Slaving away: the dirty secrets behind Australia's fresh food' and a subsequent media report by Smart Company, who said:

The Four Corners … report put a spotlight on a number of labour hire companies that have been found to be taking advantage of young foreign workers with limited English skills. Some of the workers, many of which are on 417 working visas, worked on farms and factories for as little as $3.95 an hour and worked 22 hours a day, while others alleged they had been sexually assaulted and harassed.

Even News.com published a story, 'Dark industry of backpacker exploitation', that detailed the very confronting experiences of three working holiday visa holders. They also are very confronting. One of them said that her employer would not allow them to drink water and put a drunken old man in a 12-bed female dorm. Another said that he was exposed to poisonous materials and he observed women being sexually harassed. He said that he had seen a meal thrown at a young girl. There were sexual remarks and unwanted advances, and they had asbestos lying around and wanted the girls to chuck it in the bin. It was simply not good enough.

The exploitation of workers is not only limited to unsafe work practices; working holiday makers have also experienced financial hardship as a result of misleading employers who take advantage of young desperate workers seeking a second-year visa. One person, a young woman of 22 years of age, said:

Wanting a second-year visa should not strip you of basic rights in the workplace.

Sham contractors target desperate overseas workers and then take advantage of 417 visa workers who want a second-year visa.

The Senate Education and Employment References Committee inquiry heard about the vulnerabilities and exploitative conditions faced by these types of visa holders. They reported:

We have heard stories from members about contractors saying you have to work for free for X amount of time in order to get a second visa, or you have to provide sexual favours in order to receive a second visa.

One horticulture worker from Taiwan, Sherry Huang, who is now an NUW organiser explained during the Senate inquiry how labour-hire companies target workers. She said:

Typically, the owner of a labour hire company in Australia would set up a labour hire company in Taiwan and then source all the workers from Taiwan. The labour hire agency would charge 417 visa holders a fee of several thousand dollars to arrange flights, accommodation, transport, and a job.

An organiser from the meat industry and the AMIEU, the meat workers union, described one housing situation as follows:

… the showers did not work and there were up to four 417 visa workers in small rooms …They were not allowed to use the heating in winter, the bedding was on the floor, there was no kitchen table, and they had to set up a rice cooker on boxes.

Labour-hire companies who require 417 workers to pay rent on their accommodation stand to make enormous profits. The Fair Work Ombudsman did the sums on one Beresfield property and found:

Based on 20 people paying $100 per week, the potential rental income for the property is over $100,000 per year.

This is simply not good enough. The government should spend more time concentrating on this particular issue than talking to themselves.

The Fair Work Ombudsman's annual report for 2014-15 is particularly important. The Fair Work Ombudsman monitors compliance and investigates acts and practices which are contrary to workplace laws, awards and agreements. The Fair Work Ombudsman's report looked at a number of issues. We saw, for example, across two years that: the issuing of compliance notices increased from 16 to 37; more than 100 extra infringement notices were issued, increasing from 23 to 124; an extra 17 enforceable undertakings were issued; and 21 litigations commenced, up from 12 in the previous year. Tragically, 28 per cent of cases came from my own state of Queensland. In 2014-15, the Fair Work Ombudsman received 930 dispute forms from subclass 417 working holiday visa holders. During this time, a total of $1.6 million was recovered for vulnerable overseas workers. The abuses and exploitations in this industry are outrageous.

Last Friday, the Fair Work Ombudsman released their report inquiring into the wages and conditions of people working under the 417 working holiday visa program, the subject of this cognate debate. The inquiry was established in response to increasing numbers of requests for assistance from temporary visa holders. The inquiry commissioned a survey of 417 visa holders. The report said that over 4,000 people were surveyed. About a quarter of them got the second-year visa. The Fair Work Ombudsman spoke with industry experts, unions and employers.

During the inquiry, information received about the exploitation of 417 visa holders included instances of: underpayment and/or nonpayment of wages; visa holders offering, or being induced to offer, payment to employers and third parties for assistance to gain a second-year work rights visa; an increased dependency on the employer by the visa holder seeking employment during the 88-day specified work requirement of the program in order to secure the second year; sexual harassment and workplace health and safety issues; employers recruiting workers with the offer of unpaid work to meet the second-year visa eligibility requirements; and visa holders working for free in exchange for non-certified accommodation programs. The survey found that 59 percent of the respondents—that is, 2,596 people—stated they were unlikely to complain about their working conditions in case their work was not signed off by their employer. And 66 per cent—that is, 2,904 people—felt employers take advantage of 417 visa holders due to the requirement to undertake regional work.

For the last nearly 18 months, the government has been talking to itself about this issue and been completely missing in action on these egregious examples of exploitation of workers in these areas, particularly in regional areas. The National Party and Liberal Party people sitting in their seats on the other side have done nothing. They have been completely silent about this outrageous expectation in these industries. I represent a regional and rural seat, and I know how important these particular 417, 462 and 457 visas are. But on the exploitation that we have seen in report after report those opposite have been completely silent. They have been talking to themselves. They cannot even work this stuff out themselves. Then they have the gall to ask that we just roll over and let them do this without any proper examination of the legislation and its impact on visas. These people should spend more time protecting workers who are vulnerable.

These industries are important. Agriculture is important. Tourism is important. Horticulture is important. It is important to protect workers in retail and hospitality. But those opposite will not. They will not do anything about it. They just want us to roll over. This is their compromise. I tell you what, you would not want to have the NFF in your corner in a street fight in an alley. You would not want them. They rolled over. Their members must be outraged. They must be outraged at these blokes on the other side and at the leaders of the NFF, because they have rolled over. At the first shot of political warfare, they have rolled over. They have completely rolled over to the government. The NFF had the gall to criticise the Labor Party in relation to this issue, when the NFF had been missing in action.

The mob over there, who sit on the Treasury benches, should do more to protect workers and do less talking about themselves. They should be a bit more malleable and flexible about their views on industrial relations. They should be protecting workers; that is what they should do. They should do more work on 417, 462 and 457 exploitation. That is what they should be doing. (Time expired)

Melissa Price (Durack, Liberal Party) Share this | Link to this | Hansard source

I am very pleased to speak on this bill today. Together with my other regional Liberal colleagues—the member for O'Connor, who is here with me today; the member for Barker; and also the member for Forrest, another colleague of mine from Western Australia—we worked very hard to ensure that we have a balanced bill, which we are debating today. I am very pleased that we finally have the opportunity to discuss it.

The proposed backpacker tax changes, as they are now known, would have serious consequences for all Australians; but perhaps nowhere would the impact of the backpacker tax, as it currently stands, be felt more than in my electorate of Durack. The electorate of Durack is responsible for so much of the wealth of this nation, through such a wide variety of different industries. Clearly, the miners are a big contributor to my electorate and to the nation, but so are the farmers, the horticulturalists, the pastoralists and also a significant amount of tourism and hospitality operators. I know that this new package before the House is a vital part of our commitment to simulating growth in the regions and providing the flow-on jobs that service the working holiday communities.

Taxing working holiday-makers the 19 per cent from the first dollar makes us internationally competitive against comparable countries like the UK, Canada and New Zealand. We are also extending the age criteria for eligibility of working holiday-makers from 30 to 35. This will allow those seeking perhaps a professional hiatus or maybe a sabbatical—an ever more common phenomenon these days—to come to Australia and work regionally for an extended holiday, working at the same time should they choose to do so. There will be in-built integrity safeguards to protect working holiday-makers from exploitation, with measures taken to ensure working holiday-makers are paid the same rates for their work as their Australian colleagues.

Another welcome change will allow a working holiday visa holder to work in two different locations for six months at each time for the same employer. This is particularly important for the hospitality industry, who often have multiple worksites in their businesses. You know as well as I do, Deputy Speaker Goodenough, businesses will spend a considerable amount of time training up these new employees; it is therefore important that this effort is not wasted. This will allow the employer and employee to enjoy the benefit for the 12-month period. I believe that all these changes will be welcomed by working holiday-makers, who will have more money in their back pockets. The regions where they work can only benefit from more dollar spent locally. A $5 passenger movement charge increase, the first increase since 2012—and in-line with the CPI—also makes good financial sense in offsetting some of the losses that these changes bring to our budget bottom line.

Let me just say that the Labor Party should respect the hard work of the people who feed us, clothe us and provide us with the industries that drive this nation. The members opposite have again displayed a distinct lack of understanding of regional Australia and a distinct lack of understanding of the make-up of its workforce. If they did understand it, they would support this bill without hesitation.

This measure is part of the broad, informed plan of the Turnbull government to reform the economy and promote jobs and growth in regional areas. The Turnbull government has a strong plan to relieve the tax burden on average Australians and promote growth in the regions through a range of infrastructure programs and programs for small business. This bill will put more money into the back pockets of working holiday-makers, which they will in turn spend in the regions. Any program that puts funds into the hands of small businesses in the regions simply has to be encouraged because these are the best ways, and the most sustainable ways, to promote regional growth and secure jobs for the future.

We are moving into a very important part of the year. With the spring picking season upon us, small businesses in the agricultural, hospitality and tourism sectors and working holiday-makers are currently in a state of limbo. The members opposite are playing politics with their lives and livelihoods. The uncertainty is having a profound impact on regional Australians, and it is now urgent that we resolve it once and for all. By making these changes, we are making Australia more competitive in regards to comparative countries that rely on working holiday-makers as a source of labour in their region. Even at 19 per cent, we will still be a higher rate of tax than New Zealand, our biggest competitor for working holiday-makers, who have a lower base rate of pay than most Australian agricultural and horticultural businesses. This policy will put an estimated $2,000 extra in the hands of every working holiday backpacker in Australia, money that is very likely to be spent in the regions supporting local businesses.

In the short time left I have, I want to make the point that I think all of us, in this House and in Australia, want Australians to have Australian jobs. But sad reality is that this is not always possible. I firmly believe that until we change the rules and regulations around welfare payments, this will continue to be the case. As a consequence, working holiday-makers become a critical part of the labour force in regional Australia and that is why I commend this bill to the House.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

It being approximately 1.30 pm, the debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour.