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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr Albanese interjecting—

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

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

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

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

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

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

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

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

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

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

I do.

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

He does; I am relieved. When growers cannot get their fruit, for example, off the trees and supply falls while demand remains constant, then prices go through the roof. It is not going to be a very happy Christmas for those consumers shopping for their cherries and strawberries and the like for Christmas dinner, because they are going to find themselves potentially paying a lot more as a result of the damage done by this government over the course of the last 18 months. They will know who to blame, because we will make sure they understand whose fault this is.

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

One minute to go!

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

I appreciate the 30 minutes, The Fixer. I should turn to him, because I think the South Australians are most concerned about the backpacker tax. South Australians are concerned about the Murray-Darling Basin Plan and they are worried about the backpacker tax. I welcome the fact that the Leader of Government Business is with us in the House and talking with the member for Dawson no less, who must be feeling very, very nervous about going back to his electorate and explaining why he did not fight for a lower headline rate on the backpacker tax.

Not one go, not two goes, not three goes—no; four goes at getting this right. But of course they still have not got it right. Again, it takes a special genius to end up with a higher headline rate than is necessary, but to also spend more money and give up more revenue. That takes a special kind of genius. So when the member for Riverina gets to his feet—is he getting to his feet?

A government member: Yes.

Very good. He might care to share with us how he is going to explain this to his constituents. (Time expired)

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

The shadow agriculture minister and member for Hunter has asked me to explain how I am going to explain this to my Riverina farmers. Batlow cherry and apple packer, Greg Mouat, needs eight backpackers to knock on his door within a fortnight or else his cherries will pass their prime. 'We'd be completely stuffed without backpackers', Mr Mouat said. He is from Batlow. I used to represent Batlow, from 2010 until the electoral boundaries were changed this year. He is a very, very good man. He said: 'It's up in the air. I don't know if they're going to arrive or not given it's taken so long to make this decision.' Of course he is right. I am glad that it has been resolved in a 'sensible and fair way', as the National Farmers' Federation has pointed out. 'You have to remember, we're dealing with a perishable product which doesn't stop ripening if it's not picked,' Mr Mouat said. 'We'll start cherries in the next fortnight and then we'll move into hand thinning apples for a number of weeks, then we'll pick apples in mid to late February through to the end of April.' Mr Mouat 'could swallow' a 15 per cent tax on backpackers. That is what he said. But he labelled the government's original 32½ per cent as 'ridiculous'. Mind you, that was the member for Lilley's originally, the 32½ per cent. Mr Mouat said Labor's current 10½ per cent alternative was playing politics—merely playing politics.

What we have seen today is a timely breakthrough, because we are on the very last day of parliament sitting for 2016. We could not let the tax go through at 32½ per cent. We know that. It would have done so much damage to the Riverina, to the central west and, indeed, to the Australian economy. Regional small businesses need a mobile labour force who can pick fruit, who can process meat and who can pull beers in pubs at the drop of a hat—absolutely. Backpackers will still come, apples will still be picked at Batlow, grapes will still be picked at Griffith, and pubs right throughout the Riverina and right throughout regional Australia will be staffed.

The member for Hunter went on a lot about the Australian Pesticides and Veterinary Medicines Authority moving to Armidale. He also talked about our decentralisation policy. There is nothing wrong with having a decentralisation policy. I am pleased that the Rural Industries Research and Development Corporation is moving to Wagga Wagga. That is going to bring anywhere between a dozen and 21 jobs to my home town. I am pleased that the Grains Research and Development Corporation is moving to Dubbo, in the member for Parkes' electorate—I am glad he has joined me in chamber—as well as to Toowoomba, with other offices in Adelaide and Perth. Decentralisation is at the core of what the Nationals do, but so is also making sure a fair deal has been struck on this backpacker tax issue.

You only need to go to the comment piece written by David Crowe in The Australian on 29 November where he said:

Labor, which had adopted the 32.5 per cent rate in its own election costings, saw an irresistible opportunity to cause trouble. Its position was irrational.

And its position was irrational! We started with the Labor tax rate of 32½ per cent, we put money on the table to review Labor's rate and we have arrived at 15 per cent—having to find savings to do so. The government did not wish to be belligerent, but this is important policy. We could not have left this place—the member for Lyne knows this—and left this at 32½ per cent. We could not. We agreed to move to 15 per cent, and then, at the eleventh hour, we had this ridiculous situation in the Senate where the Labor Party, along with some other senators, tried to blow the show up. Labor has one objective, and that is to wreck the show; to try and take some sort of small semblance of victory out of what has been yet another disastrous year for them.

The member for Maribyrnong and Labor have demonstrated once again that they are more interested in playing base political games—absolute low-level political games—that seek to create chaos and uncertainty for farmers and undermine the budget than delivering real outcomes in the best interests of Australians. That is what this is about. It is about delivering outcomes for Australians. I do not and cannot understand why Labor is so against the rural sector. I do not and cannot understand why Labor has such a bad record when it comes to not sticking up for regional Australia. Take a look at some of the things that have happened just in my time in parliament that Labor has wrought upon regional Australia: the live animal exports, the carbon tax, the mining tax and failing to act when the Asian honey bee incursion occurred. There were so many things. Labor did not spend one cent on mobile blackspot towers. The Murray-Darling states non-deal—it was an absolute disaster for our regions, particularly those river communities which rely on the triple bottom line approach. Labor never wanted to know about it. It was an absolute buyback. It was an absolute disaster, the amount of water that was bought out of the Murray-Darling system, out of the Murrumbidgee, out of the Murray, out of northern New South Wales and out of southern and western Queensland to prop up what Labor was trying to prop up, an environmental outcome for the Murray-Darling system at the expense of farmers and at the expense of social and economic implications.

This bill before us, the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill (No. 2) 2016, this sensible resolution that is before us, is so important. One of the most important roles I have in parliament is to stand up for the regions and to fight for the Riverina and the Central West. As the Minister for Small Business, I appreciate and understand and acknowledge that of the 15,000 small businesses in the Riverina, in my electorate, a third are farmers, and many of those farmers use backpackers. Right across the regions and across the nation, many of our small business people are tireless, hardworking farmers. They will be very satisfied with this outcome—15 per cent, as the National Farmers Federation said, is a fair and just resolution. I commend it to the House.

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

What we are seeing here is government by chaos. The backpacker tax fiasco has gone from being a problem to a major problem to a chaotic problem to a farce. It reached farce today when we had a joint statement on the letterhead of the Treasurer from the new coalition: Scott Morrison and Senator Di Natale. You pick up a few things when you have been in this place a while. When the Treasurer attempted to table the letter but then had a look at it and put it back on the dispatch box and did not really want to table it, you knew that he had botched it.

The reason that has happened is that it is such policy on the run, just like the legislation that is before us now, the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill (No. 2) 2016. This is legislation whereby we heard, as the Manager of Opposition Business indicated, silence in this chamber. The Hansard will appear with a couple of blank pages, because we had no copies of the bill that was before the House, no copies of the explanatory memorandum and no consultation with anyone about this deal that had been done. What a hopeless deal it is, from the government's own perspective. The backpacker tax has become the backtracker tax. Today, this deal costs $155 million of backtracking by this government on its economic record, where it purports to say that it is interested in fiscal responsibility. It is no wonder it has increased the debt—the deficit has increased by eight times from what it was. Remember that this government said prior to the election that it would have surpluses every year into the future, but it just gets worse.

How it got here will provide a study for public policy makers and academics in how not to do proper evidence based policy. There was the grand announcement in the 2015 budget that they were going to raise over half a billion by introducing this new backpacker tax in 2015.

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

Backtracker tax!

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

At that stage it was the backpacker tax. That was before the backtracking that occurred on the backpacker tax. It is the case that this is policymaking that would suit Dr Seuss, frankly, in the way that it has been done. They announced it with fanfare: they were geniuses! But they had not consulted the farming sector and they had not consulted the tourism sector, so they did not bring any legislation. It was still there. So what happened was that backpackers and young people in Europe, Asia, the United States and Canada were getting information, via their newfangled smartphones and the internet, about this whack that was coming on in terms of taxation arrangements and we saw dropping numbers of backpackers visiting Australia.

During the election campaign, having gone through the 2016 budget, the government decided that they would defer the implementation of this tax. Some 18 months later they finally introduced the legislation. There were 18 months of uncertainty for the agricultural and tourism sectors. They then resisted the Senate inquiry to consult people about processes. When they did that they said that it was urgent. After having waited 18 months all of a sudden it was urgent. At that inquiry the agricultural and tourism sectors put forward the argument that this tax was not in the interests of those sectors and not in the interests of the economy.

We have had these absurd arguments. The first absurd argument we have had only in the last few days is that somehow this was something to do with a decision by former Treasurer the member for Lilley. That is just a farce. The budget papers show that backpackers indeed were paying zero tax. In 2015 Treasurer Joe Hockey said that he was introducing this new measure to raise additional money. That was the point of it. It was going from zero to 32.5 per cent. We hear people like the member for Riverina say, 'We had to oppose the 32.5 per cent,' but it was their idea, their initiative. They then decided that they would change it to 19 per cent. They had no economic modelling but said it would raise less additional revenue—again them acknowledging that this began in 2015.

In order to make up for what they saw as a shortfall of this short-sighted policy they said that they would change the super arrangements so that 95c in every dollar would go straight back to the government. That was a tax not on backpackers; that was a tax on employers, which would go straight into government coffers. The change they are making here now belatedly is to 65c in the dollar, at a cost to the budget of $55 million over just three years.

They then introduced the passenger movement charge—a $5 increase. They had the same process that they had for the backpacker tax before it became the backtracker tax: they rang the major airlines on the day that the announcement appeared in the paper to let them know, just in case they did not have access to the internet at Qantas, Virgin and other major airlines. So you had this $5 charge being put in that was totally unrelated. So the agricultural sector was being hit but the tourism sector was being hit twice. It was being hit with fewer backpackers coming here, backpackers who largely work in regional Australia and who bring more money than they earn and who spend it in the communities where they are working. That is what they do.

Now we have had in the last 24 hours the Prime Minister, the Treasurer and the Deputy Prime Minister actually insult people from Germany and France who come here to make a contribution. What sort of idiocy is that? 'We do not want rich backpackers coming here from Germany and France'—completely absurd. People who come here make a contribution and spend more money than they earn here. And, what is more, when they come back with their families in a few years time they will stay not at the hostel but at the Hilton and they will spend even more money. And when they go back to Germany and France and that region, the whole time they are showing people the photos of their experiences in Cairns, Broome, Mount Isa or Gladstone—

Ms McGowan interjecting—

Or in the electorate of Indi. They become advocates for Australian tourism, and they create jobs.

But then, because they lost the vote in the Senate on the Passenger Movement Charge Amendment Bill 2016 on Wednesday night, on Thursday as the bells were ringing they went into the chamber and handed the One Nation senators a draft amendment that they had had done up for a five-year freeze that we know from a ruling from the Speaker of the House of Representatives just this week is not worth anything at all. We are a sovereign parliament, and we are talking about a tax increase that in July the government promised not to do. They promised a freeze for this term, as we did, because we know that it is counterproductive tax. At the end of the day, if you discourage people from coming to Australia, if you discourage that economic activity, you end up in a worse fiscal position. It is counterproductive. So you have that, but it is worse. It is not just that they promised it at the election. After this election, unlike after the 2013 election where they forgot to appoint a tourism minister, at least they did appoint a tourism minister. He stood at the dispatch box and said that increases to the passenger movement charge would choke the golden goose that is the tourism industry. That is what he said two weeks before the government announced this tax increase. He was not even consulted about the decision that was made. He was on his way to the Middle East when the cabinet made this decision. The five-year freeze is a farce and the senators in the other place were conned on that issue.

Then you had the announcement of a so-called deal—it was all done days ago—for a 15 per cent backpacker tax. So the 'backtracker' tax had gone from 32.5 per cent to 19 per cent and then down to 15 per cent. This time they were really serious. There were to be no more negotiations. Victory was had. 'Mission accomplished,' said the Treasurer. And yet today we have a complete failure of leadership. So obsessed are those opposite with not being cooperative with the other major political party, the Australian Labor Party, that they prefer to enter into an arrangement that costs the budget $155 million, when we had said we that we would cop 13 per cent because that aligns with the withholding tax in horticulture that applies to those Australian backpackers for whom it is unclear that they will meet the income-tax-free threshold. That $155 million is $100 million more than they would have to spend otherwise, and they are in an arrangement with the Australian Greens and One Nation. This is the mob who, with their genius strategy of the double-D election, helped recreate One Nation earlier this year. But now, instead of having an arrangement that would have minimised the differential impact on the budget, they have a $155 million hit to the budget and a Treasurer who is reduced to the humiliation of having Richard Di Natale, the leader of the Australian Greens, named on a joint release on the Treasurer's letterhead. It is completely absurd.

What we have seen with this, the whole way through, is a whole lot of misinformation. You have had the absurdity of saying that Australian workers would be taxed at a higher rate than foreign workers. This is the mob that does not seem to understand that it was Labor that tripled the income tax free threshold to $18,200, thereby taking a million Australians out of the tax system. If Australian workers earn the same as your average backpacker, guess how much tax they will pay? Zero; not a dollar. And yet, those opposite have continued to engage in this misinformation. This has been absolute chaos from the government. They have had at least five positions in the last month, after having had one position for 18 months that has caused distress and concern in the agriculture and tourism sectors. This government should stand condemned for this chaos.

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

I move:

That the motion be put.

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

The question is that the motion be put.

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

The question is that this bill be now read a second time.

Bill read a second time.