Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

My question is to the minister representing the Treasurer, Senator Cormann. Why are the government's reforms to the so-called backpacker tax arrangements so important?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I thank Senator Duniam for that very good question. It is great to be answering this question in the presence of distinguished former senators Richard Colbeck and Sean Edwards.

The government's reforms in this area help ensure we can meet seasonal labour supply needs, making sure Australia remains an attractive destination for working holiday-makers whilst also making sure that we do so in a way that is sustainable and fair. Indeed, it is important to get the balance right between meeting Australia's seasonal labour supply needs and a fair and more sustainable income tax system in Australia. We have consulted extensively to get that balance right. We have consulted with employers in relevant sectors of the economy, and indeed we have consulted with Liberal and National Party members and senators.

Our solutions for backpackers as part of an overall package of reforms is that the new 19 per cent tax rate on working holiday-makers from their first dollar is actually very competitive internationally. It puts us in a slightly better position than the equivalent markets in New Zealand, Canada and the United Kingdom. Indeed, let us look at what a backpacker in New Zealand, Canada or the United Kingdom would earn in take-home pay. When earning $13,000 in Australia it would be $10,530 in their pocket after tax, in Canada it would be just $9,837, in New Zealand it would be $10,126 and in the United Kingdom it would be $10,470.

We are also lowering the application charge for working holiday-maker visas, allowing visitors to stay with one employer for up to 12 months, and we are providing Tourism Australia with $10 million for a global advertising campaign targeted at young people. To protect against exploitation of working holiday-makers, the employers will need to register with the ATO, and legislation will need to be passed by the end of this year to allow employers time to register and to give certainty to the industry. (Time expired)

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Duniam, a supplementary question.

Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I thank the minister for his answer. I ask: is the minister aware of any alternative policies?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Before the election—as former Senator Colbeck would know—the alternative government did not have an alternative policy in relation to this. And what has Labor decided now? The Labor Party has now decided to impose lower taxes on foreign workers and higher taxes on Australian workers and Australian small businesses by again targeting their retirement savings.

The question that the Labor Party needs to answer is: why do they want a tax cut—why do they want to halve the income tax rate applied to foreign workers—and then try to pay for it by increasing taxes on the superannuation of Australian workers and small businesses? The Labor Party is all over the place on this, and I suspect that once people across Australia understand what it is that Labor is proposing to do—lower taxes for foreign workers and higher taxes for Australian workers—they will be forced to change their position.

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Duniam, a final supplementary question.

Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

What would be the impact of Labor's policy to nearly halve income tax rates for foreign workers?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Labor's policy to cut the tax rate on backpackers from 19 per cent to 10.5 per cent would cost $240 million. So it would shift $240 million in additional tax burden from foreign workers onto Australian taxpayers. And their decision to oppose any increase in the passenger movement charge would leave the budget $500 million worse off overall, given the $260 million from that measure alone.

So if Labor votes against our overall working holiday-maker reform package it will cost the budget $500 million. At the same time, they will again go after people's retirement savings. The Labor Party will again put their hands into the pockets of Australian workers and small businesses which are saving for their retirement. Lower taxes for foreign workers, higher taxes for Australian workers: that is the policy of the modern Labor Party.

I will say it again: Labor stands for lower taxes for foreign workers and for higher taxes for Australian workers. What do we stand for? We stand for fairness— (Time expired)