FARMER organisations have pledged to come out swinging harder during the federal election campaign over the next two months due to the Coalition government’s failure to backflip on the backpacker tax increase.
Federal Treasurer Scott Morrison has declined to reveal what the federal budget will contain on Tuesday in response to requests to ease the backpacker tax rate.
But multiple sources have said it’s not likely to deliver an immediate move to ease pressure on the July 1 increase to 32.5 per cent for working holiday makers.
That’s despite an ongoing public campaign this year led by the National Farmers Federation to relieve pressure on seasonal workforces due to the tax hike.
That sparked subsequent consultation with industry groups, including tourism and agriculture, to develop a proposal, across relevant government departments, that was submitted for cabinet consideration earlier this month.
Victorian Nationals MP Andrew Broad has already warned the budget’s handling of the tax increase represents a litmus test for the government’s attitude towards agriculture and fulfilling economic ambitions underpinning newly signed trade deals.
NSW Liberal Senator and Junee grain and livestock farmer Bill Heffernan has also expressed anger that the Coalition’s agricultural backbench committee wasn’t consulted about the tax increase, before it was approved in last year’s budget.
The new tax rate is due to start the day before the scheduled July 2 double dissolution federal election - but farm groups have warned the damage has already started with backpackers choosing to work and holiday in other overseas destinations like NZ.
Under the 417 visa regime, working holiday-makers pay 19pc on earnings up to $37,000 and 32.5pc up to $80,000, with a tax-free threshold of $18,200.
During the interdepartmental review, the NFF suggested a 15-19pc rate with no tax-free threshold and superannuation be paid directly to the Australian Taxation Office and then reinvested in employment programs in regional Australia
The combined earnings for those two measures were pitted at about $540m cost over the forward estimates, in a “revenue positive” alternative to the government’s estimated earnings at 32.5pc.
It’s understood the tax change was agreed by former Treasurer Joe Hockey to off-set half a billion dollars in policy measures for the $4 billion Agricultural Competitiveness White Paper released last year.
Mr Morrison’s office has said a decision on the backpacker tax proposal would be available in the 2016 budget, to be handed down on May 3.
Previously, he has indicated foreign workers should pay their fair share of tax in Australia and being a working holiday maker “does not mean you get a tax holiday” and changes had already been made by the Coalition to encourage working holiday maker visa holders to secure work in northern Australia.
However, the NFF has joined Tourism & Transport Forum Australia in demanding the federal government recognise “serious concerns” about the negative impact of the tax increase, if it’s not countered in Tuesday’s budget.
The two groups said the tax increase was “foisted” onto industry without warning in the last federal budget which was, “simply not acceptable” and more than 30,000 people had signed the NFF’s online petition, opposing the 32.5pc tax proposal.
TTF CEO Margy Osmond said the backpacker tax was “a bad policy – plain and simple”.
“We are already seeing a marked decline in backpackers coming to Australia following repeated hikes in the cost of the visa now $440,” she said.
“Slapping a 32.5pc tax on backpackers on every single dollar they earn will only encourage them to go elsewhere.
“Let’s make one thing very clear - industry expects to see movement on the backpacker tax in next week’s budget and that has to be a radical rethink.
“What the government put on the table in last year’s budget simply will not work and industry will be livid if strong action is not taken.
“We will make this an election issue.”
NFF CEO Tony Mahar said industry was increasingly worried about the backpacker tax, with farmers already reporting significantly fewer applications for seasonal jobs this year due to the announced increase.
“Already we are starting to see the economic damage of the backpacker tax and it hasn’t even been passed into law yet,” he said.
“We have farmers asking us – should we plant our crops this year?
“Where will our workers come from?
“This is going to be an economic disaster for the agriculture sector.
“We won’t be able to harvest our current crops let alone increase production to take advantage of new trade opportunities.”
Mr Mahar said the issue would not end on budget night and the NFF would continue to fight the backpacker tax until the government – whichever party that might be after the election –saw sense on the issue.
Shadow Tourism Minister Anthony Albanese and Shadow Agriculture and Rural Affairs Minister Joel Fitzgibbon released a joint statement criticising the Coalition for failing to address industry concerns about the tax increase amid rumours there would be no government back-down in the budget.
“The chaos and dysfunctionality of the Turnbull government sadly will have long term negative consequences for our tourism and agricultural sectors,” they said.
Farming representative groups also backed-up the NFF’s warning about the pending tax rate increase and its impact on seasonal worker availability.
WAFarmers said approximately 40,000 backpackers worked on farms each year and generated more than $3.5 billion to the Australian economy with those earnings under threat if no budget changes were announced.
WAFarmers Chief Executive Officer Stephen Brown said, “We cannot believe that the federal government does not appear to be taking this issue seriously.”
NSWFarmers urged the Treasurer to re-evaluate the “ill-considered” proposed tax changes, with President Derek Schoen saying backpacker spent about $15,500 during their stay in Australia.
“This means that the Australian economy is set to lose more than $15 million for every 1000 backpackers who decide to go somewhere else for their working holiday experience,” he said.
“Treasury’s forecast of $540m revenue to be generated by the backpacker tax assumes a similar number of incoming backpackers to what we are seeing currently, which we know won’t be realised as the downturn of incoming backpackers we currently experience will only get worse with the introduction of the backpacker tax.”
Queensland Farmers’ Federation President Stuart Armitage said if the government failed to act on the industry proposal to soften the tax, it would be “a real let down for Queensland’s rural industries and regional communities”.
“The federal government is showing poor judgement by proposing changes that will undermine the future of cotton, fruit and vegetable industries in Queensland,” he said.
“We cannot allow the current lose-lose-lose situation where the backpackers stop coming, the growers and farmers are affected and the local rural economies are put in unnecessary jeopardy.”