SHADOW Treasurer Chris Bowen has accused the Coalition of “dysfunction” for failing to address the backpacker tax issue in last week’s budget, ahead of the 2016 federal election campaign.
At Senate budget estimates last week Assistant Agriculture and Water Resources Minister Anne Ruston revealed Labor had supported the tax increase in the party’s 2015 budget response.
In his speech to the National Press Club in Canberra today, Mr Bowen was asked to state his party’s current position on the backpacker tax issue.
He said it was an example of the Coalition’s “dysfunction” and his party had originally sought a bipartisan stance for the tax rate on working holiday makers to increase to 32.5 per cent on July 1 this year.
“Here's one where we said ‘well look we trust you got this right (and) we’ll facility its passage because you must have done the consultation; you must have done the work’,” he said.
“Clearly they hadn't and now, a day after the budget was delivered ministers are saying ‘Oh yeah, we're reviewing that’.”
Mr Bowen said the federal Treasurer had just brought down a budget which was when such policies should be announced.
He said he and Shadow Agriculture Minister Joel Fitzgibbon and Shadow Tourism Minister Anthony Albanese had been closely monitoring the situation and consulting with the sector.
“It is causing very substantial concern amongst farmers, tourism operators, hospitality operators, in regional areas,” he said of the tax increase.
“The government clearly hadn’t done their home-work and now they're all at sea (with) cabinet ministers saying ‘yeah we're still working on it a day after the budget was introduced’.
“That is pretty dysfunctional.
“If they were going to fix it the time to fix it the time to fix it is in budget night.”
The tax on working holiday makers is set to increase to a flat 32.5pc rate on July 1 with no tax-free threshold; as announced in last year’s federal budget.
However, the National Farmers Federation (NFF) has led the charge in demanding the tax increase be softened amid fears the increase will impact seasonal worker availability.
That campaign sparked an interdepartmental review by the federal government that submitted a cabinet proposal for a reduced tax rate and other measures ahead of last week’s federal budget.
It contained input from the agriculture and tourism sectors to find a $540 million cost neutral solution to the federal budget.
Treasurer Scott Morrison rejected that proposal but has stressed the backpacker tax issue remained “alive” and this year’s budget wasn’t the last word on the matter.
Last week, it was revealed the government planned to delay the tax increase by six months to extend stakeholder consultation, to resolve the complex policy issue.
It’s understood that delay would be accompanied by a $40 million contingency allocation, for the budget, but the form of the review remains unclear and whether it will be conducted externally.
Coalition rural MPs have lobbied hard to force a back-down on the increase but remain frustrated their calls for changes, to protect agricultural viability, have been denied by the Treasurer.
Tourism Minister Richard Colbeck said the tax rate increase caused genuine issues for potential tourist numbers that he wanted to see resolved.
Senator Colbeck said he wrote to Prime Minister Malcolm Turnbull out of concern the tax increase would deter tourists and therefore reduce the number of seasonal workers for agriculture and tourism.
“It’s an issue that’s still alive and I want to see a sensible result,” he said.
NFF President Brent Finlay said his group wanted the federal Coalition to declare during the election campaign that the backpacker tax increase had been delayed or scrapped.
“We need another program actually put in place because we need labour in our paddocks and in our orchards to pick our crops our fruit, our vegetables,” he said.
Mr Finlay said backpackers were already getting mixed message about the tax increase as they were social media savvy and had declared they would not be coming to Australia and instead chose NZ and Canada.
“This is a serious issue,” he said.
“Politicians should not underestimate the amount of concern that is out there on this issue.”
NFF CEO Tony Mahar said it remained to be seen whether the issue was vote change but there was clear and strong evidence across agriculture sector that the tax increase would hurt rural and regional communities.
After the budget, Mr Morrison said the backpacker tax was a complicated issue” with the government basically saying 417 visa holders were part of the economy and expected to pay tax but “it’s not clear which part of the economy”.
“Does it extend to hospitality, or is it just in agriculture, or which industry in agriculture, like abattoirs?” he said.
“It’s not particularly clear (and) there are labour market issues that are relevant (and) whether different classes of visas are necessary.”
Mr Morrison said visa arrangements were also in place to assist seasonal workers that were introduced under former Labor Prime Minister Kevin Rudd’s regime.
“There are a lot of complicated issues here and I don’t think we’ve actually resolved them at a point where I think we’ve got good policy,” he said.
“And I’m not going to back policy in that I don’t think is good policy.
“That issue remains live but the (industry) proposal, you’re talking about is not what the government is proceeding with.”
At last week’s budget estimates, Senator Ruston said Labor’s response to the 2015 budget backed the ATO's determination that 417 and 462 visa holders would be classified under the non-residence status, which attracted the 32.5pc tax rate.
“The position of the Labor Party at the time was that they supported the changes to taxation of work and holiday visa holders - I just put that on the record,” she said.
