Australia’s Federal Government has backed down on its backpacker tax proposals, dumping the budget plan to impose a 32.5% tax on backpacker workers and instead slashing the rate to 19% – but there’s a sting in the tail: airport departure tax will rise by AUD 5, or 9%.
The tourism and agricultural industries have been agitating to have the ill-conceived backpacker tax axed altogether. They are not happy about the extra AUD 5 departure tax.
Many feel the backpacker tax is still far too high and pressure continues to eliminate it altogether, or at least, cut it to the New Zealand rate of 10.5%. Senator Jacqui Lambie says New Zealand’s rate is still far more competitive than Australia and it will encourage backpackers to head for that country instead of Australia.
As backpackers form over one quarter of Australia’s rural seasonal agriculture workforce, that’s serious.
The backpacker tax, first proposed in 2015 budget, faced massive opposition from rural industry and tourism operators. The compromise deal announced by Treasurer Scott Morrison yesterday will see the tax cut to 19% and an extra AUD 10 million allocated to the tourism industry, to market backpacker jobs
The Tourism & Transport Forum Australia (TTF) said the backpacker tax reduction was a step in the right direction but denounced the 9% rise in departure tax.
“It is outrageous situation that the Federal Government continues to view the tourism industry as a cash cow,” TTF chief executive Margy Osmond said.
“While I am very disappointed that the Federal Government wishes to push ahead with the backpacker tax, 19% is a hell of a lot better than 32.5%. TTF will be continuing our dialogue with other political parties as the legislation for this tax is introduced to the Parliament.
She said industry had been “completely blindsided” by the decision to increase departure tax (which carries the pompous official name Passenger Movement Charge or PMC).
“At no point was it flagged in any discussions in which we took part and is a bitter disappointment that we’ve been slapped with this tax hike on every traveller – Australian or international visitor – heading overseas.
“I want to make it quite clear that TTF, representing the industry, has been steadfast in our opposition to any increase in the Passenger Movement Charge. Before the Federal Election, the first plank of our election manifesto was the demand that all sides of politics continue to freeze the PMC at the current rate of AUD 55.
“We recognise that the Federal Treasurer Scott Morrison has inherited this decision from his predecessor and that it has been a difficult issue for Government. However, any need to make revenue targets has been set by the Government not industry.
“We do acknowledge that the Government has picked up some of TTF’s suggestions. The revised backpacker tax package does contain some positives for the industry. The extension of the age limit for working holiday makers from 30 to 35 and the reduction of the cost of working holiday visa by AUD 50 to AUD 390 is welcome. The relaxation of some of the employment restrictions that will now allow backpackers to continue to work for the same employer for 12 months but in different states or territories in Australia is also positive.
“The allocation of AUD 10 million for the industry to work with Tourism Australia to increase the working holiday makers to Australia following the more than 43,000 decline we’ve experienced over the past three years is something that TTF has been calling for as part of this review.”
Written by Peter Needham