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Tourism hails likely axing of dumb ‘backpacker tax’

March 17, 2016 Business News, Headline News No Comments Email Email

egtmedia59Tourism and accommodation bodies throughout Australia have welcomed the likely scrapping of a foolish “backpacker tax” which threatened to massively penalise young holidaymakers – making them likely to ditch Australia in favour of rival destinations such as New Zealand.

Federal Tourism Minister Richard Colbeck foreshadowed the demise of the planned tax in a speech to the Destination Australia Conference in Sydney, conceding that the impost could damage Australian agriculture and tourism.

The proposed tax would see foreigners on working holiday visas taxed 32.5 cents from the first dollar they earn, and a scrapping of the AUD 18,200 tax-free threshold.

Colbeck later told the ABC he would head a cross-departmental review of the tax.

“Legitimate concerns have been raised about the impact the so called backpacker tax would have on our global competitiveness as a backpacker destination,” he said.

“The backpacker workforce is vital to two of our key super growth sectors – agriculture and tourism.

“We have therefore decided that the proposed tax arrangements require further discussions to ensure Australia does not lose market share in backpacker visitation.”

Northern Territory Chief Minister Adam Giles welcomed Colbeck’s decision to review plans for the “ridiculous” tax. He wasn’t alone. The Tourism & Transport Forum Australia (TTF) expressed delight at the “long overdue review”, which it said represented “a victory for common sense” the would hopefully signal the end of the “foolhardy tax grab”.

Australia’s peak accommodation body, Tourism Accommodation Australia (TAA), echoed the sentiments. TAA has lobbied government, saying the measure would significantly affect hotels in regional and remote areas and their ability to attract workers.

“We congratulate the Government for this move as many regional and remote areas rely on seasonal workers, especially in tourism, and this tax would have seriously impacted the flow of working holiday visitors,” said TAA chief executive Carol Giuseppi.

“The Government has identified the need to create 123,000 workers in the tourism and hospitality sector by 2020, and while the hotel industry is working hard to ‘grow its own’, regional and remote areas in particular will rely on being able to attract backpackers and others to fill shortages in peak seasonal periods.

“It is heartening to see the Government listening to industry concerns and acting to address the issues.”

“The Government’s support of bilateral air agreements, free trade agreements and tourism marketing has had a significant impact on attracting international visitors, and the fall in the Australian dollar during 2015 stimulated the domestic travel sector while reducing outbound travel growth to just 1% during the year,” Giuseppi said.

“For the hotel industry, continued growth in visitor numbers is vital if we are to soak up the vast amount of new hotel supply coming into the marketplace.

“It is now estimated that there are over 100 hotel projects in the pipeline, plus a large number of significant refurbishments, and it will be important to generate significant new demand to support this unprecedented level of investment in the hotel sector.”

Commenting on Colbeck’s statement, TTF chief executive, Margy Osmond, said it appeared that the Federal Government had heard the concerns of industry that the backpacker tax would dramatically reduce the number of international visitors coming to Australia for working holidays, and was moving to act in some form.

“Today’s announcement follows an industry roundtable with Minister Colbeck held last week that raised our concerns about the impact of the tax and the Minister should be applauded for raising this issue with his Cabinet colleagues and achieving a commitment to look into the implications of this tax on industry,” Osmond said.

“TTF sounded the alarm on the negative impact of the backpacker tax on Federal Budget night nearly a year ago and we’ve continued to be a vocal advocate on the need to rethink the backpacker tax.

“Our best advice to the Federal Government is still that it should just scrap the backpacker tax – it makes no sense to slap a 32% tax on backpackers when they have an entire world of destinations, from which to choose.

“The backpacker tax is poised to smash the workforce for tourist operators who rely on working holiday makers in seasonally-sensitive and remote regions, where a local workforce simply isn’t available.

“The Federal Government has been at cross purposes with their policies on working holiday makers. On the one hand, through the Northern Australia White Paper, they are making it easier for working holiday makers to stay with the same employer for longer, up to 12 months from six, but on the other hand a 32 per cent tax on every dollar they earn is not an incentive to work in Australia.

“Nearly 30,000 people have signed the National Farmers’ Federation petition calling for the backpacker tax to be scrapped. That sends the loudest and strongest message to the Federal Government that the backpacker tax is just bad policy and has got to go.”

Colbeck’s announcement comes at a time of strong growth in visitor numbers and hotel development in Australia. The latest National Visitor Survey, released today by Tourism Research Australia, paints a very promising picture of the state of Australian tourism. (See: Domestic tourism soars on back of strong int’l figures)

For the year ending December 2015, overnight trips grew 7% to 87.1 million, visitor nights increased 4% to 322 million, and tourism expenditure spend grew 6% to AUD 57.9 billion. With similarly strong growth in international tourism, Australia’s tourism sector contributed AUD 113.5 billion in expenditure in 2015.

Written by Peter Needham

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