FEDERAL Agriculture and Water Resources Minister Barnaby Joyce says “watch this space” on the government’s pending resolution to the backpacker tax issue.
Mr Agriculture was speaking at Narangba in Queensland this afternoon on day two of the official federal election campaign.
Farm groups have promised to make the tax increase an election issue after a proposal to soften the rate, that’s set to go to 32.5 per cent on July 1, was rejected by cabinet ahead of last week’s budget.
Farm and tourism groups have warned the increase is already impacting the availability of fragile seasonal workforces.
Mr Joyce said he’d been in communication with the Treasurer and Prime Minister about the backpacker tax, as recently as this afternoon.
He said the issue was not concluded and he understood the government would “bring a further outcome, in our time frame”.
“I hear what people are saying (but) this changing of the tax rate does not happen until July 1,” he said.
“I know we’re not going to wait until the first of July but it doesn’t have to happen this afternoon.
“I hear the issue, it’s a classic example of where we hear the issue and we work towards a form of resolution – now watch this space – we’re not blind to this.
“Any issues with the backpacker tax we are at work and will find a resolution.”
The tax on working holiday makers is set to increase to a flat 32.5pc rate on July 1 with no tax-free threshold and was announced in last year’s federal budget.
A proposal to soften the increase was rejected by cabinet and no changes were made in the budget last week, to find a $540 million cost neutral solution.
But it was later revealed the government would be delaying the tax increase by six months while a review was conducted looking at the issue in greater detail with a potential outcome likely to be a consolidated visa for agricultural workers.
One rural Coalition MP who asked not to be named said a deal had already been done and it was “stupid not to get on the front foot” and announce the review.
Treasurer Scott Morrison has said backpackers need to pay tax while visiting Australia because they use public services.
But he has also acknowledged the issue is complicated and allowing more time would assist with finding a proper solution through ongoing stakeholder consultations with industry.
Voice of Horticulture chair Tania Chapman said if the tax increase was introduced many growers would not be able to harvest their crops as they would not have labour, “leaving product to die along with the future of rural and regional communities”.
“How do we get a government so divided within itself – where one side has worked diligently to gain agriculture Free Trade Agreements in key exporting countries and yet the other side is working to cripple our agriculture industry,” she said.
NSW Liberal senator Bill Heffernan has expressed concern at the lack of internal consultation in the Coalition prior to the tax rate increase being announced in the 2015 budget.
Last week at Senate budget estimates, he said it was “an arse-about-face sort of issue”.
“It is an absolutely critical issue to be able to get the fruit picked if you want to have cherries and lamb chops et cetera when you go to the supermarket,” he said.
“At Junee - and I speak from experience - I think we have about 40-odd people from Korea and other places (and) they are wonderful workers.
“In terms of the decision of the government which occurred, as I understand it, last year under the guidance of Mr Truss and Mr Hockey, with the impact down the track we are now at the impact stage it is a disastrous bloody outcome.
“All I know, speaking for rural Australia, is that we would be buggered without (backpackers).”
At his budget lunch last week, Mr Morrison said “I don't think we've actually resolved it at a point yet where I think we've got good policy”.
But Shadow Tourism Minister Anthony Albanese said the government can’t have it both ways as it was either bad policy that should be dumped, or it’s happening.
Last week WA Nationals MP Vince Catania urged regional and remote communities to boycott service to campaigning federal politicians in making a stand on the backpacker tax increase and its impact on those economies.
WA Labor Senator Glenn Sterle said if backpackers weren’t accessible to far north WA communities like the Kimberley region, roadhouses, pubs, resorts, restaurants, caravan parks, supermarkets and shopping centres would be in dire straits, “before we even start talking about fruit picking”.
“How the hell do they think the melons and the mangoes and everything else that grows in Kununurra gets into the back of a truck and down to the markets in Perth – it’s backpackers,” he said.
Senator Sterle said the Coalition’s defence of the tax increase and members saying “watch this space” was “just bullshit”.
He said the Coalition’s attitude was a case of the Treasurer fiddling with backpackers already warning they would choose to visit NZ or Canada instead.
“It’s one of two things for the Coalition - one let’s just put our head under the rug and it’ll just pass in the election campaign and we don’t have to be committed or two let’s see how hot the burn gets before we have to make an election promise,” he said.
Senate estimates last week revealed that in 2014-15 there were roughly 56,000 backpackers working in agriculture for a few months mostly in the horticultural sector and the general trend on that number, has been increasing.
The average wage is about $15,000 but the scrapping of the prior tax free threshold of about $18,000 with the July 1 scheduled increase, would see the wage reduced by about 30pc.
SA Labor Senator Alex Gallacher said “It seems pretty logical that if you get a 30 per cent reduction in your earning capacity then the job will become less attractive”.
But Assistant Agriculture and Water Resources Minister Anne Ruston said when the measures was announced in the 2015 budget – in response to the ATO's determination that 417 and 462 visa holders were to be taxed at 32.5pc - the Labor Party supported the changes.
“I just put that on the record,” she said.
Department acting deputy secretary Paul Morris said labour supply issues were generally considered as part of the Agricultural Competitiveness White Paper released in July last year, which the tax increase partly funded, along with the Northern Development White Paper.
Mr Morris said a number of submissions were made in relation to labour supply issues during the Ag White Paper process but no specific measures were introduced in response.
“However, of course, both the agriculture white paper and the northern Australian white paper needed funding to pay for them and part of the source of the funding was from this particular measure,” he said at last week’s estimates hearing.
Mr Morris said some changes made to visa arrangements as part of the northern Australia white paper.
