Shorten hammers government on backpacker tax

LABOR leader Bill Shorten has attacked the Coalition’s handling of the backpacker tax while indicating interest in the National Farmers’ Federation’s proposal to lower the rate to 19 per cent to avoid damaging seasonal labour supplies.

Speaking to media today, Mr Shorten was asked whether his party supported scrapping the tax that was announced in last year’s federal budget to remove the $18,200 tax free threshold and increase the rate to 32.5 per cent on working holidaymakers.

The Labor leader said his party had “grave concerns” about the way the backpacker tax was introduced.

He said it was National party leader and Agriculture and Water Resources Minister Barnaby Joyce's tax, who had tried to “walk both sides of the street on this tax”.

Mr Shorten said the government introduced the tax but failed to consult properly or talk to the tourism or agriculture sectors about it.

“The National Party - never shy to contradict themselves - campaigned against the tax they pushed,” he said.

“They realised that backpackers are not coming to Australia and they're bypassing Australia, according to tourism authorities and others and going to New Zealand and Canada.

“They then said during the election, ‘We will review it all and when we start to collect the tax we will review it’.

“It has been five weeks since the election (but) the terms of reference for the review haven't been released.”

The tax increase was forecast to raise $540 million over the first three years but during the election campaign the Coalition announced a six month deferral on its July 1 commencement date, at a budget cost of $40m, to conduct a review that’s due to put a proposal to cabinet in November.

Mr Shorten said Labor's position was “We are calling out the Liberals, the LNP and Nationals - it is their tax”.

He said the government didn't consult on the tax increase and had caused “untold harm” with reports of almost a de facto strike of backpackers coming to Australia.

“Now they're dragging their heels in terms of the review and they've already, in their budget, banked the tax,” he said.

“So in other words, whilst they say on one hand out in the electorates 'oh, we don't like the tax', on the other hand they've banked the tax.”

Mr Shorten said Labor would participate in the review and he was “very interested” in the principles of the NFF reform proposal, which included reducing the tax rate on backpackers to 19pc.

“Labor is going to be flexible - we want to work with the government,” he said.

“Put simply, they've made a real mess of this.

“Labor's prepared in a bipartisan fashion to help fix it up and we want to hear the voices of the tourism industry and farmers first, because they have been forgotten in this whole backpacker tax debate by the government.”

NFF Workplace Relations General Manager Sarah McKinnon said her group welcomed the Opposition leader’s acknowledgement that the backpacker tax had caused ‘untold harm’ resulting in an almost de facto strike of backpackers coming to Australia

She said the NFF also welcomed the ALP’s offer to work with the government on fixing the tax

“The backpacker tax review needs to begin without delay - time is running out for us to achieve a workable solution and have it implemented by January 1, 2016 in accordance with the government’s commitment.

“Any outcome we are able to achieve through the review must be supported in a bipartisan fashion in the interests of the agriculture and tourism sectors.

“We urge the government to begin the review process as a matter of priority.”

Last week when asked about the backpacker tax on Sky TV, Shadow Agriculture Minister Joel Fitzgibbon said he believed there was probably a case for an agriculture-specific visa, “where the rorts are less obvious and the thresholds don’t have to be as tough”.

He said rather than talking about broad reform, the government went throughout the election campaign saying ‘don’t worry we will look at it after the election, nudge, nudge, wink, wink’.

“Well the election’s over and we’ve still heard nothing from the government and of course the sectors affected, tourism and agriculture are still in crisis; they don’t know what is going to happen on January 1,” he said.

“And this of course is not their first review - this is the second review on the backpacker tax - they need to be clear on what money they are prepared to give up.”

Backlash from the agriculture and tourism sectors, amid fears about the loss of critical seasonal workers, caused the Coalition to conduct a review leading into this year’s budget to ease the tax rate.

However, that proposal was rejected by Treasurer Scott Morrison while raising concerns about the need to examine broader issues with visa and taxation arrangements to satisfy labour force supply issues across Australia, not just the agricultural sector.

Assistant Agriculture and Water Resources Minister Anne Ruston has said the new cross departmental review will need to implement a solution that ensured Australia remained competitive with countries it competed against, for the niche workers.

But she said it will also need to ensure working holidaymakers pay a fair and reasonable amount of tax, in Australia.

The tax increase scheduled for July 1 was due to raise $100m in the first year and $220m per year, over the following two years.

The $540m was allocated to fund policy initiatives announced in last year’s budget for the Agriculture Competitiveness White Paper and Northern Development White Paper.

The review ahead of this year’s budget proposed a 19pc tax rate and changes to superannuation payment arrangements to deliver a $540 million cost-neutral budget outcome but was rejected by cabinet.