Agribusiness

Backtrack on backpacker tax opens way for 15pc compromise

Grain Central, November 28, 2016

THE FEDERAL government may pass its controversial backpacker tax this week after agreeing to a compromise that would see the tax set at a new rate of 15 per cent.

The compromise position was reached today after SA senator Nick Xenophon, Victorian senator Derryn Hinch and senators from Pauline Hanson’s One Nation party indicated they would support it.

Initially the government had proposed in the 2015 budget a 32.5pc tax for seasonal workers that was strongly opposed by the farming sector.

It subsequently changed its position to calling for the tax to be 19pc which it tried to get through parliament under the Working Holiday Maker Bill.

Any hope for a resolution on the backpacker tax looked set to crumble as late as last Thursday when the Senate, with support from the Labor party and crossbenchers, rejected the Bill in favour of a lower 10.5pc tax rate.

But negotiations between the Government and key crossbenchers have led to the announcement this morning of a new 15pc compromise.

If the government is not successful in having the new 15pc rate passed in parliament this week –the last sitting week for the year – the rate will revert to the original 32.5 per cent for seasonal workers from January 1.

The National Farmers’ Federation (NFF) chief executive officer, Tony Mahar, said he welcomed comments by the Treasurer that the Government had agreed to a compromise on the backpacker tax of 15pc.

Tony Mahar

Tony Mahar

“The NFF, back to the Colbeck Review, said that a rate between 15pc and 19pc was a fair one that would attract backpackers to the sector and be comparable with rates paid to Australian workers,” he said.

“We now ask that the Senate expedite passage of the relevant legislation to provide the long-needed certainty to the sector and allow businesses to start rebuilding backpacker interest in on-farm jobs.

“In time, we hope that lessons are learned so that the farm sector is never compromised in this way ever again.”

The Victorian Farmers Federation (VFF) applauded the move with Horticulture vice-president, Emma Germano, saying she hoped the Senate would pass the amended Bill so farmers could stop worrying about where their labour would be coming from.

“The backpacker tax has been a source of great stress for the agricultural sector over the past 18 months, but now we can put the saga behind us and get on with our jobs providing food to Australians,” she said.

“Backpackers are a vital source of temporary labour for farmers, and we’re pleased to finally see a resolution to the whole saga in line with the position the VFF took to the Government early this year.”

WAFarmers chief executive officer, Stephen Brown, said the organisation was pleased for industry that a fair compromise had been reached.

“The 15 per cent compromise is a huge relief to farmers as we head into the peak working season for backpackers in the agriculture, tourism and hospitality sectors,” Mr Brown said.

“The Government has adopted a common sense approach which will see backpackers taxed at the same rate as those working in Australia through the Seasonal Workers Programme.

“Streamlining the tax rate to 15 per cent across the board for all foreign labour will minimise confusion for employers and employees, while ensuring Australia remains an attractive competitive nation to holiday and work.

“Further, there should not be any negative impact from the 15 per cent tax rate for Australian workers in the industry as they will still receive the $18,200 tax free threshold.

“The extra four per cent backpackers will save will also be of benefit to the Australian economy as they will spend those additional funds in regional communities.

“We look forward to the legislation being passed so that certainty for the three key industries affected by this tax can be secured.”

More than 40,000 visa holders work in the agriculture industry each year and bring in around $3.5 billion to the Australian economy.

Source: NFF, VFF, WAFarmers

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