Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016, Passenger Movement Charge Amendment Bill 2016 – Second Reading
Mr ALBANESE (Grayndler) (12:10): I rise to support the amendment that has been moved by the shadow Treasurer in debate on the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, which is the next step in the farce that has been the government’s handling of this issue. I give the member opposite, the member for Hinkler, a bit of credit for chutzpah—standing in here in October 2016 with legislation arising from the May 2015 budget and saying, ‘Why don’t we get on with it?’
There has been 18 months of uncertainty under this government’s policy, because on budget night 2015 they made the announcement of the new backpacker tax without any consultation, without any economic modelling, without any idea of what the impact would be. Then in the so-called solution, raised just a couple of weeks ago, we had a repeat of the same flawed process, with an increase in the passenger movement charge without any consultation with the tourism sector, without any modelling whatsoever, and they expect us to just wave it through. Well, we will not be doing that. We will be providing proper scrutiny of this legislation through a Senate inquiry and we will be making sure that the government are held to account for their extraordinary incompetence and for the consequences of their own legislation.
It does appear that they have the solution wrong, because the so-called solution, which includes the $5 increase in the passenger movement charge, comes in direct contravention of the commitment that they gave that there would not be any increase in the passenger movement charge. This has been a shambolic mess from a mob who had a plan to get into government but no plan to actually govern. It began with the 2015 budget from Joe Hockey, the then Treasurer. There he announced the government’s decision to treat working holiday-makers as non-residents for tax purposes, taxing them at 32.5 per cent from their very first dollar of income.
It does not take a genius to work out the serious flaws in this decision. This impacted particularly on the tourism and agriculture sectors. Backpackers, of course, come to Australia and in the short term assist farmers with the seasonal work, including the picking of fruit and harvesting of crops, that farmers cannot get a regular workforce located in their local communities to do. They also particularly help in the tourism sector, which is very seasonal. Places like Broome, Darwin and Cairns in northern Australia have particular on-seasons. At the same time, when it is their off season, of course, it is the on season in places like Tasmania in southern Australia. These sectors rely upon backpackers to do the work.
Previously, backpackers were able to work tax-free. That was part of the conditions attracting them here compared with other potential destinations like Canada and New Zealand.
As to the impact to the government’s bottom line, we know from analysis that backpackers spend far more than they earn. That is, they come here with a portion of money; they supplement the money that they have. But there is something in common between the money they earn and the money they bring here: they spend it in the local communities, particularly in regional Australia, providing a boost to job creation in those local communities—something that those opposite, when they came up with this appalling plan, did not seem to get. It is something that the government, through this legislation, is admitting they got wrong in the 2015 budget, because less income for backpackers means less income for local economies.
Despite those facts, the coalition pushed on. First, they delayed any commencement of the tax for six months. Then they announced they had launched a review, creating even more uncertainty—particularly across the agriculture sector, with some farmers saying they would not plant crops because they were not sure that they would be able to have them picked at the end of the process. The review spanned the recent election campaign, during which the coalition did not provide the electorate with any idea of its position, creating even more uncertainty.
Finally, today, this messy process culminates in legislation which includes, amongst a number of measures, a lower rate of 19 per cent from the first dollar of income up to $37,000. Above this level, marginal tax rates will apply.
But they did something more with this semi-backflip. The Treasurer devised a new plan to raise the passenger movement charge by five dollars—proposed without any consultation whatsoever. When we met with the officials from Treasury and from the Treasurer’s office, we asked, ‘Have you done any modelling of what the impact of this would be?’ And we had declared at the beginning of the meeting that we would disclose the outcomes, so I am not breaching confidences here. The modelling that they did was zero—nothing whatsoever. Indeed, in the backpacker tax changes, they assumed that it would stay the same in terms of the impact on backpackers.
So we are supporting an amendment to the legislation. And we are acknowledging that the Senate inquiry will be an opportunity for the sector to actually get some scrutiny—an opportunity to get some rigour into the policy process that the coalition government seemed to think should be thought about when problems are raised.
The most recent International Visitor Survey showed that Victoria, Queensland and the Northern Territory have experienced a decline in the number of backpacker visitors. All three of these, in addition to New South Wales, South Australia, Western Australia and the ACT, have also shown a serious decline in the number of backpacker visitor nights. This should not come as news to the coalition. The World Economic Forum’s travel and tourism competitiveness index in 2015 ranked Australia 127th on taxes and charges and 49th for visa requirements.
We know that, over 2014 and 2015, the number of working holiday-maker visa applications had already started to fall. The government need to pay for the compromise that they have put up—this deal behind closed doors with the courageous people from the National Farmers Federation, who said this was all bad and then completely rolled over. And we will bear that roll-over in mind the next time the National Farmers Federation say, ‘We want to have a strong campaign.’ You would not want to be in a trench with the NFF, I tell you! They folded their tent, having said that it should go back to the original proposition. But that is a matter for them to justify to their members, frankly, because their members are still complaining about the proposition that was put forward in this legislation.
The government is also increasing the tax on the departing Australia superannuation payment to 95 per cent. They think no-one will notice that this little measure has slipped in.
When you put it all together, the government is actually gaining more revenue than they would have originally. This is just another grab—the so-called washing your face nonsense, that the Treasurer said does not stack up at all. Indeed, the Tourism and Transport Forum CEO Margy Osmond had this to say on 27 September, as to the increase in the passenger movement charge:
At no point was it flagged in any discussions in which we took part …
Indeed, the new minister for tourism—they have finally got one—said, in his first Dorothy Dixer in this House in this parliament, just weeks ago, that previous increases in the passenger movement charge were:
… choking the golden goose that is Australia’s tourism industry.
Well, I say that poor old Minister Ciobo made a goose of himself in making that statement. But of course not even he was consulted. He was on a plane to the Middle East. He was in Doha when this went through the cabinet process. He was not even consulted about the increase—he was treated with contempt. And he expects us to take him seriously!
The TTF said this about it:
Prime Minister Turnbull has said during the election campaign ‘If you want less of something, tax it more’, and that is exactly what the Government’s current policy of viewing tourism as a ‘cash cow’ is going to deliver.
We know that, from August to August, the latest figures showed that there were eight million international visitors, a 10.9 per cent increase year on year. And yet what the government is doing here is trying to chuck more tax on, without any justification. What is the link with the backpacker tax fiasco that the government has presided over? There is none whatsoever. And Scott Morrison has form on this as well. This is what he had to say about increases in the Passenger Movement Charge in this parliament in 2008:
This tax is a pernicious impost on our aviation and tourism sectors, which are already under pressure. Tax increases are designed to discourage consumption, so placing a tax on travel is, I therefore assume, designed to discourage business activity in the travel sector.
That is what he had to say.
We have, with the exception of the UK on business travel, the highest charges in the world. When we talk about $60 on a ticket, it is not just $60 on a first-class ticket to Europe; it is $60 on a ticket to New Zealand, which you can get online for about $120, or a ticket to Bali. This tax can be to 50 per cent of the actual price of a ticket—and they are saying they will increase it. That is why in the election campaign Labor—as well as, it must be said, the coalition—said we would not increase the Passenger Movement Charge. We released a tourism policy in the election campaign. That is more than the government did; it did not get through; they did not have a tourism policy. But what they did very clearly do was say they would oppose an increase in the Passenger Movement Charge. That is why there is such anger in the tourism sector when it comes to these changes.
Labor set out a comprehensive plan for tourism in the election campaign: protecting our natural assets; building skills and career pathways; using government to attract more major events and exhibitions; and re-engaging the federal government with the tourism sector both domestically and internationally. The tourism sector delivers some $94.5 billion in economic activity every year. It employs, directly and indirectly, one million Australians. Those one million Australians rely on tourism, particularly in rural Australia. That is why Labor will not rush to failure like the coalition seems eager to do. The government needs to satisfy the sector that it has done any modelling whatsoever—or else Minister Ciobo’s comments about the golden goose certainly apply to this government.