Nov 29, 2016

Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 – Second Reading

Mr ALBANESE (Grayndler) (12:54): In policymaking, just like in life, it is important to think things through very carefully. If you make decisions on the run, if you fail to consider what the consequences of those decisions will be, you end up with bad outcomes. If you get it really wrong, you can absolutely damage our economy, you can destroy jobs and you can have a devastating impact on average Australians. That is what has happened with this backpacker tax.

The member for Durack, who just spoke, who spoke in here in favour of 15 per cent, last Thursday was supporting 19 per cent and two months ago was supporting 32.5 per cent. Their position is quite frankly farcical. It is an indictment of their failure to have proper policymaking processes built into the budget situation, and this comes from a group of people who farcically pretend that they care about regional Australia. For the National Party in particular to have presided over this policy disaster, when it has the Minister for Agriculture as the Deputy Prime Minister in a senior cabinet position, is quite frankly extraordinary.

It is not just us saying this. This is what Fiona Simpson, the new head of the National Farmers Federation, said this morning on Radio National: ‘We were absolutely blindsided by an item in the budget that came in that we were not consulted about that said that they were going to put the backpacker tax up to 32½ per cent, from nought per cent. When that happened we saw the dangers of what would happen to our industry. People, backpackers particularly, would have a look at that tax rate, would compare it to how well off they would be in Canada, in New Zealand or other countries, and they wouldn’t come, and they haven’t come.’ That is what the National Farmers Federation said about this debacle, presided over by this incompetent, neglectful government.

The fact is that, prior to this, there was no consultation with the industry. The backpacker tax has been causing chaos and uncertainty across the Australian community for more than 18 months. We know this from members such as the member for Solomon, who has reported mangoes lying on the ground, rotting, because of the unavailability of a workforce. We know that farmers have said that they would not plant crops because they were not sure they would be able to be picked. We know that the tourism sector, which I am proud to represent in this chamber on behalf of the Australian Labor Party, particularly in northern and regional Australia, has been devastated by these changes. It has been unable to get those seasonal workers, who are so important, just like in the agricultural sector—particularly in areas like Broome, in the member for Durack’s electorate, which has a very short tourist season. People come in and provide support for those businesses.

Yet they introduced this tax, which went from zero to 32.5 per cent, not only with no consultation with the industry but with no research or modelling into the economic effects of the tax. Indeed, there has been no evidence provided from the government that they weighed any benefits from a so-called increase in revenue from this tax against the negative effect on jobs, on businesses and on taxation from the fact that backpackers were not coming here to pay any rate at all. So, far from an increase in revenue, you have had a reduction in revenue and economic activity, particularly in regional Australia, as a result of this government’s position.

They introduced this in May 2015, and the first time it was voted on was last week, in late November 2016—18 months without them having the capacity to bring legislation before the parliament. The 2016 budget came and went; the whole of that parliament came and went; the election came and went—and still we did not have any legislation. It is quite extraordinary that you would have a 2015 budget measure still being debated in November 2016—not because it had been rejected by the Senate, because it had failed to be introduced. But, over that time, month after month, as the agriculture and tourism sectors were warning about the impact that it was having—that backpackers were not coming here and that that was having a devastating impact on small business and on regional communities in places like northern Australia and Tasmania that rely upon these people for the local economy—what we had from this government was an arrogance that refused to listen.

And then, at the last minute, you had the 19 per cent figure that they attempted to get through the parliament last week. The government had again said, just two days ago, that they would not budge. And now of course we know that that is precisely what they have done: to budge; to change their position—now down to 15 per cent, because of an amendment proposed by a very minor party in the other place, the once great National Party, rolling over to the Liberal Party on one circumstance in this place around the cabinet room, but rolling over to One Nation senators in the other place, a fact that they stand condemned on.

But the chaos has continued in this parliament. Not only did you have an idea plucked out of the air and put in the budget—and, one would assume, supported by people like Barnaby Joyce and Warren Truss, who was then the Deputy Prime Minister of the country—but then, when they changed to 19 per cent, you had, again plucked out of the air, an increase in the passenger movement charge. That increase in the passenger movement charge was made, again, with no economic modelling and no consultation with the sector. It was just a thought-bubble from an unconnected piece of legislation somehow attached to this because they had the farcical situation of having to deal with this legislation.

Last week, first, they knocked off the increase to the passenger movement charge in the Senate. So they had to put it again. And what they said to the One Nation senators was: ‘If you just agree to this, we’ll have an amendment and we’ll bind the parliament for five years.’ And of course we heard from the Speaker, in his ruling earlier on, how farcical that is. You cannot bind the parliament for next year, let alone bind the next parliament. The idea that you can do that is, quite frankly, absurd, and the legislation we will deal with next, arising after this, will have no practical effect at all. But it shows that this is government by chaos. On policy integrity, it is a fail. On proper research, it is a fail. On industry consultation, it is a fail. On parliamentary procedure, it is a fail.

Backpackers are critical to the Australian economy. They come here, they work largely in regional communities, and, what is more, they bring more money than they earn. They contribute to those local economies. It is not rocket science. If they are working in Darwin or Broome or Townsville or Launceston, what they do is: they bring money to those local economies. They earn money, and they spend it in those local economies where they are working. The money circulates around those local economies. They help to create local jobs. That is what they contribute.

But also they do something more than that, because all of the research shows that they come back. It is a bit like the people who have gone through the Colombo Plan and why that has been a fantastic investment in Australia’s future. These people become advocates. They circulate the pictures of them working in the tourism sector or the agricultural sector through social media. They become advertisers for our great nation. They encourage other people to come here right now. But they also come back. They come back with their families. They come back and, instead of staying in the hostel, they stay at the Hilton, when they come back, down the track. They become advocates for Australia. It is one of the reasons why the tourism sector is growing so strongly.

Research shows that most backpackers earn about $16,000 while they are here, and they spend many times more than that. But we have had these ridiculous arguments put forward by those opposite—ridiculous arguments about backpackers somehow being better off than Australian workers. Well, let us be clear and let us knock off that furphy. Backpackers, under Labor’s proposal, would pay 10.5 per cent from the first dollar earned. Thanks to the Labor government, there is a thing called the tax-free threshold. That is now $18,200. We tripled it when we were in government. If you want to talk about progressive tax reform—and I pay tribute to the member for Lilley for this—the most significant single progressive income tax reform in generations was when we tripled the income tax-free threshold. It took a million Australians out of the tax system completely. And, of course, most backpackers do not earn anything like $18,200. So it is the complete furphy that they have raised. They have gone out there and they have tried to argue, somehow, this case. But then, in the ultimate indictment, if anyone was unsure of whether we were right and whether they were just talking rubbish, compare their speeches of last week when 15 per cent would be ‘a disaster’ with speeches of this week when they have legislation before the House for 15 per cent. They simply cannot have it both ways.

When it comes to tourism, there are a few points. It employs more than a million Australians. It contributes $107 billion to the economy. Every dollar spent on tourism generates another 92c in other parts of the economy. Tourism has been recognised as one of the five super growth sectors. It represents three per cent of Australia’s GDP. In the 12 months to August this year, overseas arrivals show eight million international visitors came into Australia, with a 10.9 per cent increase over the previous years. We have a real opportunity at hand to grow the economy through tourism.

If you have a look at the jobs in one seat. Leichhardt, which is based around Cairns, has 8,535 jobs. We will see which way the member for Leichhardt votes on this legislation. The tourism minister himself, the member for Moncrieff, has 6,672 jobs and businesses in his seat. The member for Durack, who just spoke, has 6,195. The courageous member for Dawson will not be voting for this, surely. He has 5,325 people employed. And across Tasmania there are 10,000 direct jobs and over two and a half thousand businesses rely upon tourism.

The fact is: this government has completely botched this legislation. It has damaged tourism and it has damaged agriculture. (Time expired)