Industry groups are backing the National Farmers’ Federation (NFF) petition to stop the Australian government’s proposed scrapping of the tax-free threshold for people with working holiday visas.
The 2015/16 Australian federal budget proposed that from July 2016, backpackers and other non-residents on working holiday visas will pay 32.5 cents in tax on every dollar earnt.
This would mean scrapping the tax-free threshold that exists for residents earning up to A$18,500, which the government estimates would raise A$540m over four years as a result.
Chair of the NFF workforce productivity committee, Charlie Armstrong, said taxing backpackers 32.5 per cent would make Australia’s agricultural industry unprofitable, reducing productivity, and stripping regional communities of tourism spending.
In an online petition, the NFF has called for a 19 per cent ‘backpacker tax’, which would raise A$315.7m.
“The agriculture industry relies on backpackers to fill severe labour shortages which are often seasonal and temporary, for example, when crops are being harvested or milk production is at its peak,” Armstrong said. “Each year, backpackers contribute around A$3.5bn to the Australian economy and around 40,000 find employment on Australian farms.”
Armstrong said backpackers would be inclined to find farm work in nations like Canada and New Zealand that have lower tax rates.
“What is the point of increasing revenue through the implementation of this tax only to strip back the contribution of agriculture, tourism and regional spending to the economy?” Armstrong said. “We urge farmers and other industry stakeholders as well as the broader public to join us in demonstrating the importance of backpackers to agriculture, tourism and the regions by signing our online petition.”
Industry body Ausveg has quoted figures from the Department of Immigration and Border Protection that show the number of workers coming to Australia under 417 working holiday visas had dropped over the past two years.
“The Australian vegetable industry faces critical local labour shortages during peak seasonal periods, and our growers rely on backpackers to harvest their crops and prevent crippling losses,” Ausveg CEO Richard Mulcahy said in a press release. “While Australian growers’ first preference is always to employ local workers, there is simply not enough local labour to satisfy demand during peak harvesting periods, and backpackers play a vital role on Australian farms by providing a workforce during these critical times.”
“If the ongoing decline in the number of backpackers coming to Australia isn’t arrested, or if these workers aren’t replaced with labour from another source like the Seasonal Worker Programme, we are facing a very real threat to the future of our industry.”
The 417 visas were introduced in 2005 to address labour shortages in the agriculture industry, and while the visas have been extended to those working in other industries, some 90 per cent of 417 workers are employed in agriculture.
Federal treasurer Scott Morrison has defended the proposed changes, stating that working holiday visas are a cultural exchange’ programme and that other visas exist for people primarily seeking work.
Morrison said there were further incentives for working holiday visa holders to seek employment in northern Australia.
Seasonal Worker Programme Expanded
While the government is sticking to the tax changes for working holiday visa holders, another labour programme has been expanded.
Australian minister for employment Michaela Cash announced on 8 February that the Seasonal Worker Programme has been expanding beyond primary horticulture to broader agriculture jobs.
"The Seasonal Worker Programme has been highly effective in helping Australian businesses overcome seasonal labour shortages," Cash said.
"Employers in a range of agriculture industries including cattle, sheep, grain and mixed enterprises will now be able to apply to be part of the Seasonal Worker Programme."
"While we are determined to ensure businesses across Australia have access to the seasonal workers they need, we are equally determined that no Australian misses out on a job," Cash said.
Since the programme was first trialled in 2012, more than 8,600 visas have been issued to people from 12 Pacific nations for employment in low-skilled jobs not able to be filled by local workers.
Those employed under the Seasonal Workers Programme pay 15 per cent tax and are able to return each year for six or nine month working stints depending on which country they come from.