It looks as if the controversial 32.5pc backpacker tax debacle may finally have come to an end, as Treasurer Scott Morrison announced yesterday, 28 Nov., that the Government would compromise on a 15 per cent backpacker tax rate.
The Coalition has already reduced its original 32.5 per cent rate to 19 per cent, after widespread backlash from farmers and tourism operators, who fear it will drive backpacker workers away from Australia, reports abc.net.au.
Labor is standing by its demand for a 10.5 per cent rate, initially preferred by the Senate, saying it's what farmers want and will keep Australia competitive with New Zealand.
Mr Morrison said the reduced rate would cost the federal budget $120 million over four years and he accused Labor of being responsible for delaying a resolution.
When asked what his message was to farmers who are furious at the Coalition for its handling of the backpacker tax, he replied: "The matter is sorted this week".
The revised bill looks set to pass the Senate with the support of key crossbenchers including Derryn Hinch and those from the Nick Xenophon Team.
Senator Xenophon described the result as a "win-win" because the Government had backed his plan to allow Australian seasonal workers on Youth Allowance or New Start to earn up to $5,000 without a penalty.
Higher tax on superannuation
The backpacker tax compromise package also includes higher taxes on working holiday makers' superannuation.
The Greens are concerned about the change, which mandates that backpackers can only claim 5 per cent of their superannuation when they leave Australia.
That proposal has already passed the Parliament but the Greens will attempt to reverse the change.
Tasmanian Greens Senator Peter Whish-Wilson said the effective tax rate for backpackers will end up being higher than 15 per cent, due to the superannuation requirements.
"This is effectively [a] 24 per cent [income tax]," he said.
"We have to be really careful. The super stuff has not made the headlines. It has been the fine detail that everybody has missed."
Hort groups welcome the compromise
National Farmers' Federation workplace relations general manager Sarah McKinnon threw her support behind the new rate and described it as "fair". Yet she criticized politicians for their handling of the matter.
"There is no question that no party has covered itself in glory on this issue," she said.
"It has been a disappointment. Farmers are let down by the political process that has seen games come ahead of the public interest."
Voice of Horticulture, an organization that represents horticultural growers and business is hopeful the backpacker tax is settled before the Christmas break.
“At the end of the day the whole issue is about real jobs, and Australian growers who just need to be able to get on with the job knowing they have access to a workforce they desperately need.” Chair of Voice of Horticulture, Tania Chapman said.
Citrus Australia also welcomed the change to the tax. CEO Judith Damiani says the proposed 15% rate is both reasonable and equitable to the rate paid to overseas seasonal workers while ensuring Australia remains an attractive destination for backpacker labour.
“This issue has gone on for far too long and the industry needs it resolved during this last week of Parliament.
“Our growers are tired of these political games and just want to get on with their harvest.”
Sources: www.skynews.com.au, www.abc.net.au.
