Baulking at the backpacker tax

Photo by Jeff Klugiewicz.
Rural communities are concerned at the impact of the Federal Government's proposed backpacker tax, writes Madeleine Neale.

Greek migrants, Arthur and Mary Moriatis both came to north-west Victorian town Mildura as children in the 1950s and have since then made a living growing grapes just like their parents did.

To help with their vineyards workload, the couple have employed backpackers for years and enjoy welcoming young people from all over the world into their home.

The couple are not impressed by the Federal Government’s planned 32.5 per cent new tax on backpacker pay.

“Our rural community depends on backpackers to help out because there aren’t enough locals around who want jobs. If people don’t come, jobs won’t be done and it will be Australians who will suffer because of it,” Arthur said.

The Federal Government has announced that the proposed 32.5 per cent tax on visitors on the Working Holiday Maker program has been postponed until January 2017 after nearly 48,000 people signed an online petition to dump the plan.

From July 1, backpackers were no longer eligible for the $18,200 tax free threshold and faced a tax increase of 32.5 cents for every dollar they earned.

Dutch backpacker Emma Bicknese is one of the many working holiday makers who is annoyed at these changes and has changed her plans for next year.

“I have had a great time here in Australia but have decided to travel to New Zealand in July instead of extending my visa because they have a higher wage and I won’t have to pay as much tax.”

Emma Bicknese, photo credit Madeline Neale
Emma Bicknese. Photo by Madeline Neale.

A quarter of the country’s agriculture workforce is made up of international visa holders who contribute $3 million to the Australian economy each year.

However, when the backpackers tax is put into place in January, we could see this number drop.

“They’re lovely kids and the money they earn working here, they spend here anyway so charging them more doesn’t make any sense,” Mary Moriatis said.

Dr Vicki Peel, Monash University tourism researcher says anything that might discourage working holiday makers from coming to Australia.

“Australia has always been seen as a remote destination, something quite unusual,” Dr Peel says. “We need to keep that kind of sense that we are a welcoming environment and I think taxing working holiday makers is going against that sort of notion.”

Taxing backpackers will hurt regional jobs and tourism according to the National Farmers Federation (NFF), which launched an online petition earlier this year hoping that the government would change its mind.

The NFF agrees that backpackers, who make an average $15,000 during their stay in Australia, should pay tax. But it is proposing a rate of 19 per cent, which is fairer for both backpackers and related industries.

The vegetable industry heavily depends on international workers on temporary visas to make up for domestic labour shortages in peak seasonal periods.

AUSVEG, the peak industry body representing the interests of more than 9000 Australian vegetable and potato growers, has strong concerns that the tax increase could deter backpackers and threaten the viability of the vegetable industry.

“Without backpackers coming out to Australia under the Working Holiday Maker program, many vegetable growers would be unable to harvest their crops, and the productivity and profitability of their growing operations would be dangerously threatened,” AUSVEG spokesman Shaun Lindhe said.

The number of backpackers coming to Australia has dropped over the past two years, with over 34,000 fewer visas granted in 2014-15 than in 2012-13 according to the Department of Immigration and Border Protection.

Backpacker Emma Bicknese, 19, is on a one-year working visa from Holland which will end soon.

“I’m really sad to be leaving and sad that the honest people I have worked for may struggle if people don’t come to Australia anymore. The Australian experience is one everyone should get to live once in their lives.”

An online survey on working holiday jobs has found that 95 per cent of surveyors thought future working holidaymakers would be deterred from visiting Australia as a result of the higher taxes.

Popular destinations for workers include Canada and New Zealand, where the tax rate is only 15 per cent compared to Australia’s proposed 32.5 per cent.

Bicknese said if she would have to pay more than a third of her pay in tax, it wouldn’t be worth working here.

“It would suck cause that would mean I wouldn’t be able to save much money, like I would have to work for so much longer to actually be able to travel and see Australia.”

The Working Holiday Maker program, which includes the Working Holiday 417 visa and Work and Holiday 462 visa, allows visa holders to stay in Australia for 12 months and work for up to six months with any one employer.

Holders of the 417 visa can also receive a second one-year visa if they work for 88 days in regional areas, with the vast majority of these extensions in agriculture, forestry and fishing.

The Federal Government will review the tax in October and, if approved, working holiday makers will have to pay beginning January 1 2017.

“Postponing the tax hasn’t stopped the problem and now enforcing the rule at the peak of our busiest time of the year is some kind of joke,” Arthur Moriatis said.

“In six months, the problem will still be here and we will be left without workers during the rural community’s most crucial period”