Orchardists relieved as backpacker tax slashed
Agricultural industry welcomes 19 per cent tax rate for working holiday makers
FARMERS across Victoria’s North East and the Goulburn Valley are breathing a sigh of relief after the Federal Government scrapped its proposed 32.5 per cent tax on backpackers replacing it with a 19 per cent rate.
Third generation Mooroopna orchardist Peter Hall said the tax cut was “an improvement” – putting Australia on equal footing with other countries that use holidaymakers as a main source of horticultural labour.
“It brings it (the rate) into line with other comparable countries that backpackers would find attractive to visit,” he said.
“We need as many options for harvest labour as possible and any reduction in the availability of workers or any impediment to workers coming to our area is a challenge.
“For us, in particular, we have a unique labour requirement and it needs to be timely as the work is spasmodic, so we really need a source of flexible labour that these backpackers offer us.” The 54-year-old farmer – who grows apples, pears, plums and peaches supplying local markets, chain stores, SPC Ardmona and overseas markets – said that for as long as he could remember his family had used the working holidaymakers to help with harvest.
“The backpacker component of our labour force is considerable… it’s not a small number,” he said.
“They are a significant part of our workforce in the Goulburn Valley.
“We have used backpackers for as long as we have had orchards.
“I remember when I was a kid on my grandfather’s orchard there were always people from different countries coming to work.
“We have always mixed up the workforce depending on the demand, but we also use locals, refugees and seasonal workers,” Mr Hall added.
Farming lobby groups the Victorian Farmers Federation (VFF) and the National Farmers’ Federation (NFF) have called it a major victory for agriculture with VFF Horticulture vice president Emma Germano stating that is was “fantastic” that the Federal Government has taken the groups’ concerns on board.
“The proposal originally put forward by the government would have been a massive drain on two of our biggest industries – agriculture and tourism – because working holiday makers bring in about $3.5 billion to the Australian economy every year, but now we can breathe a sigh of relief,” she said.
But Ms Germano acknowledged that the VFF had concerns over the government’s plans to tax backpackers 95 per cent on superannuation accrued while working in Australia.
“We were told at the roundtable discussions industry had with government earlier this year that super was off the table, and not to make any recommendations on this area.
“But now Treasurer Morrison has announced a large-scale reform to super and we would appreciate the chance to respond.
“We have said that if backpackers want to work in Australia, they need to be taxed like the rest of us, but the government needs to be reasonable in its approach,” Ms Germano said.
Mr Hall said he wasn’t sure if there will be any impact on the amount of superannuation the backpackers will be required to pay as they often don’t claim it.
“The superannuation is a bit unusual.
“We have to pay it as the farmer, but they really don’t use it, so why should we pay it anyway?
“It is a cost to us as the fruit grower so we would prefer to not have it,” Mr Hall said.
NFF president Brent Finlay said they were “delighted” that a tax that would have hurt farm production and, ultimately, the Australian economy will not go ahead.
“The nature of these types of working arrangements is that farmers need an immediate, temporary workforce and backpackers want immediate cash in their pockets to spend while travelling – so the approach makes sense,” he said.
“We now look forward to seeing further detail of the announcement and working with government to make sure we have backpackers coming to our country who are eager to work on our farms and contribute to our rural and regional communities.”
AUSVEG chief executive officer Simon Bolles said the decision was a welcome relief for the horticulture industry and they were pleased the tax is now more in line with the rate backpackers pay in New Zealand, Canada and the UK.
“It remains to be seen what impact the revised tax will have on the number of backpackers coming to Australia, but we are thankful to the government for coming to a compromise position significantly lower than what was initially proposed,” he said.
“We will monitor backpacker numbers under the revised rate to see if backpacker numbers falter and whether further intervention is required,” Mr Bolles said.
FAIR TAX: Backpackers who come to work on local farms will now be charged 19 per cent tax on their earnings.