Growcom CEO, Pat Hannan, said that the review of the decision to scrap the tax-free threshold for backpackers from 1 July, announced by Minister for Tourism, Richard Colbeck, would hopefully result in a more sensible  tax measure, and one reached  in consultation with those industries directly affected.

“In our view the Federal Government’s decision to set a tax-rate of 32.5 cents in the dollar from the commencement of earnings for backpackers working in Australia was ill considered and would have disastrous consequences for the backpacker, the farmers, and the rural areas in which they work. The government did not consult with the industries it would affect, particularly horticulture where access to labour continues to be a major issue and where backpackers on temporary work visas remain a vitally important labour force during seasonal harvest periods.

 “We hope an appropriate tax rate will now be discussed - one that will preserve Australia’s ability to compete with other overseas holiday destinations and continue to attract young backpackers to work in the horticulture industry here in Australia.

“Surveys have shown that backpackers on temporary work visas – visa sub-class 417 Working Holiday Makers – comprise almost two-thirds of horticulture’s casual workforce (about 40 000 people annually). Much of their motivation for working on farms is the incentive of a second twelve-month visa.

“The new proposal from 1 July would require working holiday makers to pay 32.5 per cent tax on every dollar earned. As a result, their earnings would drop from $21.62 per hour to $14.59 per hour.

“This would mean backpackers would make a higher net rate by working in New Zealand, with Canada close behind. Both these countries are Australia’s major competitors for the working holidaymaker tourist market.

“An important fact that is often overlooked is that working holiday makers contribute more than $3.5 billion to the Australian economy each year and that injection of cash into local businesses is what keeps many small towns alive.

“We understand that the review will look at the rates of tax to be set after 1 July. Growcom has met with the Queensland Horticulture Council and discussed appropriate rates of tax. The Seasonal Workers Programme uses a tax rate of 15 percent, which seems appropriate for our industry. However, we acknowledge that there will be disparate views about what the actual tax rate should be and we are willing to work with the government and other industry bodies to determine a level, which will result in Australia remaining competitive and bring workers to our industry.

“We are keen to work with committee members to inform them of horticulture’s labour needs. As the most labour intensive of all agricultural industries we employ around one-third of all workers in the agricultural sector and consequently have an important seat at the table in these discussions.

“Horticulture is the second-largest and the fastest growing industry in agriculture with some 30 000 businesses nationally, and a farm gate value in excess of $7.1 billion (fruit, vegetable and nut production) annually. ‘Lifestyle horticulture’ (ornamental plants, turf and nurseries) adds another $1.6 billion annually.”

Mr Hannan said Growcom was also delighted with Prime Minister Malcolm Turnbull’s announcement that the government will introduce an “effects test” to address the misuse of market power by major retail players in the supply chain, as recommended by the Harper Competition Policy Review. “The effects test refers to whether conduct of, say, one of the major retailers, could be judged to have the purpose or likely effect of, substantially lessening competition under Section 46 of the Competition and Consumer Act. Inserting an effects test will enable the ACCC to have greater powers in taking action against those who have been found to be abusing their market power and in winning Section 46 cases.

“It is important for growers in the horticulture industry to feel confident that their small businesses are protected by rules that ensure a level playing field is in place regarding market power wielded by major players in the supply chain.

“We welcome this decision.”