The decision comes following an inter-departmental government review into the ‘backpacker tax’ following widespread concerns that the tax would be a deterrent for holiday makers to work in Australia, and would deprive regional communities of a valuable source of income and labour. 

“We’re pleased to see that the government has reconsidered the 32.5 per cent tax rate and listened to the significant concerns of Australia’s horticulture industry. This announcement provides an opportunity to reassure backpackers and growers alike,” said AUSVEG, CEO Simon Bolles. “The decision to reduce the tax rate from 32.5 per cent is a welcome relief for our industry and we are pleased to see a tax more in line with the rate that backpackers pay in New Zealand, Canada and the United Kingdom.”

“It remains to be seen what impact the revised tax rate 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. We will monitor backpacker numbers under the revised rate to see if backpacker numbers falter and whether further intervention is required.”

Growcom’s Chief Advocate, Rachel Mackenzie, said that at this rate Australia would be competitive with other working holiday destinations and backpackers would no longer be discouraged from working here. The organisation also welcomed the government’s decision to raise the age limit for working holidaymakers to 35 which was designed to attract backpackers in greater numbers.

Mackenzie added that it was pleasing to see that the Federal Government had finally taken the deep concerns of the agricultural and tourism sectors seriously, even if it took two reviews and countless hours of lobbying to do so. “The government has taken on board the warnings of the tax’s dire economic effects on horticultural growers and other small businesses in regional towns which are dependent on healthy backpacker numbers. Growers across Australia will be breathing a sigh of relief at this news and can finally make decisions about planting next year’s crop.”

AUSVEG is the national body representing Australia’s vegetable and potato growers and has publicly campaigned against the introduction of the backpacker tax. It recently made representations on behalf of the vegetable and potato industries to all sides of politics in Canberra to relay the concerns about the proposed tax.

Growcom said that it also welcomes the additional $10 million funding for the ATO and the Fair Work Ombudsman (FWO) to establish an employer register and assist with ongoing compliance initiatives to address workplace exploitation of working holidaymakers.

“We request that a budget allocation also be made to industry organisations to enable them to assist their grower members to understand these new requirements and meet their obligations to working holiday makers,” Mackenzie said.

Other initiatives announced include:

• Reduction in the application charge for working holiday maker visas by $50 to $390.00;
• Flexibility to allow an employer with farms in different regions to employ a WHM for 12 months (six months in each region);
• A $10 million global youth targeted advertising campaign to attract working holiday makers to Australia;
• Once-off registration of employers with the Australian Taxation office to prevent exploitation of working holidaymakers;
• Publication of the list of registered employers on the ABN Lookup website for working holidaymakers to check.

Growcom notes that to offset the cost of the changes, the Government proposes increasing the tax on working holidaymakers’ super payments to 95 per cent and increasing the Passenger Movement Charge by $5.00 from 1 July 2017.