The Turnbull government has is delaying the introduction of the controversial backpacker tax as the possibility of a Labor victory or hung parliament draws nearer.
Small Business Minister Kelly O’Dwyer made the announcement this morning while campaigning in NSW.
O’Dwyer confirmed the backpacker tax will not come into effect in July as originally intended.
Instead, the government will conduct a review of the proposed tax – which would mean people working in Australia temporarily will not be entitled to the tax-free threshold – and hand down a final decision in January 2017.
O’Dwyer said the delay will hit the budget bottom line by $40 million.
“The government has listened,” O’Dwyer told reporters this morning.
“We are absolutely committed to making sure this is very, very much right for our rural and regional communities, our tourism industry and Australia as a whole.”
O’Dwyer also attempted to hose down concerns the delay will simply add to uncertainty in the fruit picking industry and therefore turn away prospective seasonal workers.
“What I can say is that the government has announced that they [seasonal workers] will not be treated as nonresidents for tax purposes for the next six months,” she said.
“I can say that with absolute certainty and they can come to Australia with great confidence.”
Peter Strong, chief executive of the Council of Small Business Australia, told SmartCompany he welcomes the government softening its position on the backpacker tax.
He says this is good news for small tourism and farming businesses.
“I hope it means, after the election, they sit down with the farmers in particular and just sort out a better way of doing it,” Strong says.
“I think they [farmers] were pretty surprised by the outcome. We can come up with a better model.”
Margy Osmand, chief executive of the Tourism and Transport Forum of Australia, told SmartCompany the government has realised its backpacker tax is bad policy – and called on Canberra to scrap it altogether.
Osmand says this can’t just be a delaying tactic from the Coalition in the midst of an election campaign, because industry “won’t be sitting on our hands”.
“Effectively what we’re seeing here is a delay, and that delay will have an impact on the decisions working holidaymakers make,” Osmand says.
“This could affect next year’s harvest in the same way it’s already impacted this year’s. If you had a choice of going somewhere where they didn’t charge you tax, or going somewhere where they’d take a third of your wages off you, where would you go?”
“We’re already seeing a drop in those [working holiday visa] applications … New Zealand is already seeing an increase in applications. You don’t have to be Einstein to figure that one out.”
James Pearson, chief executive of the Australian Chamber of Commerce and Industry, said in a statement tourism and farming industries have been uncertain about what would happen after July 1 until today.
“The delay and, we strongly hope, the eventual abolition of the backpacker tax is a key issue for regional tourism and for business,” Pearson says.
“Working holiday makers do jobs that otherwise would not get done. They keep open the doors of tourism businesses – particularly in regional Australia.”
Broede Carmody is a former senior SmartCompany reporter. Before this, he was a co-editor of RMIT University’s student magazine Catalyst.
