Australia’s tourism industry is supportive of the review of the proposed backpacker tax, which has been announced by the Federal Government.

This week, Australia’s Minister for Tourism and International Education, Senator Richard Colbeck, announced a review of the proposed tax, which has drawn criticism from across the industry.

“Working Holiday Makers are vital for two of our key super growth sectors for the next decade – agriculture and tourism,” Colbeck said.

“Concerns have been raised about the impact of the 2015 budget measure on tax arrangements for Working Holiday Makers, particularly our global competitiveness as a backpacker destination.

“We have therefore decided that the proposed tax arrangements require further discussions to ensure Australia does not lose market share in backpacker visitation.

“The key issue is to ensure we have a balanced and equitable approach to the tax status for workers in Australia on visas.

“I will be guiding this work through a whole of government process in close consultation with the Agriculture, Employment, Immigration, Regional Development, Industry, Treasury and PM&C portfolios to prepare a revenue neutral proposal.

“We have already commenced discussion on this issue with the tourism and agriculture sectors and these will continue with key industry groups.

“I encourage stakeholders who wish to provide input to get in touch with their relevant industry organisations.

“Once this process is complete the proposal will be presented to the Treasurer for consideration by Cabinet.

“In the tourism industry alone, Australia is facing a shortage of 127,000 workers in the next five years. Over 90 per cent of workers in the tourism industry are Australian but the industry relies on workers from overseas for the remainder.

“A further 40,000 Working Holiday Makers annually contribute to the prosperity of our broader agricultural sector, including the horticulture, abattoir and general agriculture sectors.

“This review builds on the measures already taken by the Turnbull Government to support these sectors.

“It is essential we continue to put in place the right policy settings that support the super growth sectors of tourism and agriculture as the economy transitions from the construction phase of the mining industry,” Colbeck said.

Support of the review immediately came from the nation’s leading associations.

Accommodation Association of Australia (AAoA) CEO Richard Munro said the organisation intends to work co-operatively with the Government with a view to finding a workable alternative policy.

“The proposed backpacker tax would have been a powerful deterrent for a significant number of potential overseas visitors considering visiting Australia,” said AAoA Chief Executive Officer, Richard Munro.

“We are pleased the federal Minister for Tourism, Senator the Hon Richard Colbeck, has listened to the concerns of the accommodation and tourism industry by successfully pushing for a review of the policy.

“The accommodation industry looks forward to continuing to work constructively with the Minister and other key stakeholders as part of the review,” he said.

Munro said the change of tack has the potential to benefit many regional and rural parts of Australia.

“Visitors on working holiday visas, including backpackers, are an important source of labour for accommodation businesses outside of Australia’s major cities,” he said.

“Backpackers who work in other industries, notably agriculture, also generate revenue for accommodation businesses in regional and rural areas.

“If some form of tax on backpackers proceeds, local economies in regional and rural areas will experience another hit at a time when they are already underperforming.”

The Federal Government’s announcement that there will be a long overdue review of the proposed backpacker tax is a victory for common sense and will hopefully signal the end to this foolhardy tax grab, said the Tourism and Transport Forum Australia (TTF).

“It appears that the Federal Government has heard the concerns of industry that the backpacker tax will dramatically reduce the number of international visitors coming to Australia for working holidays, and is moving to act in some form,” said TTF CEO, Margy Osmond.

“Today’s announcement follows an industry roundtable with Minister Colbeck held last week that raised our concerns about the impact of the tax and the Minister should be applauded for raising this issue with his Cabinet colleagues and achieving a commitment to look into the implications of this tax on industry.

“TTF sounded the alarm on the negative impact of the backpacker tax on Federal Budget night nearly a year ago and we’ve continued to be a vocal advocate on the need to rethink the backpacker tax.

“Our best advice to the Federal Government is still that it should just scrap the backpacker tax – it makes no sense to slap a 32 per cent tax on backpackers when they have an entire world of destinations, from which to choose.

“The backpacker tax is poised to smash the workforce for tourist operators who rely on working holiday makers in seasonally-sensitive and remote regions, where a local workforce simply isn’t available.

“The Federal Government has been at cross purposes with their policies on working holiday makers. On the one hand, through the Northern Australia White Paper, they are making it easier for working holiday makers to stay with the same employer for longer, up to 12 months from six, but on the other hand a 32 per cent tax on every dollar they earn is not an incentive to work in Australia.

“Nearly 30,000 people have signed the National Farmers’ Federation petition calling for the backpacker tax to be scrapped. That sends the loudest and strongest message to the Federal Government that the backpacker tax is just bad policy and has got to go,” she said.

Tourism Accommodation Australia (TAA) has also welcomed the announcement from Senator Colbeck.

TAA CEO Carol Giuseppi said the organisation had made strong representations to Government that the measure would significantly affect hotels in regional and remote areas and their ability to attract workers.

“We congratulate the Government for this move as many regional and remote areas rely on seasonal workers, especially in tourism, and this tax would have seriously impacted the flow of working holiday visitors,” she said.

“The Government has identified the need to create 123,000 workers in the tourism and hospitality sector by 2020, and while the hotel industry is working hard to ‘grow its own’, regional and remote areas in particular will rely on being able to attract backpackers and others to fill shortages in peak seasonal periods.

“It is heartening to see the Government listening to industry concerns and acting to address the issues.”

The announcement comes at a time of strong growth in visitor numbers and hotel development in Australia. The latest National Visitor Survey, released today by Tourism Research Australia, paints a very promising picture of the state of Australian tourism.

For the year ending December 2015 overnight trips grew 7% to 87.1 million, visitor nights increased 4% to 322 million, and tourism expenditure spend grew 6% to $57.9 billion. With similarly strong growth in international tourism, Australia’s tourism sector contributed $113.5 billion in expenditure in 2015

“The Government’s support of bilateral air agreements, free trade agreements and tourism marketing has had a significant impact on attracting international visitors, and the fall in the Australian dollar during 2015 stimulated the domestic travel sector while reducing outbound travel growth to just 1% during the year,” Giuseppi said.

“For the hotel industry, continued growth in visitor numbers is vital if we are to soak up the vast amount of new hotel supply coming into the marketplace.

“It is now estimated that there are over 100 hotel projects in the pipeline, plus a large number of significant refurbishments, and it will be important to generate significant new demand to support this unprecedented level of investment in the hotel sector.”

James Wilkinson

Editor-In-Chief, Hotel Management