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Australia’s hotel and tourism industry welcomes backpacker tax postponement

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The nation’s hotel and tourism associations have welcomed the Australian Federal Government’s announcement that there would be a six-month postponement of the introduction of the ‘backpacker tax’ to allow a ‘whole of government’ review into working holiday visas.

Several associations and lobby groups made a number of submissions to the Federal Government on the issue, including AAoA, TAA and TTF, with all of them warming welcoming the review.

Accommodation Association of Australia (AAoA) CEO, Richard Munro, said the organisation was pleased the Federal Government had announced a review of the application of the non-permanent resident tax rate to backpackers.

“The so-called ‘backpacker tax’ has and would have continued to cause difficulties for operators of tourism accommodation businesses, particularly those in regional and remote parts of Australia, who rely on visitors from overseas, including backpackers, to fill positions,” he said.

“Ideally, whichever party wins government at the upcoming election should choose not to proceed with the tax.

“Australia’s accommodation industry is keen to send the following message around the world: ‘Anyone who is considering a backpacking holiday in Australia will no longer be hit with this tax impost and therefore, we urge you to place Australia on top of your ‘bucket list’ again,” he said.

Tourism Accommodation Australia (TAA) has also welcomed the decision and said it argued the tax hike would “provide a major disincentive to working holiday makers, and particularly backpackers, at a time when the industry was already experiencing shortages, particularly in regional and remote areas”, according to the association’s Chair, Martin Ferguson.

“This is a very sensible first step by the Government and one that is applauded by the tourism and hospitality sector across the country,” he said.

“Working holiday makers are an important source of labour for the accommodation industry, filling chronic labour shortages in regional areas during seasonal periods.

“Australia competes globally for backpacker tourism and this change would have acted as a serious disincentive to working and travelling in Australia at a time when the Government’s own commissioned survey identified the need for 123,000 additional workers in the hospitality and tourism industry by 2020,” Ferguson said.

TTF CEO, Margy Osmond, said a review of the proposed tax was a step in the right direction.

“The backpacker tax is a bad policy and we are very pleased to see the Federal Government has been listening to industry and will delay its introduction of the tax until at least 1 January 2017,” she said.

“Industry will continue to argue that the preferred outcome is for the Federal Government to abandon the backpacker tax in its entirety.

“The concept of taxing working holiday makers at 32.5 per cent on every single dollar they earn is foolhardy when they have the entire world as a destination to travel to and spend their money in. If we embark on this policy they simply will not come to Australia.

“The tourism sector is already expecting a 123,000 [strong] workforce shortage by 2020, driving away working holiday makers will only add to the challenge of securing staff especially in rural and remote regions that depend on seasonal workforces.

“Industry looks forward to continuing the dialogue with the Government and the Opposition on improving working holiday visas and encouraging more of them to visit Australia and support our regional economies,” Osmond said.

The Tourism Industry division of the NSW Business Chamber says the Federal Government’s decision to delay the introduction of the Backpacker tax until at least 1 January 2017 was good news for tourism operators, but warns that continued uncertainty around working holiday visas is already negatively impacting business in the tourism sector.

“Businesses in the tourism, hospitality and agriculture sectors will welcome the six-month delay in the introduction of the ‘backpacker tax’, but we urgently need greater clarity on how a re-elected Turnbull Government will address this issue in the long-term,” said Dean Gorddard, Executive Manager of the Tourism Industry Division of the NSW Business Chamber.

“We welcome the Government’s recognition that its proposal to axe the tax free threshold for working holiday makers would severely harm the tourism and agricultural businesses that rely heavily on this source of casual labour.

“Two months ago the Tourism Minister Richard Colbeck committed the Federal Government to a cross-departmental review of its backpacker tax, originally flagged in the 2015-16 Budget, but we will now need to wait until mid-October for further details.

“Unfortunately, the uncertainty around working visa requirements is already having a negative impact, with some businesses reporting 50 per cent drops in job applications. Simply delaying the introduction of the tax by six months does not address the concerns of potential workers or those who depend on their labour.

“Local tourism operators already face fierce competition in attracting holiday makers looking to work in Australia, with New Zealand, Canada and South Africa offering similar tax arrangements to Australia’s current scheme.

“The lack of clarity on this issue may have already impacted on the decisions of working holiday makers on whether to work here or New Zealand. An increased level of marketing targeted to potential working holiday-makers needs to be undertaken as a priority to ensure we have a plentiful labour source for the tourism and agriculture industries particularly in regional NSW.

“The six-month delay in introducing the backpacker tax will mean that any changes will come into effect in the middle of summer at the height of the peak tourism season, causing major disruptions across the visitor economy.

“It would be prudent for whichever party forms Government to simply abolish the ‘backpacker tax’ and do so as quickly as possible,” Gorddard said.

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