Second Reading – Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016
Mr PITT (Hinkler—Assistant Minister for Trade, Tourism and Investment) (11:56): Mr Deputy Speaker Georganas, I welcome you to the chair and, of course, to the parliament. I rise today to speak on the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 and its supplementary bills in the original form.
What is being presented today with this reform package is a workable solution that provides certainty for both agriculture and tourism stakeholders. Concerns around the tax payable by working holiday-makers were comprehensively reviewed by the coalition with consultation and input from multiple stakeholders from both the tourism and agricultural sectors. How do I know that? I was there. I was part of the consultation process. It was certainly extensive. Stakeholders have had ample opportunity to put things forward. The coalition government have listened, we have acted on the concerns and we have come up with a workable solution. So we are delivering on exactly what we said we would.
The Labor Party want to delay the passing of the legislation in the Senate by referring it to the Senate Economics Committee. They failed to commit to any options that were put on the table originally. They failed to come up with a proposal of their own. They failed to effectively engage with industries. In fact, on 23 February 2016 my good friend, the shadow minister for agriculture, Joel Fitzgibbon said:
Labor calls on the Government to take evidence based approach to the redesign of its working holiday maker taxation policy, in close consultation with the tourism and agriculture industries.
We did that. In fact, we have done it a few times. On 16 March Mr Fitzgibbon said:
The Government needs to ensure that the agriculture sector has the supply of labour it needs and the visa system is not open to exploitation.
We are doing that and we are making substantial changes. On 11 October 2016, Mr Fitzgibbon said:
Labor will finalise its position once we’ve heard from effected stakeholders and explore how the Government’s proposed new regime compares globally.
I think there has been adequate time—more than sufficient time. This is a matter of some urgency. Certainly, the people in the industry who I speak to tell me that we need to get on with it. We have a position put forward and the Labor Party are holding it up in the Senate.
Stakeholders in agriculture have made it abundantly clear that the reform package must be passed. Many growers are coming to the peak harvest season, labour force demand is very high and they need certainty. In fact, they need that certainty right now, because people who are in the tourism industry, who are working holiday-makers who are applying visas and who are planning what they will do in the next 12 months, are making decisions on where it is they intend to go, and they are making those decisions now.
The key points of this bill include that employers of 417 and 462 visa holders will need to register with the Australian Taxation Office. This is a change and it is something new. Only if they are registered will they be able to withhold the 19 per cent flat rate. I think this is a good change. As someone who pushed for the establishment of Taskforce Cadena and who has spoken in the press over a long period about the exploitation of foreign workers in this nation, I think this is a substantial change which will allow our enforcement agencies to identify just who is employing 417 and 462 visa holders. If they are not registered, the tax rate will remain as it is at 32½ per cent, which, of course, is the flat rate for non-permanent residents of Australia. A list of registered employers will be available on the ATO website, and people will be able to look them up with ABN Lookup. Most of the people working in this industry who come from overseas and are 417 and 462 visa holders are highly skilled and highly educated. They are here fundamentally for a holiday. They do some work while they are here, they make a few dollars and they tend to spend all of that money in regional Australia in particular. In my view this is an important step to making it easier to identify employers and ensure the integrity of the working holiday visa program. This is an important program; there are over 200,000 people in this country on those visas at any one time.
Tourism Australia will promote Australia to potential working holiday-makers through a $10 million global youth targeted advertising campaign. But, may I say, the best form of advertising, in particular in this market, is social media and word of mouth. These people talk to one another and they certainly advise one another about their experience and how great it has been. We want them to leave Australia with a view of what a fantastic country it is that we live in. We are making other changes to working holiday-maker visas to boost the supply of working holiday-makers and make it more attractive to visit Australia. Separately, we are extending the age of eligibility for working holiday-makers from 30 to 35. This will increase the pool of potential working holiday-makers. We are dropping the price of a visa application by $50 to $390. And we are increasing the rate of the departing Australia superannuation payments tax to 95 per cent for working holiday-makers.
During the election campaign the coalition government announced the migrant workers task force, and we are delivering on that commitment. The task force will be led by Professor Allan Fels, who is very well known to the people in this place, and will provide expert advice on measures that will deliver better protections for overseas workers. We are also increasing funding to the Fair Work Ombudsman to assist with its capabilities and its workforce—an increase of some $20 million—and there will be increased penalties for employers who underpay workers and fail to keep proper employment records. A new higher penalty category of serious contraventions will be introduced. These will apply to any employer that has intentionally ripped off workers, regardless of the employer’s size. As someone who has been involved in this for a long time and who comes from an agricultural background and electorate, I can tell you that the biggest difficulty with this matter is enforcement. We are talking about large groups of people who are transient, who leave the region after perhaps two days, two weeks or two months and who work in a number of different locations with different work hours and start times. It is incredibly difficult to identify just where they are, because the crop shifts. If you are picking zucchinis you might pick twice a day; if you are picking onions you might need 300 people for the morning—it just depends on the crop, its location and what it is that needs to be done.
We will also introduce new offence provisions that will capture franchisors and parent companies who fail to deal with exploitation by their franchisees. We will strengthen the powers of the Fair Work Ombudsman so that it can deal more effectively with employers who intentionally exploit workers by compelling them to produce information and answer questions. There are some very bad habits out there in this area and we need to ensure we address them.
Taskforce Cadena is something that I think is kicking some goals. I was very pleased to see it formed. It was something I had called for. In fact, at the Federal Council in August 2014 the Nationals voted unanimously to seek a multijurisdictional task force to address this issue. The exploitation of foreign workers is something which predominantly impacts regional farming electorates, and atypically they are held by Nationals MPs. We are very well aware of this issue. It is something that needs to be cracked down on and stopped. The allegations and complaints—and we have all received them, on both sides of the House; I am sure my colleagues on the other side of the table will agree—range across underpayment, sexual exploitation of workers, tax evasion, visa breaches, racial discrimination, the intimidation of farmers and overcrowding in private residential dwellings. In fact, I clearly recall a farmer who was bundled into a car and forced onto the road to Brisbane. He managed to escape on the highway when the car pulled up at roadworks. These are the types of issues we are dealing with regularly.
Taskforce Cadena takes real action. This government is getting on with the job of targeting unscrupulous labour hire contracting firms, who should be under no illusion: if you are breaking the law, you will be caught and prosecuted; you will lose everything you have because you are doing the wrong thing and exploiting people who are at their most vulnerable. Taskforce Cadena will make these firms accountable and provide a level playing field for all Australian businesses, targeting those exploiting workers who really have no other option. Cadena was launched in May 2015. It is led by the Department of Immigration and Border Protection and the Fair Work Ombudsman. It works with the Australian Federal Police, the Australian Securities and Investments Commission, the Taxation Office and various state and territory agencies to ensure incidents involving exploitation and visa fraud are appropriately investigated. The reason for Taskforce Cadena is that we need better coordination and intelligence sharing between agencies at the various levels of government to ensure seasonal workers are protected from unscrupulous employers. I should be clear: the overwhelming majority of Australia’s farmers are doing the right thing—they absolutely are—but we have these bad seeds in the industry who are giving Australia and the industry a bad name.
I am very pleased that Cadena will continue to operate nationwide and across a range of industries. Organised criminal networks and people who are seeking to profit by exploiting both illegal and legitimate workers should be under no illusion: Taskforce Cadena is targeting you. Not only do these people, through their actions, disadvantage employers who are doing the right thing; they are thumbing their noses at the hardworking Australian taxpayer. I see from the Fair Work Ombudsman’s report of its review, released over the weekend, that of some 4,000 working holiday-makers who were interviewed, 27 per cent of respondents had been paid in cash.
Taskforce Cadena, within a month of operating, was successful on a number of raids, catching 38 illegal workers. Following investigations by Cadena, the Fair Work Ombudsman was able to pursue one Emmanuel Bani—whom I am very well aware of—who was accused of underpaying 22 workers from Vanuatu to the tune of $77,649 for fruit and vegetable picking jobs in Queensland. I met with a number of these workers and heard firsthand about the appalling way they had been treated. I referred the matter to the Department of Employment and the Department of Immigration and Border Protection, who intervened to recover the men’s passports and secure them work with a reliable employer. This gentleman had absconded with their passports and basically left them on the side of the road. It was an outrageous thing to do.
The unskilled Seasonal Worker Program is closely monitored and there are safeguards in place to ensure agents know their obligations and workers know their rights. Agents must be registered. Where the real exploitation occurs is in cases where people have overstayed their visas or are working here illegally and the agents are not properly registered.
Working holiday-makers are not just a travelling workforce; they are a vital component of our tourism industry. In fact, I would say they are an essential part of our tourism industry in regional Australia. In my electorate of Hinkler, growers require a large labour force of unskilled workers for short periods of time and they need them at short notice. Otherwise the crops would sit there and would not be picked. As a former farmer, I know there is nothing worse than seeing a perfectly good crop which you have expended a lot of time, effort and money on that you cannot get off the ground. Until it is sold and the money is in the bank, it is never finished. The whole season’s income could be lost and possible future agreements with buyers could be put in jeopardy if they cannot pick those crops.
This issue has been around for a long time. This is not new. In fact, it was raised some 15 years ago by Philip Ruddock, a former member of this place, in 1999. It has been the subject of numerous inquiries, numerous Senate reports and various other activities within government. I wrote to the then Treasurer, Joe Hockey, after the change to 32½ per cent for the backpacker tax was announced in the 2015 budget. I outlined that it would have a significant impact on stakeholders in my electorate.
We need to ensure that Australia continues to be competitive, because there are other countries that are looking at the same market. The changes that we have put forward will ensure that we continue to be competitive. We also need to remember that backpackers or working holiday visa holders who work in this country are still utilising our infrastructure and services. They use our health systems, they use our roads and they use a number of other things which are provided by the taxpayer. So they do need to contribute to the taxation system.
Many of the issues that were identified in the Fair Work Ombudsman’s report into 417 visa holders are already being worked on. As I said, we have committed $20 million to Fair Work. We have established the Migrant Workers Taskforce. We have established Taskforce Cadena. We are putting forward proposals to ensure that the legislation is sufficient and the penalties are sufficient to crack down on those who are doing the wrong thing. So we will ensure that we provide those additional resources and we will ensure that we continue to provide the enforcement that is necessary.
In closing, I would like to go to a quote by good friend the shadow minister for agriculture, Mr Joel Fitzgibbon, today. He said:
This debacle has now been going on for 16 months …
I would put to the shadow minister right now that Labor needs to get on with it, not push it out to a Senate inquiry, not extend it any further. Clearly the industry has been consulted over a long period of time. It is not that difficult. We are coming into another harvest season. It is important that people have certainty. It is important that they can be sure that they can get their crops off the ground. In my region, where they produce some $1½ billion of produce every single year, they need to have certainty because it is absolutely invaluable to our local economy. Jobs in my electorate rely on our farmers doing well. We rely on agriculture to be a major producer and we need to ensure that that continues. With that, I commend the bill to the House.