Joel Fitzgibbon says Labor will work with the government if it will ‘concede it got it wrong’ when it proposed denying backpackers a tax-free threshold

This article is more than 4 years old

This article is more than 4 years old

Labor has committed to supporting backpacker tax legislation if the Coalition revises the policy to a more acceptable compromise – a position attacked by the Greens as destroying Australia’s competitive edge.

The shadow agriculture minster, Joel Fitzgibbon, said the backpacker tax policy was announced by the Coalition with no consultation or modelling, but Labor would support it if the Coalition put up an “conceivable” proposal. He would not nominate what tax level the opposition would accept.

“[The backpacker tax change] does require legislation and if the government wants to concede it got it wrong and backs down to a conceivable proposal, we would support it,” Fitzgibbon told Guardian Australia.



The Coalition government is reviewing a change in the tax regime for working holidaymakers which was introduced in the 2015 budget and has attracted fierce opposition from the farming and tourism industries.

Backpacker tax could be almost halved, says Coalition, as Barnaby Joyce signals deal near Read more

The Coalition initially announced that from 1 July 2016 holidaymakers would be treated as non-residents and taxed at 32.5% from their first dollar. Currently backpackers can access the tax-free threshold, the low-income tax offset and the lower tax rate of 19% for income above the tax-free threshold up to $37,000.

The measure was expected to raise $540m. But after an outcry from affected industries, the government announced a review.

On Monday the deputy prime minister, Barnaby Joyce, said delaying the implementation until 1 January 2017 had already cost the budget $40m.

As with his superannuation policy, the treasurer, Scott Morrison, will have to get the backpacker tax changes through his party room – where the tax has met stiff opposition from members of the National party and some rural Liberals. Once a compromise is landed, the change can be either legislated or established by an Australian Tax Office ruling.

But advice from the parliamentary library has suggested any ATO ruling could be challenged and legislation would provide greater legal certainty.

That advice, given to the Greens senator Peter Whish-Wilson, suggested that while a tax ruling was possible, it could be overturned in court.

“It would appear more likely that legislative amendment would be used to give greater legal certainty to the proposed change than through the ATO issuing a taxation ruling, which could subsequently be overturned in a court,” the advice said.

The Greens have called on Labor to block any change to the backpacker tax on the grounds that the favourable tax treatment of working holidaymakers ensures Australia has a “competitive edge” globally when it comes to filling labor shortages for rural industries.

“The Greens oppose the backpacker tax outright and will certainly vote against any legislation the government tries to bring in,” Whish-Wilson said.

“I have talked with some of the crossbench and they have told me that they would also oppose any legislation.

“The parliament needs to oppose any backpacker tax outright, we need to keep the competitive advantage we have and not water it down.

“This puts the heat on Labor. If they come out now and say that they will vote against any backpacker tax bill then the tax is dead.”

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Morrison said the backpacker tax was an issue from one of Joe Hockey’s budgets that needed to be resolved.

“As you know, this came up in one of Joe’s budgets and, look, I was part of the ERC [expenditure review committee] that made the decision at the time, as was Tony Abbott and others and … there was a reason to do it,” Morrison told Ray Hadley on 2GB.

“When Labor increased the tax-free threshold to $18,200, backpackers from that point on basically weren’t paying any tax on any of the income because they were earning less than that, so they basically were coming in not on a working holiday visa but on a tax-free holiday.”

