It was probably inevitable that the backpacker tax debate would descend to a pop-up beach in a London tube station.

There was our trade minister, Steve Ciobo, as wooden as his surfboard adorned with a kangaroo, surrounded by faux Aussie lifesavers and a TV celebrity.

The scene was as sensible as the process surrounding the Coalition’s May 2015 decision to increase the tax on working holidaymakers from zero to 32.5%.

Remember the backstory. Having delivered the horror budget in 2014, the Abbott government tried to resist the urge for political self-harm in 2015. But one of the ideas that got through the stupid net was the backpacker tax.

Not stupid, I hasten to add, because backpackers shouldn’t pay tax. They should and we can argue about the rate. But for calm reform, stakeholders such as tourism, agriculture and backpackers need a little notice.

Instead, the backpacker tax was dropped steaming on to the Coalition’s own support base when Australian agriculture draws 25% of its employment pool from backpackers.

No one had considered it might change the supply of working holidaymakers prepared to come to the country.



Both sides have been wilfully tricky in this debate so it is worth conducting a reality check.

In the 2015 budget, the Abbott government announced that from 1 July 2016 holidaymakers would be treated as non-residents and taxed at 32.5% from their first dollar. It was expected to raise $540m.



After 12 months of industry pressure which seeped into the Coalition party room, the government announced in the middle of the 2016 election that it would delay the start date from 1 July 2016 to 1 January 2017 to conduct a review.

In September, the treasurer, Scott Morrison, reduced the proposed 32.5% tax rate to 19% but with a $5 increase in the passenger movement charge and a 95% tax on superannuation payments to working holidaymakers when they leave Australia.

According to KPMG analysis for the Tourism and Transport Forum, the new proposal more than covers the original savings.

Point one: it took 16 months from the Coalition’s 2015 surprise announcement to decide on a final compromise rate. This delay scared off backpackers and saw growers warn that fruit would be left to rot on the ground.

So when Barnaby Joyce blames Labor for the delay and uncertainty, he is speaking through his hat. Mostly. The Coalition has itself to blame. It stuck it in the 2015 budget. It farted around on a compromise.

Point two: Labor has surfed off the break, bagging the tax while refusing to say whether it would block it in the Senate. The Greens have been upfront and said they would block it.

Point three: in their election costings, both the Coalition and Labor booked the savings delivered by a 32.5% tax rate as if it were going to go ahead – an obvious ploy to make the bottom line look better.

Now the revised 19% backpacker bills have passed the lower house and are under consideration in a Senate committee reporting on 7 November. This is the only delay for which Joyce can blame opposition parties and some crossbenchers.

In the meantime, growers have noticed serious downturns in applications from backpackers.

Which brings us back to Victoria tube station this week. In a press release titled “Bring on the backpacker boom”, Ciobo trumpeted the merits of the Turnbull government’s “reform package” for working holidaymakers.

The “sweeteners” include:

the 19% tax rate;



shaving $50 off the $390 visa application charges;



increasing the age limit from 30 to 35;



allowing backpackers to work for the same employer for 12 months, provided the second six months is in a different region.



Oh, and the theatrical marketing program which was required because the whole debacle scared so many backpackers away came at a cost of $10m.

Boom.