insert date

insertMP address

If emailing letter, cc in;

Dear < local MP >

Please protect our agricultural workforce and our communities – don’t introduce the backpacker tax!

Backpackers are significant contributors to our rural and regional communities. In the 2014-2015 year, 37,974 second year visa applicants had been employed in the agriculture, forestry or fisheries industries. The average backpacker earns approximately $15,000, and spends around 80% of that on food, travel and accommodation in Australia. Backpackers comprise a significant proportion of the casual workforce of the Australian cotton industry (almost two-thirds as shown in recent industry surveys) and this proposed change would be disastrous to our industry.

In the 2015 Federal Budget, the Australian Government announced an effective increase in tax paid by Working Holiday Makers (backpackers) to 32.5 cents in every dollar from on 1 July, 2016. Due to industry concerns, this proposed change is currently being reviewed, with a decision due to be announced by January 1st, 2017.

A simple look at the numbers highlights our lack of cost competitiveness in comparison with New Zealand and Canada – two of our major ‘competitors’ that impact on backpacker arrival numbers.

Country / Australia (32.5%)
(proposed rate) / Australia (19%)
(alternative rate) / Canada / NZ
Min. hourly wage / $17.70 / $17.70 / $11.07 / $15.25
Tax rate / [32.50%] / [19%] / [15%] / [10.50%]
Net hourly wage / $11.95 / $14.34 / $9.41 / $13.65

We know that this change is impacting on backpacker numbers now – thanks to the impact of social media where backpacker experiences can be quickly shared. A survey of over 1,400 backpackers found that 52% had decided to return home after 1 July 2016 (the original proposed date of the implementation) and that 84% had heard of backpackers changing their plans to come to Australia all because of the tax.

While it’s fair to expect backpackers to pay some tax – they use public facilities and services just like everyone else - the tax rate itself should be fair and set at a level that means Australia is competitive with other working holiday destinations. If the proposed 32.5% tax rate is introduced, it will mean:

  • fewer backpackers coming to Australia reducing overall spending in the national economy
  • fewer workers on Australian farms
  • less spending in rural communities, and;
  • more workers attracted to the cash economy.

It is our view that the proposed change goes against Government’s strategic objectives for agriculture as one of the ‘five pillars’ of the economy, which include building farm and agribusiness profitability and driving investment and jobs growth in the sector, as stated in the Agricultural Competitiveness White paper.

Please don’t support the proposed backpacker tax in Parliament. It’s a new tax that won’t allow our rural and regional communities to prosper.

Yours sincerely,

Insert name

[32.50%]

[19%]

[15%]

[10.50%]