Handling of backpacker tax embarrassing for the government

Many would think that something as simple as taxing backpackers a certain rate for short-term work would not be a complex matter.

However, for much of this year our politicians have excelled in making it a big, drawn-out issue full of confusion, connivance and complications.

And for the government, the complications have weighed on the small business operators and the rural communities they proudly claim to represent.

Even the government would struggle to defend how this whole scenario played out. 

It was as if some gypsy backpacker in an ugly Wicked camper cast a pox on the doomed legislation while burning some sacred herb.

First there was the review to stall the legislation until the government got the election out of the way.

The review looked at the original proposal of a 32.5 per cent tax rate and removal of the $18,500 tax-free threshold.

It heard uproar from the agricultural and tourism sectors, and eventually concern of what may happen to the fragile economies of regional towns that rely on both during the summer months to sustain them through the winter.

The government rightfully backed down, offering a 19 per cent rate with a claim that it would ensure the country was a competitive working backpacker destination which industry reluctantly accepted as better than no shift at all. 

Then the government had to deal with those pesky crossbenchers, keen on a bargain and even helpfully submitting for consideration some tax rates of their own.

There was 10.5 per cent from Jacqui Lambie, later supported by Labor and other crossbenchers, while the Greens preferred to tax them nothing at all.

Then politics really came into play when Labor, who had only expressed low-volume muttering about the tax before the election, seized on the government’s weakness and sought to embarrass and make an example of it.

Finally, a 15 per cent tax rate was resolved upon through a deal with the Greens that cost the government $100 million in Landcare funding.

Good environmental outcome but questionable economic outcome considering the government was greedily anticipating that the original tax rate would deliver it somewhere near $520 million.

Treasurer Scott Morrison further conceded that lowering the superannuation rate, as demanded by the Greens, and maintaining a 15 per cent rate from 19 per cent would cost the government an extra $55 million – or $155 million in total.

The drop from 32.5 per cent to 19 per cent was already forecast to lose the budget $120 million, meaning the whole exercise has effectively got the Liberals $275 million in lost revenue and additional expenditure.

At least it makes that additional $10 million the government had to spent to draw backpackers to the country scared off by news of the incoming tax seem like loose change in the glovebox.

For all the complex issues that the country has to deal with, it was disappointing to watch the government hopelessly and stubbornly fumble on what should have been simple legislation.

Equally as disappointing was to see the Opposition take advantage of the government’s poor play, and at the same time, the country’s farmers and affected businesses already fatigued from concern over what will come of their seasonable crops.