Fruit picking, travel and goon
How the backpacker tax will kill rural Australia.
The Federal Government released a survey earlier this year showing that backpacker numbers are down. The hardest-hit states are the Northern Territory (-11.3%), Queensland (-3.7%) and South Australia (-2.8%). This year the government has also announced plans to introduce a new “backpacker tax”. Essentially this means that working holiday (417) visa holders, who are currently treated as Australian residents for tax purposes, will instead be slotted into a non-resident tax bracket and pay 32.5c out of every dollar they earn.
It seems the argument is this: they are not residents, they will go home at the end of the year, so why give them a tax free allowance when there is no benefit to the Australian economy? A cynic might add - they don’t have a vote. So why is rural Australia up in arms?
Australia is lucky in having a huge landmass with varying climates, and is therefore largely self-sufficient when it comes to food production. Most crops grown in Australia need to be picked en masse at specific times of the year, and most are grown in low population areas. If you have an eight-week window and you need to run six rounds of picking across 5,000 peach trees, you’re going to need a lot of hands. You’re also going to need the people attached to those hands to be flexible with availability, working hours, and wage expectation.
You’ve got to find employees who are happy to wake up at 5am, climb up and down ladders into trees filling 10kg bags with fruit in extreme Australian heat, head home and come back to do the same thing the next day. They’ve got to be willing to do this every day until the fruit is picked, but happy to stay home for several days if there’s bad weather. You’ve also got no option but to let all of them go at the end of the season. Travelling backpackers provide a simple, humane solution to this requirement, which is why they currently make up a quarter of the agricultural workforce in Australia.
A one-year working holiday in Australia is seen as a veritable rite-of-passage for some millennials in countries such as Ireland and the UK. They come here for a year of independence, promptly get sunburned on Bondi, then head out travelling across the country. Most of them will end up seeing more of Australia than the vast majority of Australians.
Those who wish to stay for more than a year must complete three months of regional work. For the most part this enriches the backpacker’s Australian experience, the farmers benefit with harvest labour, and the local economy benefits. A lot of these rural Australian towns see no other tourism aside from the seasonal influx of 417 visa holders.
For the backpacker, money is always tight. I know this because I’ve done it. And whatever money backpackers do earn gets spent fairly quickly on having a good time in between all the monotonous work. Hostel rent, goon, travel, day trips, groceries, camping, cigarettes and more goon - these are the outgoings of a backpacker. I don’t know anybody who left Australia with money to spare.
Depriving backpackers of 32.5 cents in every dollar is, in fact, depriving rural Australian towns of trade and tourism and farmers of a labour force. As the above chart depicts, the percentage of visitors coming here for short-to-medium term visit has been falling since 2012. A recent survey by Monash University found that 62% of backpackers would consider going to New Zealand instead if the tax free threshold was abolished. We need to encourage more of these visitors, not make life more difficult for them. If we really want to help Australian farmers, we need to support Australian backpackers.
Graham Cooke's Insights Blog examines issues affecting the Australian consumer. It appears regularly on finder.com.au.