Backpacker tax threatens horticulture harvests

The Voice of Horticulture* has identified labour changes as a threat to grower profitability and is seeking a reversal of the “backpacker tax” and preservation of current award conditions.

A working holiday in Australia is full of so many wild, foreign, eye-popping experiences; the last thing backpackers want to think about is taxes. But from 2016 backpackers, and others on 417 and 462 working holiday visas, will lose the tax free threshold, meaning that every dollar earned will be subject to tax, at a rate of 32.5%.

The so called “backpacker tax” is likely to have a significant impact on the horticulture industry who employ many 417 and 462 Visa holders to help harvest their crops.
In 2013-14, 41,319 second year visas were granted to holiday visa workers in agricultural, fishing and forestry sectors. This was almost one third of the 462 and 417 Working Holiday visa holders in the country.

In recent times approximately 20% of all working holiday visa holders have been in Australia on a second year visa. Meaning they have completed 88 days of specified work in rural Australia.
Whilst the lure of an extended working holiday in Australia has been a boon for farmers needing an influx of seasonal workers, the removal of the tax free threshold will inevitably impact on the supply of much needed labour.
The impact on seasonal labour availability is likely to hit hardest in those less popular tourist destinations.

Tania Chapman, citrus grower and chair of the Voice of Horticulture said, “Australia is already at a major cost disadvantage compared to other food producing countries in terms of the cost of labour for semi-skilled and un-skilled horticultural work. In many cases, our unskilled workers are paid 1.5 times more than a worker in New Zealand, three times more than a US worker, ten times more than a South American and twenty times that of a South African.”
Ms. Chapman said “We need to be able to continue to attract temporary workers if we are to capitalise on the increasing export opportunities for Australian horticulture products in Asia.”
The commercial realities of the horticultural sector often involve split shifts and constant production during peak periods. Australian workers are not always available to meet the labour demand of the sector due to seasonality, remoteness and relative appeal of urban jobs. The resultant gaps in the labour market lead to a reliance upon foreign workers to supplement labour requirements in peak periods.

The “backpacker tax” is just one of the many challenging labour issues facing the horticulture industry.

The Modern Horticulture Award is being reviewed at hearings scheduled at the Fair Work Commission in March. Union submissions are proposing changes to the award that reduces the flexibility of employment conditions and is likely to impose significant increases in labour costs.
As the most labour intensive of all agricultural industries, horticulture employs around one-third of Australia’s total agriculture workforce. Ms Chapman firmly believes that “The reduced availability of labour and increased costs to employers are a double whammy which will impact on grower profitability.”

*The Voice of Horticulture (VOH) was established to represent the horticulture industries on the range of issue that impact on your businesses every day. AMIA is one of the founding members of the Voice of Horticulture.