Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016

I rise to speak on the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016. This bill places a new tax on the wages of foreign backpackers when they are in Australia on a working holiday. This was a measure announced by the government in the 2015 budget. In that announcement, the Abbott government proposed a 32.5 per cent tax on backpackers.

Not surprisingly, in what is becoming a familiar chaotic style, the Liberal-National party government is back-pedalling from the original 32½ per cent tax and is now proposing a 19 per cent tax on backpackers. Sadly, the number of backpackers coming to Australia to work was decreasing before the government announced this measure in 2015, but, in so announcing that tax on the wages of backpackers, it has made the situation worse.

The impact of fewer backpackers working in Australia has dire consequences for our horticulture growers. I know this because the Brisbane markets is in my electorate and I have had feedback from several growers about some of the concerns they have. Growers face the prospect of seeing their fruit rot on their trees because they do not have anyone to pick it. Even at 19 per cent, Treasury modelling shows that the backpacker tax will have a detrimental effect on the number of backpackers willing to travel to Australia on a working holiday. Obviously, that in turn will have a flow-on consequence for our farmers. The uncertainty that the Turnbull government has created around this proposed tax has caused unnecessary stress for farmers, whose very livelihoods are at stake—in Tasmania, the north-west of Western Australia, Queensland and everywhere in between.

This is obviously a tax grab by the government. The original proposal was going to rake in $540 million from foreign backpackers. Sadly, the Turnbull government, particularly the Deputy Prime Minister, have handled this issue very badly. They did not consult with stakeholders or do any modelling when they put forward this proposal to tax backpackers. Despite the coalition deal between the Liberal and National parties being very strong about many things, particularly about delaying marriage equality, we saw that the Nationals, the once great party of the bush, completely ignored their constituents, the growers. The premise of the proposal completely ignores the fact that backpackers who come to Australia to work then spend the money they earn here in Australia. It is Australian businesses that benefit from their holidays. Of course, all the goods and services—the holiday products sold to them, the alcohol, the food et cetera—attract GST and are good for our economy. In the LNP's shambolic prosecution of their case for a tax on backpackers, the Liberal government and the very muted National Party coalition partners are now proposing a lower, 19 per cent, tax. Sadly, they have decided to couple this with two other new initiatives. One of these is the passenger movement charge. When this is coupled with the backpacker tax, it makes the bill before the chamber even more problematic. We now not only have the farmers and horticulture growers in a rage in places like Longman; we also have the tourism sector upset, a sector that has been doing it tough since the global financial crisis.

For this reason, Labor supports this bill going to a Senate committee for further scrutiny. The Senate inquiry process will protect our farmers and hear from them. It will protect our horticultural growers and consult with them. Our tourism operators will have a chance to have a say, to ensure that there will not be any unexpected adverse effects on these industries. To avert any more unnecessary uncertainty, Labor will ensure this matter is dealt with before the parliament rises for Christmas.

Obviously, we are in the fourth year of a Liberal-National party government, but hopefully they have woken up to the fact that we need to get the settings on these regulations on working backpackers right. Surprisingly, when you look at the Australian workforce, seven per cent of the working population are temporary visa holders with work rights. In 2015-16 there were 214,583 working holidaymaker visas granted. That is a reduction of 5.4 per cent from the previous year. The working holidaymaker visa program is designed to foster closer ties and cultural exchanges between Australia and our partner countries, particularly with the young adults from these countries who will later be community leaders and business leaders. I do note that, in the program, rather than getting a one-year visa you can also get a second-year extension if you spend working time in the agricultural sector. But I will make more mention of that later in my speech.

To apply for a working holidaymaker visa you must have a valid passport from a country involved in the working holiday program. Not every country that we have diplomatic relations with is able to access the scheme. I have a large Taiwanese diaspora in my electorate of Moreton. Taiwan is one of the top five sources of first working holiday visas, with 14,803 first visas being granted last year. Taiwan is the second largest source for the second year of working holiday visa grants, with 7,354 issued last year. Ninety three per cent of second working holiday visa applicants indicated that they engaged in agricultural work.

Last year, because of the number of Taiwanese taking up this scheme, I travelled to Bundaberg with Ken Lai, the Director General of Brisbane's Taiwanese Economic and Cultural Office. We went up to Bundaberg. We went out to some farms—tomato farms in particular—and met some of the young backpackers. We went out for dinner with them. We chatted to them about the hourly rates and the piecemeal rates that they were being paid. I will touch on that now.

The Horticultural Award 2010 provides for a minimum hourly wage of $14.31—not a lot of money, obviously, but a minimum of $14.31. However, there is also the capacity in section 15 of the Horticultural Award 2010 in Queensland to get the piecework rate. Clause 15.2 of this award says:

The piecework rate fixed by agreement between the employer and the employee must enable the average competent employee—

average competent employee; that is important—

to earn at least 15% more per hour than the minimum hourly rate prescribed in this award …

So that would be, effectively, an extra $2.15, which would bring you to $16.46. That would be the minimum rate at the moment under the Horticultural Award.

The piecework rate agreed is to be paid for all work performed in accordance with the piecework agreement.

Obviously, you would also get the casual loading, if that was the workplace relationship. Clause 15.6 of this award says that you must agree to the piecework agreement 'without coercion or duress'. And clause 15.7 says:

The piecework agreement between the employer and the individual employee must be in writing and signed by the employer and the employee.

That means it must be understood by the employee. Also, the employer needs to keep a copy of the piecework agreement and keep it as a time and wages record.

I stress that because, in our travels around Bundaberg and in meeting some of the working holiday backpackers, we found that certainly many of them expressed concerns about the idea of the average competent employee. And, certainly, they had expressed the fact that they could not earn enough money—anywhere near that $14.31, which is the minimum hourly wage, before the penalty rates kick in.

Sadly, Ken Lai and I—and others in the Taiwanese community—have realised that there are unscrupulous operators who will take advantage of these optimistic, fun-loving backpackers. Sadly, sometimes they are the middlemen or the middlewomen, not the farmers or the horticulturalists who just want to get their crops. Basically, the person comes from the plane to the farm with no interaction with any opportunity to pick up the information about what they should be paid and what is normal.

The Fair Work Ombudsman has just released a report into the wages and conditions of people working under the working holiday visa program. The ombudsman received 1,820 requests for assistance from visa holders last year and recovered over $3 million owed to these visa holders. When the visa program was expanded a decade ago, it introduced an option for young visa holders to extend their stay in Australia for a second year. The condition of being granted the extension was that they had to undertake 88 days of specified work in regional Australia during the first year of their visa.

The Fair Work Ombudsman inquiry found that the vulnerability of young visa holders was increased if they chose to undertake the 88-day placement in order to be granted the second-year visa. According to the report: young visa holders are being exploited by underpayment and or non-payment of wages; visa holders are making payments to employers or third parties for assistance to gain a second-year visa; there are sexual harassment and workplace health and safety breaches and issues; employers are recruiting visa holders to undertake unpaid work to meet the second-year visa requirement—because they seem to have them over a barrel; visa holders are working for free in exchange for non-certified accommodation programs—which would be not what the Horticultural Award is about at all.

The inquiry found that: unreasonable and unlawful requirements are being imposed on visa holders by unscrupulous businesses; exploitative workforce cultures and behaviours are occurring in isolated and remote workplaces, especially; employers are making unlawful deductions from visa holders' wages, or unlawfully requiring employees to spend part or all of their wages in an unreasonable manner.

In particular, the inquiry found that visa holders from Asian countries were more likely: to have lower awareness of their workplace rights in Australia; to have money deducted from their pay without a verbal or written agreement—against the award; to be paid to complete the requirements to obtain a second-year visa—completely against what the program was set up for; to have paid an agent to secure regional work to meet the eligibility requirements of the second-year visa. This was similar to the experience we discovered when meeting the backpackers around Bundaberg.

The inquiry uncovered many instances of unscrupulous behaviour by employees all over Australia.

In the Northern Territory, where a labour-hire intermediary engaged young visa-holders to perform pruning, weeding and fruit-picking duties on mango orchards in Darwin, the workers were paid amounts equivalent to hourly rates of between $2.74 and $4.79, well below that piece rate of $16.46; and some workers were not even paid at all. The amount alleged to have been underpaid across the workers was more than $35,000. There were examples in Victoria of people picking, washing and packing six hours a day for six days a week in return for accommodation. In northern New South Wales, a business that grows and supplies cucumbers to Coles and Woolworths via an agent, and sells to local stores, was withholding all wages from those visa holders in exchange for providing food and accommodation.

In north Queensland—even in Queensland, Member for Longman; can you imagine it?—a business advertised for backpackers for an unpaid position, saying it would then sign off on their second-year visas, and food and accommodation was provided. There is a mushroom farm near Brisbane, not far from my electorate of Moreton, where workers were employed on piece rates, but they were not able to earn a sufficient wage under the agreed rates, with almost $650,000 in underpayments.

Sadly, it is hard to get information about workplace rights into the hands of working holiday backpackers. As I said, often they go straight from the airport to the farm, and obviously, sadly, these are non-unionised workforces, so it is hard to get the information to them. Early in November I will be going to Gatton, perhaps with the member for Wright but certainly with Ken Lai from the Taipei Economic and Cultural Office again to try and talk to some more backpackers. We will also visit the site where a 19-year-old girl from Taiwan, Chung Jia-Ying , was hit by a truck on 9 August and, sadly, killed. We will pay our respects, for her family, but also try to catch up with some other backpackers in the area.

It is important that any changes to regulatory frameworks around working holiday visas take into account the current exploitation that is occurring. We cannot just govern and hope for the best. We need to have tighter scrutiny. I think, from memory, there were about 17 Fair Work inspectors for, as I said, nearly a million workers, so it is hard to get those inspectors out, especially to remote areas. I found it hard even in Bundaberg, an area I know very well, to actually get onto the farm and into the workplace to talk to people—and sometimes people are not that keen to talk.

It is important that stakeholders, including farmers and horticultural producers and the tourism sector, are fully consulted about any proposed changes. There should be thorough consideration of this bill so that all perspectives can be considered, as well is the full implications of any changes. So Labor call for this bill to be scrutinised by the Senate Economics Legislation Committee before any changes are made to the conditions for young foreign backpackers working in Australia. They mean too much to our agricultural sector and too much to our good name abroad. If these foreign workers have this experience and then go back home and talk about being exploited or sexually harassed, or unsafe work practices, they will not be the ambassadors that we are trying to create.