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Transcript of interview with Laura Jayes: Sky News Agenda: 8 November 2016: backpacker tax

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Subject: Backpacker Tax.

ANTHONY ALBANESE: Their modelling showed when we were briefed by them that they assumed the same number of backpackers coming whether it was 32.5 or 19.

LAURA JAYES: But 19 per cent, I would argue that’s probably the most-competitive in the world because, compared to New Zealand which the Opposition has done in this case, citing the 10.5 per cent, we have a higher minimum wage and also our exchange rate is better. So therefore we are more attractive than New Zealand.

ALBANESE: Well, that is not right of course. They exchange rate fluctuates of course from time to time.

JAYES: But our currency is consistently stronger than New Zealand’s.

ALBANESE: Well, not that consistent actually in recent times. But in terms of New Zealand as well, in terms of the cost of living in New Zealand compared to Australia, the differentials are there as well. So we say that headline figure is critical when these days, with the era of smart phones and people deciding what country they’ll go to, they can look at what the headline rates are. They’ll see 10.5 per cent New Zealand, 10.5 per cent Australia. That’s a good place to land on. Bear in mind this is 10.5 per cent compared with zero. There was zero before the announcement in the Budget of last year by Joe Hockey and that’s been maintained because the legislation hasn’t changed yet. Now the Government are now saying as well that if this isn’t passed, then perhaps it will become 32.5 as the default position. So they are saying to the agricultural and tourism sectors, we’ll actually punish you because of playing politics in this place.

JAYES: There's a lot of politics being played (inaudible) …

ALBANESE: This has been a debacle.

JAYES: As you point out, this was announced in the 2015 Budget by Joe Hockey, or, yes, it was Joe Hockey. Now the Government's said, OK during the election campaign, 19.5 per cent.

ALBANESE: Well they didn't. They said that afterwards. During the election campaign there was absolute uncertainty.

JAYES: Yes, after the election. But what that difference in tax costs the Budget - about half a billion dollars. This further reduction that you're proposing is losing another half a billion dollars in revenue over the forward estimates. Is that in line with the modelling that Labor has looked at, or you haven't looked at the cost?

ALBANESE: Well, of course we have certainly looked at the cost.

JAYES: Well how do you plan to offset it?

ALBANESE: Well that's not the way a Budget works, of course Laura, as you know. Today we've offered up a proposal on superannuation that will increase the revenue to the Budget by over $1 billion.

JAYES: So is that a direct offset?

ALBANESE: No, because that's not the way the Budget works. The Budget has a whole lot of expenditures and a whole lot of revenues.

JAYES: But what the Government has done here ...

ALBANESE: We don't hypothecate taxes in this country.

JAYES: No, but the Government, in reducing this Backpacker Tax, they did offset with other savings such as increasing the Passenger Movement Charge by $5.

ALBANESE: No, they had spin. They had spin and a hit against the tourism sector, against their own policy, against the policy that we took to the election and with absolutely no notice. It is extraordinary.

JAYES: Hang on. The Passenger Movement Charge was last increased four years ago. It's now going up $5 under this proposal, indexed. That is about $1.20 a year. You can't tell me that tourists aren't going to come to Australia because of the cost of a cup of coffee.

ALBANESE: We have the second highest tax on departures of any regime in the world.

JAYES: Has that stopped tourists coming to Australia?

ALBANESE: Well, it is part of a constraint, absolutely. You can't just continue. If you had that approach, why not make it a $100 increase, $1000 increase? Where do you stop?

JAYES: Ok, I'll put something else to you. The Government ...

ALBANESE: If you're coming, if you're a working class person and you're wanting to go to Fiji, New Zealand or Bali, that's where most international travellers, including Australians, pay this tax.

JAYES: So for a family of four this is going to cost an extra $20?

ALBANESE: Well, a family of four, it will cost $240 out of what might be, in terms of the Passenger Movement Charge, out of what might be a fare of $150 each to go to New Zealand or to go to Bali.

JAYES: So, OK. I'll take that point.

ALBANESE: Of which a huge percent percentage of it is a tax.

JAYES: OK, the Government has also acted to reduce surcharges of credit card fees for airline tickets and that has been a saving of more than $20. So why not look at increasing the Passenger Movement Charge, where the Government has made savings in other areas?

ALBANESE: Well that's not a Government saving, of course. That's not a Government charge.

JAYES: Well, OK. No, but it's a saving for customers.

ALBANESE: Look, when the Passenger Movement Charge was brought in, it was brought in in order to pay for customs services essentially. So it was to pay for, it was a fee for service. Now there's no argument that the Passenger Movement Charge now gets many times more what the cost of that customs processing is for people going through. So this is now revenue that's going into consolidation. It's not actually providing a service. It's not assisting the tourism sector, which is why the tourism sector is so cross. The fact that the Government said it wouldn't make further increases. The Tourism Minister in Parliament this term, this term, stood up as well.

JAYES: Ok, so this is what I'll put to you. This will be my last question. Isn't this more about making a hypocrite of Steve Ciobo, who made what is now really an unfortunate speech in Parliament and has now had to increase the Passenger Movement Charge? This is about keeping pressure on the Government in that sense. You can't tell me, really, people are going to stop going overseas because of an increase in the charge by $5. And it's even built into the ticket price, so people don't see it.

ALBANESE: It's not built into the ticket price. You bet people get told when they book how much the tax is and Australia can't be uncompetitive.