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Monday, 28 November 2016
Page: 4568


Mr MORRISON (CookTreasurer) (16:29): I move:

That this bill be now read a second time.

This bill is the key element of a broader package of measures to implement the government's working holiday-maker reform package. This government has been committed to getting the policy right on working holiday-makers. It is important that our agricultural sector receives certainty. The government will therefore today put forward a bill which will propose working holiday-makers pay 15 per cent tax on their earnings from the first dollar they earn up to $37,000, after which ordinary marginal tax rates will apply. The government thanks coalition members and senators for their constructive contributions in resolving this matter as well as Senate crossbenchers with whom the government has reached agreement to deal with this matter.

Working holiday-makers are an important source of Australia's international tourism and a key source of seasonal labour in regional areas, particularly in the agriculture, horticulture, tourism and hospitality sectors. We have listened to stakeholders about declining numbers of working holiday-makers in areas that rely on their seasonal labour. The government wants to ensure that we have the workforce to meet these seasonal labour needs. As a result of our negotiations in the Senate, this bill will set the tax rate to apply to working holiday makers at 15 per cent from their first dollar of income up to $37,000, rather than the 32.5 per cent announced in the 2015-16 budget. Ordinary marginal tax rates apply after $37,000. The new tax rate will apply from 1 January 2017.

Taxing working holiday-makers at 15 per cent tax from the first dollar of income up to $37,000 is internationally competitive in terms of after-tax income. Even after taking cost-of-living differences into account, this change will mean that after-tax incomes for working holiday-makers in Australia are considerably higher than key competitor countries, such as New Zealand, Canada and the UK.

This bill gives both working holiday-makers and employers certainty about the tax arrangements that will apply. The Turnbull government's package of reforms to working holiday-maker arrangements addresses stakeholder concerns about the taxation of working holiday-makers and makes other changes to increase Australia's attractiveness as a destination for backpackers, while being conscious of its impact on the budget.

Full details of this bill are contained in the explanatory memorandum.

Debate adjourned.