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Wednesday, 24 June 2009
Page: 4095


Senator MILNE (9:59 AM) —I rise today to support the Tax Laws Amendment (2009 Budget Measures No. 1) Bill 2009 on the whole because it does provide for a more equitable sharing of the tax burden between all Australian taxpayers. We note that in recent years Australia has not done so well in terms of equity, and I think this is an important measure.

However, I just question the government in relation to one aspect of this. It is really about equitable income distribution and targeting high-income earners overseas, but one group of people that appears to be caught by this is young Australians backpacking in Europe. This is an important part of Australia’s culture, in my view. Many young Australians take the opportunity to go overseas for periods as long as 12 months—or sometimes six months—and help to support themselves while they are there by working.

I think it is incredibly important that young Australians do take this opportunity to expose themselves to different languages, arts, music, food and the whole cultural context. I put it to the minister that, if you were overseas for a year as a student or a young person, it would not be unrealistic to have three weeks in a ski field in Austria, a week as a waitress or waiter on a Greek island, three weeks working in a pub in London, three weeks fruit picking in Spain, a couple of weeks working in a vineyard in France and a week making beds in Ireland. If you did that, you would have worked for more than 90 days while you were overseas. I understand that, as this bill is written, if you work overseas for 90 days or more you would be caught by this particular legislation.

For high-income earners, there would be additional paperwork under this legislation but the compliance costs would be commensurate with the quantity of money that would be recouped by the government. But in the case of backpackers—young Australians who do undertake this kind of casual work while on an overseas cultural experience—the compliance costs relative to the income earned are likely to be much larger. I put it to the government that right now there would be thousands of young people overseas in this position, and they will be caught because it is unlikely that they will even be aware of this at this point and will not be doing the paperwork that is necessary in order to comply.

I would really like the government to address this issue and explain whether it has to be 90 consecutive working days—so you would need to work three months in one type of employment or with the one employer before this counts—or 90 days in a 12-month period, in which case I think we run into all kinds of compliance difficulties. But even with 90 days in the one establishment, if you manage to spend three months or so working in London, you are still likely to be earning a relatively small amount and the compliance cost is likely to exceed the tax benefit that is likely to be recouped for the taxpayer.

I really want to defend the cultural tradition we have in Australia and defend the ability of young people to work in these circumstances. I do not know what the tax regimes in all the different European countries or the Americas or whatever are in terms of who pays tax and under what circumstances, but with casual work there is often a lack of compliance anyway, particularly with things like fruit picking. There is often a negotiated wage for the week and it is just paid in cash.

While I am on that subject, I might just say to the government what I think about the way this operates with backpackers in Australia at the moment, where the superannuation contribution is made by the employer at the time they employ the fruit pickers. Whether they be Swiss, Austrian, French, German or whatever, the problem is that very often they do understand that superannuation was paid on their behalf. They go home and they never claim it. It ends up being a windfall gain for the government, with the funds being transferred from employers in Australia to the government coffers. I really think we need to consider that in terms of how we deal with superannuation contributions. But that is another matter.

I am really concerned to make sure that we are not capturing a whole lot of young Australians, who are attempting to enjoy themselves, in a mass of paperwork in foreign languages and so on, in which case we would be making a mess of things. Whilst I support the government’s intent, there are always perverse outcomes if these things are not thought through. I would be very keen to hear the government explain how we are going to exempt young people who are in those kinds of arrangements working overseas.

I also want to ask the government for some sort of explanation pertaining to Senator Xenophon’s amendment and what appear to be, again, special arrangements being made for politicians and some public servants. That is in relation to the notional tax contribution in terms of schedule 3 and the concessional contributions cap for superannuation. It appears that, because the contribution will be assessed as a notional tax contribution, it will be interpreted as a concessional cap for these taxpayers for the purposes of the bill. And where the notional tax contribution is greater than $25,000, these taxpayers, as with politicians, will continue to be allowed to put more than this amount into superannuation at a concessional rate. Senator Xenophon has drawn the attention of the parliament to what appear to be special privileges for politicians and public servants as opposed to the rest of the population. As we are targeting equity and high-income earners, I would like to hear the government’s response to that particular criticism of the legislation. Could the minister also respond in relation to those thousands of young people whose parents and families I am sure are very concerned about what this legislation means in terms of capturing them.