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Economics Legislation Committee
31/10/2016

BENNETT, Ms Tara, Executive Officer, Tourism Port Douglas Daintree

de WAAL, Mr Alex, Chief Executive Officer, Tourism Tropical North Queensland

[09:45]

ACTING CHAIR: Welcome and thanks for coming. These are proceedings of parliament, so parliamentary privilege applies should that be of any relevance to you at all. We will ask if you would like to make a short opening statement and, if you do, we will call upon both of you to do that before Senator Ketter and I ask some questions. This is a hearing of the Senate Economics Legislation Committee looking into the government's bill for the working holiday-maker reform package. This is a parliamentary committee as opposed to a government committee, and we are very keen to hear your views on the package, so over to you.

Mr de Waal : Senator, it is a privilege and a pleasure to be able to be here today, present to you and, certainly, have the opportunity to discuss a very important part of our industry. I have a statement that I have tabled for your attention, and I will just read that statement to start with, if I may. Tourism Tropical North Queensland is the peak visitor destination marketing organisation for Tropical North Queensland, Cairns and the Great Barrier Reef and is a membership based, industry funded incorporated private company limited by guarantee.

The TNQ—Tropical North Queensland—region is best known as the gateway to the World Heritage listed Great Barrier Reef and Wet Tropics of Queensland, and it is the only place, of course, where the rainforest meets the reef. The region encompasses an area in the south at Cardwell, up to and including the Torres Strait, and out to the north and west to the Northern Territory border. The land coverage is approximately 20 per cent of the total area of Queensland; however, it is home to only six per cent of the Queensland population.

Tropical North Queensland is Australia's third most important holiday destination after Sydney and Melbourne and remains Australia's most popular holiday destination for Japanese visitors. The TNQ region welcomes in excess of three million guests per annum to the city of Cairns and exhibits Australia's highest visitor-to-resident ratio of 19 to one. Tourism is the main economic driver of the regional economy and contributes $3.6 billion to the economy—or it did so over the last 12 months to March 2016—and provides employment to 30,000 residents.

The federal government's backpacker tax and initiative to remove the tax-free threshold on income for people on working holiday visas will have an adverse impact on the future growth prospects of the Queensland tourism economy. The potential negative impacts have been ameliorated by the federal government's proposed package of amendments which includes a reduction in the proposed tax from 32.5 per cent to 19 per cent; a reduction in the visa application fee; an extension of the age eligibility for a working holiday visa from 30 to 35 years of age; the $10 million of funding to promote backpacker tourism; and the PMC—passenger movement charge—increase of $5, which will increase it from $55 to $60. TTNQ recognises that this revised package will lessen the negative impacts associated with the legislation; however, the reality is that these changes raise barriers to the growth of the tourism industry and the visitor economy.

TTNQ recommends that the federal government should not impose income tax rates on working holiday visa holiday earnings and, by doing so, damage Australia's hard-earned ability to remain competitive in this important tourism market. The working holiday visa market generates not only significant export earnings but also contributes to addressing labour shortages in key regional destinations and industries.

Tourism Tropical North Queensland's recommendations are that the federal government should continue to support Australia's effort to attract more visitors, increase visitor expenditure and not diminish the competitive strength of the working holiday visa market by not proceeding with the proposal to remove the current tax-free threshold on earnings by working holiday visa holders, and by ensuring that any increase in the PMC should be allocated to Tourism Australia to drive demand for the visitor economy.

Ms Bennett : Tourism Port Douglas and Daintree is the local tourism organisation for the Douglas Shire. The Port Douglas and Daintree region is located an hour's drive north of Cairns in Tropical North Queensland. It is the place where the oldest living rainforest in the world, the Daintree Rainforest, meets the Great Barrier Reef. Port Douglas is a vibrant yet relaxed seaside village, and it is an ideal base for visitors to explore the natural beauty of the region.

Our region of almost 12,000 people achieved more than 2.4 million visitor room nights for the year ending 2015-16—that is, up to June 2016. Driving these numbers is the domestic market with 359,000 visitors and 1.9 million room nights; while international visitors totalled 97,000, with total room nights reaching 533,000. This generated $489 million for our region's economy. Tourism contributes more than 80 per cent of the Douglas Shire's economy, making us one of the most reliant regions in Australia on the tourism industry. The second-largest sector is agriculture, which includes both sugar cane and tropical fruit production.

Our visitor market combines mature travellers through to the youth adventure market. Youth adventure travellers, or those on a working holiday visa, are an important visitor sector due to their high dispersal to our regional areas and, more importantly, for the supplement they provide to our labour force during our peak visitor season. In previous years we have welcomed improvements to the working holiday visa which allowed visa holders to work for more than six months with a single employer. This provided a significant benefit to business owners and to the experience of youth travellers for their time in Australia.

The federal government's backpacker tax and the initiative to remove the normal tax-free threshold on income for people on working holiday visas will have a significant adverse impact on the future growth prospects of the Douglas Shire's tourism economy. TPDD strongly urges the federal government not to impose unfair income tax rates on working holiday visitors' earnings which, in doing so, will damage Australia's hard-earned ability to remain competitive in this very important tourism market. At the height of this year's tourism season in July several operators in the Douglas Shire, ranging from hairdressers to restaurants, were forced to close on set days each week due to staff shortages. These shortages would traditionally have been filled by travellers on a working holiday visa. TPDD is concerned that the 19 per cent proposed tax will deter further travellers from coming to Australia in favour of more welcoming government regulations in competing countries such as Canada and New Zealand. This will have a devastating effect on the Douglas Shire's tourism industry, and the heavy reliance of the shire on tourism will mean this is felt throughout our economy.

The continuing decline in the number of backpackers coming into Australia will benefit from increasing market activity as proposed in the reform. This benefit, though, will be offset by a policy that taxes travellers who have been proven to spend a large proportion of their earnings touring the country of their working holiday, often in the regional areas where they are based. The real benefits will come from a reform package that maintains a tax-free threshold and provides an equitable superannuation structure for employers and working holiday visa holders. The working holiday visa holders provide an essential supplement to the Douglas Shire workforce. Rather than take jobs from Australians, the program allows for long-term job security for hospitality and tourism workers in our region. Any threat to the availability of seasonal working holiday visa employees will negatively impact the job security of Australian workers, as trading conditions will be extremely challenging for business owners that are so reliant on tourism.

We certainly support the recommendations of Tourism Tropical North Queensland. We recommend that the federal government continues to support Australia's efforts to attract more of the youth adventure market. It is a vital sector for Australia and our regional tourism industry. We also support the recommendations of Tourism Tropical North Queensland, our regional body, that the federal government not proceed with the proposal to remove the current and generally applicable tax-free threshold on earnings by working holiday visa holders; that working holiday visa arrangements be reformed to expand the availability and qualifying requirements with the intent to increase the attractiveness of the visa category and bring more business to Australia; and that the promotion of Australia as a welcoming destination for young travellers to support positive international relations and engagement with regional communities, be supported.

ACTING CHAIR: Thank you very much for that. If we could get a copy of that for the secretariat, that would be great.

Ms Bennett : Certainly.

ACTING CHAIR: Just before I pass to Senator Ketter, you would have heard me raise some figures with Mr Woodward about New Zealand and Canada and the net hourly rate received in those countries. I am simply quoting from a submission made to the inquiry; I assume they are correct. Do you have any comment or any figures on how we do compete with Canada and New Zealand? The figures in this submission are that the net hourly rate, at 19 per cent tax, in Australia is $14.34; in Canada, with their 15 per cent, is $9.41; and in New Zealand, with their 10.5 per cent is $13.65. The submission also acknowledged that it costs more to live in Australia. Do you have any figures yourselves on our competitiveness with Canada and New Zealand?

Mr de Waal : No, Chair. Certainly, through QTIC—the Queensland Tourism Industry Council—we have done some analysis in that respect. We supported that analysis and that submission has been provided to the commission. I am not personally aware of the figures off the top of my head at the moment. Certainly, aside from the data, I think what is very important to understand is that we deal very much in the currency of image and the images associated with backpackers determining whether they go to Canada, New Zealand or this destination. There is an associated image with all of the efforts that we undertake, all of the barriers and all of the welcome mats that we have put out to the various countries that actually determines the perception of visitors around the world as to which destination is actually welcoming and inviting to visitors. I think we need to understand that dimension as well.

ACTING CHAIR: Sure. Certainly, on these figures I have, under the 32 per cent which was originally proposed, the net hourly rate falls to $11.91, which is worse than New Zealand and only slightly better than Canada. Anyhow, I will come back to you later.

Senator KETTER: Thank you, Mr de Waal and Ms Bennett, for appearing before us. In terms of the contribution of backpackers to the tourism spend in North Queensland, you have given us some figures in terms of international numbers. What is the subset of that that is constituted by backpackers? Do you have any figures?

Mr de Waal : Overall, from an international market perspective of the entire region, you are talking about 20 per cent of the visitor numbers.

Senator KETTER: So it is fairly significant.

Mr de Waal : Yes. Aside from the actual numbers and the economic contribution of the backpackers, in terms of the net value a major benefit of the backpacker industry is that that market tends to be a trailblazer. They will go into regions and disperse into regions that are not necessarily traditionally welcoming to visitors and they help develop those economies. They trailblaze and create pathways for other tourists to follow. So in terms of regional dispersal of tourism work within the region, they are a very important type of tourist to attract, not only to this region but to Australia in general. That is just another important understanding to have about the composition or the habits, if you like, of that segment.

Senator KETTER: What types of roles to backpackers fill in the employment sector in North Queensland?

ACTING CHAIR: Just before you go on, there is media in the room. There is a general rule in Senate committees that we are happy to have the media, provided the witnesses do not object to being filmed. You do not have any objection to that, I assume?

Mr de Waal : No, these characters are known to us, Senator!

ACTING CHAIR: All right, that is fine. We do that as a formality.

Mr de Waal : Thank you, Chair.

ACTING CHAIR: Sorry, Senator Ketter.

Senator KETTER: What types of roles are we looking at here for backpackers to perform?

Ms Bennett : A huge variety, particularly in hospitality—restaurant workers, and in hotels and bars. In our region it also stretches into reef operations out on the reef boats. Also, trades. They really do cover a very broad cross-section. However, for the Douglas Shire, because the majority of our employment is in tourism, they are mainly tourism-related roles.

Senator KETTER: What have you seen in terms of the numbers of backpackers coming into your region? I will start with you, Ms Bennett. Do you have any figures?

Ms Bennett : The numbers overall have softened a little. We are still seeing good regional dispersal of, as Alex said, the trailblazers who really do push a lot deeper. However, we have seen a softening in those that are here on their working holiday visas or are looking to stay in the region for that purpose.

Senator KETTER: Can you give us some specifics?

Ms Bennett : I spoke anecdotally with some of our operators, people who really are at the coalface. Dougies Backpackers Resort have been established for 15 years and they have run an employment program for the past five years. That came directly from them.

Senator KETTER: Mr de Waal, do you have any information?

Mr de Waal : If you look at the trends over the past five years, there has been a gradual decline in backpacker visitation to Australia in general, so Australia has been progressively losing competitive advantage around the world. I do not have the exact stats here before me, but the general trend is one of decline, which has been somewhat arrested to a degree. There has been a slowing of that decline in recent times due to the more favourable economic conditions globally.

Senator KETTER: If backpacker numbers continue to decline, what does that mean for Cairns, Port Douglas, Daintree and the rest of North Queensland?

Mr de Waal : It is a lessening of the optimum results that we can hope to achieve from a tourism perspective. As I think Ben Woodward advised previously, the region is very competitive in a number of other sectors and that is certainly providing for a positive general situation, so the tide is rising. The backpacker segment, the youth holiday segment, is one that is in stagnation per se but, in aggregate, the destination continues to prosper and is actually growing quite rapidly at the moment. The impact of the youth market being in stagnation or decline is one of a lessening of the current positive impact.

Senator KETTER: Ms Bennett, I was quite alarmed to hear that some of the businesses were forced to close their doors in July. Can you elaborate on that?

Ms Bennett : As was I. This was, again, through my discussions with a backpacker operator last week. The reality was they did not have the staff to fill those roles. Each business has a year-round, permanent population of staff and so during our peak period, which is from June through to October, it does rely on backpackers or working-holiday visa workers to come into the region and fill that peak capacity. As a result of not having the staff—and I believe it was mostly hairdressers, but chefs in particular and wait staff as well have been a real challenge—some businesses have been forced to close for two days and then have their permanent staff on a five-day rotation.

Senator KETTER: One thing I was not fully appreciative of—and it is a point you have made—is the importance of backpackers in ensuring the long-term security of domestic jobs. Could you elaborate on that, because I think it is a rather different take.

Ms Bennett : If we looked at occupancy in our region, we would sit in the quieter months at between, say, 40 and 60 per cent. In our peak period we are up around 90 per cent. To be able to cater for that growth, businesses will increase their workforce using working-holiday visa workers to supplement that. We simply do not have the population base in the Douglas shire to be able to fill those roles. In actual fact, the working-holiday visa system ensures the long-term stability for our permanent residents.

Senator KETTER: In terms of the reform package, prior to the announcement on 27 September of the latest changes, Mr de Waal, what input did your organisation have to those changes?

Mr de Waal : Certainly we had input through QTIC, the Queensland Tourism Industry Council, and again through ATEC. We worked collaboratively with those two organisations. We have certainly consulted and we provided significant input, with very much a strong recommendation not to proceed with the intended removal of the tax-free threshold.

Senator KETTER: Were you consulted about the increase in the passenger movement charge?

Mr de Waal : No, not at all.

Senator KETTER: Was that a surprise to you?

Mr de Waal : Aside from the youth holiday market, the biggest issue is that, in terms of destination marketing, tourism has an element of market failure, which is associated with the image and the fact that an individual operator cannot promote the destination on their own. Government and public sector investment is generally required, regardless of the sector. The challenge that we have is a population base growing at a relatively modest level and our visitor markets growing at a much greater level. As a consequence, to drive those markets you need ever-increasing resources—to market to them and obviously make sure our welcoming mat is as good as it can possibly be. The difficulty from a government perspective, of course, is that you do not have growing coffers per se, in terms of the available budget. As a consequence, government is not increasing its investment in tourism. That is constraining Australia's ability to attract optimum tourism, and the PMC, by rights, is really—if hypothecation was not an issue within government you would look at actually linking that to investment in tourism.

The $5 increase is not a major issue per se; the issue is that that investment is not actually flowing into driving the tourism business but is going into consolidated revenue. That, to me, is the biggest issue that we had with the PMC—it is not necessarily increasing it; it is the fact that we are not investing back into tourism, into the industry that actually has huge potential. With the population base that we have here, I guess the issue is we have a growing impost versus a linkage to the visitor. Any way that we can link tourism industry investment, including the backpacker segment, to the visitor and to revenues from the visitor provides for the ability for that business to grow and for the investment to grow in the long term. That is the weakness we have.

Senator KETTER: We heard at the last hearings from representatives of the tourism industry that, in terms of international competition, Australia's departure tax is already amongst the highest in the world. There was some concern expressed about increasing that even further.

Mr de Waal : Absolutely—again, it is a barrier. With any of these points that we are talking about today, we are talking about adding barriers. Naturally, we have financial realities we need to deal with within government, but ultimately every one of these changes is a barrier to the potential to drive this business, whether it be in the backpacker industry or in the general tourism industry in Australia.

Senator KETTER: What impact do you think the change to the PMC might have on Cairns Airport?

Mr de Waal : I think the tourism industry is not concerned about the direct impact of this $5 impost per se—it is not going to make a huge difference. The issue, fundamentally, is the reluctance of or inability for government to escalate its investment in the industry in accordance with the growth of that industry. That is a weakness that we have. It is about really considering how the PMC, those resources, can be allocated to the business that it rightly should be allocated to.

Senator KETTER: In terms of the 19 per cent tax rate, I would like your view about that as the optimal level. Do you have a view?

Mr de Waal : Basically my view is that it is an amelioration, if you like, of the negative impact. It is a barrier. The barrier has come down, but it remains a barrier. Certainly comparative to New Zealand, whilst the net revenue there might be less than what the income for backpackers will be here, the issue is ultimately that, from an image perspective, we have raised the barrier above you like what is prevalent in New Zealand. People do not shop around internationally to work out how much they are going to earn in a particular marketplace, but for some reason they have a look at how much tax they are going to be paying. Certainly it is an improvement and we welcome that improvement, but it is not where we would like it to be.

Senator KETTER: Indeed that sort of detailed analysis requires looking at the exchange rate, the cost of living and the tax rate. How confident would you be that people coming to Australia would look at all of those factors and judge as to whether or not it is in their interest?

Mr de Waal : The reality is that the backpacker market looks at the headline. They look at the fact that we are moving from a tax-free earning environment to one that is charging 19.5 per cent, so that is the reality. We have raised the barrier; they are not going to do the detailed analysis.

Senator KETTER: Ms Bennett, do you have a comment?

Ms Bennett : I support much of what Alex has said. In addition, I believe that, whilst the reduction to 19 per cent was welcomed, the addition of the superannuation changes has somewhat penalised them in a different regard. Yes, the tax rate has reduced, but the superannuation part will now be held—I believe it is 95 cents?—so they have almost balanced each other out. On analysis, the penalty for working holiday visa workers is still extremely high.

Senator KETTER: You said they balance each other out, but I will put this to you for your reaction: a backpacker overseas looking at the previous rate of zero tax, sees a 19 per cent coming in, in addition to the 95 per cent clawback, if you like, of the superannuation payments. That is actually two negative impacts.

Ms Bennett : Yes, exactly.

Senator KETTER: To what extent are international backpackers looking at these issues and deciding what they are going to do? Do you have some anecdotal information about that?

Ms Bennett : I do. They are very savvy travellers. In the age of digital connectivity, with the discussions and blogs between those user groups, the word will get out very quickly that Australia is somewhat less welcoming, or penalising working holiday visa visitors, as opposed to some other countries.

Senator KETTER: How confident are you that the 19 per cent rate is going to be an acceptable rate and is not going to impact negatively on the industry in North Queensland?

Ms Bennett : I am not confident.

Senator KETTER: Why do you say that?

Ms Bennett : It is still much higher than where we are currently, and, for someone looking at our country compared to other areas, we will not appear as attractive as some other options.

Mr de Waal : The biggest damage has been to the image associated with this whole discussion. The damage has already been done and is already in place. It is a matter of how we recover from the current situation. Australia needs to look at ways it can become more competitive to the global scenario. Instead of following the leader, Australia needs to find ways we can make our destination the most attractive to this sector and other sectors. At the moment, I think we are dealing with mechanics and not actually building the inspiration or the attractiveness of our destination toward this market.

Senator KETTER: I do not want to put words in your mouth, but what I am hearing from you is that even the ameliorated bill is seen as an impediment to the growth of the industries in Queensland.

Mr de Waal : Absolutely. It is a lessening of the barrier, which is obviously nice to see. But, in the first place, we should not be putting barriers up. We should be removing them and actually opening our arms to markets that are wanting to come here.

ACTING CHAIR: The tourism transport forum, in giving evidence to this committee, said that they have been seeing a decline in backpackers over the last few years for a whole range of reasons. One is that they have not been targeted specifically from a promotions point of view and that we have these expensive visa fees and some complications in how the process works for these visa holders. They go on to say, in fairness, that whatever impact decreasing it might have, it has partly been balanced by the fact that they are now going to be paying tax they were not paying before. Is your feeling that backpackers' visitations have been decreasing over the last few years?

Ms Bennett : It has been decreasing, and—

ACTING CHAIR: Long before this tax—

Ms Bennett : Yes. Absolutely. I do support the forum in that there has not been enough promotion to the backpacker or the youth traveller. We see it in some key markets, such as the UK; however, a lot more needs to be done to be attracting these travellers to Australia.

Mr de Waal : If you look at our border protection ethos in Australia and the values that we communicate to the world, we are putting barriers up. Rightly or wrongly, an international visitor's perspective, particularly in the youth market, is influenced by this type of agenda. It can be visas or the difficulty associated with going through the visa process or the cost of the visas or the fact that we are sending out messages that are not necessarily welcoming to visitors. They all have a negative impact on Australia as a destination and it's attractiveness globally. At the same time, you have destinations around the world that are going against that tide and are actually heading in the other direction and opening up their borders. They are looking at ways of attracting—

ACTING CHAIR: I have just come back from Europe, and I think they are closing them very rapidly.

Mr de Waal : True. In that environment as well, yes.

ACTING CHAIR: That is an interesting comment. The specific advertising promotion in this will help to target those images, I would assume?

Mr de Waal : Yes, and the challenge is that we are talking about a two-year campaign with $10 million. We may address this issue for two years, but we are talking about an industry that is building infrastructure and employing people for the long-term. In the absence of that ongoing investment and linkage to the ability to invest at that level on an ongoing basis—and, in fact, on an increasing basis, given the growth of the industry—that is a failure we have in Australia in terms of the support and promotion of the destination image.

ACTING CHAIR: Long-term?

Mr de Waal : Yes.

ACTING CHAIR: I have heard that comment for years, particularly from this part of the world. If you do not have the actual figures, do you have a feel of what percentage of our total inbound tourism economy is related to the backpackers?

Mr de Waal : That is approximately 20 per cent.

ACTING CHAIR: There may be evidence of this elsewhere as well, but, particularly for Tropical North Queensland, and perhaps I could include in that the Whitsundays, do you have any feel of whether backpacker tourism involvement is bigger in this northern area than it would be in other parts of Australia?

Mr de Waal : In my opening statement I talked about this region having a visitor-to-resident population ratio of 19 to one. That is the highest ratio, and you will find that in the Whitsundays it will be a similar ratio. So, in some of the destinations that are very reliant on tourism, that gives you a very good indication of the importance of tourism to those regions. As I said, for the entire region that I am talking about from Tropical North Queensland's perspective, 20 per cent of the economy and 20 per cent of employment is directly generated through tourism and then you have the flow-on effects, if you like, to other industries. In fact, of the $14 billion regional economy, I think about $3.6 billion is tourism related, so you get a feel of that, and then three-quarters of all other industry sectors derive at least 10 per cent of their revenue from tourism. So, in a community like Cairns and other cities and towns throughout Tropical North Queensland, like the Whitsundays, you will find that the reliance, of course, on tourism and the backpacker market as being a trailblazer for future tourists is critical. I will state that again: in terms of the backpacker market, they are trailblazers. They lead visitation; they often come back with their families in times to come et cetera; and they actually develop tourism and significantly build regional centres, in particular, so they are a very, very important market segment.

ACTING CHAIR: The discussion has mainly been on backpackers as customers of tourism. How reliant upon backpackers is the tourism industry as employers?

Mr de Waal : I think Tara has pointed that out specifically. She is closer to the ground in Port Douglas, and she sees the business community there. Certainly anecdotally I have had a lot of our members talking to me about the importance of staff during seasonal periods. We are fortunate in some parts of the Tropical North Queensland area in the sense that, through events and other initiatives, we are seeing a levelling of seasonality, so we do not have as great of fluctuations as perhaps we have in some of the other areas within Tropical North Queensland. So that becomes less and less of an issue as you build or remove, if you like, seasonality from a marketplace. But if I look at Mission Beach, the Tablelands, Port Douglas and the cape region as examples, these areas are particularly seasonally oriented and they really suffer when they cannot get a hold, if you like, of short-term labour during those peak periods.

ACTING CHAIR: Like Senator Ketter, I was amazed at your comment about businesses in Port Douglas shutting down in July because they could not get staff. Perhaps this is a leading question, but my suggestion to you is that that was not really related to the announcement in the May budget that the tax was going up to 32 per cent. That would have been—

Ms Bennett : No, I meant more that that is a sign of the decline that we are seeing in backpackers coming into our region overall. We still get healthy visitation, but it has softened, and that is where we are now having gaps in the labour force.

ACTING CHAIR: My experience, as I mentioned before, is that every service station you pull into anywhere from here north to the Torres Strait or west to the Gulf has some young person with a foreign accent. Do you have any feel for why it is we cannot get Australian young people—or old people—manning these stations, particularly the remote tourist areas that seem to be relevant?

Mr de Waal : I think I pointed out that seasonality perspective. The issue is, particularly in a regional centre in those remote areas, that you have significant seasonal fluctuation, so to sustain somebody 365 days a year is not necessarily possible from a business owner's perspective. They need to ebb and flow their cost base associated with when the demand is there. As a consequence, your part-time and short-term workers become a critical part of that economy. Unless we can drive visitation to an extent to start to remove some of that seasonality, you are going to see those fluctuations. There needs to be some way of allowing for and encouraging, if you like, employment in those regions that are seasonally impacted.

ACTING CHAIR: Australian young people taking a break and working in these places will now pay no tax on up to $18,000, as opposed to foreign people who will be paying 19 per cent from the first dollar. Do you think that will perhaps lead to a greater interest by Australian young people in some of these jobs in the more remote communities?

Mr de Waal : That is an interesting hypothesis. I think the aspiration of most young people today is, ultimately, that as soon as they are of age they want to travel overseas. Australians have this love affair with travelling abroad—and that continues—so I do not think no tax is going to dissuade that outbound travel. I do not think there will be any comparative perspectives by Australians considering a trip to Europe versus one within Australia based not paying any tax in Australia. I would suggest that is not going to be the case.

Ms Bennett : There are a lot of young people for whom travelling to Europe is not an option. However, I think cities are far more attractive to that age group. As we are seeing with the shifting population, moving to remote regions in Australia is certainly not an attractive alternative for young people.

Senator KETTER: I have a couple more questions. Ms Bennett, in your opening statement you talked about the devastating effect on the tourism industry in the Douglas shire. From that, I took it that you meant that the 19 per cent tax may deter people from coming to Australia in the first place.

Ms Bennett : Yes.

Senator KETTER: I want to take you beyond that. Of those that will come despite the 19 per cent tax, what do you think will be the behavioural impacts of less disposal income available to them while they are here? It will obviously have some impact on the amount that they have available to spend. Then there is the question of the incentive to work as associated to the incentive to spend time in Australia on tourism activities. Do you have a view about those behavioural changes? Unfortunately, we have heard from Treasury that they have not done that modelling, so what do you think?

Ms Bennett : It is really important to look at that flow-on effect. Certainly, in the future, when we have workers who are receiving the 19 per cent tax, I do believe that their spending will be limited. I know from our experience in our region that our working holiday visa holders will often come for six plus months and they will spend that time on their weekends going out on the reef. They certainly love dining out. They do put a lot of money back into the economy, and quite often it is almost a neutral exercise in that everything they earn while in the region they also spend—or they might save a little bit if they are moving on to travel through South-East Asia to finish their journey. So I do believe there will be the flow-on of a reduction in their actual spend whilst in the region.

Mr de Waal : I would certainly back that up. Absolutely without a doubt, the more money they make, the more they actually spend. They do not go home with their pockets filled with dough—they extend their length of stay; they extend the amount of activities they undertake. It is certainly a part of the economic modelling that should have been undertaken. I think it will significantly impact the outcome in terms of those calculations, because it is a net loss.

Senator KETTER: I do not think I have asked you about the departing superannuation tax. Anecdotally, it has previously been seen as a bit of extra money at the end of their stay.

Mr de Waal : Yes.

Senator KETTER: The 95 per cent tax as part of this package detracts from that.

Mr de Waal : The point I made is that we are adding to and raising barriers. It is another barrier. It is certainly not going to be seen as a positive. I do not have any specifics in terms of what the impacts associated with that particular element of the policy will be, but it is part of a mix in terms of raising that barrier.

Senator KETTER: The National Farmers Federation have said that that aspect of the reform measures is less than ideal in the sense that employers paying superannuation and then 95 per cent of that money going back to the government seems inefficient. Do tourism employers say anything like that to you?

Mr de Waal : Yes. Certainly those comments have been made to us.

Ms Bennett : Absolutely.

ACTING CHAIR: There is just one thing I did not ask you. Most of your members who employ backpackers would not do that directly; they would do it through third-party employment operators—would that be correct?

Mr de Waal : I do not have any data to comment on that.

Ms Bennett : I do not have data, but we are a very small community and we behave a little bit differently. Backpackers would go directly to the employers and approach them for job opportunities, or we have a network where they will put them up at different backpackers, so third parties are not involved so much with our sector. It is much more direct.

ACTING CHAIR: Okay. A submission made to the inquiry suggested that the new registration requirements for direct employers could be onerous. Has that come across your radar at all?

Ms Bennett : It has not come across my radar, but I would absolutely imagine it to be so.

ACTING CHAIR: If they have to be registered to employ people—this is to stop some of the publicised rorts going on—the suggestion made was that the tax office should consult widely with employers before going into that registration process.

Ms Bennett : That is right. Traditionally, for our region, it is more the smaller owner-operators that will be using backpackers during that peak period. Adding on another level or another registration would be an impediment to the system.

ACTING CHAIR: It is interesting that in the Port Douglas-Daintree area you do not use the employment providers so much.

Ms Bennett : No.

ACTING CHAIR: Alright. You have nothing further arising out of that, Senator Ketter?

Senator KETTER: No.

ACTING CHAIR: Thanks very much for your advice to the committee. We very much appreciate it. Thanks for coming along.

Mr de Waal : Great to see you, Senator.

ACTING CHAIR: Yes, good to see you again.