30 November 2016
Transcript - #2016172, 2016

Press conference, Canberra

SUBJECTS: Working holiday maker tax arrangements

TREASURER:

Good afternoon, I just wanted to give you a quick update on the issue of the backpacker tax. The Government's position remains resolute at 15 per cent. This is the rate of tax for seasonal workers and this is the second occasion on which the Government has sought to put forward a compromise position on this issue in the interests of seeking to resolve the matter, in the interest of supporting particularly the growers but the tourism industry. We have been seeking to resolve the matter in the interests of supporting particularly the growers but also the tourism industry. We have been seeking to deal very upfront on these matters and to bring it to a resolution this week. The Government, the National Party, the Liberal Party, believe we have struck the right balance here and that has been supported by growers, by farmers, by those in the community who are calling on the Parliament to resolve this matter.

So, what the Government will be doing is until we can have a clear commitment from the requisite Senators in the Senate to be able to pass the measure of 15 per cent, then the Government won't be returning these Bills to the Senate until such time as we can get those clear commitments. Now, I have met with a number of the crossbench Senators again today who have been very involved in this. I met again with Senator Hinch, who changed his position today on this matter, I also met with Senator Culleton and I met with Senator Leyonhjelm who also changed his position now and I appreciate that and I have been able to arrange an agreement to ensure his support for the backpacker measure at 15 per cent. Now, that requires only one additional Senator to be able to support the Government's measures at 15 per cent to ensure this matter can be dealt with this week. But I don't think it is an edifying thing, or the right way to manage this issue for it to bounce back and forward between the Senate and the House. So, when we have a clear position from the requisite number of Senators then we will enable the Bills to go back to the Senate so they can be addressed this week. I think that is what growers want. I think that is what our agricultural communities wants, the tourism industry. The Government has moved from a position of 32.5 cents from the 15-16 Budget, which was enshrining the non-resident status position which was first sent at 32.5 cents by Wayne Swan. The common law position is they are non-residents for tax purposes. So, we are seeking to change this to resolve this issue. We said at the last election we would resolve it by the end of this year. The Labor Party said that they would resolve it if they had been elected by the end of this year. They booked into their forward estimates exactly what the Government booked into their forward estimates. It is disappointing that they just see this as some sort of political sport but as the Government we will continue to work with the Senate to see if we can come to a position of support for that 15 per cent.

I must be clear, 15 per cent is the rate. That is the rate that is reasonable, that is fair, that is the right balance, that provides the consistency with other seasonal workers who are taxed at 15 per cent and to have a lower rate of tax for backpackers as opposed to seasonal workers would be an inconsistent and an unnecessary distortion in the tax system and I think it is important that we will continue to work with those Senators over the next 24 hours and hopefully we can reach a resolution.

QUESTION:

Treasurer have you had any commitment from Senator Hinch that he will give you an answer tonight or tomorrow morning so it can be resolved by the end of tomorrow?

TREASURER:

Senator Hinch is obviously very well aware of the sitting schedule and the timetable. He has undertaken to keep talking to the Government but I am by no means indicating what position he may take. That is entirely a matter for Senator Hinch and for Senator Culleton for that matter. So, we will just continue to engage with them.

QUESTION:

Are they asking for anything else, any horse-trading?

TREASURER:

No, they are not horse trading, as they said. When Senator Hinch first at gave his support for these measures he wasn't seeking anything. He voted for it at 19 so we will see what position he ultimately takes.

QUESTION:

If you don't get their support are you prepared for Parliament to rise without this legislation?

TREASURER:

As I just said, unless we can get a clear commitment at 15 per cent then the Bills will remain in the house.

QUESTION:

Are you frustrated by Labor and the Greens who keep expecting you to make the compromise instead of them?

TREASURER:

I am not surprised by Labor because they are just playing political sport and I think Australians are quite appalled by that sort of thing. The Labor Party just sees this as a game and they are playing a game with the livelihoods and the tax arrangements and the economy of regional Australia in particular. Now, the Labor Party have engaged in this process in this way all the way through and so that doesn't surprise me. It doesn't surprise me at all. I imagine it is very disappointing to Australians but it is our job to keep working with the crossbench to see if we come to that point of agreement. Again, the matter won't be progressed further out of the House of Representatives until such time as we can have an absolutely clear commitment that there is the requisite numbers in the Senate to support that.

QUESTION:

Mr Morrison, Senator Leyonhjelm's office just texted me saying the deal that you have talked through with him is still not confirmed at their end. Is there some sort of confusion about what is happening?

TREASURER:

No, no we shook on that today. We shook on that in his office. I have always enjoyed a very good relationship with Senator Leyonhjelm and the arrangement that we were able to conclude was that there were some changes to the registration process that we would facilitate and he has indicated his absolute support for the tax of 15 per cent and I asked him whether I could make that public and he said yes.

QUESTION:

So, they are talking about perhaps that not being in writing, it is a handshake deal at this point. Are they expecting something more concrete?

TREASURER:

Yeah exactly. It is the same as the arrangement that we were able to come to, obviously on different issues, with Senator Xenophon. Now, I appreciate the support we have had from the Xenophon Team, NXT. I appreciate the support we have had from One Nation on this as well. They have engaged with us very transparently and in good faith and we were able to come to the agreement that we did with them. In the 45th Parliament there are surprises and you have to keep working them until you can get to a resolution. The Government has moved on this. We have arrived at what is an entirely reasonable position which has the support of the agriculture sector, regional communities and it is time to resolve it but the Government's position is very clear. It is very strongly felt. You would have already seen a lot of rural and regional members of both the National Party and Liberal Party making their position on this crystal clear and so it really is now just a wait to see whether we can gain that one extra Senator to support this tax rate at 15 per cent so we can get that done tomorrow.

QUESTION:

In the past we were looking at 32.5 per cent from January 1 are you willing to wear that?

TREASURER:

The 32.5 cents is the common law position so that does not come into effect in January 1. It will exist now. So, the common law position is that they would be taxed at 32.5 cents. The reason we need the legislation is to have it at a different tax rate. That will work itself through tax administration. So, that is the situation we are confronted with and that's why we have been so keen to compromise to get to the position we've arrived at. We believe we have arrived at a very fair and reasonable position in the interests of growers and others. We would hope that the Senate would give it that some support but in the event that they do not give us that support, well obviously we can't progress the matter.

QUESTION:

Jacqui Lambie has previously said that she'll back the 19, before it was watered down to 15 per cent, she'd back the 19 in the event of a 32 per cent tax. So are you bothering to talk to her at all?

TREASURER:

Jacqui Lambie has made her position crystal clear that she wants 10.5.

QUESTION:

When it comes to assurances will you need them written. I mean how can you trust the crossbenchers after what happened?

TREASURER:

Well I've got different relationships with all the Senators. My relationship with Senator Leyonhjelm is I trust his handshake…

QUESTION:

Given what happened with Senator Hinch, how can you trust if he gives you his word?

TREASURER:

I'll be seeking a clear commitment from those Senators. I need to assure my colleagues and the Prime Minister and the Deputy Prime Minister on these matters so we'd be seeking those assurances. But that will be a matter between myself and the Senators involved.

QUESTION:

Treasurer are you prepared to have this issue drag out through the summer harvest if it is unresolved this week, rather than just pick up and accepting the 10.5 per cent tax rate and getting this over and done with?

TREASURER:

I don't believe taxpayers who have already on the basis of existing compromise, are going to have to find $120 million to pay for that compromise, that that bill should now be in excess of a quarter of a billion dollars. I don't think that's a responsible thing for the Government to do. I think the responsible position that the Government put forward is exactly as we've outlined it and I think there's an opportunity to proceed. But that green light must come from those Senators and if there's not a green light from those senators to enable us to move forward on the passage, then the Bill will remain exactly where it is. We had the opportunity to deal with it today. There was the opportunity to deal with it today. They made the decision they made today. If they would like another opportunity to do that, well, they would need to indicate that they'd be prepared to support the tax rate at 15 per cent.

QUESTION:

Treasurer, Senator Hinch said on Sunday that you had told him you couldn't afford to go down to the 15 per cent tax rate. Is that the case, can you explain that conversation a little bit to us?

TREASURER:

I had a brief social conversation with Senator Hinch. At that stage the Government had not made a decision to go to 15 per cent, and the Government's position was to pursue the tax rate at 19 per cent. I don't take $120 million in cost to taxpayers lightly. It will be the job of the Government now to work through the mid-year statement to ensure that we can identify the savings that make up for that lost revenue. So I don't take any cost to revenue or additional cost to taxpayers as a trivial matter. I think it's a very serious matter. The Government would have preferred to have stayed at 19 per cent. As Treasurer, I would prefer to stay at 19 per cent, but we've already demonstrated a willingness to compromise, we have done that. The 15 per cent provides that I think very reasonable position and as I said, if the Senate proceeds and gives us that green light then we'll be able to get it done. Thank you.