ROSS GREENWOOD

Let's now go to the Resources Minister, also the Minister for Northern (Australia) - areas very much affected by the potential impact of this backpack tax. Matt Canavan’s on the line right now, many thanks for your time Matt.

MINISTER CANAVAN

Thanks for having me on Ross.

ROSS GREENWOOD

All right, so you've obviously given a push. You've heard from your constituents, from the businesses in North Queensland, you knew that this was something that was not going to fly long term and it was going to adversely affect industries, particularly tourism and farming ...

MINISTER CANAVAN

Ross I mean you are right that you know we have listened to our local constituents, that's what you're in this job to do. I'm not going to suggest we always get it right the first time; we do make mistakes, we're human beings like everyone else. But when you realise you've got to make a change in life, you do your best to fix things and that's what we've done here.

This was first raised with me in January in Bowen, meeting some fruit and veggie growers up there, and we immediately reported that back, and we put off the tax for six months. Originally it was due to start in July this year. We put it back to January next year and now we've got what we think is a reasonable solution. I think all workers should pay some tax.

Just on the issues and rates you raise, one of the issues currently is – and you're right to point out that no tax is paid before $18,200 – a lot of working holidaymakers only work for six months, so if they're only working half the year, often they pay no tax at all because their rates of pay are often under that amount at $18,200.

ROSS GREENWOOD

One of the things I heard from other farmers last week when we were talking about this issue is that they've done a bit of a survey of the backpackers. They thought on average they paid about 13 per cent tax, which means they'll probably may be earning between $25,000 and $27,000, somewhere around about there.

MINISTER CANAVAN

Yep, that could possibly be right – it would be different in different areas, depending on rates of pay and the kind of work you're doing. Some of this work obviously is very hard and the pay rates are quite high to reflect that. But I do think now we've got a situation the farming sector has supported; they’ve realised we have to make some changes.

Remembering too that the tax-free threshold of $18,200 was only increased in 2012. It increased as part of the carbon tax changes. So, pre-2012, taxes being paid by backpackers above $6,400, it was a bit of an inadvertent outcome or a by-product of those changes that suddenly there was a bit of a windfall to the backpacking industry so to speak.

ROSS GREENWOOD

OK, do you believe that this means now that Australia's backpackers or Australia’s tax system is competitive with those other jurisdictions? I'm thinking of Canada and New Zealand, the alternative jurisdictions that might be able to go to and pick?

MINISTER CANAVAN

Yes I do. My understanding is that in New Zealand for example the rate is around 14 per cent. However here in Australia, the award rates of pay are higher so that from a take home pay perspective for backpackers looking at where they go, Australia would be still competitive, if not more attractive in fact is my understanding. So I'm confident that we'll continue to attract backpackers, and who wouldn't want to come to Australia anyway, particularly northern Australia where I'm from Ross. It's a great place.

ROSS GREENWOOD

Exactly. That's a very good observation! The other thing however is that it does leave a hole in the budget. Where do you fill the hole in the budget?

MINISTER CANAVAN

Well, we made sure this is revenue-neutral. We've got to fix this. I've spoken to you before about the debt situation and where we're at. We can't afford to let that blow out any more than it has and therefore we had to find other ways of funding this, and what we are proposing to do is increase the passenger movement charge, which is a fee that people pay to come into this country, tourists, by $5. It hasn't increased since 2012 and it's a moderate increase.

ROSS GREENWOOD

So that goes from $55 to $60, is that right?

MINISTER CANAVAN

Yeah well it's really not much more than a cup of coffee.

ROSS GREENWOOD

You can imagine that the Tourism and Transport Forum are not very happy about it.

MINISTER CANAVAN

Look I understand that and no one is happy with changes like that. But we've got to make those difficult decisions and I still think that's a moderate and reasonable increase. Your prices for flights to and from Australia go up and down by more than that every hour these days. I think five dollars is a reasonable increase.

We have made sure that these changes also - while the focus is often on the agricultural industry – a big user of backpackers is the hospitality industry, and in hotels and pubs, particularly in rural and remote areas. They will also have the lower tax rate at 19 cents in the dollar. And we're also funding a tourism advertising campaign through Tourism Australia to continue to attract people here. So I think it's a reasonable change and it's also funded through these other changes.

ROSS GREENWOOD

OK, just before I let you go and obviously the presidential debate today was important and the aspect that really does touch Australia is the Trans-Pacific Partnership. Donald Trump says he will tear it up. The expectation is it may go through the so-called lame duck period as Barack Obama is exiting the Oval Office. However, Hillary Clinton has also indicated that she is not entirely happy with the deal.

Now, as the Resources Minister for Australia, that Trans-Pacific Partnership is important for the free trade of goods and materials in and out and around our Pacific Rim and those nations that are part of that. How does the Government sit in regards to the comments from both presidential candidates?

MINISTER CANAVAN

Look, it's concerning. I do think it's reflective of a broader trend across the world that's become a little concerned about trade. We in this country rely so heavily on it, particularly our agricultural sector. Our beef sector exports 60 to 70 percent of its output every year. We're always in a situation we're not just feeding ourselves, we're feeding the world and we need to maintain that access. The TPP does improve access for sectors like beef and sugar, which are very important for northern Australia. So it would be a good thing if we can get this deal through.

But look, these are matters internal to the United States. They face similar, we face similar pressures all over the world. We've just got to hope and keep sending the message that it's better for America to be part of this part of the world, and it's better for the world to be trading with each other, because when you trade with each other you get to know each other, you build up better relationships and it's good for the world and for harmony and world production.

ROSS GREENWOOD

There you go. Matt Canavan is the Senator and also, rather I should say for North Queensland but also the Resources Minister and the Minister for Northern (Australia) as well, and as always we appreciate you time on the program.

MINISTER CANAVAN

Thanks very much mate, have a good night.

(Ends)