Subjects: backpacker tax, superannuation, same-sex marriage, Queensland Resources Council chief executive

DAVID SPEERS:

One of the National Party’s Cabinet Ministers, the Minister for Resources and Northern Australia Matt Canavan – thank you for joining us this afternoon. You’re pretty happy with this outcome as well, but can I ask – why does – talk me through the process here – why couldn’t the Government get this right in the first place?

MINISTER CANAVAN:

Well look, there had to be a change here.  I think we need to go back to why there needs to be, why there needed to be a change. Before 2012, working holiday makers were taxed as part of the normal tax system and they had a tax free threshold of $6,400.  So most of them would earn over that and pay some tax.  The carbon tax was introduced in 2012. The tax free threshold went up to $18,200. Because many of these workers only work six months a year, they often work under that or not much above it and they don't pay any tax. So that was if you like, a windfall gain to the working holiday makers, to foreigners, and the industry that employed them. The changes we've made move the system back to a level where people are paying tax who work here.

DAVID SPEERS:

From the first dollar earned…

MINISTER CANAVAN:

From the first dollar earned, which is consistent with some other visa categories that we have.  Now look, we recognise that the tax that was put in place last year, in the budget last year, announced in the budget last year, to come into effect this year, ended up being too high relative to other countries…

DAVID SPEERS:

And that's my question - why did the Government get it wrong then?

MINISTER CANAVAN:

Well I don't, I'm not saying I'm perfect or we are perfect but we will listen and we will make changes that are necessary to ensure the competitiveness of our agricultural sector and our tourism sector.  We have listened to that.  This really only became an issue as the start date crept up this year, so we initially deferred that for six months.  We've listened to the industry and I think made a change now which is more sensible.

DAVID SPEERS:

Let me ask you this though. With this one and the superannuation one, would more consultation with the backbench have solved some of these issues, prevented this protracted headache?

MINISTER CANAVAN:

Well look, both of these changes were announced in the budget process, which is a different process sometimes than other Government changes, but I think the key thing is that we've got to this position before this tax was implemented, before the superannuation tax changes were put in place, that I think is a broadly accepted position.

DAVID SPEERS:

But still a bit messy along the way…

MINISTER CANAVAN:

Well I'm sure not everyone is going to be happy with it, yes well, life's messy sometimes but the more important thing is you get the best outcomes.

DAVID SPEERS:

Let's look at the outcome. It is pretty close to harvest time isn't it for a lot of farmers right now. Is this going to be too late for them to bring in the workers they wanted?

MINISTER CANAVAN:

No well my understanding talking to many of them is they wanted this resolved as soon as possible.  The initial timeline we had flagged is that we would do it before the first of January and submissions only closed a couple of weeks ago.  So I think we've acted as quickly as we could to resolve this issue after the election.  Keeping in mind that you're right - I mean seasons vary right across Australia and certainly where I'm from in northern Australia is not affected at the moment but it will be next year – but some areas in southern Australia, yes the harvest season is starting soon, but the tax of course was not coming into effect until the first of January in any case as these changes will now do.

DAVID SPEERS:

And while that tax rate comes down from the original proposal, from 32 down to 19 per cent, which is great, those backpackers though will basically lose all of their super. Is that going to leave them any better or worse off?

MINSITER CANAVAN:

Well I mean certainly the idea of this is that working holidaymakers, backpackers, should be contributing to our public services, should be contributing tax just like other Australian workers. I don't think any Australian would support a system which provides foreigners some kind of tax advantage relative to domestic workers.

DAVID SPEERS:

So this is fair?

MINISTER CANAVAN:

I mean we accept that sometimes we need to employ foreigners, particularly for seasonal work like agriculture, for the hospitality industry particularly in remote areas, we need this workforce and this supply, but they shouldn't be advantaged relative to Australians.  So I do think it's fair. Our super system of course has been introduced to benefit Australians in retirement and to help them save.

DAVID SPEERS:

And backpackers aren't retiring here…

MINISTER CANAVAN:

Not here, no. So they lose it on leaving.  I mean some of them stick around obviously so if they stick around and want to stay here, they can potentially become Australian residents and grow their super balances.

DAVID SPEERS:

It's still their money though, they've earnt that money?

MINISTER CANAVAN:

Of course but we're applying a different taxation regime to working holiday makers.

DAVID SPEERS:

Now what about the - to pay for all of this, the big change here is a five dollar increase in the passenger movement charge, I mentioned earlier and you've no doubt seen, the tourism sector don't like this at all, this wasn't flagged  in discussions with them, they say it's outrageous, they're bewildered about the government's commitment to our sector. You're the Minister for Northern Australia, tourism is very important in northern Australia. What do you say to them?

MINISTER CANAVAN:

I make a couple of points.  This charge has not been increased since 2012, it's a five dollar increase, I think it's a reasonable and moderate change. I accept that position might not be agreed to by the industry itself. When Labor was in government for six years, they increased it twice, I believe in 2008 and 2012 was the last change. They increased it by nine dollars in the first instance and eight dollars in 2012. This increase of five dollars is lower than that amount.  I don't think it's going to have a material change to the amount of people coming here to Australia and that's the key thing.

DAVID SPEERS:

But when Labor did increase that last time around in 2012, let me tell you what some of your Liberal colleagues, Kelly O'Dwyer and Steve Ciobo, said in a parliamentary report on it. They said the increase is patent revenue raising, it will effectively be a tax on tourism, they found in this committee report that foreign tourists considering a trip to Australia facing the high cost in air fares will seek out other destinations without excessive fees and charges and so on.

MINISTER CANAVAN:

What we've got to do is balance all these issues when making decisions.  It's a difficult budget environment that we've been left.  I think it is right and proper that we do not make changes to the proposed backpacker changes, the working holiday maker changes, in a way which costs the budget money. So we had to do this in a way that washed its face if you like, which kept it revenue neutral for the budget, and so there were no decisions that would have been easy or not without cost, but I think the decisions we made are balanced and reasonable.

DAVID SPEERS:

Couple of quick ones.  Same-sex marriage.  Would you be willing to compromise on the plebiscite proposal?

MINISTER CANAVAN:

Well I think we put forward a reasonable proposal.  I think those that are seeking to oppose this now are doing so for political purposes.

DAVID SPEERS:

Is there room for compromise?

MINISTER CANAVAN:

Look I'm happy to consider any proposal brought forward by the Labor party and other parties, but I am firmly in favour of public funding on these kinds of issues.  If we're going to create or have a vote of the Australian people, we need to make sure that an informed choice, an informed decision and spending a moderate amount of money on making sure people who have that information is a very reasonable situation to be in.  It's now up to the Labor Party to decide how they want to respond to our proposal.

DAVID SPEERS:

And finally one of your predecessors in the job, Ian Macfarlane, was the former Resources Minister.  He has now landed the job as the new head of the Queensland Resources Council. What's your reaction to that?

MINISTER CANAVAN:

I think Ian will provide very strong leadership for the resource sector in Queensland.  I think he was a well respected Resources Minister here federally and I've certainly said that I'd like to try to continue his legacy of a very bipartisan approach to the sector, as did Martin Ferguson and Gary Gray before him.

DAVID SPEERS:

He'll get good access to you?

MINISTER CANAVAN:

I've already spoken to Ian lots taking over a role that he was in for a long time. I've spoken to Martin Ferguson and Gary Gray, I caught up with Gary in Perth recently. I mean this is such an important sector to our economy and to all Australians.

DAVID SPEERS:

But no favourable treatment is what I'm getting at here.

MINISTER CANAVAN:

No, no of course not.  But people like Ian and Martin and Gary have a wealth of experience in these areas and of course I'll always be willing to pick up the phone and listen to what they have to say.

DAVID SPEERS:

Matt Canavan, good to talk to you. Thanks for joining us.

MINISTER CANAVAN:

Thanks David.

(ENDS)