Backpacker tax and WET reforms top of Ruston’s agenda

The SA Liberal Senator was reappointed to be the Assistant Agriculture and Water Resources Minister in the Turnbull ministry, backing Nationals leader Barnaby Joyce.

Coming from rural Australia in the SA Riverland region, Senator Ruston said she loved the role and was pleased to be continuing on in the rewarding post.

She said Mr Joyce was easy to work with and “unquestionably” put the agriculture sector’s interests “first and foremost” when performing his responsibilities.

“Barnaby Joyce is larger than life and there’s always lots of colour and movement and he’ll always say exactly what he thinks,” she said.

“But everyone in the Australian agriculture sector should be really delighted that someone who cares so passionately about farmers has maintained the agriculture portfolio.

“I can’t think of a better person to do it.”

Senator Ruston expects little change in terms of ministry responsibilities, where she’ll still focus on horticulture, forestry and fisheries and Mr Joyce, as the senior cabinet minister, will retain ultimate sign-off.

She said after an eight week hiatus due to the federal election being held from shortly after the federal budget in early May through to July it was now “business as usual”.

Senator Ruston’s core priority will be formally consulting industry on the WET reforms, especially on the eligibility definition, which she hopes the government can resolve in two to three months’ time.

This year’s budget announced that the WET rebate cap would be reduced from $500,000 to $350,000 on July 1 next year and $290,000 the following year with tightened eligibility criteria in July 2019.

As part of the changes, $50 million will also be provided from July 1, over four years, to the Australian Grape and Wine Authority to promote local product overseas and attract tourism to bolster wine producing communities.

The WET program was been targeted for reform after moving beyond its original intent, to be gamed by some, to the detriment of industry, the government said at the time.

This week, Senator Ruston said on budget night the government also pledged to remove the eligibility for the WET rebate on bulk and unbranded wine and wanted to reduce the cap slightly, to support the wine industry.

She said they also agreed to review the ongoing eligibility of what defines a wine production model and was continuing talks with industry.

Senator Ruston met informally for talks with representatives from some wine regions during the caretaker period of the election campaign informally but will now enter formal negotiations.

She said a discussion paper would be ready for release in the next few weeks, followed up by industry consultations in wine regions throughout Australia.

“Hopefully we’ll be able to land this somewhere that will deliver what the wine industry sought for us to do and that was to get the distortions out of the market place,” she said.

“But also, to give the opportunity to start focussing on the export market, which is obviously where the industry’s future must lie.

“We’ve got to go out and define who is an eligible producer which is going to take a bit more time because it’s not a simple issue and if it was simple, it would have been defined a long time ago.”

Senator Ruston said stakeholders set to lose a portion of the WET rebate due to its reduction wanted to have their say about the potential consequences.

But she said importantly, there seemed to be very little resistance to removing the rebate on bulk and unbranded wine so far.

“I think the major component of the reform package, which was the removal of the rebate on bulk and unbranded, seems to have been almost universally accepted as a good thing,” she said.

However, Senator Ruston said nobody was happy with the pace of reform to the WET.

“This is something that was brought to the government’s attention nearly two years ago but this is a really complicated process,” she said.

“There is always the trade-off between making sure you get it right and taking longer than perhaps is optimal.

“But my determination now that we actually have the policy in place, is to go out and refine the policy details as quickly as possible so we can get good information into the market place, so people can make decisions about the next vintage, with all the facts in hand.”

Senator Ruston said every wine region in Australia would be given the opportunity to meet with her ahead of finalising the policy and legislating any changes.

She said she was particularly keen to ensure state grape growing industry bodies, the Winemakers' Federation of Australia and Wine Grape Growers Australia were involved, “to make sure everybody is hearing what every else is saying”.

“Depending on which region you go to you’ll have a different set of nuances about what a wine producer definition should look like,” she said.

“Some regions want the rebate gone altogether and some want it to remain at $500,000 and so it’s important everybody hears the same thing at the same time.

“Ultimately my aim would be to speak to the regions and then the states and then get the states together with the national body, all in the one room, to see if we can come up with some kind of consensus position on what this definition is going to look like.”

With responsibility for horticulture, Senator Ruston will be central to reforming the backpacker tax which was due to increase to 32.5 per cent on July 1 but deferred six months pending a review, following backlash from the agriculture and tourism sectors, amid fears about the loss of critical seasonal workers.

The SA Liberal Senator said horticulture was the agricultural subsector most implicated by any changes to the labour supply market for overseas workers.

“I’m very keen to be closely involved in the review of not just the backpacker tax but the labour force supply issues across Australia in the agricultural sector in total,” she said.

“I’ll certainly be seeking to have a big involvement in that.”

Asked whether the tax increase should be axed completely as some rural members have demanded, Senator Ruston was more cautious.

She said any tax rate that the government applied to working holiday visa holders had to ensure Australia remained competitive with countries it competed against, for the niche workers.

“I’d be keen to work through what that particular policy pinch-point is and I’d like to see if we can come up with something that would have these people pay a fair and reasonable amount of tax,” she said.

“They drive on our roads, they use our hospitals and they use all the fabulous services that we as taxpayers fund in Australia.

“I have no problem with them paying some form of tax - but we need to establish what the tax rate will be to ensure we remain competitive with other countries in the international market place for this type of labour.”

With a January 1 deadline set to implement any legislative changes resulting from the cross-departmental review, Senator Ruston said the sooner a clear signal was put into the market place about the final, settled tax rate, the better the outcome.

Despite the deferral, she said the threat of a higher tax rate was already having an impact on sectors of the national economy reliant on backpacker labour.

“As we come into the summer season it will become more and more important that we get information out to these people overseas to say ‘come to Australia because you’ll get a fair and reasonable tax rate and you’ll get a fair day’s pay’ so the sooner we do it, the better,” she said.

The scheduled increase on July 1 announced in last year’s federal budget would have seen the tax free threshold up to $18,200 removed and a 32.5pc rate charged.

It’s estimated the average working holiday maker earns about $15,000 while in Australia.

The tax increase was due to raise $100m in the first year and $220m per year, over the following two years.

The $540m was allocated to fund policy initiatives announced in last year’s budget for the Agriculture Competitiveness White Paper and Northern Development White Paper.

But leading into the May budget interdepartmental review was held to look at easing the tax rate after a heated public campaign led by farm and tourism groups that was also backed by Coalition rural backbenchers angered at not being consulted on the policy change.

The review proposed a 19pc tax rate and changes to superannuation payment arrangements to deliver a $540 million cost-neutral budget outcome but was rejected by cabinet.

However, during the election campaign the Coalition announced a six month deferral representing a $40m budget impact, with another comprehensive review to be led by Mr Joyce that’s set to make a final cabinet submission in November.

The Coalition’s review will include the ministers for immigration, employment, tourism and the Prime Minister’s Department, Treasury and Regional Australia.

However, despite announcing the deferral, stakeholders remain dissatisfied and concerned about the loss of agricultural workers and its impact on farm viability.

NFF workplace relations general manager Sarah McKinnon said the government faced a very tight timeframe to devise an alternative plan that industry can work with.

Ms McKinnon said the plan would need to be agreed by October, at the latest, to find its way through the various departmental approval processes and signed-off by Cabinet.

She said ultimately, the first review process was doomed to fail as it never had the support of key ministers and also came with the condition it need to be “revenue neutral”.

“In other words, ‘show me the money’ or no change will follow,” she said.

“And while review mark two has not yet commenced, the signs are again pointing to a similar approach.”

But Ms McKinnon said there seemed to be increasing support within the Coalition for change, with Queensland Nationals MP Michelle Landry promising to lead a renewed push to scrap the tax.

She said Queensland Nationals Senator Matt Canavan - the new Minister for Resources and Northern Australia – had also 32.5pc was too high.

“A number of key independents have openly opposed the tax and the Productivity Commission recommends a closer look at superannuation for overseas workers in the backpacker tax review,” she said.

“Amidst the uncertainty, a few things are for sure: what won't work is an outcome that carves a new hole in the agriculture budget or that allows the looming agricultural workforce shortfall to linger.

“Long term policy for smarter workforce design is important, but not at the cost of this year’s harvest.”