Backpackers already turning off Australia as tax hike looms

AUSTRALIA is proving the place to be for all but one segment of the travel market — backpackers who are facing a big tax hike on dollars earned Down Under.

Endangered species? Swedish backpackers like Tova Svensson, 20, and Evelina Segerkvist, 20, could become few and far between if the backpacker tax goes ahead. Picture: Shae Beplate

BACKPACKERS are already starting to give Australia a miss in the face of planned tax changes that will see them hand over a third of anything they earn down under to the government.

The latest International Visitor Survey by Tourism Research Australia showed a seven per cent fall in the time backpackers spent down under.

The downturn is in stark contrast to other overseas visitors who increased more than 10 per cent in the year to June 30, and racked up 5 per cent more nights in Australia.

Turning their backs on Australia ... Tourism operators fear backpackers will go elsewhere if a proposed tax hike takes effect next year. Picture: iStock

Tourism industry leaders were quick to blame the looming “backpacker tax” for the result and again urged the Federal Government to scrap the proposed change — due to take effect at the start of next year.

Under the change, people on Working Holiday visas will be taxed at a rate of 32.5 cents in every dollar earned, as opposed to current arrangements which see them taxed at about 19 cents in the dollar after they earn more than $18,000.

WELCOME MAT WITHDRAWN

Australian Tourism Export Council Managing Director Peter Shelley said the IVS results made it clear the government had sent the wrong message to backpackers.

“The word is out on the backpacker tax and we are beginning to see the signs of a change in demand from this market who are spending less time on our shores and therefore less money in our economy,” said Mr Shelley.

“We urge the Federal Government in its current review of the Working Holiday Maker visa, to scrap the proposed tax and reinstate Australia’s position as a leading destination for backpackers.”

Dwindling resource? Backpackers are likely to be less interested in low paid jobs like fruitpicking if a 32.5 per cent tax takes effect. Picture: Luis Enrique Ascui

Tourism and Transport Forum CEO Margy Osmond said the downturn detected in the IVS was likely to be just the tip of the iceberg.

“We know from a survey of backpackers by Monash University and YHA that the Government is risking a 60 per cent exodus of working holiday makers if the 32.5 per cent tax becomes law,” Ms Osmond said.

“That will smash regional and rural economies that depend on the spending of visiting backpackers and significantly undermine the ability for tourism operators to secure workers.”

REGIONAL IMPACT

Some regions were feeling the backlash worse than others including Queensland’s Sunshine Coast where backpacker numbers were down 5.5 per cent in the year to June, compared with the previous 12-months.

“We will be making strong calls to the Government to abandon the idea of the tax because it is well-known that the backpackers of today are the higher-spend visitors of the future,” said Visit Sunshine Coast CEO Simon Latchford.

Empty ... Western Australia has been among the hardest hit states by the backpacker downturn. Picture: Tourism WA

Sydney, Melbourne, Brisbane, Alice Springs, the Whitsundays and the NSW North Coast also saw significant falls in backpacker numbers with only Tasmania experiencing an increase in the amount of time travellers spent in the state.

Federal Tourism Minister Steven Ciobo acknowledged there were “mixed results” for backpacker numbers but said overall the industry was booming.

“Australia’s tourism industry is currently growing three times as fast as the rest of the Australian economy,” said Mr Ciobo.

“International tourists spent $38.1 billion in the financial year, an increase of 14 per cent or $4.7 billion over the year.”