Backpackers Are Good To Australia, But Is Australia Good To Backpackers?

26/03/2016 6:44 AM AEDT | Updated 15/07/2016 12:51 PM AEST
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Rear view of a couple backpacking

Last week, the Federal Tourism Minister announced that he would lead the review on the controversial 'backpacker tax'.

From July, the proposed tax rule would consider backpackers as non-residents and tax them 32.5 cents from the first dollar they earn, scrapping their existing $18,200 tax-free threshold.

The last large-scale survey on backpackers was conducted in 2008, so our knowledge on this population is outdated, and the recent Senate Inquiry report recommended a new study to be undertaken.

In the 2008 study, it was found that the average total earning of backpackers was $4,638, while their total average expenditure was $13,218 during their stay in Australia. It was estimated that backpackers created 23,138 full-time equivalent jobs.

There is abundant evidence to suggest that backpackers have been good to Australia. But has Australia been good to backpackers?

A 2015 Four Corners report revealed that underpayment of workers is rife in farms, where backpackers have to work for three months to be eligible for the second working-holiday visa. Many of the workers who were exploited in the Baiada chicken factories were working holiday makers. The Chairman of the Horticulture Committee commented that the industry was losing backpackers because they were being exploited. The Senate Inquiry Report called Australia's treatment of migrant workers a 'national disgrace' and ordered a review of working holiday visa programs.

Exploitation of backpackers isn't at all new and Australia has known this all along. In the 2008 study, 36 percent reported they were paid less than $14, when the national minimum wage was $13.74.

I am the president a not-for-profit organisation called KOWHY. We work primarily with Korean working holiday makers, and are part of United WHY, a broader network that works with working holiday makers from South Korea, Taiwan and Hong Kong.

I have been asked many times why the number of South Korean working holiday makers has dropped in recent years. There were 39,547 visas granted to South Koreans in 2008-2009, last year, the number was 25,589.

The 2008 study shows that South Koreans made one of the lowest hourly wages, just above the minimum wage ($13.90 on average, when the national minimum wage was $13.74), while their spending was one of the highest. South Koreans were especially good to Australia, but Australia wasn't good to them.

Similar patterns can be observed for the Japanese working holiday makers, who earned less money and had higher expenditure in 2008. Their number dropped from 9,339 in 2008-2009 to 8,079 in 2009-2010.

The number of Taiwanese backpackers, who became the focus of the Four Corners report and the Baiada chicken factory controversies, has been dropping for two years in a row by 10 percent.

It pains me to see backpackers not experiencing Australia's quintessential character: fairness. It is not fair to tax a higher rate on backpackers, most of whom earn minimum wages and are excluded from social benefits. It is not fair for Australia to be a bystander to exploitations that it has known about for years. We know that cash-in-hand employment is a widespread problem in the backpacker job market. So why create an incentive for expansion of cash-in-hand employment by taxing at a higher rate?

You reap what you sow, it has been said. Australia should sow seeds of fairness.

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