Among the changes, which came after several months of lobbying and consultation from tourism, agricultural and education stakeholders, WHMs will be taxed 19% from the first dollar earned up to A$37,000. This differentiates them from other migrant workers who receive a tax-free threshold of up to $18,200 of earnings if they are an Australian resident for tax purposes.
The government offers WHM visas to 18-30 years olds to work and study in the country for up to 12 months, but Australia’s VET and ELICOS peak bodies, whose institutions receive significant enrolments from WHMs, argue the proposed new tax rate could have consequences for enrolment figures.
“Any changes that impact on the affordability of visas will have an impact [on total visa holder numbers]”
“Any changes that impact on the affordability of visas will have an impact [on total visa holder numbers],” said Rod Camm, CEO of VET peak body ACPET.
He told The PIE News many WHMs use vocational providers to gain qualifications in skills such as barista and bartending to broaden their employability options.
“Visitors and students are always cost sensitive. That means if less holiday makers visit, there will be less call on this type of training,” he said.
The new taxation rate was originally proposed at 32.5% from the first dollar earned, however, after stakeholders from several industries, including international education, lobbied the government, the rate was lowered to 19%.
English Australia CEO Brett Blacker said his organisation had sent the government a submission arguing against the initial proposal and has welcomed the lowered rate.
“The proposed 32.5% tax on WHMs would have had a negative impact, which was a significant concern for some members colleges who operate in regions that attract large numbers of ELICOS students that combine English language study with their work arrangements whilst in Australia,” he said.
“The greatest impact would have been experienced in Queensland where almost 50% of ELICOS student enrolments are non-student visa holders.”
Both Camm and Blacker said their organisations had not been contacted for consultation before the proposal was made.
“English Australia in our submission to government noted that ELICOS students and indeed international students were overlooked in the tax review process for WHMs,” Blacker told The PIE News.
“The review focused extensively on the impact on labour supply to agricultural industries and neglected the social and economic contribution of WHM visa holders to Australia’s largest service export industry [education]. “
According to 2015 figures from English Australia, 17,786 English language learners held a WHM visa – representing about 10% of English learners around the country but also revealing a fall from 2013’s 22,000 WHM enrolments.
“It is disappointing that if harder [economic] reforms are not possible, softer reform targets are selected”
South Korea, Japan and Taiwan are the main source countries of WHM enrolments on ELICOS courses with a lower number coming from Europe, mainly Italy and France.
In its submission to the government, EA argued that a tax hike would hasten the already sinking enrolments of WHM students.
While the lowered proposed tax rate was generally well received across industries, Margy Osmond, CEO of Tourism and Transport Forum Australia said the new 19% tax was a step in the right direction but still accused the federal government of treating the tourism industry as a “cash cow”.
Camm similarly commented, “education is a critical export industry for Australia and it is disappointing that if harder [economic] reforms are not possible, softer reform targets are selected.”
Also proposed were several additional pricing changes affecting visa holders, including a $5 increase to the departure tax to $60 for all visa holders, an increase from 38% to 95% tax on superannuation taken out of the country, and a $50 reduction to the WHM visa application fee to $390.
At the same time, the government pledged funding of $10m each for two programmes to support a global youth-targeted advertising campaign for WHMs and to address workplace exploitation of WHMs.
The tax rate change is proposed to come into effect from January 1, 2017, while the decreased visa application fee will come into effect from July 1, 2017.