Discuss about the Management Research Project Sustainable Business Tourism.
Sustainable business tourism is one of the main areas that in the social, economic and environmental respectfully. In the present economic times, tourism is one of the most and largest industries for any country in the world, this is often viewed as one of the biggest economic tools of any country. It provides foreign exchange earnings for different countries. in this way, business tourism also brings a lot of economic benefits with regard to employment creation and income generation to a particular region on various rounds of the multiplier effect and re-spending. One such areas is the agricultural industry of Australia especially among the backpackers (aph, 2017).
The backpackers are the most important contributors to the Australian agriculture workforce by use of the travelling to Australia on working holiday maker visa. In this manner, the employees are the most important group in the timely harvesting of the country’s consumable products especially in the rural areas. With the issuing of the working holiday maker visa the country has seen a rise of more than 175,000 visas being issue by 2015 (Hillman, 2009). In the most important issue about this is that agriculture is emphasized in the country due to the shortage of agricultural workforce in the country while there is an increasing demand for labor markets in an inadequate increase with regard to the number people visiting the country.
In past, backpackers in Australia were often viewed as social deviants, however with their impact on the agricultural sector they have been regarded as business travelers, this is why they attract this study especially with regard to their motivations for travelling, their experience in Australia, taxation laws for business tourist and behavior of the locals towards them. According to an investigation conducted in Australian agriculture industry, backpackers have reported increasing tension between then and the locals. Vajta, et al., (2015) reflected on some violent incidents where backpackers have been chased away, their properties destroyed or even sent back to their home country. This is not in Australia along, in a Canada for example, a backpacker was killed in the accident by a local security offer. The researcher thus claimed that backpacker work with a lot of tension between them and the security officials in the community which makes it difficult for them to continue working in peace (Hoogenraad, et al., 2004).
With the recent tax reforms in Australia, this is bound to be more difficult for the backpacker travelling to the country to work in the agriculture industry, in this manner tax reforms will not be expect to raise revenue. There is currently a lot of concern regarding tax increase in Australia as a way of meeting the demands of the country’s public service. However this comes with another challenge as it is going to have a negative impact in the country’s agricultural industry (Allon, et al., 2008). this is because the primary source of labor in the agricultural farms will be reduced causing a recurrent decrease in the amount of tax that is being paid by the industry.
This paper will thus identify the current proposed changes to the backpacker tax. It the same line the paper is also going to provide a critical review and primary research on the potential impact that the backpacker tax will on the agricultural industry of Australia. At the end the paper will recommend on the government’s department and other industry stakeholders (Hoogenraad, et al., 2004).
This paper made use of both the primary and secondary data. The secondary data was derived from collecting information from internet search where electronic journals and media reports were the source of the main information. Secondary data was also seeked from the government websites with a major focus on immigration and immigration laws of Australia. The paper also looked at various press releases regarding backpackers and taxation. There were other papers and doctoral papers that addressed the importance of backpacker workforce in the Australian agricultural sector which was also searched. This also looked at the economic impact of the backpackers with regard to the tourism industry apart from agriculture. Other scholarly articles as provided by google were also very useful in the secondary data search. The Australian taxation office website which identified to the research policies regarding the current tax situation of backpackers. Also primary research was used in the research was conducted by use of online interviews with backpackers living and working in Australia. The interviews were based on the issue of business tourism and taxation laws and how this will eventually affect doing business in Australia.
Backpackers provide strong labor force for season, remote farm labor
Amid the backpacker groups that always transverse Australia every year seeking the sun or to surf in the Australian beaches, many of this tourist do this under the name of working holiday makers. The increasing number of backpackers to Australia shows that the resilience and strength of the market. In addition, despite the short term fluctuation of the picture that is emerging from the said trends this basically looks at the diversification and expansion of the backpacker industry in relation to the independent travel sector. accord to information from the tourism research Australia’s’ niche market report’ the market of backpacker exhibits one of the most considerable resilience with regard to adversity (Hampton, 2008). In this manner, adversity is very appropriate in terms of characterization of the current condition that is facing the Australian business tourism as the decline began being observed in 2008 for the first time after seven years.
It is also important to note that backpackers should be recognize as being flexible and resilient type of travelers. They also usually looked at as being indifferent to risk which is a characteristic that has continued to increase to their value since the global economic fall low international travel during the SARS outbreak of 2003 in Asia. Other challenge include the terrorist acts in the united states, London, Egypt, Bali and London. All the qualities that include youthful enthusiasm, resilience and flexibility have also cited some of the employers being some of the key attributes of the working environment of backpackers (Hoogenraad, et al., 2004).
One of the main relevance of backpackers is that they have been able to provide a flexible work force in Australia with regard to labor shortages and skills to do the work, this is also appreciated by many employers in the country. Resilience, flexibility and a strong ethic with regard to the way they work has also repeatedly been mentioned by employers in most of the research work done. According to the studies, backpacker are loved by the employing institutions as they provide one of the best workforce that Australians are not inclined to (Hampton, 2005). For example they can be found working in a place like Anzac day picking up a glass in a pub, where if your try to find a local guy who will do that will be very impossible. This gives the hospitality industry of Australia a great pull of labor which is not usually available. At time these backpacker are not even interested in holidays like Christmas and they will work through that since back in their country it may not be such a big deal, meaning they will keep on thinking work through (Hillman, 2009).
This mean that backpacker are a flexible pool of labor which does not mind to work on public holidays and are attracted to even the fairly menial jobs with regard to even cleaning bathroom floor and picking up glass and other dirty jobs. At time backpackers have been referred to as the working holiday makers who have the essential skills, labor and services that are important for the service industry, health, agriculture and more (Hoogenraad, et al., 2004). These are independent labor pool that are increasingly derived from business tourists.
According to australian tourism office, ( aph,2017), the Australian working holiday makers program was first established in 1975. By use of the WHIP visas, young people were allowed to work and travel in the country for a total period of 12 months. In the present state, Australia as reciprocal agreements in corporation with 21 countries. in this manner, the main objective of the scheme is meant to encourage travelling of young international professional by allowing people between ages 18-30 to incorporate their holiday making with work in Australia. The common wealth program for example has estimated that the scheme has successfully contributed to over $1.3 billion in the Australian economy (aph, 2017).
As noted above, backpackers work in a range of industries one of them being agriculture, which has increasingly become reliant on the backpackers. This issue was observed since 2005,where backpackers have been working as seasonal workers in the country. The minimum period is 3 months which has been able to apply onshore for an extra 12 month visa. They also apply for the onshore with it comes to a skilled independent regional visa to stay in the country. Research conducted in Sydney Australia indicated that backpackers provide a very valuable workforce in the country especially in remote areas where there are shortages (Hampton, 2008). The backpackers program is also meant to provide a very important labor force that will suit the demand and expectations of farmers. Backpacker are reputable for being captive, immobile as they are not able to change employer as they are bound by the backpacker visa and contract. Backpackers are also very organized and reliable workforce which makes sure that growers will be guaranteed of their crops being harvested on time.
Vajta, et al., (2015) also argues that backpackers are 60-70% more active than the local employees even those who return for multiple agricultural seasons. There has however been some case where backpackers have been summoned on illegal labor activities which has also seen the reduction of worker in the Australian agriculture labor force. This is also inclusive of worker abuse as will be discussed later in this paper. The WHIM in Australia has also in competition with the illegal foreign labor supply. According to a recent world bank discussion paper of 2015, it revealed that in 2013-14 there were a total of 17,185 non-citizens located jobs in Australia (Hanson & Bell, 2007).
In addition, Hillman, (2009) also acknowledged that there was no reliable estimation on the number of undocumented workers in the agricultural sector. in this manner thus, the number is likely to be very high. It also indicate that by encouraging employers in Australia to shift their labor hire practices like the illegality found in hiring labor contractors will call for a strict force approach. This is because the backpacker are very important in filling the labor gaps experienced in the agricultural labor force of Australia as they able to boost the country’s productivity (Hampton, 2008). In Australia, before establishing regulations on the labor sector were strict, it made it easy for more work opportunities for those who are legitimately allowed to work in various sectors.
Proposed changes to the backpacker taxation scheme
On December 2016, during the last parliamentary sitting day of the year, the Australian parliament surprisingly passed the bill that established a 15% income tax rate to the temporary foreign workers that are popularly known as ‘Working Holiday Makers’ or the backpackers, the bills was commonly known as the ‘backpacker tax’. In this manner, the tax rate is meant to be applied to people who engage in short term employment in the country under specific visas was a very controversial issue in the whole of 2016 (loc, 2017). In this manner most farmers were also concerned on the possible negative impact that the higher tax rate will impact on the number of seasonal workers in the country especially in the unforetold harvests. According to the budget that was released in May 2015, there was a proposal by the Australian parliament on the change to the tax status of the temporary working holiday makers in comparison to that of the resident and nonresident which was meant to apply from July 2016. With reference to the residential tax approach thus, the earning of foreign workers on the destined visas would be exempt from the income tax to up to AUD 18,000 (loc, 2017).
Also those workers who earn between AUD18,201 and AUD 37,000 are also going to be taxed at a rate of 19% in addition to the higher marginal rates that also apply to the subsequent higher amounts charged. In addition, the appeals by the tribunal rulings that was tabled in the month of march 2015 also showed that some of the WHMs may not be able to qualify as resident in the country meaning that the backpackers will not automatically claim what is referred to as a tax free threshold. This is because they are not residents of the country. (loc, 2017)
Also according to the discussion, a non-resident tax approach is going to see the WHM also being taxed at a rate of 32.5% as long as they are earning up to AUD $80,000. There are however a number of concerns on the new tax reform which dictates that the new policy would substantially increase the incentives in regard to tax evasion, also the number of working holiday makers in the country will eventually fall down as soon as the visa holders continue to perceive a less economic benefit in undertaking work that is most reluctant to Australians like fruit picking, casual hospitality and cleaning (loc, 2017). In this manner thus, the new income tax policy is going to highly affect the Australian agriculture sector which will find it hard to fill job vacancies that does not look at the casual visiting workforce in the country.
In addition, the tourism industry is also concerned since most of the backpackers are also tourists, they may thus decide to go to other regional areas moving the revenues since most of them are high spenders. They will also be less likely to visit the country and will go to a country like new Zealand, south Africa or Canada. At the same time the industry is very much dependent on the working holiday makers workforce (Vajta, et al., 2015).
As a result of all of the above discussions, there is a lot of controversy on the decision by the government to reform the tax arrangement for the working holiday makers. This has come from all corners that include the ministry for agriculture and water resources, and the working holiday makers visa program which finds it to be a sensible approach to the agricultural industry in the country. In this manner the government of Australia stated in May that the commencement of the date for the policy in the previous budget was going to apply from early January this year (Hampton, 2005). The review in itself, commenced after the general elections with a package that measured the impact of tax increase in the agriculture and tourism sector including the whole Australian labor force and revenue collection.
Impact which the backpacker taxation is predicted to have upon the agricultural industry
Just at the eleventh hours and after the protracted debate that began in 2015, the wrangles on the backpacker taxes became a major issue on Australia. Despite the proposal by the federal government of a 32.5% tax rate for backpackers, there was a compromise of 19% following a post-election which also came with the refusal to negotiate below this. In this manner the federal government had reached a deal as the primary labor force. This was the first development to backpackers problems with the Australian tax office. However with the recent growing debate on the issue, it is more worrying that the tax is going to cause a labor shortfall and the strife and growth of the country’s $10 billion industry especially in the horticulture sector. on the other side it is argued by some remote area MPs that the proposed tax may not really generate the full $540 million forecast by the treasury on the coming three years (Underhill & Rimmer, 2016). What is real is that the changes are going to see foreigners that are on a working holiday visa being taxed 32.5 cents from the first dollar they earned and a scrapping of the $18,200 tax free threshold that was there (Hillman, 2009).
What the country has forgotten is that since the introduction of an incentive for backpackers to be allowed to work in particular areas in Australia for 88 days so as to secure a second year visa extension in 2005, between 30,000 and 40,000 of backpackers were able to apply for the additional year on their visa by use of a stint in agriculture to meet this criteria. In this manner, it meant that backpackers as it stands are already the dominant source of labor supply at the harvest time for growers. In addition, this also possess other serious risks for the growers, most of them have no choice but to continue relying on the backpacker labor with regard to their business model (Hillman, 2009). It is important to note that most of these group do not come to the country on a work visa, as their visas are usually meant for cultural exchange. However, the country has been increasingly becoming reliant on the backpacker in the performance of low skilled jobs in the country’s economy and especially in the harvest related jobs. However as the backpacker tax saga is now emerging, these group of the country’s labor force in not very stable.
According to Hanson & Bell, (2007) most backpackers are made of young people who will often change their planned trip to the country on the basis of a number of variables. The changes in the arranges of taxes, the unstable Australian dollar and the reputation of the country is a desirable destination for most tourists who are all factors outside the control of growers. In addition, they will also impact on the decision of the travelling of backpackers to the country and work in the agricultural industry.
One of the other main issue with the use of backpackers us the country’s labor supply for the horticulture sector another agricultural sectors, this will bring about the vulnerability of the group in the labor markets. According to one landmark report by the fair work ombudsman in the country, on the visas of backpackers it was found that 88 days of extension was provided for the creation of license for the unscrupulous growers in who push backpacker in to exploitative working conditions. The ombudsman inquiry also found that there were various situations of underpayment of wages and poor working conditions which were not compliant with regard to the award that is provided for workers in the agricultural industry (Hillman, 2009). in the situations of the exploitation continue to prove to be endemic, arising from the use or backpacker labor in the agricultural industry, then it might be likely that there is bound to be an increase in the calls for the second year extension of backpackers to be abolished in the market.
In addition, as the county continues to exploit backpackers through taxes this will not be an issue by itself with regard to the works. It will be an issues that is going to undermine the viability of the entire agriculture sector. as (loc, 2017) reveals, the main problem that farmers will be facing will be that the agricultural sector has never been a level playing field for Australian farmers, as the non-compliant ones have also been able to use worker exploitation to selling their products at a lower cost. What is thus needed is the comprehensive solution to address the needs of growers in regard to changing tax rules for backpackers. And even though the governments compromise will seek to neutralize this as among the politics of the country, it does not fully address the underlying issue that uses an unstable labor source for the industry which is of very much importance to the food security and economy of the country.
In addition, even if the need for labor in the country is push for mechanism to retain backpackers in the county, they will need to maximize on the government discomfort as it may not also have a coherent and sustainable program on how farmers are able to meet their needs for labor during the time for harvest (Hillman, 2009). The labor taxation policy in Australia needs to be coherent with regard to how farmers can be able to meet their labor needs during the time of harvest. In this manner the labor taxation policy should be one that will keep the backpackers entering the Australian labor force. This is because it is evident that the new taxes will eventually lead to more inadequacy of backpackers as being among the primary labor solutions for farmers. The country thus needs a more sustainable and targeted way that they will be able to meet the need of farmers in the country in terms of labor, this also need to be through a dedicated pathway for the agricultural worker and not a backdoor war of sourcing labor like the Working Holiday Maker Visa which is often riddled with problems (Hanson & Bell, 2007). There thus needs to be a dedicated pathway that employees will allow farmers to plan for the harvest time and will also allow the regulators like the fair work ombudsman to more accurately monitor taxes in regard to wages that are offered to backpacker workers..
Impact of Backpacker tax on the tourism industry
The backpacker tourist are known to spend more money as they travel a lot in the country and stay for longer periods in their expeditions than other forms of travelers despite being basically tourist that work on budgets that are tight. Backpackers thus prefer spending a little on accommodation cost and spend most of their money on other important activities. They will usually settle for the value for money. They want to have services that are good and are worth paying for. In this manner, the same is experienced in Australia where each year back packers will go ahead with expanding their exploration of the country and as a result the amount of diversity that this group literature and research has grown over time (Allon, et al., 2008).
For Australia, just like many other countries, back packing tourism has been linked with other travel form from as far back as the 17th and 18th centuries. The backpacker tourism in modern days is mostly associated with the youth ranging from ages 18yeasr to 35 year. The main motivation for the back packer tourism is to meet with other travelers.
At this the tourist that is involved will at most of the time take the opportunity as a chance to learn new tips for travelling and concept. They are usually attracted to the adventure of touring and other forms of activities which need that to actively participate. However with the increased restrictions of the backpacker tourism with regard to the changes in the taxes, the country is bound to lose a lot in the following was (Allon, et al., 2008).
First of all, as much as they are travelers in the country, backpacker are known to be a source of knowledge and expertise with regard to destinations that they travel. In this manner when they stop to particular destinations in the country, they will share they experience and knowledge on how the country runs their activities and ways of doing this. In the same way, the country’s destinations are marketed by backpackers. This is because most of them will expose this knowledge to the people in their destination and social media circles and help them learn new concepts and ideas on how things are supposed to be done (aph, 2017). In addition, these travelers are vital in cultural exchange for the country, they will travel with facilities and equipment that may have not reached the places that they desire to visit. During their visits also, they will be able to teach their locals on the manner and uses in which such facilities and equipments are operated. However all this may not be realized as their travel is going to be limited with an increase in taxes.
Backpacker tourists are also good ambassadors when it comes to creating global awareness. The country is also going to lose a lot in this. Backpackers usually spread awareness on the state of the country they visit. They will come from all corners of the earth and may not have the firsthand experience on the issue that is affecting other parts of the world. however as they travel they share experiences and are able to inspire people in the society. Other factors such a poor health conditions, poverty, lack of education, inadequate clean drinking water and environmental degradation of the country can be solved through backpacking tourism (Vajta, et al., 2015). However this is deemed to reduce as the tourist may not be able to sustain the travelling of more destinations where problems like the one listed above are spotted, they country will also not be able to come out of conditions in the remote areas that by have been blinded by the city life. If the information that they group provide is taken in to account, and mechanisms for this type of implementation is also considered, then such problems will also be alienated partly if not fully. They will also be able to provide activism which channels towards change. The amount of awareness that the backpackers can provide will also have a long lasting impact if it is taken in a much more serious manner.
The country’s financial generation from tourism is also going to reduce drastically. Backpackers are a great source of financial generation for the country’s tourism industry especially when it comes to supporting local businesses. this is because most backpackers prefer cheap hotels, eating food from ordinary joints as opposed to the other ordinary tourists who spend most of their time in big five star hotels. in this manner, the benefits that local businesses have been getting from backpackers will also drastically reduce for the people in the grassroots and other remote areas in Australia (Hampton, 2008).
In conclusion, backpacker are a very important part of the country’s economy in various ways. First of all, when looking at the agriculture sector in the country, the group has been able to generate a lot of revenue to the country’s economy. As at the moment, backpacker are among the highest tax payers in the country which is most advantageous to the country’s budget. in addition, due to the fact that most of these groups provide cheap labor for the local farmers, most of them have been able to sustain the harsh economic time and made good profits from them. The tourism sector will also agree no further since the back packer makes one of the highest number for people visiting the tourism and other destinations in the country. In this manner, it is important for the government to consider all the advantages and disadvantages of raising taxes for these group. As per the above discussion, the government and the country at large is bound to lose a lot should it decided to impose more taxes on the backpackers. In fact most of them will chose on other destination, affecting both the tourism and agriculture sector of the country. This is because backpackers have now become part of the country’s economy and they should be treated with the kind of respect and legal support they deserve.
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