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'Backpacker Tax' study shows travellers would avoid Australia

New research undertaken by Monash University shows that Australia will become a less attractive destination if the proposed backpacker tax goes ahead, threatening the multi-billion dollar export industry.

The Federal Government is currently conducting a review into its proposal to tax Working Holiday Makers at 32.5 percent from the first dollar they earn. YHA helped facilitate research by Dr Jeff Jarvis at Monash University’s National Centre for Australian Studies into the motivations of Working Holiday Makers, with results clearly showing that 60% of the sample would not have come to Australia if the tax was 32.5 percent.

Further damning evidence of the ramifications of the proposed tax is that 57% of Working Holiday Makers also said that they would spend less time travelling in Australia if the tax changes were to take effect, with 69% saying they would spend less on tours. In addition, 70% said they would look for cash-in-hand jobs to avoid it.

New Zealand also looks set to benefit from the proposed changes, with 62% of those surveyed saying that they would have considered going there on a working holiday if the tax rate in Australia was 32.5 percent. Canada was also identified as a major competitor with 53% considering it as an alternative destination. Working Holiday Makers would also be less likely to advise friends to come to Australia due to the proposed changes (22% recommendation rate versus 75% prior).

The quantitative research study was undertaken with 335 international Working Holiday Makers in Australia between May and June 2016, staying in hostels in three locations (Melbourne, Cairns and Port Douglas) coordinated by Dr Jeff Jarvis (Director, Graduate Tourism Program, Monash University). The research is part of an ongoing research study looking at the behaviour of working holiday makers in Australia entitled ‘Long term tourists or short term migrants’.

Dr Jarvis said: "It is clear that the proposed tax changes will have a significant impact on potential demand for Australia as a backpacker destination, with 60% of Working Holiday Makers surveyed indicating that they would not have come on such a visa if the tax rate was 32.5 percent. In addition only just over one fifth of travellers would recommend to their friends to come to Australia on a Working Holiday Maker visa and 57% would spend less time travelling around Australia. That means there would be a significant impact, in particular on regional tourism economies."

YHA is part of the world's largest budget accommodation network, Hostelling International, with 4,000 hostels in 90 countries.

For more info or to interview Julian Ledger, CEO of YHA Australia, please contact Silke Kerwick, Communications Manager, ph: 02 9261 1111; email: silke.kerwick@yha.com.au

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