Consultation on a tax again overlooked

As shadow treasurer, Joe Hockey was forever berating Labor for a lack of consultation with industries when changing or making new tax policies.

Back in the 2010 election year, Hockey accused former treasurer Wayne Swan of "completely lying" to everyone about having undertaken consultations for his mining tax.

Aside from raising the hackles of the mining industry, the key policy that came out of the Henry tax review proved to be a disaster.

It raised millions rather than the billions of dollars that had been promised and was quickly dumped when the coalition came to power years later.

On a smaller scale, Chris Bowen got an earful during his brief spell as Labor treasurer in the 2013 campaign for wanting to make changes to the fringe benefit tax on cars that would raise $2 billion.

Hockey compared changing FBT arrangements on car leasing and salary sacrifice packaging to taking a baseball bat to the motor vehicle industry.

"This is poorly thought-out, there was no consultation with any stakeholders," he said at one of the numerous car showrooms he visited during the campaign.

The coalition won the election and the idea fell by the wayside.

But in a classic case of "do as I say not as I do" Hockey appears to have committed the same sin.

In his second budget in 2015 as treasurer - just months before he was dumped by the newly anointed prime minister Malcolm Turnbull - Hockey flagged what was to be called the backpackers' tax.

A change of arrangements meant temporary working holidaymakers would be taxed at 32.5 per cent from their first dollar of income from July 1, 2016, raising just over $500 million over four years.

At present, such workers are treated as residents for tax purposes, and only pay the lower tax rate of 19 per cent for income above the tax-free threshold, up to $37,000.

It prompted a wave of anger from farmers, the tourism and hospitality sectors who rely on cheap labour, particularly during the fruit and vegetable picking season.

Placing a hefty tax on their modest earnings would send backpackers to competing countries like neighbouring New Zealand and Canada, they argued.

Earlier this year, now treasurer Scott Morrison said he was considering calls to wind back the tax, but it was still in place when he handed down his 2016 budget in May.

Bowen got his own back during his budget-reply speech for Hockey's earlier taunts, saying the government clearly hadn't done its homework.

"Now they're all at sea ... that is pretty dysfunctional," he said.

Even the government's own side were unhappy, with Liberal senator Bill Hefferan letting rip for the "strategic error".

"It's a disastrous bloody outcome. We are going to go topsy-turvy in the bush and the government, I don't give a rat's arse ... they've got to sort it," he blasted during a Senate committee hearing, which pretty much summed up the anger in rural Australia.

This week the government finally came up with a response, albeit an interim one that would put off any hard decisions until after the July 2 election.

The introduction would be delayed until January 1, 2017 at a loss of $40 million in projected revenue while a review headed by Agriculture Minister Barnaby Joyce takes place.

"We recognise that there are much broader issues that we need to look at here," Assistant Treasurer Kelly O'Dwyer said announcing the delay.

The backpacker tax also goes against Turnbull's rhetoric when slamming Labor's proposed changes to negative gearing and the capital gains tax discount.

"If you increase the tax on something, you discourage it," Turnbull says.

One assumes that's not what Hockey intended, but then again it appears he clearly didn't ask the question.