26 July 2012

RESOURCE industry employer group AREEA has urged the federal government to reconsider its proposed changes to the tax break people receive when working away from home, highlighting a range of serious workforce issues that would arise from the amendments.

AREEA executive director, industry Minna Knight says the government’s intention to cut misuse of the Living Away From Home Allowance (LAFHA) would in practice limit the resource industry’s access to skilled workers and slap employers with additional costs.

“AREEA accepts the need to minimise any rorting of the system, but these proposed changes have many potential side effects that go further than the government might have envisaged and which would seriously impact the resource industry,” Ms Knight says.

“The immediate effect would be the reduction in the take-home pay of many employees who are required to work away from home, even though they would be still working under the same employment contract.

“Employers would then be forced to consider paying compensation in order to remain attractive to both domestic and overseas talent. These proposed reforms also impact the ability of resource employers to attract domestic workers to regional areas where many of Australia’s largest projects are located.

“Further, the necessity to maintain a house in Australia that you are living away from for work severely reduces employers’ ability to attract talented and skilled employees from overseas who are crucial in helping us build big projects and create more jobs.”

In its submission to the House of Representatives Standing Committee on Economics Inquiry into the Tax Laws Amendment (2012 Measures No 4) Bill 2012, AREEA makes 10 recommendations that address key deficiencies in the proposed bill.

“Employers already face severe impediments to attracting skilled labour to work in remote areas and we believe our suggestions are sensible and fair amendments to the bill,” Ms Knight says.

“For instance, it seems reasonable that there should not be a 12-month time limit on the ability to claim the allowance, given the construction phase on most projects far exceeds that timeframe.

“The proposed 12-month time limit on all LAFHA tax concessions will only serve to encourage skilled workers to review their arrangements and potentially change employers every 12 months.

“AREEA looks forward to further consultation on these matters as industry and government collaborate to achieve the balance that will provide the best outcomes for the country.”

Click here to read AREEA’s submission to the Inquiry into the Tax Laws Amendment (2012 Measures No 4) Bill 2012.

Click here for a PDF of this media release including relevant media contacts.