The Business Council of Australia said it was disappointed with the government’s decision today to withdraw proposed legislation removing tax measures that hamper the flow of skilled labour into Australia.

Without these measures a person who is a first-time resident of Australia on a temporary entry visa will continue to be taxed on income and gains and that they earn overseas, even though this income is unrelated to their Australian employment.

BCA Chief Executive Ms Katie Lahey said the existing rules were inconsistent and uncompetitive with taxation laws already in place in economies that were competing with Australia for skilled labour.

“The government has implemented a range of excellent reforms over the last few years which are essential for attracting investment and growth opportunities into the country.

“Retaining these outdated tax measures will impact on the ability of Australian business to attract skilled labour.

“It will be detrimental in the short term and means the loss of a potential competitive advantage for Australia in the long term. To get around the existing measures, Australian employers have been forced to meet these tax costs themselves, so they form a direct cost to business.”

Ms Lahey said abandoning these reforms following their rejection twice in the Senate was not just a concern for businesses.

“It is also a concern for our essential services that rely heavily on filling temporary employment gaps with overseas nurses and doctors. It is also a concern for our education sector which draws on an international workforce for temporary shortages.

“While these measures are technical, it appears that some Senate members have unfortunately not taken the time to understand the full benefits for Australia. Other Senate members have comprehended their value but were under the misconception that they could pass them at some future stage. The government has now removed that opportunity.