There are 12 local jobs right here that wouldn’t exist without the LAFHA

I remember hearing about it from someone and being one of the Aussies outraged. But there’s no denying it’s very difficult to find good talent, no matter what market you’re in within the APAC region.

Yes but Tim, you do realise that Aussies know how to edit magazines, run award ceremonies and start websites too don’t you?

Some of us even employ people.

Oh c’mon, Europe’s a mess. Australia’s the best place to be financially. As if the poms need any encouragement to come here.

This is what the press release from Treasury said (go to treasury.gov.au):

“No permanent resident legitimately using this tax exemption for accommodation and food expenses will lose any entitlements.”

According to the Treasurer the measures are to tighten up the benefit and try and crack down on its undoubted misuse. It makes it pretty clear it’s not being ‘axed’ at all. And given it’s effectively a form of middle-class welfare which accrues overwhelmingly to highly-paid professionals, is that really a problem?

Actually @Rushdie makes a good point

When you moved to Australia 5 years ago the exchange rate was $2.50 to the pound. Now it is $1.60 and given our resources boom likely to stay well below $2 for a good while longer. The currency makes Australia vastly more attractive as a destination for temporary foreign workers – another good reason this is bad policy that should be cut.

For every Tim Burrowes who sets up a succesful business and employs locals, there are 20 foreign nationals who exploit this loophole by living in luxury accommodation and then refuse to employ locals, because you are NOTHING to these people unless you have “UK experience”.

Just to put another perpective on this….

Although ‘Pom’ bashing is an easy route to take, it’s actually many inter-state Australians who will suffer. Yes, if you move from your home town of Melbourne to work in foreign Sydney, you could have claimed LAFHA. Now you cannot.

Secondly, the smart employers were always tapped into perks of LAHFA and actually reduced the total salary to offset any individual gains. Keeps a nice level playing field.

Finally, whilst everyone is bashing this ‘Rort’ being on a 457 means that if you loose your job you have 28 days to leave the country. For anyone that’s a heavy weight to carry.

It’s just a case of the Government closing a tax loop-hole that they benefit from themselves. Live in Perth, work in Canberra, hello Lafha!

Whoops, didn’t actually mean live in London, work in Sydney. Loop-hole closed. There may be some potential loss of foreign employment that will be both good and bad for our industry.

So yes, Lafha will be missed, but as other commentors have mentioned, pay in Australian Advertising and Marketing is now on a par with or better than other markets.

Whilst I appreciate your justified preening that YOU were the person for the job. It just illustrates the operation of that well known cultural cringe, that O/S people are best for the job. The publishers of BT had a business plan, which given their call to you, was fairly well developed and maybe, just maybee, there would have been an OZ Bod who could have pulled the rabbit out of the hat just as well as you did.

Love what you do not love the LAFHA and the universe will take care of the rest (or something like that)

We don’t need perks like that to have people who really understand the quality of life here to be attracted to our sun (occasionally) drenched shores.

Lets hear it for getting inexperienced people (local) and have them learn on the job !

Cheers,

Frank

Without LAFHA it’s fair to say I’d be squeezing my employer out of a lot more pennies. We have an unwritten agreement I’d say. Effectively I get a visa and LAFHA which comes to a decent net benefit, they get me not hankering for a pay rise at every opportunity and not jumping ship to the first place that offers me more.

It’s fair to say that with my skill and experience, I could easily leave and get somewhere for more money, but the LAFHA and visa situation (I could get PR already if I wanted) keeps me tied down. I’m happy with that.

Like many, I took an effective pay cut to work in an industry perhaps 5 years behind the UK and USA in many aspects. Without LAFHA it just wouldn’t have been possible. I love it here, and feel that foreigners absolutely bring skills and add value to Australian business.

LAFHA isn’t so much a gravy train, but it certainly subsidises housing costs, unlike most Sydneysiders we don’t all live with our parents in their nice North Shore/Eastern Suburb mansions and use their holiday homes until we reach the age of 30. Without LAFHA it’s fair to say I wouldn’t be looking at paying $550 per week in accommodation. I suspect if they clamp down on LAFHA there is going to be a fair swathe of middle-tier accommodation suddenly being vacated across Sydney. The likely effect? Cheap housing to increase in demand and price, expensive housing to fall slightly.

Geographical mobility and the influx of skills into Australia (and I’m particularly thinking online here) has definitely benefited Australia and my Australian colleagues.

For all the whinging Aussies 1. Sure, the LAFHA brigade are getting a tax break, but it’s almost all being spent back in this country.
2. As someone who used to work in recruitment in the UK (I know, I know) then it’s a severe case of the pot calling the kettle black. Almost every Aussie over there works through a system of contracting as a limited company, avoiding huge amounts of income tax and national insurance.
3. We like beer and if my mates back home knew I was paying 6 quid a pint (that’s $7 a schooner) then they wonder why on earth we were living here.

I have to think the real tax dodge that Poms use is that they are not funnelling wages into pokie machines down the RSL.

love what you’re doing Tim, but if you hadn’t started Mumbrella someone else would have done something similar…maybe not as well, but let’s face it, the incumbent titles aren’t too hard to show up, are they? Maybe 12 jobs wouldn’t have been created…but maybe 15 locally filled jobs would have…who knows? it’s not helpful to speculate and i dont think this is a sound reason to defend the status quo

Tim,

Your view is why the Australian tax code is roughly 6 million pages long. Everyone disapproves of tax lurks unless they’re personally benefitting from them. For example as a long distance commuter I benefitted greatly from the car leasing depreciation lurk until they nixed that one in May. The fact I presonally benefitted from it didn’t make it any less appalling and unfair a lurk. The whole country would be far better off if we ripped up the book, got rid of all the middle class welfare, other lurks and perks and then you would have got a better starting salary anyway because of the resulting lower taxes across the board.

Tim,

I normally love what you have to say. I don’t always agree but I enjoy learning your point of view,however, this article made me a little uncomfortable with your self gloating. Yes, the jobs may not have been created by Tim Burrowes, but if there was someone else in your role, a Brit, an Aussie or a Sudanese, there’s every chance the roles would have been created by THEM, shock horror.

I have MANY friends on LAFHA and they can’t believe our government assists them to live in some of the most amazing properties in this sunny seaside city of ours, and in every case has propped them up into a rental bracket that I myself cannot afford and fight against 40 other applicants at each propertu viewing only to be knocked back time and time again. I also know of one very sucessful agency employee who claims the LAFHA and has 3 other people sharing with him, covering the entire rent, so he makes a tidy profit with LAFHA (not everyone corrupts the system, but I’m sure there are many more like him.)

While we all know and understand that there is some wonderful talent to be cherrypicked fm the UK, a decline in Brits into the Aussie media market may result in a foucs on development of staff form our own backyard, which couldn’t be a bad thing.

Not quite outraged, but sure there’s a better way to spend that money.

Gillard and Swan saw an immediate opportunity to fix their shitty budget, and no harm in votes, so they grabbed the opportunity with both hands.

I laugh seeing the responses and comments here. On one hand, people want to be able to drink their espressos, eat their sashimi and enjoy the benefit of working for global brands in so-called “Global cities” such as Sydney (!) but at the first opportunity it’s “wogs and poms out”.

Xenophobic, ignorant and short sighted. Australia should be doing everything to encourage immigration, to encourage a global view, to work with and learn from people who have different – bad maybe better skill sets – otherwise we’ll just be a small branch office.

We grew here. You flew here.

Geez, Bondi rents will fall through the floor.

I know many UK citizens that have and continue to take the piss with LAFHA and avoid becoming ‘an Australian’ after 10 years of living here just so they can continue to receive this pay out.

They are the reason this benefit is being axed, which is unfair to those that deserve it.

Is this any different to the thousands of Aussies who live in London, are employed through off-shore companies and pay 3% tax? I know a lot of them. One who saved so much as a contract accountant in his 8 years in London by not paying a penny in tax that he was able to buy property out there, sell it when he moved back to Australia and buy a $1m joint on the Gold Coast virtually tax free.

All the Aussies who work in the UK are at it…..

Ha ha ha! Tim you aren’t serious?

B&T needed an editor from overseas – a business with so many magazines – editors, subs, cadets and guess what – overseas staff – probably on LAHFAs. Was the person who recruited you from overseas too?

Frankly a company like Reed is exactly the problem. A UK/Dutch publisher that can’t train up local staff to launch new products but has to get someone from os. How pathetic.

And the profits they make and they couldn’t afford to pay you your value but got the Aussie taxpayer to chip in.

Maybe the POMs haven’t yet twigged to the egalitarian ethos in Oz – they still feel their worth is so high and that the ad industry will fail without them.

Get serious. If all the OS staff left tomorrow we’d manage. And it isn’t just the ad industry. And it isn’t just POMs – I’ve had the same experience with Japanese and French. Overpaid, and over here.

This is just the same argument that the multi-million $ salaries for CEOs use – we need to hire the best. Well spend some time in the UK and see what the best have done for the general population there. Save us from the best Europe has to offer!

I hear you Tim but how many expats make the decision to move here purely based on LAFHA? And is it really that hard to get people to come and live in Australia? The land of endless sunshine, non-existent winters, beautiful beaches, great lifestyle and and nice exchange rate to boot?

To your point JDB, the only reason why lafha exists is because the government introduced it for themselves as yet another perk for being a politician. ‘I live in Melbourne but need to work in Canberra at times, best give myself a tax break for the pleasure’. Whether or not candidates are taking advantage of the system is irrelevant really, the government has been rorting the system from day one of lafha and is continuing to do so now. Get rid of lafha for everyone if you’re going to abolish it Wayne, then we would all be on a level playing field.

@Bob whilst you point in regards to exchange rate seems logical in practise it doesn’t work unfortunately….the fact is its far more expensive to live in Oz than in the UK nowadays, so whilst you may be earning “more” pounds, you spend more too….its all relative.

@Localshire….we may have flown here, but your folks probably sailed here in shackles….think on

Tim, i think you and i moved over at the same time, and similarly, LAFHA helped make up the salary difference. However from what i’ve seen (and i haven’t done a detailed study, but more based on anecdotal evidence), the change in currency rates has more than made up for the difference in salaries in between the UK and here. Around the Olympics, The UK / Dollar was around 50p to the dollar – now at 63p to the dollar, salaries between the two countries are far more aligned, and LAFHA is more of a bonus than a requirement to make up the missing gap.

So from your perspective of it making up the difference, not sure if the same would apply today due to the stronger dollar

@agency guy

If you think telling an Australian his ancestry came here in shackles is some kind of insult, you clearly don’t understand the culture. At. All.

Hey team, how about expressing a little more love for Tim. Even though I am on the outskirts of the industry, I absolutely enjoy reading the Mumbo. Keep up the good work, dear boy.

I’m not going to buy into arguments about Aussies vs Brits.

The issue for me is that this industry fights hard against government intervention in every other area of their business, so why expect these subsidies to continue?

We all need to expect fewer handouts in the coming decade unless they encourage direct, substantial international investment.

p.s. It was only a few short years ago I sat next to my pommie mate as he was consoling all his buddies losing their jobs in the UK, time we all quit whinging

@Mike Zed – think you’ll find it was closer to 30p around 2000.

I’m with you @Blue. As a Canadian, I appreciate the wonderful weather and landscape that Sydney has brought into my life (perhaps why my 1 year stint is still going nearly 7 years on!) but I can get a lot more diggs for my dosh in Toronto.

My starting $42k salary wouldn’t have stretched so far living in Bondi without that LAFA…and I dare say the markets and local cafes wouldn’t have made as much off me during that time either.

Good on ya Tim…I wouldn’t have known about this LAFA change had you not written this Opinion piece.

The biggest problem is that every second backpacker in Australia is claiming LAFHA.
It was just a matter of time before the government closed this loophole.

We have about 20 temp staff from recruitment agencies all claiming it.

I am totally lost why the 12 local jobs wont exist with this scam Tim???

@Con – I think you miss the point entirely. This isn’t about xenophobia or ‘pom bashing’, this is about removing an incentive that’s no longer needed and gives unfair advantage to one segment of our population.

@Tim – Like Tammy I have a lot of friends on LAHFA (as we all do working in this industry), so don’t want to begrudge them their ‘good fortune’. However, a perfect example of the LAFHA rort was a friend who changed 457 employers recently and was bemoaning the fact for brief period it looked like she might lose the allowance. She didn’t think about cutting down on her drinking, going out or little ‘disco treats’, she just felt outraged that the Australian taxpayers would even think to deprive her of the extra income she effectively gets to fund that through LAFHA.

I love the Poms I’ve worked with in the media industry over the last six years or so … but seriously, you shouldn’t need any extra incentive to come and work or stay working here given the reversal of economic fortunes our lands have found themselves in. More local talent being promoted to the senior spots ain’t bad either !

It seems that most folks are ignoring the fact that in the case of foreign talent, the folks LAHFA helps the most is the businesses that employ the non-local talent. They have the opportunity to pay someone the take home figure that equates to $130-135K by only paying about $100-110k…

While on occasion this allows an individual only worth $100-110k to live as if they were making $130-135k, more often it means that an organisation is able to fill a position that they would need to pay $130-135k for an Aussie local with an outlay of only $100-110k and a super obligation of about 50% otherwise required.

This seems in no small part to be a rule designed to help businesses and incentivise permanent employees in a nation with an employment rate that is currently very close to full employment both functionally and structurally. There’s a reason there is a backlog of 457 visas — the economy is cranking and skilled labour is at a shortage in all industries not just advertising.

And Yes, I’m foreign national talent, and yes I’d require a higher base wage to do the job I do without LAFHA. But I made more money in advertising working overseas and am here to work with the people and company I work with, not to make extra money thru a perk that is scamming the Aussie government and tax payer. As for the strong currency, it is the only thing that makes this lower wage feasible as I have foreign denominated debts to pay. I’m guessing many 457 holders also do given the state of savings to debt ratios in much of the rest of the developed world.

Ending LAFHA for 457 employees will primarily make local agencies become a bit more efficient or charge higher rates or most likely both. It probably won’t open up many jobs but it will likely send a chunk of 457 employees elsewhere.

Just left a job in the uk worth 105k sterling to a job here worth $110k plus LAFHA. Yes I came for a change in scene but I would never have taken the job without LAFHA. My employer would have never got a guy with 12 years digital experience locally as they simply don’t exist unless an ozzy has worked overseas. I’m now recruiting myself for digital managers and there just isn’t the people to fill the roles locally. As for me I’ll wait it out but come next year ill want a pay rise or will move jobs. The impact will be huge on our industry.

What a emotional topic – bash bash bash!

@old fart

LAFHA doesn’t just apply to poms coming to steal jobs here but to Aussies living away from home in other cities.

In fairness to Wayne Swan though, just once, when the economy is going into recession (and it is) then it makes sense to cut back on the number of foreign workers or make Aus less attractive.

@457 holders

Just because you are on a 457 it doesn’t necessarily follow that you are entitled to LAFHA allowance. I would read this link – there does come a point, even though you are on a 457, that you are not ‘living away from home’:

http://law.ato.gov.au/atolaw/v...../ATO/00001

Eg
A Journalist transferred between capital cities
15. The facts of Board of Review Case 88 1 TBRD 353, were that the taxpayer had been compulsorily transferred in his work from one capital city to another, a transfer he was bound to accept under the terms of his employment. The taxpayer brought his family to live with him in the new city. The Board of Review found, on the facts, that he had changed his place of abode and was not living-away-from-home.

@EVERYONE

There’s a fair swap between Aussies in UK and Poms in Aus. This is a good thing and it would be a shame if governments made it too hard.

Also @a few comments above

It is a condition of a company issuing 457s that they train Australians – either by auditable in-house training or through contributions to a TAFE fund. A sensible idea and DIAC do enforce this.

we might have also have missed out on your expert opinion via 2GB
re. the value of brands. that would have been a loss.

@mumbrella

No, that was pretty much exactly my point, I didn’t make it clear. The LAFHA will still be available for those who it was originally designed to serve: Australian permament residents moving interstate for (e.g.) resources sector jobs.

The LAFHA no longer being available to 457s means that the government is no longer providing tax breaks to highly-paid executives. It is effectively middle-to-upper class welfare. In fact it’s even worse since a %age of the wealth retained will be taken back to Europe or the USA when the visa expires. While I’m sure your example provided a net benefit for Australia, you’ll appreciate that this will be an edge case. The majority will take management positions, not employ anyone or create a single job, work for a couple of years, then go home, along with any wealth accrued through tax assistance.

For companies, complaining about the loss of the LAFHA is the same as miners complaining about the resource rent tax, or Gerry Harvey re: GST on online goods. The government is no longer giving them a helping hand in buying the labour resources they claim to need. If businesses can’t afford the quality labour resource they need, that is very much their problem, not the governments.

If I go and work in Singapore I earn more than in Sydney and I pay naff all tax, plus I get a maid who cleans up after me and eventually when I come back to Sydney I have saved a fortune…

I wonder if people will seek such destinations to pitch their tents for a stint as a result of not being able to gain LAFHA here in Oz? It is now one of the most expensive countries to live in, granted the dollar is high, however house prices are out of control… (Negative gearing will be next but that is a different story.)

Hey ho, if employers want to hire the cream then they had better offer better wages.

So you’re saying that if it weren’t for our tax dollars you would still be enjoying the vibrant monarchy of Dubai rather than living in indentured servitude in Sydney? Or are you saying that LAHFA enabled you to hire a bunch of otherwise worthless Australians that you could have lured to the steamy paradise of Dubai to work for you?
 
Commiserations & welcome to Australia.

Just to add another point, I *do* have to chuckle at all you expats above complaining about Oz being one of the most expensive countries to live in now. Yes, hi, welcome to the locals world. Imagine how worse it is for those of us with no LAFHA to start with, and no management wages ! It’s like a recent poster said “I left a job in the uk paying 105k sterling for one paying 110k here”. 110k salary ? What planet are you on – the average local wage is 45k. I’m on a *little* bit more than that after 6 years in media but can only *dream* of your lofty heights as do most locals. So you shouldn’t complain too loudly really, should you …

My only worry here is that this will negatively impact on the skills shortage in Australia, which is already pretty bad. I’d love to know how the Australian Government is hoping to tackle this issue in the long term.

It’s a shame to see all the Pom-bashing on here.

As many people have pointed out, particularly Devil’s advocate; there are very valid reasons to be dropping LAFHA for expats in Australia (and there are others, not just UK expats).

Whilst home grown skills can, should and will be nurtured, companies (mine included – healthcare) require a level of skilled employees that is not immediately available in Australia. Tim’s experience echoes that.

LAFHA helps to bridge the gap for expats to work here, both in salary, rental affordability and providing a tax break for the expat to return home once per year. Whilst I concede this is unfair to local taxpayers, who may be struggling in the same level jobs, the real challenge here is how both the Federal government and local business will be able to remain financially and geographically competetive in the employment market for highly skilled expats to work here.

That is what the argument is about, and not to quote localshire: “We grew here. You flew here”. Quite ignorant…

My profound apologies to all you poms who have made the ultimate sacrifice to come and live in this penal colony to show us all how to do stuff. I’m not sure that we truly appreciate how fortunate we are to have you, nor do we fully understand the gravity of the sacrifice you’ve made to live in flash apartments on Bondi Beach and have your lattes all half paid for. It must be terrible for you. Such hardship. And all because none of us is smart enough to get high-level gigs in advertising. Please, drop the self-serving and sanctimonious self-pity and realise how lucky you’ve been. You’ve had Paradise subsidised for too long.

@Andy – apology accepted

@Andy “are”

As you were…

Sorry to be tangential, but … can someone explain what the attraction of Bondi is? It seems to attract expats and hipsters like flies to shit.

Not complaining though—it means more room and lower rents for the rest of us in the nicer seafront ‘burbs.

@Pommie Pete, your claim that there are no locals with 12+ years experience is complete and utter garbage. Caveat: I can only speak client side.

I’ve got 12+ years digital experience – I survived the first two busts and booms, web2.0 and the Social Media revolution – specifically in email but I know of dozens of others who have similar levels of experience across the digital skills spectrum. I can’t talk of the agency experience, but I’ve never once had a problem gaining well renumerated full time permenant employment in media and publishing in positions of responsibility for the past six or seven years.

I readily acknowledge that agency side there may well be issues in getting talent, but your attitude is a big reason why a lot of locals in the industry are happy to see the roll back, and frankly to see a lot of ex-pats squirm.

@ RoRo – “it’s hired somebody who is out to make the quickest buck possible, even if it means trashing brands and publications in process”

Very interesting observations.

Loblaw – I agree in part with your theory (The Government shouldn’t subsidise inefficiency, markets should decide what the taxpayer needs/pays for)

As a migrant on a 457 visa I am happy to pay full tax. I think Lafha is a loophole that should be closed, despite befitting from the 20% extra in my salary.

However, 457 visa holders are currently ineligible for a lot of the benefits received by permanent tax paying residents – Discounted childcare and less expensive private healthcare being 2 examples.

If the country believes that foreign migrants should pay all the tax yet receive few of the benefits – fine, but you should understand that it makes your country a less desirable place to work and live. The current global workforce is as fluid as it have ever been – exciting times and people will move if they think it means a better standard of living

Migration has been crucial to Australia’s current success and will continue to be in the future – The current benefit set to migrants of a beautiful country, a strong dollar & Lafha was more than enough to generate increasing levels of skilled migration (which Australia has seen over the past few years)

Impact of Lafha loss won’t be too immediate but longer term the government should also make sure that they continue review all parts of their skilled visa package to make sure it remains competitive.

A net deficit in migration would not be good for the country, it would represent a missed opportunity

I have enjoyed the benefits of LAFHA and am proud to have been re-investing my tax savings into wholly owned, family-run Australian businesses for a number of years. Whatever the ATO have lost, Coopers Brewery have gained.

@Tim

I think everybody needs to take a step back and ask “Why do we have problems finding experienced staff?”.

Simply, we don’t invest enough in grads nor pay them enough to make the industry attractive. Not enough new blood = not enough experienced staff down the track.

The solution is improving conditions for intake and education of grads, not subsidizing rent for imports.

@ Mary Bryant at Sydney Cove. Check to ensure your grammar sense is engaged before activating a response. “None” is effectively an elision of “not one”, and hence ALWAYS takes the singular. You’re wrong.

@Andy. Get it right Andy, I am from Sydney cove…

I agree with Andy (not on the grammar).

The attitude towards the ‘second class’ Aussie stinks and it makes me ashamed to be British.

In our industry a lot of people regarded as the best in the world started in Australia: Murdoch, Droga, Eastwood etc. The only thing is they’re making it in America where the colonial attitude doesn’t exist.

It is also worthy to note, with very few talented exceptions, most Aussies head overseas at the beginning / height of their career, while a lot come over here towards the slippery slope of their career – when, like me, they can’t find a job in sunny London.

The only thing is I’ve done far better here than I ever would back in London, mainly due to prejudicial pompous twats who run the industry there.