Treasurer agrees to 15pc backpacker tax compromise

The tax will revert to 32.5pc if the parliament is unable to resolve the matter this week causing further upheaval in the agriculture sector amid concerns about the ongoing loss of critical, seasonal overseas workers.

Mr Morrison said he hoped the backpacker tax issue would be resolved as soon as today and expressed gratitude for the support of SA Senator Nick Xenophon and Victorian Senator Derryn Hinch, while adding he was now waiting for One Nation’s response.

He also pointed to the pragmatic input of SA rural Liberal MP Tony Pasin and other crossbench Senators and members who had worked “passionately” with the government to find a solution.

But he was scathing of the Labor party for “blowing up” the issue and the federal budget with the government’s 15pc compromise, from its original position of 19pc, set to cost the budget $120m.

“This matter has gone through needless difficulty because of the bloody mindlessness and the political game playing of the Labor party which we see writ large every single day,” Mr Morrison said.

“It’s not an opposition committed to actually helping people in rural and regional Australia or in areas that are deeply affected by changes taking place in our economy.

“It’s just an opposition led by a phoney who wants to cause havoc, on every single occasion.

Mr Morrison said the government had been listening to members who’ve been working with the government on the backpacker tax issue which the farm sector opposed increasing to 32.5pc.

The increase was deferred to January 1, during the federal election campaign pending a cross-departmental review.

Mr Morrison said he didn’t think anyone would be disappointed with the 15pc outcome.

But he said the federal parliament would now have a $120 million bill to deal with, as a result of making this change “and that is something I expect the Labor party to come to terms with”.

“Every time they engage in this bloody mindedness and political games with the budget they put our AAA credit rating at risk,” he said of the ALP.

“The villains in this process once again are a wrecking Labor party.

“The villain in this, the phoney in this is Bill Shorten and the Labor party who are quite happy just to blow up the show, blow up the budget on every single occasion, without any regard to the impact that has on hard working Australians every single day.

“The Labor party should be ashamed of themselves.”

The National Farmers’ Federation (NFF) welcomed Mr Morrison’s comments that the government had agreed to a compromise with a 15pc backpacker tax.

NFF CEO Tony Mahar said it had been a painful process but expressed gratitude a 15pc compromise rate had been reached.

“The NFF back to the Colbeck Review said that a rate between 15pc to 19pc was a fair one that would attract backpackers to the sector and be comparable with rates paid to Australian workers,” he said.

“We now ask that the Senate expedite passage of the relevant legislation to provide the long needed certainty to the sector and allow businesses to start rebuilding backpacker interest in on-farm jobs.

“In time we hope that lessons are learned so that the farm sector is never compromised in this way ever again.”

Last week the government’s original proposal to lower the tax rate to 19pc was cut to 10.5pc after amendments passed the Senate with Labor’s support and crossbenchers.

But the 19pc rate was restored after the legislation returned to the Lower House.

WA Liberal Senator Chris Back said the backpacker tax issue should have been resolved long before this final sitting week of parliament but was confident it would now be concluded.

Senator Back said the 10.5pc rate was “far too low” and there was no reason why Australian workers should be disadvantaged over overseas workers.

He said there was also no reason why backpackers should get a benefit over Australian workers on superannuation payments, simply for being non-residents.

No other country where backpackers would be likely to go and visit and work in like NZ, South Africa or Canada had an employer based superannuation scheme, he said.

“It’s essential the backpacker tax issue is resolved this week because we need to remove the uncertainty for the agriculture, horticulture, tourism, hospitality and fishing industries and I’m confident it will be resolved this week,” he said.

“The matter is back before the Senate again for reconsideration and if indeed there is no resolution by Thursday afternoon the default position is 32.5 cents in the dollar which would commence on the 1st of January next year.

“That would be bad for everyone and to be perfectly honest, it’s not beneficial to anybody involved in the process.

“We’ve come to rely so heavily on backpackers in each of those industries but I believe it can be resolved this week.”

Shadow Agriculture Minister Joel Fitzgibbon said the government had not approached the opposition with any alternative to its 19pc backpacker tax and 15pc was not good for farmers.

“This is the government’s tax and is a problem of their own making and we believe 10.5 - the equivalent of the NZ headline rate - is the only way of restoring Australia’s international competitiveness in terms of backpackers,” he said.

“I think 15 per cent will be a bad result for Australian farmers.

“Treasury themselves admitted that 19 was no better than 32.5.

“If the government does come forward with an alternative proposal, it needs to demonstrate how that proposal restores our international competiveness.”

Mr Fitzgibbon said the backpacker tax and other issues with the Murray Darling Basin Plan and APVMA’s relocation were all problems of the government’s own making with Nationals leader Barnaby Joyce the common factor.

“Barnaby Joyce shows time and time again he is prepared to put his own political interests ahead of the interests of the Australian community and in particular, Australia’s farmers,” he said.

Mr Morrison said finding the $120m was a process that would be worked through in MYEFO with announcements set to be made on December 19.

Asked whether Labor would support the 15pc rate he said it didn’t matter what they did now, “because they've already had their fun at the expense of the Australian taxpayers”.

“They have already had their fun at the uncertainty in rural and regional communities, and frankly the Labor Party can go and take a flying leap,” he said.

“If they wanted to be constructive about this issue they could have been, but they chose not to.

“They chose to play cynical, childish politics, but the government is the adult in the room and we've got together with some other adults in the room on our own side, particularly people like Tony Pasin and we have got together with the crossbench and we have been able to sort this issue out.

“But it will come as a cost to taxpayers, let's not misunderstand that.

“What the Labor Party have done is they've said they want a lower rate of tax - remember, they were asking for 10.5 cents - they wanted a lower rate of tax for foreign workers and they wanted that to be paid for and it will have to be paid for, by Australian taxpayers.

“So, don't give me all this rubbish from the Labor Party about standing up for Australian workers and Australian taxpayers - they have just given them a kick in the guts.

“Now, the government has sought to mitigate that impact and we will have to do more work as we go into MYEFO now to ensure that we can cover this off, but that's my job, to make sure we work the budget, get outcomes and we move forward.”

Mr Morrison said the Labor Party had exactly the same position as the government on the backpacker tax at the last election and did not put forward 10.5 cents before it.

He said the opposition booked in their election budget the same revenue as the government did, saying that they would go through a six month process of consultation.

But Labor lost the election and they went through a six month process of “childish politics and wrecking” he said.

“Now, the government has sorted it out (and) that will be sorted out this week and we can just get on with it,” he said.

“I'm very confident that the backpacker tax will be sorted out.

“What I know is that Senator Xenophon is very committed to ensuring that this matter gets resolved.

“How that works its way through the Senate I will leave to my colleagues who understand the mysteries of the Senate far better than I do, as a mere humble Member of the House.

“But this is an important matter to be resolved this week.

“The Government has put forward our position on 15 cents, together with the package that I had arranged with Senator Xenophon and that means the issue can be squared away.”