Opposition blocks backpacker tax 15 per cent compromise

TREASURER Scott Morrison is attempting to claw back support for a 15 per cent backpackers tax after it was shot down in the Senate.

TREASURER Scott Morrison is attempting to claw back support a 15 per cent backpackers tax after it was shot down in the Senate.

The Treasurer took to social media to announce he had managed to win Senator David Leyonhjelm’s support for the rate.

The Senator has been a staunch opponent of the backpackers tax and was one of four crucial crossbenchers who helped torpedo the Government's proposed tax rate of 15 per cent on Wednesday morning.

The vote reinstated senator Jacqui Lambie’s push for the controversial tax to be dropped to 10.5 per cent.

Treasurer Scott Morrison is trying to win back support for the 15 per cent backpacker tax. Picture: Kym Smith

Meanwhile, Prime Minister Malcolm Turnbull said it was up to the Labor Party to break the stalemate.

“The reason the backpacker tax will remain at 32.5 per cent is because, absent a change of heart in the Senate, is because of Labor’s bloody mindedness,” he said.

Neither party is accepting responsibility for the “chaos” created by the high-stakes standoff.

Labor, the Greens and four crossbenchers joined forces to block the 15 per cent rate with 35 votes to 32 in the upper house on Wednesday.

Senator Derryn Hinch had reportedly had a last minute change of mind.

It comes after Treasurer Scott Morrison grudgingly announced on Monday the Government was willing to compromise and drop the proposed rate from 19 per cent to 15 per cent.

The Government has refused to budge any further.

After the vote, Finance Minister Mathias Cormann took aim at the Opposition, saying “the people have been stuffed”.

Senate Question Time. Senator Mathias Cormann. Picture Gary Ramage

Senator Cormann said the tax would revert to 32.5 per cent in January.

Farmers have been strongly opposed to the higher rate, which the agricultural sector says has been responsible for a 40 per cent drop in visitor inquiries.

On Monday, National Farmers Federation president Fiona Simson had welcomed the 15 per cent rate.

Shadow Agriculture Minister Joel Fitzgibbon said the Labor Party was prepared for a “Mexican stand-off” on the tax.

Mr Fitzgibbon also warned the National Farmers Federation to “get on board” with the push for a lower rate.

“This afternoon we could have a backpacker tax at 10.5 per cent, but we need the farm groups to show some leadership,” he said.

“If those farm groups don’t back us in, well, we remain concerned about how long this might go on.”

Senator Rod Culleton once again split with the three other One Nation senators to vote for the lower rate, along with senators Derryn Hinch, David Leyonjelm and Jacqui Lambie.

The embattled WA senator, still facing a High Court case over whether he was eligible to be elected, voted against the rest of his party to support the launch of the inquiry into the Bell Group legal storm on Tuesday.

He also split with them over superannuation amendments.

But, despite a public clash last week with One Nation leader Pauline Hanson, Senator Culleton has rejected any suggestion he will leave the party.