Backpacker tax: Labor shifts to support 13 per cent rate

Scott Morrison is staring down demands to lower the tax from 15pc, as Labor joins crossbenchers to back 13pc.

Backpackers pick fruit on a farm in Mareeba, Queensland. Picture: Josh Woning

Bill Shorten has thrown down the gauntlet to Malcolm Turnbull over the backpacker tax, challenging him to accept the 13 per cent rate Labor now says it will join with key crossbenchers to support.

“Our message to Malcolm Turnbull is grow up, swallow your pride, accept a solution,” the Opposition Leader said.

Labor has shifted its position from 10.5 per cent to 13 per cent, as the government stares down demands to lower the tax from its proposed rate of 15 per cent.

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Following calls from key crossbench senators Derryn Hinch and Rod Culleton for a further compromise on the tax, Treasurer Scott Morrison said this morning that he would not bend to their demands and engage in a “Dutch auction on tax rates”.

“I think that would frankly make a farce of the whole process,” he said.

Treasurer Scott Morrison.

“This is not a game, this is not a game of ping pong on legislation and tax rates.

“The 13 per cent rate is arbitrary, it is about politics, it is not about outcomes and so we would hope that those senators might reconsider.”

Labor Treasury spokesman Chris Bowen said the backpacker tax, originally proposed at 32.5 per cent in the 2015 budget, had been an 18 month mess of the government’s creation.

“Just a few hours ago, in a press conference just as arrogant and petulant as the one on Monday in which he told the Labor Party to go jump and said he was not interested in a bipartisan solution, (Treasurer) Scott Morrison doubled down on 15 per cent,” he said.

“That is not the sort of leadership that Australia’s agriculture and horticultural sectors and tourism are looking for.”

“In the spirit of compromise in the spirit of this parliament, providing the leadership necessary, Labor is prepared to support a backpacker tax of 13 per cent.”

Labor agriculture spokesman Joel Fitzgibbon said he had spoken to five peak industry leaders from all over Australia this morning, who supported Labor’s position.

“The most significant call was one from Stuart Armitage. Stuart Armitage is the chair of the Queensland Famers, an arm of the National Farmers, and very, very interestingly he said, ‘Joel, I’m backing you at 10.5, but, mate, if you can’t get 10.5, can you go 13?’

“I thought that was a significant contribution from him,” Mr Fitzgibblon said.

“Of course he said I’m happy for you to quote me, as I’m doing now.”

.@billshortenmp urges @TurnbullMalcolm to 'grow up' and accept the 13% backpacker tax 'solution' #auspol https://t.co/FfycjO8A9W

— Sky News Australia (@SkyNewsAust) December 1, 2016

Legislation for the tax rate will not be introduced again into the Senate until the government is confident that it has the eight votes from the crossbench to pass the bill.

The Coalition currently has the support of seven crossbench senators after it secured support from Liberal Democrat senator David Leyonhjelm yesterday.

Labor and the Greens had sided with Tasmanian senator Jacqui Lambie in supporting a 10.5 per cent rate.

Mr Morrison said that the parliament was only in its infancy, and the government had engaged in the “spirit of reasonable compromise” to get an outcome.

“This is the 45th parliament, it is going to go on for several years, and we can’t have a process where we have this sort of unseemly trading on these things,” he said.

“We have put forward a compromise, it is a reasonable compromise.”

He said the agricultural sector would be “very disappointed” if the Senate rejected the legislation, which would leave farmers with the current non-resident tax rate of 32.5 per cent.

“This is overreach now, this is just playing politics, and I would hope that we would be able to get an outcome today.”

Reducing the rate to 13 per cent would cost the budget another $60 million, which Mr Morrison said he could not justify given the demands on the public purse.

The 15 per cent compromise rate has already cost $120 million, which will be reflected in the mid-year budget update. He has also argued that a 13 per cent tax rate would be administratively difficult for farmers, and would be at odds with the rate levied on seasonal workers who come from the Pacific Islands.

“I am not going to loosely go around surrendering those positions in the budget because I know the other deicisons that I as Treasurer have to make in order to make up for those changes, and they are very difficult decisions,” he said.