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Govt agrees to 15 pct backpacker tax deal

AAP logoAAP 27/11/2016 Paul Osborne and Colin Brinsden

The Turnbull government looks set to pass its controversial backpacker tax this week after gaining the support of One Nation for a new rate of 15 per cent and Nick Xenophon on a seasonal work deal for the unemployed.

But the Labor opposition is standing by its position of a 10.5 per cent rate, saying it would keep Australia competitive with New Zealand and was what farmers wanted.

Alongside the 15 per cent rate, the government has also agreed in a deal with the Nick Xenophon Team to support a trial allowing Australian job seekers to earn up to $5000 on seasonal fruit-picking work without penalty.

It will prevent the rate spiking to 32.5 per cent for seasonal workers from January 1, which had been the initial proposal in the 2015 budget, and lessen the risk of fruit being left to rot this summer.

However, it is less than the 19 per cent the government subsequently wanted and means Treasurer Scott Morrison will need to find $120 million over the next four years to fill the gap, which he says will be resolved by the December 19 mid-year budget review.

Mr Morrison will introduce legislation on Monday for the new rate.

"That means this week, hopefully even today, this matter is resolved," he said in Canberra.

He said he had put the government's new position to One Nation leader Pauline Hanson by phone on Monday morning.

Senator Hanson and her three colleagues helped vote down the government's 19 per cent tax rate proposal last week.

Farmers were thankful the issue had been resolved.

"We now ask that the Senate expedite passage of the relevant legislation to ... allow businesses to start rebuilding backpacker interest in on-farm jobs," National Farmers' Federation chief executive officer Tony Mahar said in a statement.

The Senate opted for a 10.5 per cent rate, a decision rejected by the government-controlled House of Representatives.

Mr Morrison took aim at Labor's hypocrisy over the issue.

"The villain in this ... is (leader) Bill Shorten and the Labor Party who are quite happy just to blow up the show, blow up the budget on every single occasion," he said.

Shadow treasurer Chris Bowen told reporters Labor would be sticking with its position of a 10.5 per cent rate.

"The treasurer ... said the Labor Party could go jump and he is clearly not interested in a proper and sensible discussion in this 45th parliament," Mr Bowen said.

He said the opposition had offered the government billions of dollars in alternative budget savings, but had been rejected.

Labor agriculture spokesman Joel Fitzgibbon said backpackers would look at the headline rate and decide to go to New Zealand.

"There has been no research or modelling done, it is an arbitrary figure and this government stands condemned for selling out our farmers, and putting some of their own interests around Senate negotiations in front of the interests of the country and our farmers," he said.

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