Turnbull government strikes deal with the Greens for 15 per cent backpacker tax

“Today what we have achieved is a win for farmers and a win for the environment”: Greens leader Richard Di Natale Photo: Eddie Jim Prime Minister Malcolm Turnbull during question time at Parliament House on Thursday. Photo: Andrew Meares
Nanjing Night Net

Deputy Prime Minister Barnaby Joyce and Prime Minister Malcolm Turnbull are all smiles as they announce the Greens deal to secure the passage of the backpacker tax. Photo: Alex Ellinghausen

The Senate has passed a bill to tax backpackers’ incomes at 15 per cent, in an extended late-night sitting on Thursday.

Senators voted 43 to 19 in favour of the bill, after the Turnbull government struck an an 11th-hour deal with the Greens.

Rod Culleton, Derryn Hinch and Jacqui Lambie were among the Senators who voted with the government, ending a week of farcical politicking as Parliament rises for the year.

The deal will bring peace of mind to farmers and regional communities, who faced the possibility that working holidaymakers would automatically be whacked for 32 cents in the dollar from January 1 if no compromise was reached.

As part of the compromise, tax on backpackers’ superannuation payments will be reduced to 65 per cent from 95 per cent, while the government agreed to give an extra $100 million to the National Landcare Program, which assists farmers with sustainable agriculture. It was close 43 -19. #backpackertax— Barnaby Joyce (@Barnaby_Joyce) December 1, 2016

That led Labor to portray the deal as a desperate attempt to save face that was worse for the budget bottom line than Labor’s compromise proposal of a 13 per cent tax. “This is a bigger tax at a bigger cost,” Opposition Leader Bill Shorten said. “It goes to show Malcolm Turnbull will pay any price to anyone.”

But a buoyant Prime Minister heralded the breakthrough, calling the Landcare concession a “great investment” and said the arrangement with the Greens would preserve the 15 per cent rate “for all time”.

Treasurer Scott Morrison conceded the package was no longer the revenue booster set out in the budget, but “today it’s 70 per cent of nothing rather than 100 per cent of nothing”.

He also directed his message at the major ratings agencies, noting the uncertainty was now over and arguing the deal demonstrated the government could make the 45th Parliament work.

The National Farmers Federation welcomed the deal, which put an end to 18 months of speculation and a week of frenzied political posturing that prompted fears of backpackers boycotting Australia.

NFF president Fiona Simson congratulated the government for achieving “a very, very sensible commonsense package that is going to benefit agriculture … and give backpackers the certainty that they need.”

A farcical final week of Parliament saw Mr Morrison initially announce a deal with One Nation on Monday for a 15 per cent tax. But that broke down in the Senate on Wednesday when Derryn Hinch and Rod Culleton ended up supporting Labor’s preferred 10.5 cent rate.

In the Mexican standoff that followed, Senator Hinch and eventually Labor pitched for a 13 per cent tax and goaded the government to compromise. But the arrangement with the Greens’ nine senators means the government has enough votes to secure the higher rate.

Nationals leader Barnaby Joyce thanked Greens leader Richard Di Natale on Twitter. “Credit where credit is due. Thanks to the Greens for doing what Labor should have done,” he wrote.

Senator Di Natale said the deal showed his left-wing party was able to “clean up the mess that is of the government’s own making”. Farmers had been the victims of “bloody mindedness” and a “silly standoff” by the major parties, he said.

Mr Turnbull heralded the deal as a symbol of the government’s “term of delivery”, following the passage of two key industrial relations bills over the past fortnight – the establishment of the Registered Organisations Commission and resurrection of the Australian Building and Construction Commission.

He singled out Finance Minister Mathias Cormann for praise for negotiating the deal, and thanked Senator Di Natale, One Nation and the Nick Xenophon Team for their support.

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