Backpacker tax: Member for Mallee Andrew Broad's compromise call wins Coalition support

On Monday morning, Mr Broad renewed his call for a 15 per cent tax rate on holiday farm workers.

“It’s not a back-flip, it’s about being a pragmatic government,” Mr Broad told ABC radio.

“If you put good compliance around it, you will clearly collect the revenue at 15 per cent.”

Mr Broad had backed the compromise in the middle of a standoff between Labor and the Coalition on the best way to restore Australia’s competitiveness for overseas workers.

Former Yarriambiack mayor Ray Kingston congratulated Mr Broad via social media.

The Coalition wants to reduce its budget tax increase from 32.5 per cent to 19 per cent, while Labor has called for 10 per cent.

The 32.5 per cent rate came into effect in July this year and saw farmers, fruit growers and horticulture businesses complain that foreign backpackers had been scared off from working in Australia.

Many backpacker workers had previously paid little tax due to the threshold of nearly $20,000, while the new regime taxed them at the rate of Australia’s high earners.

Mr Broad has previously told the Mail-Times that the higher tax rate could have an effect on grain harvesting in the Wimmera.

“I was in Donald the other day and a lot of people use backpackers for chaser bin drivers, particularly in a big harvest like we’re having,” Mr Broad said in September.

“Certainly not to the extend of horticulture growers use them, but they are an embedded part of our seasonal labour source.”

Last week One Nation floated a compromise of 15 per cent, which Mr Broad first backed on Sunday. 

If legislation passes this week, the proposed backpacker tax on all earnings will be cut from January 1, 2017.

Under the original amendment, the rate will apply up to earnings of $37,000, and then normal tax rates will apply.

The 2015/16 federal budget eliminated the tax-free threshold for those on working holiday visas and placed an immediate 32.5 per cent tax bracket on backpacker’s earnings.

Mr Broad previously said the backpacker tax hike was a poorly thought out policy imposed by former Treasurer Joe Hockey. 

The 15 per cent compromise will likely cost the budget $120 million in lost revenue but would prevent the 32.5 per cent rate from being locked in if parliament failed to pass an amendment this week.