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New 'backpacker tax' will devastate Australia's agriculture industry: farmers -

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MARK COLVIN: Fruit and vegetable growers are getting increasingly anxious about a new tax on the backpackers they rely on to pick their crops.

They've already got more than 8,500 signatures on a petition urging the Government to change its plans.

The current system means people on working holiday visas pay no tax in Australia until they hit an $18,000 threshold.

The new system would mean them paying almost a third of their income from day one.

If that were actually implemented in July, farmers say it would devastate the agriculture industry and local economies.

Imogen Brennan reports.

IMOGEN BRENNAN: Growing melons in the Queensland town of Chinchilla is challenging, even in the good years.

This season, Terry O'Leary's crop is going to be about half of what it should've been, because a hail storm hit just before harvest.

In previous years he's employed about half a dozen backpackers. This year, with the smaller crop, it's just two.

TERRY O'LEARY: Backpackers are always pretty good because at the end of the day they're pretty motivated people, and they're out there and they want to earn some money, so you know, they're willing to get in, they're willing to do the hours and do the hard work.

IMOGEN BRENNAN: From July, the Federal Government wants to tax people on working holiday visas at a rate of 32.5 per cent from the first dollar they earn

TERRY O'LEARY: I actually think it's pretty rough. The European-mainly backpackers, they'll just stop coming here, because they've got plenty of other options.

On the flipside you'll probably also see a lot of the return to the cash-in-hand work and you know, we're going to be losing a lot of the protections for employees and employers if it does get back to that stage.

IMOGEN BRENNAN: Australia's National Farmers Federation has almost given up on the idea of a complete Government back down - but it is pushing for a compromise, in the form of bringing the tax increase down from 32.5 per cent to 19.

Donna Mogg is from the horticulture lobby group Growcom.

DONNA MOGG: Backpackers, or 417 visa holders, the working holidaymakers, I mean, they're the lifeblood of the horticulture industry around the country.

The reason that a lot of people work in this industry is to get their second 12 month visa. So they can only get that by doing their 88 days in a rural-regional industry, so the question is will they continue to do that work, for such low remuneration?

IMOGEN BRENNAN: The Government is hoping that even if the backpacker numbers fall, there'll be more applicants for the existing Seasonal Worker Program.

That program involves workers from the Pacific Islands and East Timor.

They can already apply to work for either six or nine months in Australia, they pay a 15 per cent tax rate and they're allowed to return every year.

Until now the Seasonal Worker Program has been limited to horticulture, aquaculture and cane farming.

Now they'll be able to work on cattle, sheep, grain and mixed farms as well.

The Agriculture Minister Barnaby Joyce wasn't available for a PM interview, but the Minister for Employment, Senator Michaelia Cash, spoke to ABC Rural.

MICHAELIA CASH: It's a very separate visa. So the Seasonal Worker Program is very much an economic aid program, the Working Holidaymaker Program, a very different purpose.

That's a cultural exchange program. That's all about having an extended holiday, earning money through short-term employment placement, going off, spending that money and stimulating the Australian economy.

IMOGEN BRENNAN: Melon grower Terry O'Leary says the Federal Government's backpacker tax will work against itself and the agriculture industry.

TERRY O'LEARY: You know, it might be nice for the Government to stand up and say, yeah, we've got another half a billion dollars worth of tax, but what are the flow-on effects to, you know, even just a very small proportion of 20,000 people not applying and coming here?

IMOGEN BRENNAN: So a lot depends on the Treasury forecasts, and whether the extra tax gathered offsets any fall-off in backpacker numbers.

And if the Government doesn't change its mind, the only way to tell that will be in the small print of the budget in the following financial year.

MARK COLVIN: Imogen Brennan reporting.