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Backpacker tax: 'We have compromised. What Labor is doing is playing politics' - Treasurer Scott Morrison -

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MICHAEL BRISSENDEN: The Federal Government is facing another battle in the Senate, this time over the so-called backpacker tax.

The Coalition originally wanted the tax set at 32.5 per cent but dropped that to 19 per cent after lobbying from the farm sector and its own backbench.

But now Labor and crossbench senator Jacqui Lambie want to cut the rate even further.

The Government argues if the legislation doesn't pass by the end of the year it will enforce the original tax rate.

I'm joined now in the studio by the Treasurer, Scott Morrison.

Scott Morrison, good morning.

SCOTT MORRISON: Good morning Michael.

MICHAEL BRISSENDEN: Just, we'll get to the backpacker tax in a minute.

But just on the US election, your frontbench colleague, Christopher Pyne, I noticed last night said he thinks Hillary Clinton will win and that would be the best outcome for Australia because she supports free trade and supports the United States being deeply engaged in our region. Do you agree?

SCOTT MORRISON: Well, I think the issues of deep engagement in our region and free trade are very important for Australia, particularly on the issues of free trade and the TPP, both of the candidates frankly, have said a lot of things which aren't terribly encouraging.

But I think, as always, we will wait for the American people to make their decision and we will…

MICHAEL BRISSENDEN: Sure, do you think Hillary Clinton is the best outcome though for us?

SCOTT MORRISON: Look, I think it's a matter for the American people and I would no more welcome overseas commentators saying what Australians should decide and on that basis I think it's up to the American people.

And we will work with whoever is elected on, you know, this great day of democracy and we've got a wonderful relationship with the United States and that has always endured regardless of who sits in the Lodge and who sits in the White House.

MICHAEL BRISSENDEN: Okay, to the backpacker tax.

The way things stand at the moment no-one wants the backpacker tax really at 32.5 per cent, do they, but that's what could happen.

SCOTT MORRISON: Including the Government.

MICHAEL BRISSENDEN: But that's what could happen if agreements can't be reached in the Senate, so will you compromise?

SCOTT MORRISON: Look, we have compromised already. We've brought down a package which takes it down to 19 cents, which puts us in an internationally competitive position when you take into account what is actually left in the backpackers' pocket after they have done the same amount of work.

In fact, a better off position even compared to countries like New Zealand which have a lower tax rate but their wage rates are lower. So this is a competitive position.

We've also put the money into supporting the tourism industry, to go out there and get more backpackers to Australia.

And we've done that also by reducing the visa application charge for backpackers to make it more competitive.

I've also stressed that with backpacker numbers, they've been falling since 2012. I mean before the budget was even introduced in 15/16, the numbers had already fallen by 35,000 and that was after the tax free threshold was raised to $18,200 and that effectively had a tax cut as a result of that, so the notion ...

MICHAEL BRISSENDEN: The point is though if you don't compromise you're going to get 32.5 per cent, isn't that right?

SCOTT MORRISON: Well, that's a matter for the, the Labor Party have broken a promise, Michael.

At the last election they said they were going to resolve this issue at no cost to the budget, they factored into their forward estimates the revenue of these measures, and what they did yesterday is just throw that out the window.

MICHAEL BRISSENDEN: They did always say they were going to reduce it to 19 per cent though, didn't they?

SCOTT MORRISON: No, what they said was their forward estimates included the revenue of the $500 million, so they said they were going to resolve this issue with no detriment to the budget.

Now we said the same thing and we've done that with a compromise position which keeps our international competitiveness, strikes it at 19 per cent, a level that the agricultural sector welcomes as does the tourism industry because the hospitality workers are also affected by this, and we have compromise.

What Labor is doing is playing politics. They just want to drive a wedge in the House of Representatives and play politics with a very serious issue.

We've compromised, the Labor Party wants to play politics.

MICHAEL BRISSENDEN: Okay, but you're holding out for 9 per cent really because Jacqui Lambie and the Labor Party ...

SCOTT MORRISON: It is $500 million, the cost of what Labor announced yesterday. That's four times the annual national partnership agreement on homelessness.

MICHAEL BRISSENDEN: How much will it cost the agricultural industry if it's at 32.5 per cent and numbers fall further?

SCOTT MORRISON: This is why we've introduced the compromise package into the Parliament, Michael.

So the Labor Party are refusing to compromise on this. They're playing politics with it. They've gone back on an election commitment to deal with this within the budget and forward estimates which they set out in their own election costings.

So this is a backflip when it comes to that commitment at a cost to taxpayers of $500 million.

So what they're saying is, they want to give a bigger tax cut to foreign workers and ask Australian workers to pay for it - because who else is paying for it?

It is $500 million where the budget goes backwards, so who's paying for that? You are and your listeners are paying for that so foreign workers can get a tax cut and put an even greater disincentive for, in these areas for them to employ Australians.

MICHAEL BRISSENDEN: Sure, sure. But I mean you've had pressure from your own backbench. These are very important workers for the agricultural sector in Australia, aren't they?

SCOTT MORRISON: Yeah, and we've listened and we've compromised.

MICHAEL BRISSENDEN: But you haven't agreed and you won't agree to drop it to 10 per cent which is the figure that New Zealand ...

SCOTT MORRISON: Because that cost $500 million. Now Labor have put forward an unfunded proposal. They promised to have a funded proposal and they back flipped on that, just like yesterday they back flipped on their commitment not to have additional super taxes.

MICHAEL BRISSENDEN: Okay, we'll get to super in a second but still, but the certainty continues then for the farming sector, doesn't it?

SCOTT MORRISON: Well, Labor can resolve it and the Senate can resolve it. The Government has compromised.

MICHAEL BRISSENDEN: So you're going to test it in the Senate ...

SCOTT MORRISON: Of course, the Government has compromised and others refused to. Nineteen cents on the tax is significantly less than 32.5 cents. The common law position is if the Senate is unable to resolve this then it will default to 32.5 cents.

Now I don't want to see that. That's why we've compromised.

MICHAEL BRISSENDEN: Okay, on super ...

SCOTT MORRISON: Let me just make my other point on that.

Labor is saying that they think small businesses between two and ten million dollars should pay higher tax rates because they refuse to support the Government, even on that redefinition of a small business.

So they're saying, no small businesses can pay higher taxes but we want foreign workers on farms to pay lower taxes. That's their priorities and we don't support that.

MICHAEL BRISSENDEN: Well, I think a lot of the farming sector would, a lot of the farming sector want lower taxes too, don't they?

SCOTT MORRISON: Well, we're offering those small business farmers between two and ten million of tax cut and access to the instant asset write-off and a whole bunch, which they refuse and they're saying no, we want foreign workers to get a tax cut and Australian small businesses and Australian workers have to pay for it.

MICHAEL BRISSENDEN: I do quickly want to go to super.


MICHAEL BRISSENDEN: You're introducing the Government's planned super changes into the Parliament this afternoon. Labor's come up with some suggested amendments. You're basically indicating you're not going to consider them.

SCOTT MORRISON: Well, Labor lied. Labor lied.

At the last election they said that they would have changes to superannuation which would be in the same budget envelope as the Coalition. That's what they said before the election.

MICHAEL BRISSENDEN: It claims their changes are going to save $1.4 billion?

SCOTT MORRISON: So they're saying at the last election, no we won't go beyond the $3 billion, the net position, and they've lied on that and they've come up with an extra at least $1.4 billion in extra taxes on Australian superannuants and those saving for their superannuation.

Now we see that as a blatant lie, a secret super tax which they refuse to reveal to the Australian people.

They are penalising people with home-based businesses, those who work in small businesses that don't allow salary sacrificing contributions to their superannuation, tradies who also have a wage job as well as a contracting job.

They're saying you don't get the same access to superannuation tax concessions that others do.

This is a very unfair, punishing proposal from the Labor Party to treat superannuation as a tax milk cow, not to treat it as we have and that is to reform the system to make it more flexible, to make it more sustainable and to make it fairer.

MICHAEL BRISSENDEN: But the Labor plan will save money though, you concede that, $1.4 billion?

SCOTT MORRISON: No, what it will do is it increase tax and it'll increase tax on mothers who are trying, after having children, to rebuild their superannuation balances, it increases tax on tradies, it increases taxes on people who are saving for their superannuation and want to do more and happen to work for a small business.

Now Labor didn't say they were going to change any of those things. The only issue they raised before the election, with our package, was the non-concessional lifetime cap of $500,000. That was the only issue they raised in their post-budget reply.

And now they've welched on that and they want to bung on an extra $1.4 billion secret super tax that they refused to reveal to the Australian people.

Now we were up front Michael before the election on superannuation. We attract criticisms for it but at least people knew exactly what we were going to do. I'm following through on that on today.

Labor lied.

MICHAEL BRISSENDEN: Okay, Scott Morrison, we'll leave it there. Thank you very much for joining us.

SCOTT MORRISON: Thanks Michael.

MICHAEL BRISSENDEN: That's the Treasurer, Scott Morrison there.