28/11/2016 11:01 AM AEDT | Updated 28/11/2016 11:58 AM AEDT

Government Compromises To Bring In 15 Percent Backpacker Tax

Farmers said the rate was fair.

Alex Ellinghausen/ Fairfax Media
Treasurer Scott Morrison says the government is settled on a 15 percent backpacker tax.

CANBERRA – Treasurer Scott Morrison has announced the Turnbull Government will settle on a 15 percent tax on the earnings of backpackers, amid warnings that summer fruit may rot on trees if backpackers won't pick them.

The Turnbull Government had wanted a 19 percent backpacker tax, crossbench senators were insisting it fall to 10.5 percent, so it is ended up sort of in the middle.

And Morrison declared Labor could "take a flying leap" if it thinks it can negotiate it down further.

The new rate has been secured with the support of Pauline Hanson and her One Nation Senators as well as Senator Nick Xenophon and Senator Derryn Hinch.

Hanson has claimed it as a win for One Nation.

"This is a win for farmers, small business and tourism, but this is also a win for One Nation and a win for common sense," she said.

The Treasurer revealed the outcome will leave the budget $120 million worse off.

"It means that we will be able to move forward and the Parliament will now have a $120 million bill to deal with as a result of making this change."

Morrison also used the moment to attack the Labor Party for not playing ball.

"Every time they engage in this bloody mindedness and these political games with the Budget, they put our AAA credit rating at risk.

"The villains in this process, once again, are a wrecking Labor Party."

The National Farmers' Federation (NFF) has welcomed the latest compromise.

"It has been a painful process but we wholeheartedly welcome the announcement that a compromise rate of 15 percent has been reached," the NFF's Chief Executive Officer Tony Mahar said in a statement.

"The NFF back to the Colbeck Review said that a rate between 15 percent and 19 percent was a fair one that would attract backpackers to the sector and be comparable with rates paid to Australian workers."