01/12/2016 3:40 PM AEDT | Updated 01/12/2016 8:46 PM AEDT

Backpacker Tax Passes With Greens Support

The surprise move comes after days of enate wrangling and will see backpackers taxed at 15 percent.

Fairfax Media
Richard Di Natale says the Greens deal on the 15 per cent backpacker tax will introduce certainty

The federal government's 15 per cent backpacker tax has been thrown a last minute lifeline after a deal was struck with the Australian Greens.

The move ends a week of horse trading over the deal, with the Turnbull Government sticking to the 15 percent position it announced on Monday, while Labor and the independents wavered between a 10.5 percent and 13 percent tax.

But in an unexpected, last minute deal that threw the government a lifeline on Thursday, the Greens threw their support behind a 15 percent tax.

The backpacker tax passed the Senate 43-19 late on Thursday night.

Labor have attacked the deal, arguing key negotiation points will hurt the budget bottom line.

Greensleader Richard Di Natale said the deal introduced certainty for farmers and fruit pickers left confused by the debate over the tax.

"Today we've introduced some certainty, we've ensured that we've provided a circuit breaker and it is a great day for farmers and for the environment," he told journalists in Canberra.

"What we have got today is we've ensured that backpackers will continue to come to this country and provide the really important workforce that this country needs.

"We know that farmers right around the country use backpackers to help them to grow the food that we all enjoy and this Government put all of that at risk with its penny pinching."

Di Natalie said The Greens only began negotiating with the government on Thursday after "it became clear that the Government was not prepared to entertain a 13 percent rate."

The Government has reportedly agreed to scrap its plan to tax 95 percent of backpackers' superannuation and inserted will tax 65 per cent.

Under the deal, the government is expected to chip in an extra $100 million in Landcare funding.

"This is exactly what the producers have been asking for," Di Natale said.

Opposition treasurer Chris Bowen labeled the deal a product of the "coalition of the unwilling" that will harm the budget bottom line.

"The Australian people have to tolerate a deal which brings the headline rate much higher than New Zealand, which means that we remain uncompetitive," Bowen told parliament on Thursday.

"But (treasurer Scott Morrison) is so determined not to give into this side of the house that he goes off and does a deal with the Greens, which is worse for the budget than a deal with us would have been.

"This is what his incompetence has lead us to. This is a coalition of the unwilling — we have One Nation, next the Greens, the liberals and the nationals. And what's the result? A worse budget deficit."

Prime Minister Malcolm Turnbull, Deputy Liberal Leader Julie Bishop and Finance minister Mathias Corman had been involved with negotiations with the Senate crossbenchers to get them across the line.

The government earlier warned the rate would revert to 32.5 percent from January 1, and had been sticking to a 15 percent position announced on Monday, while Labor and Jacqui Lambie had wanted 10.5 percent, before moving to 13 percent on Thursday.

The last 48 hours in particular, have become really a huge political game.Fiona Simpson

The National Farmer's Federation supported a 15 to 19 percent tax.

NFF president Fiona Simpson said farmers can now plan next year's harvest, and said the previous 48 hours had been a "huge political game."

"We congratulate the government (and cross benchers)... on reaching a very, very sensible, commonsense package that will benefit agriculture and be of great benefit and gives backpackers the certainty that they need to continue to plan their working holidays in Australia," she said.

"This is what we've been striving for in the last 18 months. It is extremely rewarding today that package is on the table."

In a press conference after the deal was made public, Prime Minister Malcolm Turnbull described it as a "great investment."

"It supports so many groups across the country, so many volunteer groups, and we're very pleased to be able to do that. Extremely pleased, actually," he said, while flanked by Deputy Prime Minister Barnaby Joyce and Treasurer Scott Morrison.

Joyce was asked if it was embarrassing to have the party of Black Jack McEwen rescued by "the inner city Greens."

"Politics is about getting things through and what I think is important for my people, for people in regional areas, is they're going to get their fruit picked, they are going to get cash coming in, that money is going to go into the towns," he said.

"I'm happy to work with those who want a positive outcome."

Morrison said the arrangements will ensure that the government will achieve over 70 percent of the revenues set out in the budget.

"You've heard me say often and the Prime Minister, that 80 percent of something is better than 100 percent of nothing. Well, today it's 70 per cent of something rather than 100 percent of nothing."

Earlier attention had focused on Justice Party Senator Derryn Hinch, who had a position supporting a 19 percent, 15 percent and 10.5 percent tax, before shifting to 13 percent.