Opposition parties including One Nation combined in the Senate to lower the backpacker tax from the government’s preferred 19% rate to Jacqui Lambie’s suggestion of 10.5%.
But the government rejected the Senate amendments on Thursday, and sent the bill back down to the House of Representatives to have them removed. It means the rate reverts back to 32.5% on 1 January unless the government is prepared to accept another compromise proposal.
The Senate is expected to consider the legislation next week, which is the final sitting week for the federal parliament for 2016.
Malcolm Turnbull told parliament during question time if backpackers ended up paying 32.5% it would be the fault of the Labor party. “They are the ones that are going to ensure, if they have their way, that backpackers are paying 32.5 cents,” the prime minister said.
Asked why the government would not accept the verdict of the Senate, the treasurer Scott Morrison declared “what those opposite are proposing is they want a lower rate of tax for foreign workers”.
“Those opposite come into this place everyday, lecturing about the need for more revenue measures, and in the other place, and in here, Mr Speaker, they have voted to give foreign workers a tax cut at the cost to the Australian taxpayer of $500m,” Morrison said.
In an interview later on Thursday afternoon, the finance minister Mathias Cormann did not provide a clear answer when asked whether backpackers would pay less tax than Australians under the amended proposal, as various ministers had said in the House.
After being asked several times, and talking around the point, Cormann told Sky News he would “let the treasurer and deputy prime minister talk for themselves” – but he said the government’s objective was to ensure foreign workers were not delivered a tax cut.
In arm twisting before the critical Senate vote on Thursday afternoon, the Turnbull government had tried to convince One Nation senators to accept its proposed rate of 19% by promising to restore a volunteer worker program that allows holidaymakers to work very short stints on farms in return for accommodation.
But a spokesman for Pauline Hanson told Guardian Australia: “We’re not interested in horsetrading, we’re interested in the right outcome for farmers.”
He said if the 10.5% tax rate did not pass, One Nation would have been prepared to accept a higher rate of between 12% and 15%, in line with consultations the party held with farmers in north and western Queensland.
“We don’t want to see the government implement a 32.5% tax,” he said, in reference to the tax rate that will apply if a compromise is not reached.
After the backpacker tax vote, the Senate then voted to increase the departure tax from $55 to $60 after a deal between One Nation and the Coalition.
One Nation had agreed to a $5 increase in the departure tax if the government promised to freeze the charge at $60 for five years after increasing it.
Labor senator Penny Wong accused the Coalition of “procedural chaos” after the vote, saying the last 24 hours in the Senate had been a shambles.
On Wednesday evening, the government suffered an embarrassing parliamentary blunder after a One Nation no-show blocked its proposed $5 departure tax increase.
Hanson and fellow One Nation senator Brian Burston told the Senate on Thursday in separate personal explanations they had missed the vote because they thought the division bells were ringing for a quorum, not for a vote on legislation.
In a fiery session, Wong and Hanson traded blows over deal-making in parliament, while Lambie, the Tasmanian independent, accused the government of lying to the public for months by characterising her 10.5% backpacker tax proposal as a tax break.
“Unfortunately some gullible media has fallen for Barnaby’s porkies and reported that I’m going to vote for their legislation,” Lambie told the Senate.
Lambie warned the government not to criticise her stance on the issue, because she was merely trying to ensure there were enough people in Tasmania available to pick fruit.
The Tasmanian also declared she had been “helping to sell” the government’s welfare changes to her constituents. “Don’t you dare criticise me with your crap because I am not taking it,” Lambie said.
Later she was involved in a televised confrontation with the new president of the National Farmers Federation, Fiona Simpson.
Lambie blasted the farmer’s lobby group, declaring the NFF “lap dogs for the LNP” and she advised Simpson to get out of Canberra and consult farmers to see what level of tax they were happy for backpackers to pay.
“Get out there and get your job done,” Lambie told her.
Things got heated between @JacquiLambie and the president of the National Farmers Federation over #backpackertax https://t.co/KiuW3uF3YX
— Sky News Australia (@SkyNewsAust) November 24, 2016
The deputy prime minister Barnaby Joyce derided Lambie in the House of Representatives and said Labor should not have accepted her proposal.
“Do you honestly believe that the Australian Labor party believes that the best form of economic advice that they can get, rather than from the member for McMahon [the shadow treasurer Chris Bowen], is from Senator Jacqui Lambie from Tasmania?” Joyce said.
He asked whether advice from Lambie was “the economic lot of the Labor party.”
“Why are they doing this when they went to the election proposing a 32.5% tax? Why would they go to the election proposing a 32.5% tax, and now they are proposing a 10.5% tax for no other reason than to destroy the deal that is done so we can start working ... start getting the fruit off the trees?”
