Labor, Lambie switch position on the backpacker tax

The government is determined to get the matter settled by the end of Thursday as otherwise the tax will revert to 32.5 per cent on January 1, 2017, which could deter backpackers – who help the horticulture industry pick crops – from staying in Australia.

On Thursday morning Jacqui Lambie and Labor changed their stance from backing a 10.5 per cent tax rate for the workers and joined Derryn Hinch and breakaway One Nation senator Rod Culleton to support 13 per cent.

Labor agriculture spokesman Joel Fitzgibbon said: "we are backing 13 to get this fixed today".

But this is unlikely to lead to a resolution. The government said moving the proposed rate down from their stance of 15 per cent to 13 per cent would be a bridge too far.

"We can't have a process where we have this sort of unseemly trading on these things. We've put forward a compromise. It is a reasonable compromise," Treasurer Scott Morrison said.

"Politicians will seek to try and get reasonable compromises on reasonable positions, but I think this is overreach now."

The Coalition's smooth end to the year was undermined on Wednesday, after an ambush vote in the Senate scuppered a deal on the rate at which backpackers will be taxed, opening up a hole in the budget.

Key crossbenchers – Senators Hinch and Culleton – switched from supporting the government's 15 per cent backpacker tax compromise to support a lower 10.5 per cent rate.

Mr Morrison said the government would continue to attempt to convince the crossbench and would consider opening the door to more seasonal workers to make sure fruit does not rot on the trees if there are not enough backpackers.

"There are these opportunities and the Government will be looking at those measures very clearly," he said.

The National Farmers Federation - a key player in the debate - has now urged the government to do a deal on Thursday before Parliament rises.