An interim parliamentary committee report has floated the measure as part of a wider plan to address urgent needs across regional Australia.
People on the dole should be able to stay on JobSeeker while performing low-paid agricultural work, the Joint Migration Standing Committee said.
The Federal Government is being urged to develop a "have a gap year at home" campaign to attract Year 12s and university graduates to work in regional areas.
The committee said the campaign should give consideration to a HECS/HELP discount and appeal to young people's "patriotism" along with those who planned to take a year off overseas.
However, the Australian Workers’ Union called the campaign "cute".
“There a now a million Australians searching for work,” AWU national secretary Daniel Walton said.
“We don't need exotic branded schemes to entice them into horticulture, we just need farms to obey the law.
“The reason Australians are not being employed on farms is because too many employers in the sector prefer to hire people they can easily underpay, exploit, and, in many cases, harass.”
The committee also said the Federal Government should work with states and territories to recruit workers from Pacific nations under two labour schemes.
The report recommends a raft of changes to the working holiday maker visa to be in place for 12 months.
Under the committee's plan, backpackers could count work in key industries across all regional areas towards a second or third year in the country and travellers would be able to work in hospitality, tourism and other industries in all regional areas rather than just northern Australia.
They also recommended working holiday makers should be able to work for the same employer for more than six months provided they are outside major cities, and border movement exemptions would be in place in areas with high labour needs and no coronavirus cases.
Under the plan, more financial incentives would be given for visa holders to work on farms and international student graduates should be offered to stay in the country for an extra one or two years to work in critical industries in regional areas.
Committee chair and Liberal MP Julian Leeser said the interim report was designed to help the government respond to urgent labour shortages.
“During the course of the committee's public hearings, it quickly emerged that a major shortage in agricultural labour is emerging,” he said.
“Time after time, the submissions and witnesses to this inquiry told the committee about the effect that a lack of working holiday-makers entering Australia would have on the upcoming harvest season.”
Labor's agriculture spokesman Joel Fitzgibbon said more needed to be done higher up the value chain to create interesting and sophisticated jobs for Australians.
“COVID-19 has highlighted our vulnerability on a number of fronts including our dependence on foreign labour,” he said.
The report also recommends a one-off payment to help with travel and accommodation costs to be paid after a certain period working in regional and rural areas.
The committee also wants a hotline established for working holiday makers to address exploitation concerns and workplace rights.
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