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Abbott: 'We will scrap this toxic tax'

Tony Abbot says he is confident that the Senate would repeal the carbon and mining taxes and pass the bulk of his government's budget measures.

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The federal government has moved to put a week of political chaos behind it, with Environment Minister Greg Hunt directly negotiating with Clive Palmer over amendments to repeal the carbon tax and give business certainty.

An exasperated Prime Minister Tony Abbott on Friday flagged the prospect of a double dissolution election in six to 12 months if the political impasse continued, although he later said his government could work with the new Senate crossbench.

Business groups, meanwhile, demanded certainty over who would be hit by the tough penalties applicable to entities that did not pass on savings that Mr Palmer has demanded be included in the carbon tax repeal package.

Mr Abbott later said he was confident repeal of both the carbon and mining taxes would go ahead and the government would get the ''bulk of our budget savings through''.

''One or two days of argy-bargy certainly doesn't make for a political stalemate,'' Mr Abbott told 2GB radio. ''I think it would be a mistake to see the whole of the life of this new Senate being like the past few days.

''I'm confident that for all the sound and fury, for all the colour and movement in the Senate, we will get the bulk of our budget savings through and that once everyone huffs and puffs we will get the carbon and mining taxes repealed.''

After a day of high drama in the Senate on Thursday that saw the Coalition's attempt to repeal the carbon tax stymied again, the government was negotiating on Friday over several versions of a carbon tax repeal amendment for Mr Palmer to move.

The mercurial coal miner will have the option to introduce the amendment himself to the House of Representatives on Monday, although late on Friday some government sources feared Mr Palmer could still push to personally implement an amendment with the word ''tax'' in it, which would be unconstitutional.

Nevertheless, senior government sources remained hopeful the tax would be repealed next week, but were reluctant to put a time frame on the bill.

The Palmer United Party leader also moved to clarify on Friday that the harsh penalties he has demanded for companies found to have withheld price cuts after the abolition of the carbon tax would apply only to power and gas providers.

Mr Palmer said his PUP senator Dio Wang, who had suggested the penalties could apply to all suppliers of goods and services to consumers, ''maybe … got it wrong''.

Mr Palmer conceded on Friday that for supermarkets and airlines Qantas and Virgin, ''there can't be a legislative requirement on them, but what there is is a market imperative'' to pass on carbon tax savings.

Senator Wang's comments had heightened concern for business, with the Australian Industry Group and the Business Council of Australia warning of ''unworkable'' amendments and regulatory mayhem.

Competition regulator chairman Rod Sims said business was expected, on repeal of the tax, to remove any remaining carbon components in prices and ''that consumers will see the benefit of the repeal''.

Woolworths and Coles promised any savings would be passed on, but cautioned that food prices had generally not risen under the tax, while Qantas and Virgin both said they had not raised prices because of the tax.

The government believed the safeguards it has put in place to ensure savings from repeal of the tax are passed on, which will be enforced by the competition regulator, were sufficient. However, it has moved to satisfy Mr Palmer by putting in place additional measures.

With Stephen Cauchi