What's at stake?
The government is attempting to repeal the carbon tax introduced by the Gillard government in 2011. Labor and the Greens want to keep a price on carbon so the government needs the support of six of the eight crossbenchers in the Senate to scrap it. Luckily for the government, all the crossbenchers want to get rid of the carbon tax. Unluckily - at least for now - the Palmer United Party isn't going to make it easy.
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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.
What does the PUP want?
As a condition of its support for the scrapping of the carbon tax the PUP wants businesses that have increased prices to cover the tax to pass on all savings to consumers when the tax is repealed. The government had already given the Australian Competition and Consumer Commission (ACCC) additional powers to punish price exploitation in its carbon tax repeal package. But the PUP don't think the powers go far enough so has drafted its own amendments. That's where things got messy. Very messy.
What's in the PUP amendment?
There have been three versions of the PUP's much-discussed amendment on price exploitation. The latest version, which includes stiff penalties for companies who can't show they have passed on savings to consumers, has caused some confusion.
Both PUP and the government insist penalties are only intended to apply to electricity and gas companies. But the business sector fears other companies would be drawn into the scheme and is alarmed by the prospect of increased compliance costs.
The amendment includes two rules. The first rule says an entity – that is, any individual or company – may be required to explain how the carbon tax repeal has affected its "regulated supply" input costs and explain how it is passing on these savings to consumers. According to the repeal regulation, regulated supply refers to the supply of natural gas, electricity, synthetic greenhouse gases or synthetic greenhouse gas equipment.
The second rule says entities that sell electricity or natural gas must provide statements to the ACCC and consumers showing how they have passed on their carbon tax savings. If it is found the entity hasn't passed on the savings, they would then have to pay an amount equivalent to 250 per cent of the saving to the Commonwealth.
The Business Council of Australia is concerned the amendment is so vague that caravan parks and refrigeration suppliers - to name just two sectors - would be hit by the amendment.
So what went wrong?
The government insists it agreed to all three versions of the PUP amendments. So why did the carbon tax repeal not sail through the Senate yesterday?
First, the whole process was conducted in a mad rush. The government, keen to fast-track debate on the bills, set an 11.50am deadline for a vote. But when it became clear it was in trouble, it ended up trying to delay a vote as it negotiated with Clive Palmer outside the chamber.
Behind the scenes the PUP had also been advised that their amendment - specifically the 250 per cent penalty - was unconstitutional because the Senate cannot introduce revenue-raising measures. In the end, the PUP withdrew its amendments and voted against the carbon tax repeal.
Who's to blame?
Environment Minister Greg Hunt gave his version to 7.30 on Thursday night: "They had the support of the Coalition senators who were in the Senate, about to vote for it, and for reasons not known to me, it was then withdrawn and brought out, and then subsequently, they put in another version. But at every stage we have indicated our willingness to support each of the three versions that had been presented."
Mr Palmer, unsurprisingly, wasn't accepting fault, saying that the government had not circulated the PUP's amendments in time for the Senate to consider properly.
''It [the savings legislation] was to be circulated by the time Parliament had come in and it hadn't been circulated and our senators hadn't been told and they were left in the dark," he said on Thursday. ''Fortunately we've discovered that and [the senators] were able to become aware of it so I've just met with them down there and their view was that under no circumstances they would be voting for the carbon tax repeal."
On Friday Prime Minister Tony Abbott said the dispute was due to the new senators' lack of experience. ''This is the kind of thing that you could expect with a new Senate, with people coming in who don't have a lot of parliamentary experience," he said.
While acknowledging the whole process was a mess, senators Nick Xenophon and David Leyonjhelm blame Mr Palmer's tactical manoeuvres for most of the chaos. They say they saw no evidence of ''double-dealing'' by the government as Palmer alleges.
What happens now?
The show resumes on Monday when the government will reintroduce its carbon tax repeal legislation into the House of Representatives. Either the latest version of the PUP's amendments will be included or a new version following further negotiations over the weekend. The government insists it is confident the carbon tax will be repealed next week. Given the opposition to the carbon tax in the Senate, this remains the most likely outcome. But following this week's dramas you'd be mad to say it's a sure thing.