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Clive Palmer is set to agree to the repeal of the carbon tax but the government may face a fight to abolish related elements of Labor's clean energy package, with crossbench support for retaining the profit-making Clean Energy Finance Corporation.
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Senate numbers are finely balanced and DLP Senator John Madigan has warned the Government he won't be taken for a fool. Analysis with Chris Hammer and Fairfax political correspondent James Massola.
Mr Palmer and the three Palmer United senators-elect are due to announce a final position on the carbon tax repeal package on Wednesday at 5.30pm.
''Wednesday night we'll have an announcement to make on what we think is a solution for Australia and the world,'' Mr Palmer told the ABC.
''It's going to be a very exciting time I think.''
Fairfax Media understands the PUP bloc will give their blessing to the Abbott government's plan to legislate the carbon and mining taxes out of existence in return for agreements around savings being passed back to energy consumers.
Mr Palmer is also likely to seek financial concessions for veterans as part of the price for his support.
The PUP group, along with its ally Ricky Muir of the Australian Motoring Enthusiast Party, Democratic Labour Party Senator John Madigan and the South Australian independent Nick Xenophon are looking closely at the merits of renewable energy.
There would be enough support for the government to abolish the 20 per cent Renewable Energy Target, despite figures showing consumers would be better off the target was kept, but the CEFC, which has turned a $200 million profit on investing in renewable energy projects, is likely to be retained on current numbers.
Senator Xenophon stated his support for the CEFC in a speech in the Senate last week.
The only votes the government can rely on to kill the CEFC is NSW senator-elect David Leyonhjelm and Bob Day of Family First.
Mr Muir, who will vote against the carbon tax, is said to be ''very interested in issues around renewable energy''.
Glenn Druery, an adviser to Mr Muir, said the Victorian senator-elect would make no final decisions until after a briefing with government next week.
''In my opinion, Ricky's vote may not be crucial on the carbon tax but he is leaning towards voting against it,'' he said. ''It is likely his vote will be important on certain aspects of the clean energy package like the Clean Energy Finance Corp,'' he said.
The government is preparing for protracted negotiations, warning the new crossbench senators on Tuesday that they may be kept in Canberra until the government gets the result it wants.
Coalition leader in the Senate, Eric Abetz, has written to senators-elect flagging that the fortnight of sitting days from July 7 could be expanded to deal with its most important package of bills.
''I flag to you that to ensure passage of this legislation, the government may move to sit on additional days,'' the letter from Senator Abetz states.
One incoming senator said: ''The message seems to be that we will keep you voting until you get it right.''
The government has already injected an extra fortnight into Parliament's sitting schedule so that it can deal with Prime Minister Tony Abbott's ''pledge in blood'' to axe the carbon tax.
Senator Abetz said: "Private correspondence between myself and other Senators will remain private. The normal practice is that the agenda in the Senate is set by the government."
Leader of the Opposition in the Senate, Penny Wong, said Senator Abetz could not add sitting days at a stroke of his pen.
''I'm surprised he is threatening, rather than talking, to crossbench Senators. Any extension of hours is a matter for the Senate, not Senator Abetz,'' she said.
The government gagged debate on the carbon tax repeal bills in order to rush them through the House of Representatives and have them ready to be considered by the Senate from July 7.
Incoming senators, who cannot pay staff until July 1, will also have to deliver inaugural speeches as well as understand the repeal legislation.
Senator Nick Xenophon said it was an unreasonable time frame for such an important vote and it was his preference to delay.
NSW senator-elect David Leyonhjelm, of the Liberal Democratic Party, said he was ready to vote to end both taxes.
''The carbon tax and the mining tax I feel comfortable about dealing with,'' he said.
Bob Day of Family First, representing South Australia, has pledged to vote with Mr Leyonhjelm on economic issues such as the tax repeal.