The Abbott government has been dealt a major blow after the repeal of the mining tax was defeated in the Senate.
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The tax will survive at least until Parliament next sits on August 26 after Labor, the Greens and crossbench senators used their numbers to stop the government abolishing the tax and the approximately $10 billion in spending linked to it.
The next instalment of the mining tax is due to be paid by companies by July 21st.
The Palmer United Party, Labor and the Greens had been pushing amendments to the repeal bill that would preserve spending funded by the tax including the Schoolkids Bonus, low income superannuation contribution and the income support bonus.
The Abbott government wants all spending linked to the mining tax to be abolished along with it.
Government senators appeared shocked as they left the Senate chamber on Friday afternoon as the PUP senators walked away from the repeal because the government refused to keep compensation for families.
The House of Representatives had voted to block the demands of Labor, the Greens and the PUP and return the bill to the Senate on Friday morning after the upper house decided late on Thursday night to retain the spending linked to the mining tax.
The government was blindsided by the PUP senators' decision to vote with Labor and the Greens to keep their amendments – and therefore the mining tax - as Clive Palmer had campaigned strongly against the tax before the election.
It is another blow for Prime Minister Tony Abbott, who took the repeal of the mining tax to the 2010 and 2013 elections.
Defeat of the repeal comes a day after the government secured the scrapping of Labor's carbon price, but only after a hard-fought and chaotic two weeks in which the abolition was defeated once in the Senate, and several attempts to bring on a vote faltered.
The mining tax was introduced by Labor back in 2010.
Mr Abbott issued a veiled warning to the PUP senators before Friday's vote, telling ABC radio on Friday morning that the government had gone to the election "with a very clear position".
"We said that we would abolish the mining tax but we would also abolish the spending that the tax was supposed to fund. You can't get rid of the tax responsibly without also getting rid of the spending," he said.
"We wore the opprobrium and unpopularity of saying that the Schoolkids Bonus would go because it was a cash splash with borrowed money."
