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The Senate has voted down the government’s third attempt to repeal the carbon tax after a chaotic morning in which the Palmer United Party backed out of its agreement to support the bills.
Carbon tax repeal voted down
Palmer senators have joined Labor, the Greens, and Ricky Muir to vote down carbon tax repeal legislation.
PUP senators and Motoring Enthusiast Party senator Ricky Muir sided with Labor and the Greens to defeat the abolition of the carbon tax, with a final vote just after 12.30pm rejecting the repeal 37 votes to 35.
The decision is a major setback for Prime Minister Tony Abbott who had expected that the scrapping of the carbon tax would be the first order of business of the new Senate.
But those plans were thrown into disarray on Thursday, when PUP senators refused to back the repeal arguing an amendment drafted by the government to guarantee savings for consumers did not reflect a deal done between the two parties.
That amendment was beefed up by the PUP overnight to include stiff penalties for any company that failed to pass the full savings from the carbon tax repeal within 12 months.
Speaking to reporters after the Senate chaos, Senate Leader Eric Abetz and Environment Minister Greg Hunt said the government would now introduce a set of amended bills to repeal the carbon tax to the House of Representatives on Monday.
Those bills would then go to the Senate and the government hopes it will have the carbon tax repealed by the end of next week.
When questioned on whether the government had any confidence it could work with the new crossbench to pass the repeal bill, Senator Abetz said Thursday's chaos came down to a technical glitch.
"The government does see the need to have this legislation passed as soon as possible," he said.
"The Palmer United Party are committed to the repeal of the carbon tax, as is the government, so I believe that next week we can resolve the issues that were of a technical nature."
In defending his party's decision, Palmer United Party leader Clive Palmer said his senators had been ''doubled crossed'' by the government and as a result they abandoned the deal and sided with the opposition.
However, the government maintains that the amendment put forward by Mr Palmer was unconstitutional because it would have constituted a money bill, which by definition cannot originate in the Senate.
The Abbott government had expected to be celebrating the achievement of its long-cherished ambition to axe Labor's price on carbon this week, but instead has found itself scrambling day by day to negotiate with an unpredictable crossbench.
Carbon tax to linger
The Government says it will continue its attempts to repeal the Carbon Tax despite failure in the Senate.
Mr Palmer had earlier on Thursday confirmed that his senators would not vote for the carbon tax repeal on Thursday, saying amendments had been lodged with the Senate Clerk’s office at 8.30am.
''We asked that it be distributed and we had a violent action from government, a violent reaction I would say,'' Mr Palmer said.
''We had ministers calling us and visiting our senators and complaining.''
Greens leader Christine Milne said the chaos in the Senate was "government by incompetence".
"(The Prime Minister's) back room deals, trying to ram things through, hoodwink the Senate, have failed, and failed utterly. He is a crash and crash-through PM and today he crashed."
Labor Senate leader Penny Wong said the government had failed to explain the impact on small and large business from the latest deal with PUP.
"Australians are entitled to know does the price pass-through apply to all businesses or only to electricity and gas companies," she said.
She said there were also questions about how criminal penalties would apply.
"Maybe if the government had paid attention to proper process rather than just try to ram these through to get a political win, it may not have been in such a chaotic and shambolic mess," Senator Wong said.
The failed vote came after the government had a win in the Senate on Thursday morning with a motion to bring on an urgent vote on the carbon tax just before midday.
After an unsuccessful first attempt on Wednesday, the government secured the vote it needed from Senator Muir to pass the urgency motion 35 votes to 33.
Should the Abbott government succeed in scrapping the carbon tax, it would make Australia the first country in the world to abolish a legislated price on carbon.
On Thursday in Perth before Mr Palmer's announcement, Mr Abbott said that he maintained confidence in his Senate leadership team, led by Eric Abetz, despite the crossbench blowing a more than $9 billion hole in the budget by refusing to pass savings measures associated to with the repeal of the carbon and mining taxes.
''I have great confidence in the ability of all of my frontbench and the Senate leadership team,'' Mr Abbott said.
''In the end, though, this is a question of keeping commitments. The Coalition committed to scrap the carbon tax. Just about all of the crossbench senators committed to scrap the carbon tax so this is a day for people to keep their commitments.''
with Matthew Knott and AAP