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The Abbott government has suffered a humiliating defeat in the Senate at the hands of the Palmer United Party which sided with Labor and the Greens to block the repeal of the carbon tax.

The last minute ambush saw the three-member PUP team join forces with Motoring Enthusiast Party Senator, Ricky Muir, to vote down the repeal legislation.

The defeat of the repeal by 37 votes to 35 is a major embarrassment for Tony Abbott who earlier this morning trumpeted the benefits of scrapping the tax, saying it amounted to a 9 per cent impost on power bills and $550 a year hit on average household costs.

“Getting rid of the carbon tax is good news for families, it’s good news for business, good news for jobs and good news for prices,” he said in Perth.

The vote means that businesses will not be freed from the carbon tax until next week at the earliest with the government having now agreed to Clive Palmer’s demands to toughen up the legislation. The repeal will be reintroduced into the House of Representatives on Monday and rushed through both houses.

Mr Palmer had objected to the wording of an amendment ensuring that energy savings were passed on to consumers as too vague. A redrafted proposal now forces businesses to pass on cost savings within 12 months, or pay the government 250 per cent of the value of those savings.

Australian Chamber of Commerce and Industry chief executive Kate Carnell was disappointed by the outcome in the Senate.

“What business is telling is that this sort of approach is really undermining confidence,” she told Dynamic Business. “Looking at it at the moment you’d wonder what is going to get through (the Senate). The antics that we’ve seen this week doesn’t fill you with a great deal of confidence.”

Executive director of the Council of Small Business of Australia, Peter Strong, also expressed concern at the outcome and said it did nothing to help business certainty. He also questioned Clive Palmer’s commitment to small business.

“We want certainty. We are busting to get some certainty and that’s why it’s got to pass. And it should have passed today,” he said. “It is worrying… Secondly, I’ve never heard Clive Palmer talk about small business. My concern is that he doesn’t understand the sector. Given what’s happened today I’ve requested a meeting with him to discuss his policies around small businesses.”

Mr Strong also said the repeal of the carbon tax would put supermarket giants Coles and Woolworths to the test. He questioned whether they would try and use the savings arising from the repeal to pay suppliers less.

“When the carbon tax came in Coles and Woolworths refused to let their suppliers pass their costs on. Will Coles and Woolworths now use this as an opportunity to gouge their suppliers and make a unilateral decision to decrease the money they are paying them? I’m quite afraid of that. Will they say to their suppliers you are saving money now so we are not going to pay you as much?”.

Mr Palmer caught many by surprise by recently appearing with former US Presidential hopeful Al Gore at Parliament House in Canberra to call for an emissions trading scheme with a carbon price of zero so it can be activated when Australia’s major trading partners take action. He has also insisted on opposing any watering down of the Renewable Energy Target.

Environment Minister Greg Hunt said the carbon tax was costing Australian families and businesses $11 million per day.

“The electricity sector has acted in good faith and there is an importance to proceed quickly and swiftly,” he said. “It is also important that the markets are given the certainty and we are hopeful and we believe that it is necessary that these bills should be passed by the end of next week.”

Australian Industry Group chief executive Innes Willox warned that the “cost and complexity of unwinding the tax goes up as each day passes”.

“Any further amendments intended to ensure that carbon savings are passed on should be carefully scrutinised.” 

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Joe Kelly

Joe Kelly

Joe Kelly is a writer for Dynamic Business. He has previously worked in the Canberra Press Gallery and has a keen interest in business, the economy and federal policy. He also follows international relations and likes to read history.

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