Senate makes good on prime minister's ‘pledge in blood’ to ‘axe the tax’, with nation unlikely to meet 5% emissions reduction target

Australia’s carbon price has been repealed, leaving the nation with no legislated policy to achieve even the minimum 5% greenhouse emissions reduction target it has inscribed in international agreements.

After eight years of bitter political debate, during which climate policy dominated three election campaigns and contributed to the demise of two prime ministers, after last week’s Senate drama in which the repeal was again defeated and this week’s lengthy last gasp debate, the Senate has now finally voted to make good Tony Abbott’s “pledge in blood” to “axe the tax”.



The government was backed by seven of the new crossbench senators, including the three Palmer United party senators, Liberal Democrat senator David Leyonhjelm, Family First senator Bob Day, Motoring Enthusiast senator Ricky Muir, DLP senator John Madigan. Independent senator Nick Xenophon was unwell.



Only the Australian Labor party and the Greens voted against repealing the carbon pricing scheme they introduced, which came into effect two years ago.



Leader of the government in the Senate and former climate change minister Penny Wong said repealing the bills meant “this nation will have walked away from a credible and efficient response to climate change”.



Wong said the prime minister Tony Abbott had “staked his political career … on fearmongering and scaremongering and that is what this debate has been about for years”.



“I think future generations will look back on these bills and they will be appalled … at the short-sighted, opportunistic selfish politics of those opposite and Mr Abbott will go down as one of the most short-sighted, selfish and small people ever to occupy the office of prime minister.”



Government backbencher Ian Macdonald accused opposition parties of being hypocrites for refusing to accept the will of the voters and said that while he had “an open mind”, he would like to point out that Brisbane had recently had its coldest day in 113 years.



Greens leader Christine Milne said it was “a vote for failure” amid interjections from government backbenchers that she should “get over it” because the parliament was “respecting the will of the Australian people”.



Senate vote on carbon tax. How the Senate voted

The bills passed 39:32. There was none of the jubilation that accompanied their passage in the lower house, but the leader of the government in the Senate, Eric Abetz, shook hands with backbench senator Cory Bernardi, who led the revolt against Malcolm Turnbull when, as leader of the opposition, he backed Labor’s carbon pricing scheme.



The tax was $25.40 a tonne and was scheduled to move to the floating and lower international price in 12 months.



The repeal will cost the budget around $7bn over the next four years as around 350 businesses, mainly electricity generators and big manufacturers, no longer have to pay the tax.



The government argues the carbon pricing scheme has been ineffective, but national emissions have actually fallen by 0.8% in the first calendar year of its operation, the largest fall in 24 years of records. Since the tax began, emissions from the east coast electricity market have fallen 11%, but emissions from other sources – especially coal and gas mining have increased.



The government also says households will be better off by an average $550 – the amount treasury estimated prices would rise when the tax was introduced – but supermarkets and airlines are now saying consumers should not expect price reductions.



The Australian Competition and Consumer Commission’s special powers are to monitor and enforce only electricity and gas price reductions. Electricity bills will rise, but by an estimated 9% less than they otherwise would. Gas bills will rise by an estimated 7% less than they would have with the tax still in place.



The Abbott government says it will now achieve the target of a 5% reduction in Australian emissions compared with 2000 levels by 2020 with its Direct Action policy, which will offer $2.5bn in competitive grants over the next four years to companies and organisations voluntarily reducing emissions. The budget actually allocated only $1.14bn over the four-year forward estimates for the scheme. The government said this is because they will pay on delivery of the abatement. The policy is voluntary and puts no overall cap on emissions.



The government itself has not modelled Direct Action (Abbott said he would prefer to “have a crack”), but two other modelling exercises found even the 5% cut would cost far more than $2.5bn, and the independent climate change authority – which the government is seeking to abolish – has said Australia’s “fair share” of international emissions reductions has now increased to between 15% and 19% by 2020.



The government says it is sure Direct Action will meet the 5% target, but Abbott has said he will not allocate any more money even if it does not, and has not said how he would make deeper reductions in Australia’s emissions which are likely to be required after the United Nations meeting to try to forge a new post-2020 climate agreement in Paris next year.



Malcolm Turnbull warned of the long-term costs of the policy in a speech to parliament after he was deposed as leader because of his support for an emissions trading scheme, when he said Direct Action style schemes were “a recipe for fiscal recklessness on a grand scale”.



The carbon price repeal bills were voted down in the Senate last week after a last-minute change to a Palmer United party amendment was ruled to be unconstitutional by the clerk of the Senate. The government had been prepared to accept the amendment but then changed it again over the weekend after business groups raised major concerns.

Business groups welcomed the repeal as a “first step” towards achieving an effective emissions reduction policy.

The Business Council of Australia, the Minerals Council of Australia and the Australian Industry Group called on the government to “develop and implement a cost-effective emissions reduction fund” as “part of a toolkit of measures to reduce emissions”.



But the Climate Institute thinktank said that “by repealing laws that price and limit carbon pollution, Australia today became the world’s first country to dismantle a functioning and effective carbon market, taking a monumentally reckless backward leap even as other major countries are stepping up climate action”.



And the Australian Conservation Foundation said: “This backwards step makes Australia an international embarrassment.”



Describing it as a “tragic day”, Greens leader senator Christine Milne said after the vote that “the big polluters should pay for the destruction they are causing to the planet”. She accused the Coalition of “wanting to cost-shift the burden of climate change onto the community and away from the people who are causing it”.



Both Labor and the Greens say they remain committed to carbon pricing as the best way to reduce emissions.



Speaking after the vote, agriculture minister Barnaby Joyce said the tax had imposed high costs on families, and questioned whether it was needed, saying “look at the weather today, look at the way you are dressed, no one thinks it is too hot”.



“I believe there is climate change happening, I just don’t believe we are going to change it with a broad-based consumption tax.”



“I am glad the carbon tax has been axed … we have Direct Action and there are programs that hopefully can assist … but the idea that somehow we inflict on every household the fact that we would attack their power prices to the Australian taxation offices. They took it to the Australian people and the Australian people rejected it,” Joyce said.