As Clive Palmer relishes the power he will soon wield via his balance of power votes in the Senate, a perfect illustration has emerged of the conflict of interest between his influence over the political process and his business interests.



Palmer has the power to “game” votes in the Senate in a way that could, quite legally, earn him around $9m. There is no evidence he plans to do this. But a conflict of interest is not about what someone does, or even plans to do, it is about how they could use their position to advance their other interests. And Clive Palmer could use his party’s Senate votes to make $9m. Here’s how.



Under the current carbon price laws, high-emitting, trade-exposed businesses get free permits to cushion the impact of the price. Under the law they are also able to sell these permits back to the clean energy regulator at any time, and the regulator is required to buy them.



If the carbon price is still in place on 1 September, high emitting companies will be able to receive 75% of their free permit allocation for the next year. And, as noted last year by the research firm Reputex, if those companies felt certain the carbon price was about to be repealed, they could take a risk and get in ahead of that vote and sell their permits back. It would be a risk because if the tax was not repealed, the companies would still need the permits to meet their carbon tax liabilities. Reputex calculated the potential total cost of this loophole to the government to be $2b.



“Should the (carbon price) be disbanded from end of September 2014, Reputex notes that the government can expect companies to utilise the buy-back facility before the permits become worthless, with government facing a bill in excess of A$2bn to cash in nearly 87m freely allocated permits,” Reputex said.



But for Palmer there is no risk involved in taking advantage of the loophole. With Labor and the Greens voting against the repeal, his four-strong voting bloc will determine its timing. He is the only industrialist in the country who can know for sure when it will happen.



Palmer’s wholly-owned Queensland Nickel will get about 533,172 free permits this year. Next year, depending on production levels, they may get around 500,000, two-thirds of those permits available from 1 September. Between that time and the repeal of the carbon tax those permits could be sold back at $25.40 each, earning Palmer over $9m.



Asked about the possibility of companies making windfall gains in this way, the Department of the Environment said: “The government is committed to the repeal of the carbon tax with effect from 1 July 2014 and industry assistance arrangements, including the jobs and competitiveness program which will also be abolished with effect from that time.



“The government believes that any legislative issues associated with a short delay in the passage of the repeal legislation are manageable.”



Palmer had always said he would support the carbon tax repeal, but believed it should be retrospective, but in April threatened to block it if the government “played games” by including its Direct Action climate change fund in budget appropriation bills to avoid its defeat in the Senate. Palmer has long insisted his senators would vote against Direct Action.



The clean energy regulator recently confirmed Palmer’s Queensland Nickel still had an outstanding carbon tax debt of $2.68m, despite paying back a portion of his debt earlier in the year.



When the carbon repeal bills were before the lower house, Palmer abstained, conceding he had a conflict of interest. He insists his senators have no such conflict of interest, and will vote.



He currently claims he won’t speak to the government because it has offered his party seven extra staff members, but has refused to formally recognise it has “party status” because that requires five senators and MPs and Palmer has four – three senate seats and his own in the lower house.



He nevertheless had dinner on Wednesday night with the communications minister, Malcolm Turnbull, and others at a Canberra restaurant.









