Tony Abbott
Tony Abbott Vicki Wood

Bad day for Abbott as govt loses $1.5 billion in savings

A VOTE on the Abbott Government's carbon tax repeal is expected to go ahead on Thursday after a chaotic day in the Senate where the government lost another $1.5 billion in promised savings.

The third sitting day of the new Senate was again dominated by debate on the carbon tax repeal bills, with a repeal of $1.5 billion in tax cuts blocked and the $2.5 billion renewable energy agency secured.

During a series of votes and amendments in the Upper Chamber, Liberal Democrat Senator David Leyonhjelm voted with Labor and The Greens to ensure the tax cuts will be delivered.

The tax cuts, totalling $1.5 billion, will start in July next year, but the government had already included the massive savings from abolishing them in its budget.

It will now be forced to come up with an extra $1.5 billion to plug the hole left by the unexpected combination on the crossbench.

The government's carbon tax repeal plans were dealt a further blow, with Motoring Enthusiast Senator Ricky Muir doing a deal with the Palmer United Party on Wednesday.

Sen Muir and PUP senators have pledged to vote down the government's planned abolition of the Australian Renewable Energy Agency.

A vote on the agency's future is not expected until later this year, but the deal has secured its future, despite both PUPs and Sen Muir's support for the carbon tax repeal stripping its funding.

The government's plans were further frustrated by an amendment from Independent Senator Nick Xenophon to force the government to acknowledge most electricity prices were a result of rising network charges, not the carbon tax.

While that amendment was narrowly voted down, Coalition Queensland Senator Ian MacDonald crossed the floor to support it.

Bills to repeal the Climate Change Authority were also separated from the rest of the carbon tax, with the authority likely to remain after PUP's support for it was declared.

Debate will continue on the repeal bills in the Senate on Thursday.

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