Palmer move costs $1.5b

Clive Palmer will put another $1.5 billion dent in the Federal Budget by waving through a second round of tax cuts scheduled as compensation for the soon-to-be-extinct carbon tax.

It is understood the three Palmer United Party senators-elect will join three other crossbench senators, Labor and the Greens to defeat Treasurer Joe Hockey's attempt to head-off increases to the tax-free threshold and tax rates.

The Government argues that because the carbon tax will be axed within the next month, there is no need for compensation for cost-of-living pressures caused by a higher carbon price.

One of the 11 carbon tax repeal Bills seeks to stop the tax-free threshold being increased to $19,400, up from $18,200, and the 32.5 per cent personal marginal tax rate increasing to 33 per cent.

Budget savings imperilled by a hostile Senate reception now total more than $26 billion.

But Tony Abbott yesterday appeared relieved that Mr Palmer's surprise alliance with former US vice-president Al Gore on Wednesday had at least not translated into a damascene conversion in support of the carbon tax.

"The member for Fairfax is absolutely right: abolishing the carbon tax will make our industries more competitive and it will make our people's lives more manageable," the Prime Minister told Parliament. "I do look forward to working with the member for Fairfax and crossbench senators to ensure that all the savings from the abolition of the carbon tax are passed on to consumers."

Colin Barnett yesterday expressed concern about Mr Palmer being central to the future of climate policy.

"I think he is a volatile individual and I fear for Australian government if he is going to be given a prime place on major policy issues," the Premier said.

Mr Palmer wants the carbon tax to be replaced by an emissions trading scheme that would lie dormant until Australia's biggest trading partners took similar action.

Experts warned that the Palmer plan would do nothing to meet Australia's 5 per cent emissions reduction target.

The West Australian

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