The Abbott government’s legislation to repeal the carbon tax required the support of at least six senators to pass through the parliament. This looked a possibility when the Palmer United Party (3 senators), Australian Motoring Enthusiast Party Senator Ricky Muir, Democratic Labour Party Senator John Madigan and Liberal Democratic Party Senator David Leyonhjelm indicated they would support the government by voting in the Senate to repeal the legislation.
The Palmer United Party’s support was conditional on the legislation ensuring that energy producers passed the full savings on to their consumers (www.palmerunited.com/read-offline/39275/proposed-amendments-carbon-tax-repeal).
Amendments to the Clean Energy Legislation (Carbon Tax Repeal) Bill 2004 drafted by the government were to be moved in the Senate by Palmer United Party Senator Lazarus on 10 July 2014. The amendment provided for ‘a new prohibition on businesses engaging in a carbon-specific price exploitation with respect to certain key goods in relation to the carbon tax repeal, with contraventions incurring…pecuniary penalties’ but it did not specify that the savings had to be passed on to consumers as the Palmer United Party wanted (for details of this amendment see see Explanatory Memorandum at http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bid=r5311, pp. 51-52). Palmer United Party leader Clive Palmer explained: ‘The draft amendment was one the government and the Palmer United team had negotiated. Based on advice the Palmer United senate team received on Wednesday night (9 July 2014), the position to them was clear. It was not mandatory that any savings brought about by the repeal of the carbon tax to be passed on to consumers of natural gas and electricity; our senators required that there be a mandatory pass on’ (C. Palmer 2014, House of Representatives Debates, 14 July p. 59).
The Palmer United Party redrafted the amendment ‘to deliver reductions to electricity and natural gas consumers from benefits the repeal of the carbon tax would deliver to generators of electricity and producers of natural gas’ and this was delivered to the clerk of the Senate on the morning of the 10th July 2014 (palmerunited.com/2014/07/message-clive-palmer-mp). It was reported that this amendment included ‘stiff penalties for any company that failed to pass on the full savings from the carbon tax repeal within 12 months’ (Cox, L. 2014, http://www.smh.com.au/federal-politics/political-news/ricky-muir-and-palmer-united-senators-vote-with-greens-and-labor-against-repeal-of-carbon-tax-20140710-3bo57.html; http://www.smh.com.au/federal-politics/political-news/turmoil-as-palmer-foils-repeal-20140710-3bq84.html; http://www.theguardian.com/world/2014/jul/10/clive-palmers-last-minute-carbon-tax-amendment-sows-confusion).
This amendment was not circulated by the office of the Senate because it was deemed to be unconstitutional. The Palmer United Party then withdrew the original amendment and voted against the legislation to repeal the carbon tax (C. Palmer, 2014, ‘A message from Clive Palmer MP, media release).
The Senate and money bills
You will find on pages 164 and 165 of the text book, Australian Political Institutions 10th edition, a explanation of the Senate’s power over money bills as set out in s. 53 of the Australian Constitution (see pp 462-463 of the text book).
It was reported that the Palmer United Party’s amendment ‘was deemed unconstitutional by the Senate clerk because it was a money bill’ (www.smh.com.au/federal-politics/political-news/devil-in-the-detail-sees-palmer-party-rule-the-day-30140710-zt3e8.html). This reasoning could be derived from an interpretation that the monetary penalties for failure to comply included in the amendment could be construed to be a ‘tax’ (www.smh.com.au/federal-politics/political-news/turmoil-as-palmer-foils-repeal-20140710-3bq94.html). Under the terms of the Australian Constitution the Senate is precluded from originating money bills. A detailed explanation of the constitutional provisions relating to the powers of the Senate on financial legislation can be found at Odgers’ Australian Senate Practice Thirteenth Edition, Chapter 13 – Financial Legislation, http://www.aph.gov.au/About_Parliament/Senate/Powers-practice-n-procedures/odgers13).
The decision by the three Palmer United Party and the Australian Motoring Enthusiasts Party senators to vote against the carbon repeal legislation meant the government did not have the numbers to pass the legislation in the Senate. It was defeated by 37 votes (Labor, The Greens, Palmer United Party and Australian Motoring Enthusiasts Party) to 35 votes (Coalition, Family First, Liberal Democratic Party, Democratic Labour Party and independent senator Xenophon (Senate, Debates, 10 July 2014 pp 1130-1131).
Following this defeat the government held negotiations with the Palmer United Party, the result of which was a government amendment to the Clean Energy Legislation (Carbon Tax Repeal) Bill 2014 to satisfy the Palmer United Party’s demands that suppliers of electricity, natural gas and bulk supplies of synthetic greenhouse gases had to pass on all cost savings to their customers. The amendment imposed ‘a penalty on electricity and natural gas suppliers equal to 250 per cent of any cost savings they do not pass on’ and they were required to ‘inform the ACCC and customers about how they are passing on the cost savings amounts’ (G. Hunt, Minister for the Environment, House of Representatives, Debates, 14 July 2014, p. 30; Supplementary Explanatory Memorandum, Clean Energy Legislation (Carbon Tax Repeal Bill Amendment 2014). The carbon tax repeal legislation including this amendment passed the House of Representatives and was then introduced into the Senate where it was passed with the support of the Palmer United Party, Australian Motoring Enthusiast Party, Liberal Democratic Party, Family First and Democratic Labour Party senators.
The constitutional issue that prevented the Palmer United Party’s original amendment from proceeding in the Senate on 10 July was not applicable in this case because the bill containing those penalty provisions passed by the Senate on 14 July had originated in the House of Representatives.
Dr Gwynneth Singleton
19 July 2014