Palmer blows up budget

    Clive Palmer has blown a fresh $9 billion hole in the Abbott government's budget by torpedoing Coalition plans to abolish the Schoolkids Bonus, the low-income superannuation contribution scheme and a bonus for welfare recipients.

    Mr Palmer's move is a populist one that will be welcomed by many families, some of which will be up to $4000 a year better off under the Palmer United Party's plan.

    But it foreshadows major difficulties for the government, which is trying to rebalance the budget within five years, by slashing spending and scrapping billions in Labor handouts it says were never affordable.

    Prime Minister Tony Abbott's already gridlocked budget now faces further hurdles, with Mr Palmer insisting on keeping federal government spending linked to the minerals resource rent tax, even though he supports that tax's repeal.

    On Tuesday, Mr Abbott said that the government would push on with its budget measures.

    ''We went to the election with very clear commitments and many of them were very tough commitments. We said . . . that we would scrap the schoolkids bonus, that we would scrap the low income support payment, that we would scrap the low income superannuation payment because all of these were funded by the mining tax which was threatening investment and threatening jobs but wasn't raising very much revenue.'' he told Channel Seven.

    ''Obviously, we will keep talking to the crossbench senators but, in the end, if they want to keep spending this money presumably they are going to have to find savings to pay for it. We will just push on with good government. We will push on with implementing our program. That's what we were elected to do.''

    Speaking at the National Press Club, the Palmer United Party leader said his three senators would vote to keep the Schoolkids Bonus, retain the instant asset write-off provision for small business, and protect the low-income superannuation contribution scheme. He also wants to retain carbon tax-related tax cuts for the lowest paid already legislated and set to flow from July 1, 2015.

    The declaration came as Mr Palmer further ''clarified'' his policy on carbon pricing, declaring his party would now back the government's otherwise friendless ''Direct Action'' scheme - which he had previously derided as a waste of money - but only if Labor's emissions trading scheme is retained in law, albeit with a carbon price per tonne of zero initially.

    The Palmer ploy came on day one of the new Senate and suggests a chamber dominated by Labor and the Greens since the election has merely been replaced by one beholden to a small group of senators of unknown philosophy.

    Mr Abbott no longer has the crucial majority in the upper house needed to axe about $9 billion in combined Commonwealth outlays over four years, on top of $25 billion in proposed savings already being blocked by the opposition and the Greens until now.

    In a demonstration of the unpredictability of the newly configured upper house, a pledge by Mr Palmer on Sunday to support a government move to suspend standing orders to facilitate a vote on the carbon tax repeal lasted less than 24 hours.

    The PUP bloc voted against the government to stop debate being brought forward.

    With chaos now engulfing the terms of the carbon and mining tax repeals, Fairfax Media has been told Environment Minister Greg Hunt and Senate leader Eric Abetz propose to take the Palmer ''zero ETS'' demand to the cabinet.

    The government denied this on Monday, and Mr Palmer refused to comment.

    Scrapping the Schoolkids Bonus - which delivers $820 per high school child and $410 per primary school student to families on Family Tax Benefit A - would save the budget $5.2 billion over four years, based on figures from the Parliamentary Library.

    The Low Income Superannuation Contribution Scheme provides refunds of up to $500 for super contributions from workers who earn $37,000 a year or less. About 3.6 million people, 2 million of them women, are eligible for the scheme.

    Scrapping the scheme would save an estimated $3.8 billion over four years.

    Mr Palmer said: ''Palmer United Party supports the abolition of the mining tax, but can't support some of the measures within the legislation, and is negotiating and will move to have them removed in the Senate.

    ''I think the Senate is in charge of its own business. So I would imagine if that comes before the Senate, those measures would be separated and if necessary we would vote against them and we would vote for the repeal of the mining tax per se, but not for the repeal of those measures.''

    Mr Palmer also confirmed that PUP would support the repeal of the fixed carbon price - the carbon tax - but would oppose the abolition of the Climate Change Authority and Clean Energy Finance Corporation.

    The government's first attempt on Monday to force a debate on the repeal of the carbon tax this week failed.

    Labor and Greens senators voted for the matter to stay with a Senate committee until it tables a report next week.

    The government's push for the repeal of the carbon tax to be the first order of business for the new Senate was defeated by 36 votes to 32.

    Palmer United senators voted with Labor and the Greens for the repeal to be kept in committee, despite Mr Palmer saying on Sunday his party would back the government's calls for a vote.

    With Matthew Knott

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