• Clive Palmer

Clive Palmer switch threatens to blow $9bn hole in budget

Clive Palmer appears to have blown a huge new hole in the Abbott government’s budget – saying he will vote against Coalition plans to abolish the schoolkids’ bonus, the low income superannuation guarantee and a bonus for welfare recipients – at a total cost of more than $9bn.

Palmer is also demanding the government back his “dormant” emissions trading scheme to win support for its Direct Action climate legislation, a scheme Palmer had previously declared to be “dead”.

Within hours of his three senators being sworn in alongside other new senators, Palmer announced that, contrary to his previous declaration that Direct Action was a “waste of money” and his senators would not vote for it, his senators would support the legislation if the government backed Palmer’s alternative zero-rated emissions trading scheme.

And he also appeared to completely revise his position on the mining tax. He had previously said he would support it if the government retained an income support bonus for the children of veterans who had died in combat.

He has now added the schoolkids’ bonus, the low income superannuation guarantee, a bonus for low income earners and keeping the last of the tax cuts proposed by the former Labor government (which was not linked to the mining tax).

He said that if the government did not remove the measures from its mining tax repeal bills, he would combine with Labor and the Greens to consider the measures separately and then vote them down.

Labor’s families spokeswoman, Jenny Macklin, said Labor would “do anything we can” to retain the schoolkids’ bonus, the income support bonus and the low income superannuation guarantee. The Greens have also opposed the government’s plans to abolish the payments in the past.

“Labor wants to make sure that the schoolkids’ bonus continues and we’re very pleased to see Mr Palmer today indicate he will not support the abolition of the schoolkids’ bonus,” Macklin said.

With the Senate starting its debate on the carbon tax repeal – which the three Palmer United senators are committed to support – Palmer himself appeared at the National Press Club again.

The mining tax-related cuts he wants to keep include:

• The schoolkids’ bonus – which provides eligible families with $410 per primary school child and $820 per high school child. Retaining the bonus will cost the budget $3.9bn over four years.

• The low income superannuation guarantee – which provides a $500 top-up to the superannuation accounts of very low income earners to make up for the vastly higher tax advantage super savings offer higher income earners. Retaining the guarantee would cost $2.7bn over four years.

• The income support bonus – a top-up for government benefits – at a cost of $955m.

He also wants to keep the last of the former Labor government’s proposed tax cuts as compensation for the carbon price – costing $1.5bn.

Palmer said he had spoken to Greg Hunt on Sunday night “about the mining tax and the provisions and we made it clear, the schoolkids’ bonus and other things we didn’t support. I think we wait and see what the government does about that. I’d be surprised if they moved that in the Senate knowing it will be defeated.

“We certainly spoke about the need to have an ETS and the need for it to be an international basis to have one and we said that our support for Direct Action would be very much dependent upon how they dealt with an ETS issue and they’re going to look at that I think.”

A spokesman for Hunt said “the government’s opposition to an ETS has not changed”.

The PUP has also released the amendments it will insist upon before voting for the carbon tax repeal. The government has confirmed it has agreed to the changes.

They seek to reverse the onus of proof on electricity suppliers so they have to show the Australian Competition and Consumer Commission how they have passed prices on, rather than the ACCC just monitoring price pass-throughs.

The PUP will move an amendment to the Climate Change Authority repeal bill so it does not, in fact, repeal the Climate Change Authority, and includes a replica of the existing emissions trading scheme, but with new provisions that it not be activated with an actual price before several trading partners have moved to carbon markets.