Matthew Knott Communications and education correspondent

July 11, 2014

Prime Minister Tony Abbott has flagged the possibility of an election within 12 months if the chaotic scenes of this week's Senate negotiations over the carbon tax repeal continue.

After telling radio 2GB on Friday morning that it might be time for a poll if the government's ''difficulty'' continued for six to 12 months, Mr Abbott later told reporters at a media conference that his administration was there to govern, not call another election.

Prime Minister Tony Abbott says he is confident that the carbon tax will be repealed and his budget measures will get through despite chaos in the Senate yesterday. Photo: Ken Irwin

Mr Abbott said on radio that despite a week of "argy bargy", he was confident that the Senate would repeal the carbon and mining taxes and pass the bulk of his government's budget measures.

The Prime Minister's comments came as crossbench senators David Leyonhjelm and Nick Xenophon blamed Palmer United Party leader Clive Palmer, rather than the government, for the fact that the carbon tax was not repealed this week.

On Thursday Mr Palmer accused the government of attempting to ''double-cross'' him over the wording of an amendment forcing companies to pay large fines if they fail to pass on savings from the carbon tax repeal to customers.

PUP Senator Jacqui Lambie called for Coalition Senate leader Eric Abetz to resign, labelling him a ''disgrace''.

By contrast, the Prime Minister and other senior ministers have been careful not to attack Mr Palmer and his party, with Mr Abetz saying the repeal bill failed because of a ''technical difficulty''.

''One or two days of argy bargy certainly doesn't make for a political stalemate,'' Mr Abbott told 2GB radio on Friday. ''I think it would be a mistake to see the whole of the life of this new Senate being like the past few days.

''Let's never forget that Mr Palmer and his senators were elected on a clear platform of abolishing the carbon tax, abolishing the mining tax – they essentially have the same centre right platform as the government.

''I'm confident that for all the sound and fury, for all the colour and movement in the Senate we will get the bulk of our budget savings through and that once everyone huffs and puffs we will get the carbon and mining taxes repealed.''

Asked if his government would consider calling a double dissolution election, Mr Abbott said: ''If we had six to 12 months of difficulty maybe yes it would be time to start thinking along those lines.''

Opposition Leader Bill Shorten on Friday accused the government of rushing its carbon tax repeal and causing confusion in the business community.

Mr Shorten said business leaders had told him they are concerned that any company using synthetic greenhouse gasses in their supply chain would be drawn into the penalty regime.

''Does anyone seriously think that the Abbott government gave this more than a cursory glance when they were so desperate to announce a win yesterday?'' he told ABC radio.

''This week's farce I’d put squarely at the feet of the government because they're too arrogant to be able to ever admit they have to negotiate or work out something that isn't 100 per cent want Tony Abbott wants.''

PUP says it will repeal the carbon tax only if the government accepts an amendment that would require companies that fail to pass on savings within the first year of the repeal to pay a penalty of 250 per cent of the savings to the Commonwealth.

Although PUP and the government have insisted that the amendment only applies to power and gas companies, the business sector is concerned that it extends far further than this and would place huge compliance costs on industry.

The PUP amendment refers to ''an individual, a body corporate, a body politics, a partnership, any other incorporated association or body of entities, a trust or any party or entity which can or does buy or sell electricity or gas''.

Australian Industry Group chief executive Innes Willox said: ''Amendments that drag in the broader business community would be unworkable and cause regulatory mayhem, particularly as so many businesses have absorbed the carbon price and not passed it on to their customers.''

Liberal Democrat senator David Leyonhjelm said he would vote against the PUP's amendment, describing it as an ''absurd regime of compliance''.

''The ACCC already has enough power without any amendments from PUP – nothing else is required,'' he told Fairfax Media on Friday.

Asked about the Senate chaos on Friday, Mr Leyonhjelm said: ''This is all Clive Palmer's doing.'' He defended the performance of Coalition Senate leader Eric Abetz.

"We never saw the amendment until five minutes before we were asked to vote on it; I hadn't even read it. Luckily it was withdrawn," Senator Leyonhjelm said.

Family First senator Bob Day said he had concern about the ''big and ugly penalties'' for companies that do not pass on carbon tax savings, but had not decided how he would vote on the amendment.

If senators Day and Leyonhjelm vote against the amendment, the government would need the support of senators Nick Xenophon and John Madigan.

Mr Xenophon said he supported the PUP amendment.

''If the government can live with it, I can live with it,'' he said. ''It won't cause regulatory mayhem if companies are passing on the savings.''

Mr Xenophon said he did not approve of the PUP's tactics and said he saw no evidence the government had double-crossed Mr Palmer.

Poll: Who is to blame for the Senate's surprise decision to block the government's legislation to repeal the carbon tax?

Clive Palmer and the PUP 26%

Eric Abetz and the government 70%

Other 4%

Tony Abbott dismisses Senate 'argy-bargy', backs away from new election speculation