The Australian government plans to reintroduce its emission trading scheme to the parliament for a third time in February after a hostile Senate voted down the legislation on Wednesday (02/12).

However, Julia Gillard, acting prime minister, said the Labor government did not plan to call an early election on the issue even though the second Senate rejection had given it the power to do so.

Ms Gillard said the government would reintroduce the ETS to provide the opposition Liberal party with an opportunity to “work through and deal with this legislation in the national interest”.

The decision maintains the pressure on the opposition which on Tuesday replaced Malcolm Turnbull as leader with Tony Abbott following an internecine brawl between the conservative and liberal wings of the party.

Mr Abbott, who is on the record saying the argument for climate change is “absolute crap”, is yet to set out the opposition’s climate change policy.

Mr Abbott’s first act on becoming opposition leader was to abandon his party’s previous backing of the ETS by saying he would join the National party, junior members of the coalition, in voting down the legislation.

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Labor lacks a majority in the upper house and needs the support of seven non-government Senators to have its bills passed.

The tortuous progress of Australia’s ETS, first rejected by the Senate in August, underlines the difficulties governments around the world, including the US, face in having their climate change laws passed.

The news was greeted with dismay in Australia.

Heather Ridout, chief executive of the Australian Industry Group, the country’s biggest business trade body, said an important policy issue had been left unresolved and it would “prolong, if not compound the uncertainty for business”.

The Climate Institute, an independent research group, foreshadowed another year of political squabbling and scaremongering.

“The low-carbon train is leaving the station around the world and Australia is haemorrhaging investments in clean energy industries and technology to competitors in developed and developing countries,” John Connor, the Climate Institute’s chief executive said.

“It’s a sad irony that while the US and China are investing billions in renewable energy and battling over who will lead the clean energy economy, Australian politicians are squabbling in the ’domestic playground’ of party politics,” he added.

After the Senate decision, Mr Abbott said it would be a mistake for Australia to make a decision before the Copenhagen climate change summit and before the US had established its model.

“The Senate has delivered a big win to the people of Australia who have been saved from a massive new tax that would have been foisted on them without proper scrutiny,” Mr Abbott said. 

(By Peter Smith, Financial Times, 02/12/2009)