The Abbott government’s carbon tax repeal bills have been defeated in the Senate.

The government on Thursday forced an urgent vote on the repeal bills, expecting the three Palmer United Party (PUP) senators and Australian Motoring Enthusiast Party’s Ricky Muir to give them the numbers.  

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But in a last-minute twist PUP leader Clive Palmer pulled his party’s support, triggering chaos in the upper house.

Senator Muir and the three PUP senators sided with Labor and the Greens to defeat the legislation.

The Government has now agreed to put the legislation to a vote in the House of Representatives with the PUP amendments.

It is expected to be voted on in the Senate late next week, with the leader of the Senate Eric Abetz confident that the “technicality” will not be an impediment again.

It is the second time the package of repeal bills has been rejected in the Senate.

It’s a major blow for the government, which had been counting on the PUP senators to back the repeal as promised.

Mr Palmer upped the ante earlier on Thursday by announcing surprise changes to his own party’s amendment at the eleventh hour and declaring his senators would not vote for the repeal as expected.

PUP Senate leader Glenn Lazarus then withdrew his party’s original amendment to ensure savings from the repeal were passed on before his team voted against the package.

Greens senator Sarah Hanson-Young summed up reaction to the vote and events leading up to it with a one-word tweet: “Wow”.

How it played out

The PUP had an agreement with the government to support amendments that guarantee savings from the abolished tax are passed on to consumers and business.

But on Thursday, after supporting a government move to bring on a vote at 11.50am, Mr Palmer announced changes to his own amendments.

The amendments provoked a “violent reaction” from the government, he told reporters in Canberra.

“There are no circumstances that we’d be voting today for the carbon tax repeal.”

One of the key changes is a penalty imposed on entities that do not pass on savings to gas and electricity customers.

The penalty would be 250 per cent of the saving that has not been passed on.

It also removes reference to “domestic” electricity and gas customers, potentially leaving it open for companies to be penalised if they don’t pass on savings to overseas customers.

The definition of “entity”, which replaces “corporation”, is expanded to include individuals and “any party or entity which can or does buy or sell electricity or gas”.

The time in which entities have to give the consumer watchdog a notice they are complying with price cuts has been set at 30 days after the bill gains royal assent.

Entities face a $34,000 fine if they don’t comply – double the original fine.

The time in which customers must get notice of electricity and gas price savings has been reduced from 90 days to 30 days.

Breach of this attracts a fine of $68,000 – four times the original amendment’s provision.

Mr Palmer said the amendments were lodged with the Senate Clerk’s office at 8.30am.

“We asked that it be distributed and we had a violent action from government, a violent reaction I would say,” Mr Palmer said.

“We had ministers calling us and visiting our senators and complaining.”

Mr Palmer defended his party’s move, arguing the changes ensure savings would be passed onto consumers.

The PUP leader says he suggested a vote be delayed until later on Thursday to allow senators to consider the altered amendments.

Mr Palmer claimed he had been on the receiving end of “nasty conversations” with the government and other people.

Finance Minister Mathias Cormann sidestepped questions in parliament about PUP’s changed amendments.

The amendments would be dealt with later on Thursday, he said in response to Greens questions about government discussions with PUP.

Labor senate leader Penny Wong said the government was resorting to desperate stalling tactics and would not have been left in such an embarrassing situation if it hadn’t gagged debate.

“It certainly takes a special blend of arrogance and incompetence to seek both to guillotine and filibuster in the same debate,” she told parliament.

Former Victorian premier Jeff Kennett pulled no punches when asked for his opinion of Mr Palmer.

“He reminds me of a great blimp flying around this world of ours, this country of ours, and every now and then it lets off steam, or, to use a Clive Palmer expression, he just farts,” he told Fairfax Radio.