The Australian Senate today passed the Carbon Tax Repeal Bill 2014 and seven pieces of associated legislation to repeal the two-year old carbon tax regime. With effect from 1 July 2014, liable businesses and other entities will no longer have to pay carbon tax liabilities under the carbon pricing mechanism or through other levies such as fuel excise.

The carbon tax, introduced by the former Labour government in 2013 and pricing carbon emissions at AUD 25.40 a tonne, has been the subject of much recent political debate in Australia. The tax was described by Prime Minister Tony Abbott as "the world's biggest carbon tax" and its repeal was a major pre-election promise.

The Carbon Tax Repeal Bill was the first Bill introduced into Parliament by the Government after it came to power in September 2013. The legislation did not pass at this time due to the membership of the Senate. Even with changes to the membership of the Senate which took effect on 1 July 2014, the Government unexpectedly failed to pass the legislation again last week. It finally passed the repeal legislation today with the support of a number of minor parties.

The Australian Government has restated that it is committed to achieving its international emissions reduction target of 5% below 2000 levels by 2020 and plans to achieve this though a policy of "direct action". In June, the Government introduced the Carbon Farming Initiative Bill 2014 into Federal Parliament which will establish an Emissions Reduction Fund offering AUD 2.5 billion in competitive grants over the next four years to companies and organisations voluntarily reducing emissions. Building on the existing carbon farming initiative legislative framework, the Government will fund projects which can demonstrate greenhouse gas emission reductions including in the areas of waste management, reforestation and agriculture. The earliest this Bill will be considered by the Australian Parliament is the end of August when Parliament resumes.

Major business groups have welcomed the repeal of the tax and called for the swift implementation of the AUD 2.5 billion Emissions Reduction Fund. 

The Government has also introduced legislation to repeal the mining tax regime.