The Gillard government declared victory for a "historic economic reform" today after the Senate finally passed a carbon tax - laws that have created political havoc for four years and have been debated for more than a decade.
The government won the historic vote in the upper house 36 to 32.
Labor and the Greens combined to pass the 18 "Clean Energy Future" bills just after midday, to applause from the packed public galleries.
Finance Minister and former climate change minister Senator Penny Wong said that, on the Labor side of politics, "we accept the science, we accept the need to act [on climate change], and, like John Howard and Malcolm Turnbull, we accept the science and the advice that putting a price on carbon is the best way to reduce emissions."
Senator Wong failed to secure the passage of the former Rudd government's emissions trading scheme.
Coalition leader Tony Abbott was overseas when the Senate took its vote, but National Party frontbencher Senator Barnaby Joyce declared it was "a sad day when we reorganise our economy on the basis of a colourless, odourless gas ... it is the height of foolishness."
He said the tax would do nothing to change the temperature of the globe "whether it is going up down or sideways" but said Australian households would definitely be poorer and the Coalition "would make certain" they hadn't forgotten the reason at the next election, when he predicted Labor would be "crucified".
Greens Senator Christine Milne said Mr Abbott had "cut and run" and could have delayed his departure for a conference in Britain to be in Australia for the vote.
A last minute amendment by the Coalition and independent Senator Nick Xenophon to allow electricity generators to defer payment for the purchase of billions of dollars in forward-dated pollution permits failed.
A $23 a tonne carbon tax will now be paid by about 500 high-emitting companies from next July, with about half the revenue to be returned to households in the form of tax cuts and increases in pensions and family payments, to compensate them as electricity generators pass through the cost of the new tax.
Another $9.2 billion over the first four years of the carbon pricing scheme will be paid to high-emitting industries with overseas competitors not subject to a tax. They will receive up to 94.5 per cent of their emission permits for free.
The carbon price is designed to meet the emissions reduction target endorsed by both major parties of at least 5 per cent by 2020, compared with 2000 levels. Labor is now promising to cut Australia's emissions by 80 per cent by 2050.
Mr Abbott, who took the Liberal leadership after a revolt against former leader Malcolm Turnbull's support for the Rudd Government's emissions trading scheme, has made opposition to the carbon tax a central issue of his leadership and has "pledged in blood" to repeal it.
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