Wannon MP Dan Tehan predicts it will bring millions of dollars in savings for export industries and lower power bills for householders and business operators. He said south-west dairy farmers could expect their energy bills to fall by $8000 to $10,000 a year.

However, Panmure environmentalist Gillian Blair said the decision was a short-sighted and backward step in reducing pollution.

Woolsthorpe-based vice-president of the United Dairyfarmers of Victoria, Roma Britnell, described the tax as a feel-good token which made Australian dairy products less competitive on the international market.

“The decision to scrap it is a significant event for the dairy industry,” she said. 

“Anything that makes us more cost effective will flow on to the region’s economy. Dairy farmers are committed to reducing carbon emissions in other ways because it makes their industry more cost effective.”

Ms Blair who is secretary of the Sustainable Agriculture and Communities Alliance said despite government claims there had been positive results in the carbon tax reducing pollution.

“The rest of the world is moving towards wind, solar, co-generation and tri-generation power production while in Australia we are going for coal and gas,” she said.

“This government is like King Canute trying to turn back the tide.” 

Australian Dairy Industry Council chairman Noel Campbell said the tax would need to be replaced by a “credible and effective mechanism to reduce carbon emissions”.

 Mr Tehan said savings of 9 per cent in household power bills and 7 per cent in gas bills were expected to filter through in the next three months.

Asked if he was surprised how much haggling it took to get the vote through 39 to 32 he said he had expected it would take the new senators to “reflect the will of the Australian people”.