The Turnbull government's plan to save nearly $1 billion by axing carbon tax compensation for new welfare recipients appears dead on arrival.
The Nick Xenophon Team has confirmed it will join with Labor and the Greens to vote against the government's legislation in the Senate, guaranteeing it will fail.
But Social Services Minister Christian Porter says he is not giving up, vowing to press ahead with negotiations until a final vote is taken.
The government has been trying to scrap the Energy Supplement - a top-up payment Labor introduced alongside its carbon price - for more than a year. It failed to get the cut through Parliament as part of its omnibus savings bill but has now reintroduced it as an individual measure.
The cut - which would save the budget an estimated $933 million over four years - would only apply to people who started getting the pension, unemployment benefits or other welfare payments after September 20 last year. People who started getting them earlier would be unaffected.
Under the change, a new single pensioner would receive $365 a year less than one who gets the supplement, and couple pensioners would be $550 worse off.
Even business groups have opposed the plan, arguing unemployment payments are so inadequate they act as a barrier to people finding jobs. Critics say cutting the supplement would put the newly unemployed a record 32 per cent below the official poverty line.
Labor and the Greens are against the plan - which they say would hurt 1.7 million people - meaning the government would need crossbench support to pass it.
But in an email to activist group GetUp! - which has been campaigning to kill off the cut - Nick Xenophon Team MP Rebekha Sharkie confirmed her party's three senators will vote against the bill.
"While we no longer have a carbon tax, energy prices have skyrocketed across Australia. To take this money away from those of us who are least able to afford increasing energy prices is just plain wrong," she said.
"Further, this legislation would create a two-tiered payment system depending on whether you were an old or new Centrelink recipient."
Mr Porter said it was extraordinary for Labor to oppose the cut given it included the saving in its costings at the 2016 election.
"I'll continue negotiations with all parties in the Senate right up until a vote is taken," he said.
"This is a sensible measure to remove compensation for a tax which existed for only a short time before being scrapped by the Coalition. Labor needs to explain where it will make up the $933 million in savings this common-sense proposal would achieve."
GetUp! welcomed NXT's decision.
"With Labor, NXT and the Greens standing united against this cut, this spells the end of the Coalition's latest attack on people struggling to make ends meet," campaigns director Natalie O'Brien said.
Parliament has already voted to remove the energy supplement for new recipients of family tax benefits and Commonwealth Seniors Health Cards.
The story PM's $1b plan to scrap carbon tax compo dead on arrival first appeared on The Sydney Morning Herald.