Monday, May 23, 2011

Why did Julia Gillard rule out a carbon tax last year?

During the "cut and thrust" of a close Australian federal election campaign in 2010, Julia Gillard, the Australian prime minister said something remarkable.

The election was characterised by the usual claims and counter claims about a variety of the "usual issues" such as health, education, the economy, taxation and budget deficits.  There was also contention about some tentative Government policies designed to help us move to a low-carbon future such as the poorly implemented and managed home insulation scheme, green loans and solar panel rebates.

Climate change was the elephant in the room.  The Labor government's previous attempt to push through an Emissions Trading Scheme (the CPRS) had failed for two main reasons:
  • The Liberals broke their bipartisan support for it when Tony Abbott rolled Malcolm Turnbull as opposition leader.  Abbott's basic position was a mixture of denial that climate is happening and obscure objections to the proposed market-based mechanism for limiting carbon pollution.
  • The Greens and other independents did not support the CPRS because they judged it was far to generous to the big polluters and would not have been effective in reducing carbon pollution.
Kevin Rudd, who was prime minister at the time, lost his nerve and didn't call a double dissolution election on this issue.  Instead he back-flipped and delayed the introduction of the CPRS, an action that he had strongly criticised the Liberals for during the 2007 Federal election campaign.  The so-called "gang of four" - Julia Gillard (Deputy PM), Wayne Swan (Treasurer) and Linsday Tanner (Finance) along with Kevin Rudd collectively agreed to go soft on climate change.

Julia Gillard then rolled Kevin Rudd and became the prime minister in the run up to the election.  She was supported by some strong factional players, including Paul Howes (secretary of the Australian Workers Union), who has subsequently stated that "climate change policy must not cost a single worker's job".

Back to the question.  Tony Abbot was running (and still is) an effective misinformation campaign about climate change and carbon pricing that Labor party campaign people felt was getting significant traction with voters.  He was claiming that the CPRS was a "great big new tax" and that Labor would bring in a carbon tax.

With the failure of the CPRS (ETS), a carbon tax was the only quick and effective means of pricing carbon pollution left.  It was worthy of immediate consideration.  However, Julia Gillard specifically ruled it out in the closing weeks of the election campaign by stating "there will be no carbon tax under the government I lead".  

I thought at the time that this was an ill-considered statement designed to take the wind out of Tony Abbott's sails.  In short, political considerations during the election campaign ruled out a viable policy option that had been suggested and endorsed by Professor Ross Garnaut, the government's own advisor on climate change policy.

Fast forward to 2011.  To form a minority government, Julia Gillard had to gain the support of the Greens and two out of the three lower house independents.  Part of the deal was formation of the Multi-Party Climate Change Committee.  The Liberals and Nationals, still stuck in a degree of climate change denial,  "spat the dummy" and refused to participate.  The others on the committee, a mix of Labor, Greens and independent MPs, resolved during 2011 that a carbon tax was indeed a valid and effective mechanism for pricing carbon.

Julia Gillard is now been constantly and relentlessly criticised by the Liberal National coalition for breaking her promise about never introducing a carbon tax.   Yes, she made a stupid promise.  However, a price on carbon is one essential measure for reducing carbon emissions.  But it is only one of many needed.  

It is also subject to the same corruptive influence that fatally compromised the CPRS - industry groups lobbying for special consideration, financial assistance and low carbon tax price - which of course means they just keep polluting.  The fact that many large industry players are opposing the carbon tax is a good thing.  We need to curb excessive profits reaped from carbon pollution and transition to a lower carbon economy.

The proposed carbon pricing mechanism is not even actually a tax.  It is set price on carbon that is likely to only apply to the top 100 listed companies in Australia, which could face an annual carbon cost of $3.3 billion if the government imposes a $25 per tonne price on carbon.

Low income households are already suffering from large increases in their energy bills without a carbon price.  Part of the proceeds of the carbon price will be directed to compensating them for their energy costs so they will end up better off when the carbon price is in place.

Along the journey to carbon price, presumably in response to some agitation by industry and some right-wing unions such as the AWU, Julia Gillard also decided to criticise the Greens at the Gough Whitlam oration in April 2011 with the following statements: 

"The Greens wrongly reject the moral imperative to a strong economy. The Greens have some worthy ideas and many of their supporters sincerely want a better politics in our country. 

"They have good intentions but fail to understand the centrepiece of our big picture - the people Labor strives to represent need work.

"And the Greens will never embrace Labor’s delight at sharing the values of everyday Australians, in our cities, suburbs, towns and bush, who day after day do the right thing, leading purposeful and dignified lives, driven by love of family and nation."

This is just more nasty, spiteful and divisive poll-driven politics. It demonstrates a basic failure of leadership by Julia Gillard and alienates a lot of people who voted for Labor either directly or via their preferences with the expectation they would deliver real action on climate change. 

The right wing media in Australia - most notable the Murdoch press including the Australian and the Herald Sun - jumped on these comments and have embarked on their own campaign to attack the Greens, Labor and any sort of price on carbon.  They are clearly in the thrall of large polluting industries who don't want to change, and are aligned with and supporting the Tony Abbott-lead conservative opposition in this regards.  This is not news - it is ill-informed opinion, and a public relations smear campaign.

A carbon price in excess of $50 per tonne is required to shift investment decisions towards renewable energy rather than natural gas.  A lower carbon price will result in a massive investment shift from coal-fired power to gas-fired power.  Unfortunately, while gas is more efficient than coal as an energy source, it will still produce huge quantities of carbon emissions.  I predict that the Gillard Government will announce a carbon price of $15 per tonne, which would be an abject failure.

So in summary, the broad policy measures we need to tackle climate change include:
  • A carbon price on pollution in the range of $50 to $100 per tonne. 
  • 7 star national building energy ratings.  Our current state standards are lame and a dog's breakfast.
  • Mandatory energy efficiency standards for appliances in line with european standards
  • A national feed-in tariff  to boost investment in large scale 100% renewable energy such as wind and concentrated solar
  • Standard distributed local solar energy production plants of remote communities - possible based on the CSIRO parabolic solar dish system
  • Major investment in low-carbon public transport systems in both city and rural areas.  This should be mostly rail systems powered by electricity
  • Local low-carbon water storage and conservation measures such as rainwater tanks and urban storm water collection to avoid the construction and use of massive energy guzzling desalination plants.
  • Protect Australia's remaining old growth forests to keep the carbon they store safe, and allow logged forests to regrow and sequester more carbon.  Shift all timber production to plantations.
Unfortunately, or political system and leaders seem to be mired is a sideshow prize fight about only one issue - a price on carbon.  

Gillard is bad, but Abbott is worse.  His plan to hand about billions of our money (yours and mine) to large corporates without any tangible or effective carbon emissions resulting is a complete sham.

Both Gillard and Abbott really need to lift their game.