Yesterday, Julia Gillard announced that the Government will move to introduce a price on carbon in mid-2012. Flanked by Climate Minister Greg Combet, cross-benchers Rob Oakeshott and Tony Windsor, and Greens Senators Bob Brown and Christine Milne, the PM calmly explained the details: an introductory fixed-price period for three to five years, followed by a smooth transition to a floating carbon market, regulated by the government through carbon permits.
In Question Time, Tony Abbott predictably went berserk, quoting from Macbeth and turning all of his considerable attack skills against a Prime Minister he claimed had broken an election promise on carbon taxes.
Yesterday’s announcement marks the recommencement of hostilities around one of the defining public policy issues of the last four years. It also marks the first real policy initiative of the year. If 2011 really is going to be the year of "decision and delivery" then it goes without saying that shepherding the legislation for a carbon price — make that a carbon tax — will be one of the key tests of Julia Gillard’s leadership.
The carbon wars are back and despite the wishes of scientists and environmentalists, this round will be all about politics — not policy, not evidence, and certainly not science.
So far, however, Gillard has played carbon politics hard and smart. Recall that Kevin Rudd’s administration spent more than 18 months in ponderous development of its doomed Carbon Pollution Reduction Scheme, allowing time for opponents to marshal their forces and for lobbyists to win tens of billions in concessions for dubious "compensation" claims.
The result was a climate bill so complex and so full of loopholes that few understood it. Those who did didn’t like it at all. Crucially, the government lost the support of the Greens in the Senate, and with them many environmentalists and public policy experts, who found the idea of churning billions of dollars from consumers to polluting industries too much to bear. Once Tony Abbott ascended to the leadership in December 2009, the only supporters of the CPRS were in Kevin Rudd’s increasingly beleaguered inner circle. Then came the politically disastrous Copenhagen conference. Labor’s 2010 death spiral had begun.
This time, Julia Gillard is playing a cannier game. There were almost no policy details released yesterday beyond the decision to implement a fixed price, and the decision to include transport but to leave out agriculture. That left little for industry critics to go on, and allowed Gillard to cleverly foreshadow Abbott’s anti-tax attack.
The intensity of the Coalition’s attack in Question Time yesterday clearly shows they will fight this policy to the death. Industry groups, the conservative media and various other rentseekers and lobbyists can be expected to join the crusade. But we knew all this already. The litmus test will be whether Gillard has the policy nous to tailor a deal acceptable to at least some of the big polluters, and the tenacity to stare the rest down.
This won’t be easy, but it may not be as politically poisonous as some think. After the debacle of the CPRS, a simpler and broader scheme may be enough to win over environmentalists and the independents. While the Greens will drive a hard bargain with their numbers in the Senate, they also face some political imperatives of their own. In the end, the Greens probably have to vote for a second go at a carbon price — being seen to vote against it twice is too big a risk.
A new and simpler policy should also be easier to explain to voters, who were frankly bewildered by the CPRS. In this, Labor can try the novel tactic of actually explaining the policy — something Kevin Rudd was singularly unable to do in 2009. And by getting on the front foot on climate change, Gillard can continue to make some obvious points about the Opposition’s own policy, which is effectively a tax-and-spend program with no credible mechanism to reduce emissions. Labor will also be reminding the media and voters of the irony of the Coalition’s opposition to market mechanisms.
There are plenty of potholes in the road ahead. There can be no getting around the fact that this is a broken promise, however Gillard tries to wriggle around it. And the Prime Minister still needs to lassoo an unwieldy committee of Greens and country independents into formulating all the toughest issues of a climate policy: which industries to include, how many free permits to give big polluters, how much to compensate consumers for rising power bills, and of course the actual price of a tonne of carbon.
But if Labor can stick to the basics — climate change is real, and Australia needs to respond to it — then the Coalition may find its reflexive opposition far less popular than it currently assumes.
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