Will Gillard Keep The Faith On Carbon?

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Julia Gillard’s government needs a "Hail Mary" pass, according to Kristina Keneally.

The former NSW premier has been pretty visible of late: far more visible than your average opposition backbencher from a state parliament, and far more visible than many in her party would like. You don’t have to subscribe to the theory that it’s all just a symptom of "relevance deprivation syndrome" to see why her latest thought bubbles about the federal leadership and the carbon tax are less than welcome to many of her colleagues.

Keneally thinks things have got so desperate that federal Labor has few other options than to stake everything on a last-ditch gamble — a "Hail Mary pass", as it is known in US football terminology.

And what is that pass? Well, apart from resigning quietly and handing over the reins to — well, to someone who isn’t Kevin Rudd — Keneally thinks Gillard should drop or modify the carbon tax. Writing in the ABC’s The Drum, Keneally argues that "reducing, lessening the impact, or possibly, revoking, the carbon tax … is the one Act of Contrition she needs to make".

"It removes the ability of Abbott and state Liberal governments to bang on about a ‘big new tax’ that is responsible for any price rise," Keneally continues. "In doing so, she would tell the people of Australia ‘I am sorry, and I am listening to you.’"

Oh yes, I see you nod. It’s the carbon tax wot did it. After all, we note sarcastically, there are no other reasons for voters to dislike Labor. Err, right.

There’s no doubt that the carbon tax is unpopular. The available polling on the tax has pretty consistently found that a majority of Australians are against it. In October, for instance, when the government’s carbon legislation cleared Parliament, an Essential poll recorded 39 per cent supporting the tax compared with 53 per cent opposed. A Newspoll at around the same found 32 per cent supporting against 59 per cent opposed.

But to argue that the carbon tax is the main source of Labor’s woes is wilfully blind. There are many reasons for voter discontent with the Gillard government, over and above the carbon tax. Just to take issues firmly within the realm of politics, these include dissatisfaction with the minority government, the scandals surrounding Peter Slipper and Craig Thomson, the spiralling drama within the Health Services Union, and the continuing leadership instability that saw a challenge from Kevin Rudd earlier this year.

To these we can add a more general sense of malaise gripping the community that relates to the ongoing weakness of much of the domestic economy. With house prices falling, consumer confidence low, and important sectors of the economy like housing construction, manufacturing and tourism undergoing small-scale recessions, it’s not surprising many voters are feeling somewhat uneasy.

This week’s half-percent interest rate cut will certainly assist matters, but it’s not going to revive economic activity single-handedly. As we’ve argued at NM, with the states and Commonwealth both cutting back on government expenditure, interest rates are going to have work in opposition to contractionary fiscal policy. It will be some time before the sky-high consumer confidence of 2007 returns, if indeed it ever does.

Nor is the carbon tax itself to blame for the unpopularity of the Gillard government’s carbon policies. Many in the electorate are obviously angry about the nature of the tax’s introduction and the fact that it was a broken promise, rather than merely with the detail of the policy itself.

And of course the compensation package attached to the carbon tax has yet to roll out. This will begin to happen in early June and will act like a mini stimulus package, putting cash into the wallets of ordinary householders. Labor is fervently hoping that this will begin to turn the tide of voter opposition to the idea of pricing carbon, and perhaps even give Julia Gillard’s government one of those quasi-mystical "bounces" in the polls.

I’m rather less optimistic than that on Labor’s behalf: there’s every chance that the compensation will have little electoral impact on an already jaundiced electorate. Even so, it’s hard to see many voters sending their compensation payments back.

Then there’s the issue of consistency and trust. The governments standing in the eyes of voters is at an all-time low, as we observed on Tuesday. It has run out of political capital — what Crikey’s Bernard Keane (channeling Joseph Nye) has called "soft power".

After abandoning "the greatest moral challenge", abandoning a people’s assembly on climate, and then abandoning the position to abandon a carbon tax, Gillard and Labor are in no position to change course or to execute clever tactical manoeuvres on climate policy, because no-one in the press or the wider public is prepared to believe in their good intentions. Backing down now will hardly silence the bitter opposition from the business community, nor will it ensure that the government is given any easier a run in the mainstream media. As for ordinary voters, those that are still listening may well find their opinions of Gillard and Labor as hopeless, incompetent and inconsistent handily confirmed.

Could Labor modify or rescind the carbon tax, even if it wanted to? It’s already passed both houses of Parliament, so new legislation would have to be introduced to repeal it. Unscrambling the egg will be something of a nightmare, both legislatively and in policy terms.

To begin with, such a move would obviously be opposed by the Greens, and perhaps also by some of the independents, so the government would require the assistance of the Coalition. I doubt that Tony Abbott and Christopher Pyne would extend a helping hand. The Coalition is sitting pretty in the polls and most assume the Abbott bandwagon to be rolling irresistibly towards power next year. The Coalition has every incentive to keep the government twisting in the wind. Abbott doesn’t even have to oppose Labor on such an issue — the Coalition could agree to killing off the tax in principle, and then refuse to support the government at the last minute on a manufactured pretext.

The truth is that Labor is stuck with a carbon tax now, whether it wants one or not. Perhaps in the long term that’s not such a bad thing anyway. If Labor is going to lose next year, it may was well lose with a measure of dignity and principle. At the very least, Labor will need to rebuild a progressive, left-leaning base after 2013. It will be that much harder to do so if the party is seen to have abandoned the one policy that is has sacrificed so much to try and achieve.

Labor doesn’t need an act of contrition. It just needs to keep the faith.

Ben Eltham

Ben Eltham is New Matilda's National Affairs Correspondent.

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