Australia’s new Prime Minister is clearing the decks. Julia Gillard is seeking to quickly resolve contentious issues to set the Labor party up for the forthcoming federal election. First it was settling the dispute between the government and the mining giants over the proposed Resources Super Profits Tax (RPST). Last week it was establishing a position on Australia’s most exaggerated issue, asylum seekers arriving by boat. And this week Gillard will reportedly address climate change. The PM will seek to outline the climate policy Labor will take to the polls
Rather than canvass Labor’s policy options (done well here by Adam Morton), I’d like to explore the implications of Gillard’s mining tax compromise (or capitulation?) for the carbon-pricing agenda. With the speed of Gillard’s clean up job little has been written about the impact the RPST backdown will have on the push for a domestic emissions trading scheme.
Put simply, Labor’s backdown is mostly bad news for proponents of carbon pricing in Australia. By giving in to the powerful mining interests that helped destabilise the Rudd government with its successful anti-tax campaign, Gillard has set a precedent for other special interests. There is no doubt that Australia’s fossil fuel lobby was paying close attention to the outcome of the mining tax reform. Buoyed by the success of the major miners, Australia’s “greenhouse mafia” is guaranteed to work harder to kill off or substantially weaken the Carbon Pollution Reduction Scheme (CPRS) legislation in the years ahead.
The fossil fuel lobby can now follow the anti-RSPT model and attempt to reframe narrow self-interest as the national interest. Fossil fuel interests can launch an aggressive anti-carbon pricing advertising campaign built around something more widely experienced than mines in the outback—electricity. Australians experience the benefits of electricity every day: It is used to power our homes, run factories, office buildings, and hospitals, et cetera. Government-led carbon-pricing measures will be presented as a threat that will increase the cost of living for ‘working families,’ the cost of business for small businesses, and diminish the nation’s economic competitiveness. Unlike the mining tax that targeted the most profitable firms, the argument will be made that emissions trading ‘taxes’ all Australians through increased electricity prices—like something straight out of Tony Abbott’s playbook.
Of course there is a key difference between the RSPT and the CPRS. The politics of climate change have a different dynamic. The RSPT was troubled by the absence of a clearly defined beneficiary to champion the reform. The small businesses and other sectors that would benefit from the ‘super profits’ tax were drowned out by the major miners’ scare campaign. In contrast, Australia’s largest and best-funded environment groups support the CPRS. They can mobilise their supporters to back the emissions-trading scheme and use their own resources to counter a misinformation campaign. The support of the ENGOs looks promising but the record is not. These groups haven’t been able to leverage their support into good policy or make the case strong enough to break through obstruction in the Senate.
The one positive ETS advocates can take away from Labor’s mining tax backdown is the well-established need for national climate change policy. There is no doubt that the absence of a clear rationale for the RSPT disadvantaged the government and made the reform a tough sell. The fact that politicians, ENGOs and the media have presented emissions trading as synonymous with action on climate change for several years is advantageous. However, this benefit would also apply to alternative climate change policies pursued by government and climate advocates. The rationale for action on climate change is not intrinsically linked to emissions trading policy.
The mining lobby’s success in evading a tax on its industry will boost the morale of the greenhouse mafia and intensify their efforts to undermine emissions-trading legislation. In the wake of Gillard’s backdown emissions trading gets a mixed but mostly bad report card. Climate advocates would be wise to consider pursuing alternative climate policies, or at least account for the changed political landscape.