Why Australia repealed its carbon tax

  • Article by: JULIA BAIRD , The New York Times
  • Updated: July 25, 2014 - 11:39 AM

It was working to reduce emissions, but politics polluted the debate.

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SYDNEY, Australia - It will be remembered as one of the most ignoble moments in our history: On July 17, Australia became the first country to repeal a carbon tax.

The deputy leader of the Greens Party, Adam Bandt, said it was “the Australian Parliament’s asbestos moment, our tobacco moment - when we knew what we were doing was harmful, but went ahead and did it anyway.”

The tax, or carbon-pricing mechanism, had defined three elections, destabilized three prime ministers and dominated public debate in this country for eight toxic years. Finally, the leader of the center-right Liberal Party, Tony Abbott, fought the last election on a pledge to “ax the tax.” Abbott is famous for his fitness and his muscular approach. As a student at Oxford, he won a “blue” at boxing for the university and was known for his all-out, flailing attacks. When the carbon pricing scheme was cast in law in 2011, he vowed to lead a “people’s revolt” and “fight this tax every second of every minute of every day.” It worked.

His political success was not, in fact, a result of the failure of the policy. The scheme was, in at least the most important sense, working, since emissions were declining. The initial public opposition was fading. But the Labor government that introduced it had failed to sell the policy. Critics portrayed it as an onerous burden that would hurt businesses and cost households, instead of one that would cut pollution and ensure a more secure future for our children. It was the misleading old cliché - the economy versus the environment - but politicians staked their careers on it, and won.

In 2010, the Labor prime minister, Julia Gillard, said she would look at carbon-pricing proposals, but also promised, “There will be no carbon tax under the government I lead.” Then, under pressure to form a minority government, she made a deal with the Greens and agreed to legislate a carbon price: a tax by any other name.

The heat, anger and vitriol directed at her as a leader - and as Australia’s first woman to be prime minister - coalesced around the promise and the tax. It grew strangely nasty. She was branded by a right-wing shockjock as “Ju-Liar,” a moniker she struggled to shake. The political cynicism surrounding the carbon tax certainly reduced Gillard’s political capital, but it was a perceived lack of conviction in the policy itself that damaged the pricing scheme’s credibility.

Business leaders opposed what Abbott called a “useless, destructive tax,” even though just 0.02 percent of Australia’s 3 million businesses were affected (the top 500 polluters). But Australia is one of the world’s biggest producers of coal, and the industry is worth about $60 billion and supports an estimated 200,000 jobs. A powerful triumvirate campaigned against the law: mining companies, the conservative coalition parties and Rupert Murdoch’s newspapers. A study found that 82 percent of articles on the carbon tax in News Corporation’s Australian papers were negative.

Gillard now believes she made a crucial error in framing. After losing office in June 2013, she wrote: “I erred by not contesting the label ‘tax’ for the fixed price period of the emissions trading scheme I introduced.” With Labor plummeting in the polls, her leadership was challenged and she lost the vote to the party’s previous leader, Kevin Rudd. (Rudd’s victory was short-lived; less than three months later, he was defeated in the general election by Abbott.) “I made the wrong choice,” Gillard ruefully conceded, “and, politically, it hurt me terribly.”

Opposition to the carbon tax trailed off after Gillard’s ouster, and public concern about climate change has grown. A recent poll found that almost two-thirds of Australians believe there should be carbon pricing for major emitters, but 42 percent agreed with the repeal of the tax (against 36 percent who did not). We did, after all, elect a government that promised to ax it. So we’re a hot mess of contradictions.

Abbott’s claim that households will be better off by 550 Australian dollars, or $520, a year following the repeal has been greeted with skepticism. Electricity prices did go up after carbon pricing came in, but this was mostly because of investment in infrastructure. Consumers are likely to see no effect now - unless they’re paying less simply because they’re using less electricity. An Australian National University study reported that carbon dioxide emissions from the power generation sector had been cut by 1 to 2 percent as a result of the tax.

So carbon pricing was working, yet the law was repealed. Now Australia has no clear climate policy, even though Abbott says climate change is occurring and he takes it “very seriously.”

The prime minister’s paramount concern, though, is still that taxing emissions should not “clobber the economy.” His government has proposed an alternative to the carbon tax, the Direct Action Scheme that would provide incentives for businesses to cut emissions. But it faces fierce criticism - even from within Mr. Abbott’s own administration - because of loopholes, a lack of consequences for nonparticipants and its unfunded targets.

What’s clear is that Australia has proved again that politicians rarely choose to take the lead on tackling climate change. When the public is conflicted, our leaders too often whip up fear, and reason and evidence go out the window. The shame is that when the tax was axed, so were the facts.

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