Misconceptions helped kill Australian carbon tax

Published on NewsOK Modified: July 6, 2014 at 1:19 am •  Published: July 6, 2014
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CANBERRA, Australia (AP) — In 2007, Australians were ready to do something to combat climate change, even if it was expensive. More than two-thirds of them said so in a poll, and both major political parties vowed to make industries pay for greenhouse-gas emissions.

The undoing of that perspective will likely be complete after a new Senate is sworn in Monday. It's expected to give Prime Minister Tony Abbott the votes he needs to repeal a 2-year-old tax charged to around 350 of Australia's biggest carbon polluters. Three top political leaders lost their jobs over the issue as support for climate-change measures plummeted.

A global recession, political miscalculations and failed negotiations only partially explain the dramatic change.

Opponents of the carbon tax implemented in 2012 had the media largely on their side. Electricity prices soared — not mainly because of the tax, but because power companies were spending billions on infrastructure. Most electricity users were compensated for the added cost of the tax, but many of them didn't know that. And rising gas prices fed the fury — even though the tax didn't apply to gasoline.

Australia's experience illustrates how easy it is to scuttle complicated environmental laws, and serves as a warning to President Barack Obama, whose recent proposal to force a 30 percent cut in power plants' carbon emissions is drawing anger from both sides of politics.

"One of the keys was the fact that we did lose bipartisan support for emissions trading as one of the solutions," said John Connor, CEO of the Sydney-based Climate Institute think tank. "And that then threw this issue into the sort of political and cultural trench warfare that you see in the U.S., but not so much of elsewhere."

Australians' concerns about global warming peaked before elections in 2007. Prime Minister John Howard had grown unpopular for joining Washington in refusing to accept U.N. Kyoto Protocol targets for cutting carbon emissions. Both Australia and the U.S. are leading producers of coal, a major source of the pollution.

An annual poll by the Lowy Institute for International Policy shows the proportion of Australian voters who saw global warming as a serious problem that demanded immediate steps — even at significant cost — peaked at 68 percent in 2006. The telephone survey of 1,007 voters had a 3.1 percentage-point margin of error.

Facing defeat, Howard's conservative coalition back-flipped. Both sides advocated a cap-and-trade scheme in which free-market forces set the price of emitting a ton of carbon dioxide.

Kevin Rudd's center-left Labor Party won, but the Senate thwarted his efforts to introduce a cap-and-trade system. Some senators considered his plan too extreme, while others found it too weak. Meanwhile, the global economic crisis eclipsed the environment in Australian politics.

The government and the leader of Australia's conservative opposition, Malcolm Turnbull, were on the verge of a cap-and-trade deal in 2009. But Turnbull lost his leadership post to Abbott, then a senior opposition leader and a fierce opponent of the proposal.

Rudd shelved the plan. His popularity plummeted, and he lost his job in a Labor Party leadership vote to Julia Gillard.

The minor Greens party soon became pivotal. Rather than a cap-and-trade scheme, the Greens advocated a carbon tax in which government, not the market, set the price of pollution. After the 2010 election, Gillard needed the Greens' support to form a government. To get it, she agreed to a carbon tax, something she had vowed not to allow.

The tax, which went into effect in July 2012, charged major polluters a fixed price on carbon. It was to switch in mid-2015 to a cap-and-trade scheme, with a floating price set by market forces and linked to the European Union market.

Gillard and her government's popularity nose-dived. The 2012 Lowy poll showed support for costly steps to combat global warming hit bottom: 38 percent.

While Gillard's broken promise drove much of that anger, other forces were at work.

Rupert Murdoch's News Corp., which owns 70 percent of Australia's newspapers, supported Rudd in 2007 but by 2010 was backing Abbott. The top talk radio hosts in every major Australian city pushed the climate skeptic line.

Within days of the tax taking effect, Australia's consumer watchdog cautioned two companies that sold solar panels for falsely claiming electricity prices under the tax would rise 400 percent by 2019. The managing director of a major bakery franchise resigned over a memo in which he urged store owners to raise prices and "let the carbon tax take the blame." There were hundreds of complaints of misleading advertising and price-gouging.