Labor could turn a carbon tax into a positive
July 31st, 2010 by Mark Bahnisch | Published in Advertising, Climate change, federal election 2010 | 14 Comments
The Coalition campaign has less money in the coffers than Labor, and if past indications are any guide, they’ll be holding back on their advertising spend for a blitz in the final ten days or so. It’s worth gazing into the near future to see what those ads might be all about.
So far, the Liberals haven’t been emphasising their “Great Big New Tax” line as much as might have been anticipated (and it was a clever political ploy for Julia Gillard to turn it around on them, talking about the implications of the big business levy for supermarket prices).
This theme appears to be some sort of bogey for Labor strategists, despite the fact that most of us are actually paying less income tax this financial year. The Henry Tax Review was pretty much dead on arrival, and the only suggestion which had high profile support, the Resources Super Profits Tax, of course, became one of the issues Julia Gillard identified as needing a fix when she became Prime Minister.
I’d venture to predict, based on so far sotto voce rhetoric from Tony Abbott at his press conferences, that the Coalition intends making a Carbon Tax an issue, if not the issue, in the last stretches of the campaign.
It’s here that Labor’s attempt to fudge the politics of climate policy with its much derided Citizens Assembly pledge could be highly problematic.
The original CPRS, it’s not often remembered, contained generous compensation provisions for households (as well as free carbon permits for Big Pollution). The effect of the ETS, had it been implemented, would have been a net transfer to many lower middle and low income households.
The failure of Labor to sell the ETS meant this never really sunk in.
At the same time, voters in Queensland and New South Wales, in particular, have seen electricity prices rising at a rate far higher than CPI for some time. In Queensland, resentment at this is closely associated with sentiment against the Bligh government’s privatisation agenda. Power is more expensive, the perception goes, because electricity distribution has been privatised, and promises to restrain the rate of increase in tarriffs haven’t been kept.
Hence the feeling among Labor strategists earlier in the year that a scare campaign on electricity prices for households would be fatally damaging to the ALP in Queensland and NSW marginals. The irony, of course, is that the dumping of the ETS proved fatally damaging to Kevin Rudd’s leadership, and recent polls suggest that the government as a whole has yet to recover from it.
Last night’s Nielsen shows that 60% still support an ETS.
There is other polling around which purports to show support declining as perceived costs to voters increase, which has become standard political wisdom among party strategists and the commentariat.
But that polling is occluded by the lack of public information about the actual costs, and the effect of already increasing prices I’ve mentioned above.
If we take the example of water usage and pricing in Queensland, we can see that public awareness of resource scarcity can drive changes in behaviour and attitudes, and that public support for shifts in price signals can be secured where there is a sense of collective endeavour and purpose.
There’s no reason to believe that the same would not hold true for an ETS, particularly as the net impact of a carbon price would either be small or negative.
Labor’s problem, in the face of a Coalition campaign against a ‘Great Big New Carbon Tax’, is going to be that the ALP has already ceded ground on the issue.
But, although there’s a political imperative not to walk away from the climate initiatives announced so far (however derisory their reception), it’s by no means impossible for Julia Gillard to still make a virtue out of a carbon price in this campaign.
That would take an early start to the leadership she says she intends to give on the issue in the next term.
At the moment, the Coalition is creating a phantom in the minds of voters, because no one knows or can say what a carbon price will be under Labor, and how its impact would be ameliorated.
Scare campaigns work best when their object is hazy around the edges, because it enables all sorts of worries to be projected onto the one theme.
The ALP could still announce an intention to legislate for an interim carbon price, and release the modelling that must have been done within the Department of Climate Change when the Garnaut option received serious consideration earlier in the year.
The Prime Minister should then take the Australian people into her confidence, and communicate the ALP’s actual intentions in this area, and talk up the impact on carbon emissions.
It would be a bold play, but it would be one that would also bear fruit in shoring up Labor’s primary vote among the many electors for whom climate change is a key issue.
And it would shake up a somnolent campaign message, seemingly designed to avoid attacks, rather than to go on the front foot.
Isn’t it a tiny bit hard to impose a short-term carbon price while still holding a Big Shiny Commission of Investigation into that Climate Change Stuff and the much derided Convention?
Just get it to refocus on some small aspect of the broader picture, or hold it in Jandowae at the middle of the night on Easter Saturday, or something?
Seriously, since they’ve said they want a carbon price, I’m sure a bit of creative redefinition of the role of the Citizens Assembly and Climate Commission wouldn’t be beyond their ken.
Even then, redefinition is going to take a bit of time and while the public think they’re gutless for proposing the CCCC it’s going to be hard to back off without looking gutless, silly and indecisive…
I’m not minimising that, Leinad, but it’s worth the effort, I think.
I wouldn’t worry about the prospect of a Great Big New Ad Campaign. During the 1980s and ’90s I saw a number of Liberal student pamphlets where popular movie posters had their names changed slightly and before you knew it, mildly amusing Liberal propaganda. Little did I know that the same undergraduate humour, pretty much unchanged, would come to underpin a multi-million-dollar national campaign. The Liberal ads have been absolutely dire, and I strongly doubt (to quote LBJ on Nixon) that chicken shit will suddenly turn into chicken salad.
I realise you’re leery about historical analogies, Mark, but bear with me here. The McMahon government introduced metric measurements in 1972 but skimped on the public awareness campaign, and Whitlam had other priorities. Yes, that was almost 40 years ago and the government was on a hiding to nothing – but next time you rattle off a measurement of some sort and someone asks what that is in pounds/ feet/ gallons/ whatever, understand that taking people with you is important.
Bruce Hawker must not be let anywhere near the awareness campaign for carbon pricing.
Good points, Mark. The old class commitments of Labor and Liberal were certainly evident in their ETS designs and you’re right that Labor did an abysmal job selling it.
This video is emblematic in that regard http://www.youtube.com/watch?v=5PAHLGOaMbM
Also, as I’ve argued previously, the reporting framework has been in place for a long time, so the final implementation step really wasn’t as big a one as many on the right have made it seem
http://newmatilda.com/2010/05/05/can-we-keep-talking-about-cprs
@5 – Interesting analogy, Andrew E. I was born in ’68 and I still think in terms of feet and inches in terms of people’s height.
@6 – Yep, dk.au, I can’t remember who I saw making the point recently that the basic principles have been in place for many years, and it’s an important but under-realised fact.
Actually, what would be really helpful is if the Libs would do what the ALP will not — spend a large part of their budget insisting that contrary to what they say, if the ALP get elected and the Greens hold the balance of power, that they will move quickly to put a price on carbon.
“the downside of a commodities boom is very fast growth that pushes up the exchange rate, interest rates and inflation; sucks in high levels of immigration; swallows slabs of the skilled workforce; and puts pressure on our cities, infrastructure and water, whether we are ready for those pressures or not”, writes laura tingle in the australian financial review.
i believe that the biggest slice of the mining boom downside however, is the pollution and damage to our environment. why is the media largely silent about this? why is our government not demanding that mining companies must repair, clean and restore the results of their mining.
and what is the carbon footprint of this huge commodities boom where big profits are mostly going overseas, leaving us with the bill to pay for generations to come. the taxes and royalties these big companies pay us will not even begin to repair the damage we are allowing them to do to our environment, our economy, and our society.
why is there virtually no public or political debate on these important issues?
The really depressing thing for me is that nobody in any major party seems to be making any attempt to “sell” such a tax. The “big new carbon tax” line is a lie, because this tax need not be that big. Plus it could be made revenue neutral via other tax cuts, so that frugal power consumers might even be better off.
The idea gets destroyed when people try to compensate the worst polluters and consumers to the point where they don’t need to change their lifestyle or business model. Of course, that defeats the purpose. Regardles of economics, it needs to be pitched economically so that the majority of people are affected to a tolerable level.
John Quiggan did some numbers almost a year ago IIRC, that showed a $30/tonne carbon tax workd out at less than 8 cents a litre on petrol, and a one off change in domestic retail power prices of about 20%. Since Garnaut we have seen the industry put up prices by this amount anyway. The real losers should be the aluminium industry, and the Victorian governemnt dragging its feet in abandoning Brown Coal. A $30/tonne carbon tax would be enough to force them to change.
Don’t like the analogy much myself. The decimal system of counting was ‘introduced’ a fair while ago too, but you can still only buy eggs by the dozen.
Brian: If we are going to have a citizens convention on climate action it should be allowed to consider a number of climate action options – not just putting a price on carbon. MRET experience suggests theat we would need a price of at least $40/tonne CO2 to drive investment in renewables and less than $20/tonne to drive the replacement of coal fired with CCGT (Combined cycle gas turbine) – So, unless the carbon tax is over $20/tonne (and the gas transition accepted) the obvious question will what the hell does the tax actually acheive? Keep in mind too that carbon taxes come with most of the compensation complexities that made CPRS so hard to sell.
Having said this Labors poll position has dropped every time it is seen to be watering down its commitment to climate action.
To help save the election Labor needs to make some dramatic commitments to climate action that people have some chance of understanding and which don’t undermine the Gillard/Abbot obsession with balancing the budget. A number of my obsessions lepa to mind:
1. Set up contracts for the supply of cleaner electricty before the end of 2012. Promise that enough contracts will be set up to reduce electricty related emissions by at least 25%. (Will come on line in 2015 with a price increase of a bit over 2 cents/kWh – a 50% reduction by 2020 will give a 25% reduction in total emissions.) ALL INVESTMENT WOULD BE PRIVATE SO GOVERNMENT EXPENDITURE WOULD BE MINIMAL.
2. As for 1. but commit to the replacement of all coal fired power with CCGT if appropriate tenders are received – will give a 60% reduction in electricty emissions by 2015 with a power price increase of less than 2 cents/kWh)
3. Leave the price of fuel unchanged and set up an MRET style system to drive down the average fuel consumption/km of new cars. (Car manufactuers/importers would have to keep the average fuel consumption of the cars they sell durng a year or buy credits from a company whose average was below target.) GOVERNEMNT EXPENDITURE WOULD BE MINIMAL AND THE PRICE OF FUEL EFFICIENT CARS WOULD ACTUALLY BE REDUCED.
Any of the above should be easy to explain and sell WHILE PROVIDING SIGNIFICANT ACTION.
Hey, John D, it’s Mark’s post!
If we are going to have a tax on carbon I think the idea put forward by Brian Toohey on 17-18 July in the AFR is worth thinking about. He suggests starting low at $2.50 and increasing the tax by $2.50 pa. He thinks that the prospect of higher prices in the out years would do the trick because power suppliers need to consider profitability over the whole life-cycle of their investment.
$2.50 would add 0.1% to the CPI, he says.
But there is also the possibility of starting higher. $10 would raise $5 billion, which could be used to do really exciting stuff to move things along.
One of the worst aspects of Gillard’s policy is the condition that coal-fired power stations can still be built, but need to be CCS-ready, when everyone knows now that CCS is a complete crock.