To tax or not to tax, that is the question

Mar 21, 2011

First published on The Drum: 15/03/2011

Context is everything. All of a sudden Labor’s political predicament does not seem as dire; no-one is dead or missing; nuclear reactors aren’t melting down; the only after-shocks are electoral.

The enormity of the Japan catastrophe wipes everything else from public consciousness, allowing a wounded prime minister and her team to step back from the limelight, reflect and regroup.

As this week’s Essential Report shows, there is a path to repairing the damage the government has suffered and a way of setting up a debate that could, in the long-term, see it regain the political initiative.

Like so much in politics, the secret lies in the questions you ask. Ask whether people support a price on carbon and the answer is a decisive ‘no’.

Q. Do you support or oppose the Government’s recent announcement to introduce a carbon pricing scheme from 1 July 2012, which will require industries to pay a tax based on the amount of carbon pollution they emit?


Last Week This Week Vote Labor Vote Lib/Nat Vote Greens
Total Support 35% 38% 55% 28% 78%
Total Oppose 48% 49% 32% 73% 11%
Strongly Support 9% 12% 17% 4% 39%
Support 26% 26% 38% 16% 39%
Oppose 19% 17% 17% 20% 6%
Strongly Oppose 29% 32% 15% 53% 5%
Don’t Know 18% 13% 13% 8% 11%

But spend the time to explain that it is actually not an impost on consumers, but a tax on polluters with compensation for consumers on price increases and the result is different.

Q. Would you support or oppose this carbon pricing scheme if the money paid by big polluting industries was used to compensate low and middle income earners and small businesses for increased prices?


Total Vote Labor Vote Lib/Nat Vote Greens
Totally Support 54% 78% 34% 80%
Totally Oppose 30% 11% 51% 7%
Strongly Support 17% 29% 6% 39%
Support 37% 49% 28% 41%
Oppose 14% 8% 22% 3%
Strongly Oppose 16% 3% 29% 4%
Don’t Know 17% 11% 15% 13%

The way the government has allowed the first question to take root as the truth rates as one of the more spectacular own goals in recent political history.

With the benefit of hindsight, it was an error to concede the pricing regime amounted to a ‘carbon tax’. It is a market intervention to shift the relative price of carbon before reimbursing the funds raised back into the economy. Taxes raise money. This mechanism is income negative. It is not a tax. But in an attempt to avoid a semantic debate, the Prime Minister allowed herself to be tarred a liar and gave Tony Abbott a springboard to spread his wanton misinformation.

The price for this mis-step has been a big hit in the polls, a five point drop in two-party preferred and a similar drop in approval for the Prime Minister.

But the bigger cost has been the way it has allowed the debate to be dumbed down into a ‘Liar, liar’ pantomime and wipe the real national interest arguments off the agenda.

Issues like:

  • • Why are energy prices so high today? Answer: The long-term failure to invest in capacity.
  • • Why are new projects on hold? Answer: there is no price on carbon to provide certainty to investors
  • • Why are industry leaders like BHP-Billiton’s Marius Kloppers urging a price on carbon? Answer: see above.
  • • Why are Australian companies innovating alternative energy products but having to go overseas to see them realised? Answer: see above
  • • And how much more will I actually pay? Answer: you will have to wait until the detail is released but if you are middle or lower income, very little – and if you reduce your consumption of carbon you’ll most likely come out ahead.

Of course, the last point is a tough sell and proves that the timing of the initial announcements was arse-about; but what this week’s polling shows is that when the government reaches this point a semblance of sanity may return to the debate.

This is the detail that must now be explained, through advocacy or advertising. When it is, the majority of people, who recognised that now is the time to act on climate change, will respond positively.

Which brings me back to the tragedy in Japan.

Over the coming days we will focus our attentions on the forces of nature, reminding ourselves that there are limits to human omnipotence.

We will reflect on the implications of using power sources that we have always known have dangerous side effects, but kid ourselves are safe to use.

We will see and feel the economic costs when systems break down, the trickle down impacts that prove decisively we are one world.

Quite rightly, we will not be thinking about our own trivial, selfish issues; we will be grateful for our own national wealth, we will be aware of our own personal security; we will hug our kids a little harder.

And when it is the appropriate time to move on, just maybe, we will all look at our fragile planet a little differently.

At that point, the debate over climate change and our responsibilities to future generations, may take a turn for the better.

– Peter Lewis: Director, EMC

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