Isra-Mart srl: Australia’s Climate Legislation Meets a Surprise Success

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After months of Tea Party-type astroturf attacks by the Australian coal industry, Prime Minister Julia Gillard has prevailed in introducing a comprehensive carbon tax on the top 500 polluters in the country to move the heavily coal-dependent Australian economy to a more sustainable future based on clean renewable energy, in the country’s most comprehensive economic reforms in a century. The support of the Green Party turned the tide, according to the Canberra Times.

Beginning with a fixed carbon price of $23 from July 1 next year, the tax would move to an EU-style Emissions Trading Scheme by the middle of 2015, at which point, the market would set the carbon price. As former PM Kevin Rudd’s deputy, Gillard had opposed beginning an ETS until there was bipartisan support, which is almost impossible in a nation with such a powerful coal industry. Building it in now, but delaying the start for four years, is unpopular both with those who see no reason to delay it, and with those who want it – never.

The carbon tax that would begin next year would affect just the coal industry. In a last minute compromise, petrol was not included. The tax will raise billions for investment in clean energy to switch the nation from a carbon based economy to a sustainable one based on renewable energy. Assuming that the coal industry passes on their costs of paying for carbon dioxide emitted, this would increase costs 0.7% for individual households.

To compensate households for this estimated cost increase, the carbon tax would be offset with $15 billion in household tax cuts for Australia’s 8.8 million households. About half of Australian households (4 million) would have a net reduction in energy costs, and another 4 million would come out even or slightly better. The remaining 700,000 households, Australia’s top earners, would not be compensated for the slight increase in their energy costs.

Most of the cost of providing household offsets would be covered by the tax, but the remaining cost to the government would be $4.2 billion over four years, eroding a forecast return to a $3.5 billion surplus by 2013.

Prime Minister Gillard’s center-left Labor Party was given the surprise last minute boost from the far left Green Party over the weekend, securing some real support during negotiations inside the Multi-Party Climate Change Committee, enabling a massive change in fortunes for climate legislation that her predecessor former Prime Minister Rudd described as one of the great moral challenges of our time, before his defeat last year, and which now has Australian media slavering for her own defeat in the next election, in August.

The opposition leader, Tony Abbott, head of Australia’s right-wing Liberal Party speaks for the polluter community, which lobbied hard to be paid to reduce pollution instead. “It’s a tax increase pretending to be an environmental policy” he said. “It’s socialism masquerading as environmentalism.”

Over the weekend meeting, the centrist Independent Party aligned with those to its left, her own Labour Party and the Green Party, in support of the measure, despite concerted and successful astroturfing against climate legislation over the last few years, rivaling that by media and front groups controlled by the fossil industry in the US.

The individual risks to those who bucked Australia’s huge coal industry are great, but borne with equanimity.”It’s not about me being re-elected, or who’s going to be the prime minister,” one Independent MP, Tony Windsor, told the BBC. “This is about the history of people, most of whom haven’t even been born yet. And if I’m sacked from politics because of that, well, I’ll remove myself with a smile on my face.”