Wrong promise broken

- First published in the Australian 19 October 2011

The carbon pricing bills that passed the House of Representatives last week represent a broken promise by Prime Minister Julia Gillard. But it’s not the one everyone seems to think.
In this paper’s Media section on Monday Errol Simper was very scathing of Julia Gillard for breaking her “no carbon tax” promise. He wrote that:
“It would be fascinating to see some segment of the media try one of these days to forensically examine the mechanics of that broken promise, even if they eventually had to veer off into informed speculation. Because, in terms of a blatantly broken promise, it’s more or less in a league of its own.”
Simper also ridiculed Penny Wong’s half-hearted “semantics” defence. But semantics is an important element of this “broken promise”.
Earlier this month, Manufacturing Australia’s Executive Chairman, businessman Dick Warburton, was accused of hypocrisy because he supported a “carbon tax” two years ago but now campaigns against one.
For example, in a letter to the Australian Financial Review in October 2009 he wrote that “of the two choices currently available for combating global warming we should select the simple and flexible method of instituting a carbon tax rather than the complex method of an emissions trading scheme”
Warburton’s response last week to ABC radio was that “in those days the carbon tax was just going to be a tax as such but now we are getting into permits and rights which the ETS [emissions trading system] is involved in.”
That is, the scheme he opposed two years ago, Kevin Rudd’s Carbon Pollution Reduction Scheme, was an ETS that started with a fixed price. And the scheme he doesn’t like today, Gillard’s package, is also an ETS that starts with a fixed price.
Warburton is being consistent. And so is Gillard—to a point.
During the 2010 election campaign she (now famously) declared there would be no carbon tax under a government she led, but she did leave the way open for an ETS.
See this article by Paul Kelly and Dennis Shanahan, published the day before the election. It begins with this sentence:
“Julia Gillard says she is prepared to legislate a carbon price in the next term.”
And they quote her: “I don’t rule out the possibility of legislating a Carbon Pollution Reduction Scheme, a market-based mechanism … I rule out a carbon tax.”
Can’t get much clearer than that, can you? Well you can, because who knows what’s a carbon tax and what’s an ETS?
What did she mean by “carbon tax”? Was it what the Greens and Ross Garnaut were advocating—a fixed carbon price for an indefinite period?
Or Tony Abbott’s description when he argued for one in 2009 (see this video clip on Sky News, 9 minutes 15 seconds in)?
Or was it something like the plan described by economist Geoff Carmody to Kelly in 2008, a consumption tax whose main benefit would be that it penalises goods made overseas as well as in Australia?
Gillard never said and possibly didn’t know herself. She just wanted it off the table. But she left the door open for a scheme just like the one passed last week.
If it is a “tax”, then so was Rudd’s CPRS, and Australians voted for a “carbon tax” in 2007. But of course they didn’t.
So where is the broken promise? It’s in the timing. Gillard said any mechanism would (in Kelly and Shanahan’s words) “not be triggered until after the 2013 election”. That would give people a chance to vote for it. This scheme starts in July next year. She broke that promise.
The government never calls its scheme a “tax” but it is widely known as one. Allowing this to happen was a serious political own goal. But our Prime Minister is quite accomplished at those. We might guess it was driven by a desire to differentiate herself from all things Kevin. And an assessment that arguing the toss about one broken promise while conceding another (the timing) would be unpleasant politics.
Better to just admit the broken promise and move on. Except moving on proved difficult.
Perhaps she was allowing the Greens to save face, because most experts agree this ETS is weaker than the one they refused to support in the last parliament.
But the result is that in the eyes of most Australians—and most commentators and news editors—this is a tax, and the connection between the 2007 election, which was for a time seen as an overwhelming vote for a scheme just like this, is gone. Now it’s a broken promise, a tax, a cave-in to the Greens, something that will stuff the economy.
In February 2010, Newspoll found 57 percent in favour of the Rudd government’s CPRS. Then in May, days after Gillard successfully urged Rudd to dump the policy, a Nielsen poll found support for “an Emissions Trading Scheme for Australia” at 58 percent. The next month, as new Prime Minister, she declared that “we need a deep and lasting community consensus about [putting a price on carbon]. We don’t have it now.”
Today support for the government’s carbon pricing package hovers in the 30s.
How’s that for deep and lasting consensus?