Carbon Tax Appears To Backfire in a Big Way in Australia

Story by the Associated Press/Curated by Erica Ritz

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SYDNEY (AP) — The ruling Labor Party's probable collapse in Australia's next election is largely the consequence of its qualified success in the last one three years ago. To form the coalition she needed to stay in power, then-Prime Minister Julia Gillard reneged on a promise and agreed to place a carbon tax on major polluters.

On Saturday, the bill for that bargain comes due. Voters have never stopped hating the tax and its effect on their electric bills. Longtime Labor Party supporters — even people who have helped cut pollution by installing solar panels at home — have flocked to the opposition.

"Whoever gets rid of it will get my vote," said Mark Keene, a 54-year-old maintenance worker from Sydney who, for the first time in his life, won't be voting for Labor.

Opposition leader Tony Abbott has declared the election a "referendum on the carbon tax" — a sure sign of confidence that most voters remain staunchly against it.

Australian Prime Minister Kevin Rudd speaks to supporters at a rally in Mount Druitt in Sydney's outskirts on September 6, 2013, as a new poll shows he is heading for an election wipe-out. (Photo: AFP/Getty Images)

Its unpopularity has already produced the downfall of Gillard, who lost her job to Kevin Rudd in a June vote of party lawmakers desperate to avoid a crushing election loss that could send them into the political wilderness for a decade. But Labor candidates for Parliament continue to trail badly in opinion polls.

The tax on big polluters such as power plants and factories has been in place since July 2012. It started at 23 Australian dollars ($21) per metric ton of carbon dioxide produced and has since risen to AU$24.15 per metric ton.

The government estimated the tax would cost the average person less than AU$10 per week, but three months after it took effect, most Australians surveyed by policy think-tank Per Capita said it was costing them more than twice that much. But they also expressed confusion, with most blaming the tax for higher gas prices even though it is not levied on motor fuel purchases. The poll was a representative online survey of 1,422 people and has a 2.6 percent margin of error.

Lynne Chester, a Sydney University energy researcher, said that in Australia's most populous state, New South Wales, household electricity prices have risen more than 110 percent since 2007. But she said only 9 percentage points of that increase is attributable to the carbon tax; increased charges for power transmission and distribution account for the rest.

Most Australians, but not the wealthy, get government compensation for higher electricity prices.

The carbon tax is one reason Sydney resident Geoff Hamment, who normally votes for Labor, is supporting the conservatives this time around. Hamment said he's seen his household electricity bills go "through the roof" since the tax was introduced.

"I don't like it," he said. "I think us paying so much is just pointless when you have countries like China churning it out."

(Photo: Shutterstock)

Hamment spent AU$8,000 to install solar panels and a gas hot-water heater, and has trained his two children to turn the lights off whenever possible. Several of his retired friends who are surviving on pensions have had it much worse, and have struggled to cope with the higher costs.

"They're sitting at home in the cold because they're afraid of the power bills," he said.

Politicians in this coal-rich country of 23 million have long sought to cut carbon dioxide emissions. According to the U.S. Energy Information Administration, in 2010 Australia produced about 19.7 metric tons of CO2 per person, more per capita than the United States and almost any other nation.

Labor and the coalition have both promised to slash Australia's greenhouse gas emissions by 2020 to 5 percent below 2000 levels. But now both want to accomplish that with something other than a carbon tax.

Gillard is not the first politician undone by attempting to respond to the issue.

During the campaign for the 2007 election in which Rudd won his first stint as prime minister, both Labor and the coalition had proposed emission trading schemes similar to the one used in many European countries. Major polluters would buy and sell credits on the open market to get the right to produce carbon dioxide and other greenhouse gases.

Liberal leader Malcolm Turnbull had been close to a deal with Labor on a trading scheme in 2009, when Abbott challenged him for the party leadership and won by a single vote. With Rudd's ETS hopes in tatters and his popularity in free fall, Labor replaced him with Gillard, his deputy, in 2010.

Weeks later, Gillard went to an election promising to seek consensus on how Australia should deal with its greenhouse gas emissions. Fatefully, she also promised never to introduce a carbon tax.

She went back on her word because Labor needed support from the minor Greens party to have enough seats in Parliament to control government, and the Greens insisted on the tax.

The broken promise triggered protest rallies across the nation and mortally damaged Gillard's government in opinion polls. And the incessant feuding between her and Rudd has fed even more disenchantment with their party.

In a picture taken on July 1, 2011 a protester holds a placard during a protest in Sydney against plans to introduce a carbon tax. (Photo: AFP/Getty Images)

"The Labor government is all about themselves — the individual — rather than the whole party," said Agnes Lee, a Sydney IT consultant who plans to vote for the conservative coalition on Saturday. "They don't have the harmony or unity to work together because they're trying to backstab each other. I don't want to have a government like that governing our country."

Lee, a longtime Liberal Party supporter who has installed solar panels to reduce her power bill, said Labor's inability to clearly explain the carbon tax was one of the party's major failings. She agrees with the government that something needs to be done to curb carbon emissions, but she's not sure a carbon tax is the solution.

"I don't think at this stage anyone has a clear understanding of what the government is going to do with the carbon tax," Lee said. "Is this really a tax, or is this really a carbon trading scheme?"

Rudd wants an emission trading scheme by 2014 — a year ahead of the current schedule. He says it would reduce the cost of emitting a metric ton of carbon dioxide from AU$25.40 to an estimated AU$6.

Abbott wants neither a carbon tax nor carbon trading, but taxpayer-funded incentives for polluters to operate cleaner. He calls it a Direct Action plan, but Labor and environmental groups have called it a "con" that cannot achieve the reduction target.

Abbott has committed to cap Direct Action spending at AU$3.2 billion, even if it fails to reach the target. He has also revealed that the opposition has no modeling to suggest that the plan could succeed.

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McGuirk reported from Canberra, Australia.

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