Australia Kills Carbon Tax – If and Why There Is Still Hope

The main campaign slogan of  Tony Abbot, Prime Minister of Australia, was to abolish the carbon tax. Via website of Liberal Australia.

By Angela Yeh, Climate and Energy Project Officer of Delta Electronics Foundation

Last week, the Australian government repealed the first market-based carbon tax mechanism that was established among developed countries. The decision not only undermined at least a decade of efforts leading up to the trading scheme (that only lasted for two years), but also diminished the world’s confidence on Australia’s leadership (or the lack of it) on climate change.

Australia has the highest per capita carbon emission among major western nations. And the carbon tax scheme may very well be Aussies’ most significant efforts (if any) to curb carbon emission. Internationally, Canada and Australia are seen as possibly the two most notorious developed countries in international climate negotiations – partly because both countries have more than abundant fossil fuel reserves, but mainly because of the powerful positions in parliament that are occupied by leaders with short-termism.

In fact, last month, both Prime Ministers of these two countries – Stephen Harper and Tony Abbot held a joint press conference to speak on climate change, in response to Obama’s draft proposal to reduce 30% coal industry emissions by 2030. Not surprisingly, when asked whether the U.S.’s decision to implement such stringent laws to curb emissions has imposed pressure on their respective domestic policy – their answers were consistent, cliché but expected – a ‘no’, no matter how you read it.

Joint Press Conference of  Prime Minister Stephen Harper (right) and Prime Minister Tony Abbot (left),  via Flickr of Tony Abbott.

What’s more, Harper denied the extent to which countries will take climate actions, stating that ‘no country’, no matter what they say, will consider climate change if it is ‘going to deliberately destroy jobs and growth’. He then added that they are just more frank about it. This statement almost foreshadowed the repeal of the carbon tax scheme in Australia that took place a month after. PM Abbot applauded the repeal of the carbon tax, saying that ‘a useless destructive tax which damaged jobs, hurt families’ cost of living and which didn’t actually help the environment is finally gone’. What Abbot meant by ‘damage’ and ‘hurting’ translate to roughly $550 per year, per family of electricity bill, and a supposedly more competitive SMEs (in theory, and also in the short run).

None of this is news, really – right-winged politicians abandoning taxes on environmental externality that is supported by wealth of evidence to be beneficial in the long run. To point out their short-sightedness appears to be stating the obvious, yet they apparently don’t see what is obvious. Or they refuse to see it. Here is why.

The election cycle is set up in a way that rewards politicians who can create jobs, cut taxes and safeguard the economy. In some ways, an election cycle is the synonym for short-termism. For politicians to see beyond votes means that they will have to advocate for the benefits of future generations (the voters’ children and the children of their children) – which means additional taxes on current voters, which sometimes means less popular election campaigns. Neither Abbot nor Harper saw beyond an election cycle.

Australia’s parliamentary decision is without a doubt, a huge step backwards, especially given the functional mechanism that had worked for two years. The idea that these heat-trapping gases are causing sea level rise, extreme weather events and warming of the planet, which in turn affects crop production, increased casualties from natural disasters or impact on eco-tourism – is not worth a relatively marginal tax to deter, has spurred much disappointment in the international community. Al Gore called it a ‘disappointing step’ and the European Unions emphasized that a carbon pricing trend is where the world is moving towards (with or without Australia).

If there was any console to Abbot’s killing of the carbon tax, it would be the fact that the scheme was implemented in 2012 not because of, but in spite of his efforts to stop it. And that it had worked successfully before it was repealed.

Further Reading
Abbott Government makes polluting free, WWF Australia 
Senators, now explain it to your grandkids, Australia Conservation Foundation
Australia’s carbon tax abolition draws international criticism, the Guardian