Australian carbon tax is levied

Australians now pay AU$23 per tonne of CO2.

The Australian carbon tax came into effect on Sunday, at a price of AU$23 per tonne of CO2. The tax is supported by just a third of Australians, and has driven support of the Labor party, which leads the coalition which introduced it, to a forty year low, but many campaigners consider it a forward-looking measure.

The price will rise by 4 per cent a year for the next two years, before the tax becomes an emissions trading scheme in 2015. From then on, the cost of a tonne of carbon will be set by the market. A number of concessions had to be made to get the tax through the legislature at all, including exempting agriculture entirely and issuing large rebates – of up to 94.5 per cent – to industries like steel and aluminium mining, which take the largest hits from being undercut by foreign businesses.

The target is to reduce the countries emissions by 5 per cent by 2020, and 80 per cent by 2050, from 2000 levels. As it stands, Australians create more CO2 per capita than any other developed country. The country is responsible for 1.5 per cent of global greenhouse gas emissions, just 0.2 per cent less than Britain, which has three times the population.

The tax itself has been set at a relatively low figure. The Stern review, the seminal 2006 report by the economist Nicholas Stern, is commonly thought to have lowballed the damaging effects of climate change, and still suggested that the social cost of a tonne of carbon was in the order of $85 (AU$83). It is also intended to be revenue neutral, and in order to avoid what would otherwise be regressive effects, most of the money is being used to effect major cuts to income tax. The threshold for income tax raised by over $10,000 to $18,200 yesterday, and even direct payments into bank accounts under the name "Clean Energy Advance". Overall, any household earning udner $80,000 should be better off after the changes.

All of which appears to have done nothing for the popularity of the tax, which is hurt by the sheer strength of climate scepticism in Australia. Not only is the opposition leader, Tony Abbott, a climate skeptic, but the views of right-wing shock-jock Alan Jones are representative of a relatively large section of the population:

What [Prime Minister Julia Gillard] has done ... is to diminish the image of parliament and politics in the eyes of the public. The notion of global warming is a hoax, this is witchcraft. . . There are stacks and stacks of eminent scientists all over the world who've argued it's witchcraft. . . I have interviewed every one of them on my program and not one syllable they have uttered has been produced on any other media outlet anywhere in Australia. . . There is a conspiracy in this country to deny the other side.

Nonetheless, the government – made up of a coalition between the Labor party and the smaller Greens – has hope for the policy. Greens leader Christine Milne says:

I think people will shrug their shoulders and say 'what was all that about'. People will start to get angry with the Coalition [the opposition party], for having made all the claims they've made.

Even Milne seems to be anticipating a Coalition victory in the next elections, and no surprise. If there were an election today, they would win in a landslide. But as she says, the tax is in place, and it may be that by the time of the next election, there are more important questions to answer.

Protesters don't like Julia Gillard. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Will Euroscepticism prove an unbeatable advantage in the Conservative leadership race?

Conservative members who are eager for Brexit are still searching for a heavyweight champion - and they could yet inherit the earth.

Put your money on Liam Fox? The former Defence Secretary has been given a boost by the news that ConservativeHome’s rolling survey of party members preferences for the next Conservative leader. Jeremy Wilson at BusinessInsider and James Millar at the Sunday Post have both tipped Fox for the top job.

Are they right? The expectation among Conservative MPs is that there will be several candidates from the Tory right: Dominic Raab, Priti Patel and potentially Owen Paterson could all be candidates, while Boris Johnson, in the words of one: “rides both horses – is he the candidate of the left, of the right, or both?”

MPs will whittle down the field of candidates to a top two, who will then be voted on by the membership.  (As Graham Brady, chair of the 1922 Committee, notes in his interview with my colleague George Eaton, Conservative MPs could choose to offer a wider field if they so desired, but would be unlikely to surrender more power to party activists.)

The extreme likelihood is that that contest will be between two candidates: George Osborne and not-George Osborne.  “We know that the Chancellor has a bye to the final,” one minister observes, “But once you’re in the final – well, then it’s anyone’s game.”

Could “not-George Osborne” be Liam Fox? Well, the difficulty, as one MP observes, is we don’t really know what the Conservative leadership election is about:

“We don’t even know what the questions are to which the candidates will attempt to present themselves as the answer. Usually, that question would be: who can win us the election? But now that Labour have Corbyn, that question is taken care of.”

So what’s the question that MPs will be asking? We simply don’t know – and it may be that they come to a very different conclusion to their members, just as in 2001, when Ken Clarke won among MPs – before being defeated in a landslide by Conservative activists.

Much depends not only on the outcome of the European referendum, but also on its conduct. If the contest is particularly bruising, it may be that MPs are looking for a candidate who will “heal and settle”, in the words of one. That would disadvantage Fox, who will likely be a combative presence in the European referendum, and could benefit Boris Johnson, who, as one MP put it, “rides both horses” and will be less intimately linked with the referendum and its outcome than Osborne.

But equally, it could be that Euroscepticism proves to be a less powerful card than we currently expect. Ignoring the not inconsiderable organisational hurdles that have to be cleared to beat Theresa May, Boris Johnson, and potentially any or all of the “next generation” of Sajid Javid, Nicky Morgan or Stephen Crabb, we simply don’t know what the reaction of Conservative members to the In-Out referendum will be.

Firstly, there’s a non-trivial possibility that Leave could still win, despite its difficulties at centre-forward. The incentive to “reward” an Outer will be smaller. But if Britain votes to Remain – and if that vote is seen by Conservative members as the result of “dirty tricks” by the Conservative leadership – it could be that many members, far from sticking around for another three to four years to vote in the election, simply decide to leave. The last time that Cameron went against the dearest instincts of many of his party grassroots, the result was victory for the Prime Minister – and an activist base that, as the result of defections to Ukip and cancelled membership fees, is more socially liberal and more sympathetic to Cameron than it was before. Don’t forget that, for all the worry about “entryism” in the Labour leadership, it was “exitism” – of Labour members who supported David Miliband and liked the New Labour years  - that shifted that party towards Jeremy Corbyn.

It could be that if – as Brady predicts in this week’s New Statesman – the final two is an Inner and an Outer, the Eurosceptic candidate finds that the members who might have backed them are simply no longer around.

It comes back to the biggest known unknown in the race to succeed Cameron: Conservative members. For the first time in British political history, a Prime Minister will be chosen, not by MPs with an electoral mandate of their own or by voters at a general election but by an entirelyself-selecting group: party members. And we simply don't know enough about what they feel - yet. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.