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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Brexit has opened up big rifts among the remaining EU countries

Other non-Euro countries will miss Britain's lobbying - and Germany and France won't be too keen to make up for our lost budget contributions.

Untangling 40 years of Britain at the core of the EU has been compared to putting scrambled eggs back into their shells. On the UK side, political, legal, economic, and, not least, administrative difficulties are piling up, ranging from the Great Repeal Bill to how to process lorries at customs. But what is less appreciated is that Brexit has opened some big rifts in the EU.

This is most visible in relations between euro and non-euro countries. The UK is the EU’s second biggest economy, and after its exit the combined GDP of the non-euro member states falls from 38% of the eurozone GDP to barely 16%, or 11% of EU’s total. Unsurprisingly then, non-euro countries in Eastern Europe are worried that future integration might focus exclusively on the "euro core", leaving others in a loose periphery. This is at the core of recent discussions about a multi-speed Europe.

Previously, Britain has been central to the balance between ‘ins’ and ‘outs’, often leading opposition to centralising eurozone impulses. Most recently, this was demonstrated by David Cameron’s renegotiation, in which he secured provisional guarantees for non-euro countries. British concerns were also among the reasons why the design of the European Banking Union was calibrated with the interests of the ‘outs’ in mind. Finally, the UK insisted that the euro crisis must not detract from the development of the Single Market through initiatives such as the capital markets union. With Britain gone, this relationship becomes increasingly lop-sided.

Another context in which Brexit opens a can of worms is discussions over the EU budget. For 2015, the UK’s net contribution to the EU budget, after its rebate and EU investments, accounted for about 10% of the total. Filling in this gap will require either higher contributions by other major states or cutting the benefits of recipient states. In the former scenario, this means increasing German and French contributions by roughly 2.8 and 2 billion euros respectively. In the latter, it means lower payments to net beneficiaries of EU cohesion funds - a country like Bulgaria, for example, might take a hit of up to 0.8% of GDP.

Beyond the financial impact, Brexit poses awkward questions about the strategy for EU spending in the future. The Union’s budgets are planned over seven-year timeframes, with the next cycle due to begin in 2020. This means discussions about how to compensate for the hole left by Britain will coincide with the initial discussions on the future budget framework that will start in 2018. Once again, this is particularly worrying for those receiving EU funds, which are now likely to either be cut or made conditional on what are likely to be more political requirements.

Brexit also upends the delicate institutional balance within EU structures. A lot of the most important EU decisions are taken by qualified majority voting, even if in practice unanimity is sought most of the time. Since November 2014, this has meant the support of 55% of member states representing at least 65% of the population is required to pass decisions in the Council of the EU. Britain’s exit will destroy the blocking minority of a northern liberal German-led coalition of states, and increase the potential for blocking minorities of southern Mediterranean countries. There is also the question of what to do with the 73 British MEP mandates, which currently form almost 10% of all European Parliament seats.

Finally, there is the ‘small’ matter of foreign and defence policy. Perhaps here there are more grounds for continuity given the history of ‘outsourcing’ key decisions to NATO, whose membership remains unchanged. Furthermore, Theresa May appears to have realised that turning defence cooperation into a bargaining chip to attract Eastern European countries would backfire. Yet, with Britain gone, the EU is currently abuzz with discussions about greater military cooperation, particularly in procurement and research, suggesting that Brexit can also offer opportunities for the EU.

So, whether it is the balance between euro ‘ins’ and ‘outs’, multi-speed Europe, the EU budget, voting blocs or foreign policy, Brexit is forcing EU leaders into a load of discussions that many of them would rather avoid. This helps explain why there is clear regret among countries, particularly in Eastern Europe, at seeing such a key partner leave. It also explains why the EU has turned inwards to deal with the consequences of Brexit and why, although they need to be managed, the actual negotiations with London rank fairly low on the list of priorities in Brussels. British politicians, negotiators, and the general public would do well to take note of this.

Ivaylo Iaydjiev is a former adviser to the Bulgarian government. He is currently a DPhil student at the Blavatnik School of Government at the University of Oxford

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