Why no Coalition leader can back a carbon price

Essential Research has more polling today on the complex politics of climate change. There is still a small plurality – 47% versus 43% – in favour of taking action on climate change soon, and only 19% who say that we don’t need to take any action at all. That latter figure is consistent with the 18% Newspoll found late last year who said they don’t believe in climate change at all. So the hardcore sceptics are still significantly outnumbered.

But some of those who say we should act now lose their nerve when it comes to any actual plan to do something now.

Take a look at the strongly oppose figures in particular. Overall, they outnumber the strongly support by 3 to 1. And on these figures, no Liberal leader could support a carbon price and survive. Strong Coalition opposers outnumber strong supporters 24 to 1.

There was also a question on compensation. Unsurprisingly, in populist terms there was little support for compensating corporates, though if respondents were told that prices will rise and jobs will be lost without compensation then attitudes might change.
8/1: Newspoll comes in at 53% against a carbon price to 42% in favour.

19 thoughts on “Why no Coalition leader can back a carbon price

  1. It’s odd isn’t it. 47% want action soon but only 35% support the government’s proposed carbon tax/price. Maybe the 12% prefer the Coalition’s policy? It’s hard to come up with another rational explanation because so far at least, the tax has the Greens’ support and little has been said in terms of compensation that could alienate those wanting action.


  2. Some people need to realise that just one does not support this TAX measure, does not mean that they disagree with fixing a broken down environment.


  3. But the coalition is backing a carbon price. All these “direct action” measures they are proposing imply a price on carbon emissions, a higher one, in fact, that you would get from a carbon tax or emissions trading (for the same amount of emissions reduction).


  4. S of R – I’m not sure about whether the cost to taxpayers is higher or lower, but yes there is also a tax burden from the Coalition’s plans, though not a direct price.

    Old taxes are much easier to sell than new taxes.


  5. Andrew, what the coalition is proposing is variants on cash for clunkers, which would have cost taxpayers $400 per tonne of emission. I don’t think they are proposing quite as expensive, but no one, including them, has done the costings, as far as I know. In any case, by definition, “direct action”, where certain things are made compulsory by regulation, has to be more costly than setting a generic price for carbon, and letting businesses choose for themselves which is the lowest cost production process.

    This is where the coalition is exquisitely intellectually dishonest. Abbott might or might not realise this, as his knowledge of even the most basic economics is somewhat rudimentary, if it exists at all, but Greg Hunt certainly understands it.

    And that is quite apart from the cost of direct subsidies for this or that technology.

    But as you say, it’s a lot easier to sell increases in old taxes, or better yet, non-decreases, than new taxes. Still, John Howard managed to sell the GST.


  6. I’m certainly not saying the Coalition has an intellectually coherent stance on this issue! The cost angle was impact on taxpayers rather than price per tonne of emission.

    I suspect many people will feel like me. Taxes are high now, but they are less likely to go higher under the Coalition than Labor.


  7. That might be true in general, but the coalition’s carbon policies (Greg Hunt version) will cost the taxpayers more.


  8. “That might be true in general, but the coalition’s carbon policies (Greg Hunt version) will cost the taxpayers more.”
    Given that Labor doesn’t seem to know quite what they are proposing (and nor the Coalition, who seem to prefer magic at this stage, making it The Void vs. Magic), I’m not sure anyone can really answer this question right now.
    “Still, John Howard managed to sell the GST.”
    I don’t think John Howard sold this, what he did was do it and then everyone found out the consequences were trivial. If Labor does this, and the consequences are trivial, I think they’re on winner — not only will they will be able to rub it in like the Libs could with the GST (e.g., Abbott is scaremonger etc.), but there’s a big psychological advantage of getting people who previously didn’t believe you change their mind.


  9. Andrew Norton #6

    “Taxes are high now, but they are less likely to go higher under the Coalition than Labor.”

    You see I just don’t get this, I think taxes are fine at the moment and should certainly be higher on high incomes.

    How else are we going to have public services.

    Also, wasn’t it shown that the tax burden went up under Howard compared to the Hawke/Keating years?


  10. Tax revenue was certainly surging in under Howard, but as a % of GDP it was higher in some Hawke-Keating years. Essentially, all levels of government grew from low to mid-30s% of GDP in the late ’70s and early ’80s and has fluctuated around there since without strong long-term trends.


  11. “direct action”, where certain things are made compulsory by regulation..

    My understanding of the Coalition’s policy is that it will involve tendering out for abatement, not regulation of particular activities. On that basis, it is a market mechanism of sorts. And the Coalition claims that the average cost of abatement under its scheme will be $15/tonne. So far, I don’t think anyone has demonstrated that to be wrong.


  12. “So far, I don’t think anyone has demonstrated that to be wrong.”

    I think the Department of Climate Change has put costings on some of the Coalition’s climate change programs. The Productivity Commission is currently enquiring into what the implicit carbon price is of direct action programs in other countries. We’ll see what they have to say, but I think it is unlikely that the coalition has managed to overturn the wisdom of every economist since Adam Smith.


  13. The DCC is hopelessly conflicted. To the extent that things like abatement through soil and algae etc work and are recognised, a tender process could theoretically yield lower cost abatement than a tax in which such activities were not recognised. At this stage, agriculture is excluded from the proposed carbon tax.
    The main problem with a carbon tax (or an ETS) is the churning of revenue that it is likely to involve. That churn will probably lead to higher effective marginal tax rates and reduced national output and welfare going well beyond the direct impact of the tax itself. Avoiding this would require a commitment by government to use the revenue to reduce distortionary taxes, but that already seems unlikely.


  14. “The DCC is hopelessly conflicted” Why? Because they advise the Government? That’s their job. This sounds like an argument the Left used to make against the Treasury during the Fraser government, which led to the creation of the rival and completely useless, department for advising on economic policy, EPAC, in the Hawke government.


  15. The DCC remains profoundly attached to its CPRS and sees its job solely in terms of getting that up. It’s like asking Ken Henry to review alternatives to his RSPT.


  16. I don’t think the data necessarily supports your proposition.

    It’s also quite likely that levels of opposition are significantly boosted among Coalition supporters due to the very fact that the scheme is the one proposed by the other side. A large number would likely change their tune on the matter if the Coalition proposed a scheme, even a substantially identical one.

    Besides which, where is Coalition supporter disaffected by a Liberal leader’s support for an ETS supposed to move their vote to? The only risk to the leader is from their parliamentary party, not from their voters.


  17. Caf – A fair point. While Coalition supporters were more sceptical and more against an ETS than Labor supporters before Abbott became leader, the collapse in Coalition support for a carbon price occurred when the party changed its view. On the other hand, the internal right-wing politics on this are as feral as I have seen on any issue in a quarter century of involvement. There would be a large amount of disunity if the party went back to the Turnbull position.


  18. Since late 2009, more has changed than just the Liberal leader. The failure of Copenhagen and Rudd’s (and Gillard’s) backdown have taken away a lot of the impetus for carbon pricing in Australia.


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