Australia’s Conservative Government Plays A Carbon Tax Shell Game

Australia’s Conservative Government Plays A Carbon Tax Shell Game by Michael Silverstein and Kay Wood A number of governments around the world have carbon taxes of various kinds. They include Finland (which instituted one in 1990), Sweden, Ireland, and in our own hemisphere the province of British Columbia in Canada. All these taxes to a greater or lesser extent have done what they were designed to do — reduce carbon emissions from polluters, encourage alternative energy buying by homeowners, and incline utilities to move into solar and wind to feed energy into their own grids. These taxes are also generally popular, especially the one in British Columbia, because there the revenues the tax generates from polluters are used to reduce other taxes paid by the province’s residents. And then there’s Australia. In Australia on July 17 of this year, a new conservative government succeeded in rescinding the country’s own carbon tax, and did so with popular support. Therein lies a story of utility and government deceit, a story that provides an important lesson about a shell game played by those who oppose carbon taxes. Australia’s carbon tax came into effect during a Labor Party administration in 2012. In the following years electricity rates in the country doubled. Australia’s conservative Liberal Party campaigned on a platform of eliminating the carbon tax which they blamed for these rate increases. Voters went along. It was all a con, however, a shell game. Because what really caused the huge electricity price hike was a bungled decision by electricity producers themselves. A few years back these worthies projected a sharp increase in electricity demand and proceeded to invest $45 billion in “poles and wires,” Australian-speak for grid infrastructure—investments in new power plants (mostly coal-fired because these utilities have only built a single large solar farm), and in new sub-stations and transmission wiring. But electricity demand in Australia didn’t increase. It has fallen in recent years. This is due in large measure to the success of renewable energy systems. The country has the most home-based PV units anywhere on the planet. One in ten houses in this sun-baked country has one. The incredibly ill-advised huge investment in grid-linked infrastructure had nonetheless to be paid for plus interest. Since Australia’s electric utilities (like many utilities) make a legally guaranteed profit, they did not have to eat the costs of their terrible planning. They stuck their customers with the costs instead. They weren’t about to admit that the doubling of electric rates was their own fault, so they looked around for a scapegoat. With the help of the conservative Liberal Party, they successfully pinned the blame on the carbon tax. So what’s the lesson here for environmentalists when it comes to promoting a carbon tax? It’s this: Take charge of the argument. Don’t let the anti-carbon tax forces frame the terms of the debate. In Australia the conservatives linked higher electric rates with a carbon tax in voters’ minds. They projected the message that in difficult times the public can’t afford out-of-pocket expenses just to promote environmental interests. Environmentalists actually had the better economic message. They simply didn’t make their case. They had a perfect villain to accuse for higher rates (bungling utility planners). They had other places in the world with carbon taxes they could point to whose economies as well as their environments had improved because of the tax. Environmentalists didn’t win the public debate because they preferred to focus on purely environmental considerations. That’s how they lost on the carbon tax in Australia. That’s how not to lose anywhere else. *** Michael Silverstein is a long time environmental writer, and former senior editor at Bloomberg. Kay Wood is the author of an environmental graphic novel, The Big Belch.

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