Gillard’s struggle to sell her carbon plan is getting harder: Kohler

It is becoming clear that the Gillard Government’s carbon tax is virtually identical to the Rudd Government’s CPRS, at least as far as businesses are concerned. The only differences are bad ones.

The Canberra bureaucracy spent 18 months designing the CPRS and, understandably from their point of view, sees no need to start again.

However, a few things have changed since 2009. The Government no longer has a majority, and the Opposition sees it as a means of regaining power rather than a matter of principle as it did two years ago. As a result the politics of climate change have changed completely.

That has led the Government politicians, as opposed to those designing the tax in the bureaucracy, to declare that households will get more than 50% of the compensation. That was neither the promise nor the reality of the CPRS.

Moreover, 2009 was before the Government brought forward the “surplus date” of the budget by 12 months in the lead up to the last election, promising to deliver a balanced budget in 2012-13.

Since then GDP growth forecasts have also had to be wound back as the reality of slow consumption growth has offset the mining boom. In order to meet that promise, this year’s budget will have to contain spending cuts.

That means it cannot also contain the sort of $3-4 billion in extra spending that was in the CPRS without matching that with even more spending cuts.

Those two promises – households to get more then 50% compensation and that the scheme must be revenue neutral – are now provoking panic and outrage among business leaders.

Meanwhile Tony Abbott’s anti-carbon tax message is clear, precise and consistent – and cynical of course.

By contrast the Government’s efforts on the subject are complicated and messy, including a lot of “wait for the details”. That’s inevitable because the reality of pricing carbon is very complicated – especially the way Australia’s is proposing to do it, with various definitions of core and non-core emissions and different levels of compensation for emissions intensive trade exposed businesses.

When the details are released, it will be even messier. The Government will try to concentrate its message on household compensation but every shower of dollars for “working families” will be matched by cries of pain from businesses and forecasts of job losses.

With the Opposition Leader in front carrying the banner, and the success of the mining companies in opposing the resources rent tax last year behind them, business leaders feel unusually emboldened, and are starting to get up a powerful head of steam.

It is very unlikely the Gillard Government will be able to successfully bring in a carbon tax with the support of no one but the bureaucracy and the academy.

The nation’s boffins are now lined up against the providers of capital and labour – businesses and unions.

There’s very little disagreement about the fundamentals of climate change and the need for action; most business leaders are not climate change sceptics and signed up as PR greenies years ago, if not fully-fledged greenhouse warriors. They have been working hard to reduce their “carbon footprints” and updating “stakeholders” on their progress. The same goes for the unions.

There was even a general acceptance of the CPRS back in 2009, except in the electricity industry, where asset values were going to be wiped out.

This time around the electricity generators have been able to take a back seat as the much more powerful manufacturers and their unions take the lead.

This article first appeared on Business Spectator.