Politically, increasing petrol prices is one of the least popular things a government can do. But is there any point to a carbon tax if it doesn’t cover petrol?
Vladimir Putin has just found how quickly a man can become unpopular if petrol supply dwindles or if prices skyrocket. The Russian government recently tried to keep prices low by regulating prices, which had the perverse effect of getting the refiners to slow down production, and led to a crisis of chronic under-supply. Putin’s in serious damage control right now, as petrol is potent political poison.
Two essential laws in Australian politics are that governments must give everyone TV (hence free set-top boxes for pensioners who haven’t transitioned to digital yet) and provide a steady stream of reasonably priced petrol for the cars of the masses.
Fuel taxes are relatively low here, but keeping prices down isn’t easy given we’re in the midst of another global oil price spike.
In Australia we’ve been shielded somewhat from that pain by the high Aussie dollar. Yet without the currency’s climb, petrol would be cripplingly high, the inflation genie would be out of the bottle as increased costs flowed through to everything else, and we may well be in a spiral of mortgage and petrol price increases.
And that spells political trouble.
Research by my colleagues Jago Dodson and Neil Sipe showed a strong relationship between mortgage and oil vulnerability in Australian electorates and voter behavior in the federal election Howard lost. So it’s no wonder there’s big pressure to exclude petrol from the carbon tax.
One has to argue though, what good is a carbon abatement measure (such as the carbon tax) if it fails to affect one of the largest contributors to the nation’s carbon emissions?
And why would you not apply carbon abatement measures to the one sector that will directly reduce urban congestion, which the voters are crying out for?
Surely if you were serious about using price signals as the main method to change people’s behavior then this is the clearest, most obvious place to affect that shift.
There is dissonance between society’s regularly expressed idealistic intentions to reduce greenhouse gas emissions and gut responses to paying more for fuel, partly because the outer suburban system is chained to the automobile.
It’s not just our price settings that support car use. The built environment, the ‘car-chitecture’ and lack of transport alternatives in the outer suburbs ensure almost every adult out there has their own car.
The broader policy environment, including all the tax breaks for car ownership and use, reinforce it.
And the suburban culture is predominantly car-centric, across genders and across all age groups that vote. It’s not for no reason that our politicians love being photographed in car-assembly plants, as Tony Abbott did this week.
The good but as yet little-reported news is that some strange things have been going on recently with car use. Bureau of Infrastructure, Transport and Regional Economics figures suggest car use plateaued around 2004 nationally, arresting what had been a long post-war climb.
Per capita, people are driving less and less.
And the proportion of travelers using public transport has grown significantly in the period 2008-10, particularly in Brisbane, Melbourne and Perth.
With a slowdown in migration rates and international student arrivals, the pressure on the roads is not as fierce as many had worried it would be by now in my city, Brisbane (much to the dismay of our new toll-road companies).
Combined with the high Australian dollar, now is as good a time as any to try to increase the marginal cost of motoring and start reducing emissions from the transport sector, if that is your stated public policy.
The only problem is that those most vulnerable to price changes are spatially concentrated in outer suburban marginal electorates. Expect a major set of pay-offs to those affected, or trouble come election time.