From Hawke to Shorten: the ALP’s vexed history with the carbon tax

Bill Shorten is reportedly reconsidering the Labor Party’s position on the question of a carbon tax, the latest chapter in Labor’s long history with climate change policy. AAP/Alan Porritt

As the new leader of the Labor opposition, Bill Shorten has a number of issues to deal with that have been left over from the previous three years of Labor government. Working out Labor’s climate change policy is one of these.

Here, there are two urgent decisions to be made. First, Labor has to decide whether it remains committed to the “carbon tax”. Second is what Labor will do in the Senate when the new Abbott government introduces legislation to repeal the carbon tax put it place by Shorten’s predecessor, Julia Gillard.

The signs are that Shorten is considering abandoning the carbon tax - a repudiation that might also be the basis for allowing the Abbott program through the Senate. In doing so, Shorten reveals that he is a realist and that he views Labor’s landslide defeat at the recent federal election as having been caused to some extent by the Gillard government’s approach to this matter.

By the same token, the repudiation of a carbon tax is not the same thing as declaring that climate change is no longer relevant to the national policy debate. It can be safely assumed that Labor will seek to define, yet again, what it would do to address the problem of climate change in the future. The lesson learnt from the Gillard approach is that a future policy will have to avoid reference to “tax”, because it is clear that voters don’t like that idea at all.

The evolution of Labor’s fateful decision to have a carbon “tax” at the centre of its climate change policy is an interesting study of how difficult it is for politicians to make policy quickly and effectively. The idea of putting a price on carbon production has been around for a very long time. It was first seriously considered back in the mid-1980s, when the then-Labor government under Bob Hawke sought to shift the national environmental debate away from conservation to instead talk about “Ecologically Sustainable Development” (or ESD).

The ALP first discussed a ‘carbon tax’ under the leadership of Bob Hawke. AAP

Hawke convened a series of working groups to discuss how ESD could be achieved, and it was in the group discussing energy policy that the carbon price idea was floated. The idea was supported by an economic argument that production costs did not include the price of environmental damage, but that a carbon charge would remedy this economic distortion.

This idea was rejected by political realists at the time as unlikely to proceed, given voter resistance to policies that put energy prices up. Naturally, voters wanted policies that would bring prices down.

Hawke lost the Labor leadership to Paul Keating, who lost government to John Howard who had things other than the environment on his government’s agenda. This was until the onset of what could be considered an ecological problem that caused even a conservative government to demur. A long drought affecting much of Australia and impacting particularly in the Murray-Darling Basin gave practical resonance to the sort of things ecologists had been warning of under the general rubric of “climate change”.

Now a matter that had been confined to the esoteric world of public policy had a popular resonance, and voters began to demand that government do something about global warming and climate change.

On the eve of an election that it would lose, the Howard government decided that it would seek to address climate change and global warming. This was a consensus of sorts. The interesting thing here, however, was that there would now be disputes as to what would be the best way to at least be seen to be doing something about climate change.

Into the debate now came newly elected Labor prime minister Kevin Rudd. He had already flagged his commitment to a policy remedy with a rhetorical flourish about “great moral challenges” – an utterance that would haunt him for the next three years at least.

Kevin Rudd proposed then withdrew emissions trading legislation. AAP/Lukas Coch

Rudd’s preference was for an emissions trading scheme (ETS). This had the appeal of replicating the approach being taken in Europe, and it was a policy that the financial services sector was eager to support. The capacity for the emissions trading idea to wedge the non-Labor side of politics was evident in the way some sections of business were willing to endorse the Rudd scheme.

This, in turn, was matched by the extraordinary proposition that the Coalition opposition, at that time under the leadership of Malcolm Turnbull, would vote for the scheme in the Senate - thereby denying the Greens the ability to block it.

Turnbull was to pay a high price for this idea, as he was soon replaced as Liberal Party leader by Tony Abbott. The golden opportunity for Labor to win an election (in this case, a double dissolution election) on the climate change issue suddenly presented itself. For whatever reason, Rudd failed to exploit it. Soon his leadership was terminated as well.

By 2013 climate change policy was a major liability. This was in stark contrast to 2009, when it looked like being a winner for Labor. Failing to heed the realist views of those who dismissed carbon taxes under the auspices of Hawke’s ESD working groups, Labor allowed itself to be talked in to applying a carbon tax by rural independent Tony Windsor, and then proceeded to present the idea as a triumph of a broad Labor-Green-rural independent consensus that had stranded Tony Abbott.

The political problem was that the electorate didn’t see it quite like that. Newspoll figures show that voter support for the Gillard government tumbled well below 50% on a two-party preferred basis, and Labor never got ahead of the Coalition again thereafter.

The public’s scepticism was only partly due to its clear loathing of taxes. In the period between the 2007 and 2013 elections, the drought broke. Ecologists may well be right to warn that climate change is occurring and may have dire consequences, but for the general public the emergency that the drought implied had receded. There are new concerns now, mainly to deal with employment and the economy.

Labor’s chance to do something about pricing carbon has passed. Bill Shorten knows this and has to alter his party’s approach as a consequence.