Australia's Carbon Tax Message
Tony Abbott shows that climate absolutists have a problem: democracy.
July 17, 2014 12:56 p.m. ET
Tony Abbott scored a big win Thursday when the Senate repealed Australia's carbon tax, fulfilling the Prime Minister's most prominent promise from last year's election. The global intelligentsia is now making Mr. Abbott public climate enemy number one, but he deserves applause for honoring his campaign pledge and removing a burden on the Australian economy. As the first developed nation to rebel against the cost of climate scare-mongering, Australia could start a trend that has greens worried.
Mr. Abbott's Liberal Party doesn't control the Senate and so had to enlist the support of Clive Palmer, a colorful entrepreneur-turned-politician whose Palmer United Party holds three seats. Mr. Palmer generally turned the debate into a circus that included an appearance by Al Gore, who somehow was led to believe that repealing the tax would lead to a cap-and-trade scheme.
This made it possible for most of the world's media to ignore the reason the tax had to go: The public hates it. Somehow Australians don't buy the argument of Greens party leader Christine Milne that without a carbon tax the country will become "a global pariah."
Five years ago Australia was in the vanguard of the anticarbon crusade. As Tom Switzer writes nearby, Labor Prime Minister Kevin Rudd set out to pass a cap-and-trade scheme in 2009, but failed to strike a deal with an opposition leadership then ready to support it. When the rest of the world then declined to sign up to expensive carbon-reduction measures at the Copenhagen summit that December, Mr. Rudd looked even more foolish.
Two defeats in the Senate paved the way for a leadership challenge in 2010 by Julia Gillard, who promised not to impose a carbon tax. But Ms. Gillard still lost seats in parliament, and at the behest of her coalition partners in the Greens the new Prime Minister reneged and pressed ahead with the unpopular levy of A$23 (US$21.54) per ton of carbon. That further weakened the Labor Party and set up Mr. Abbott to win election last year on a platform of repeal.
The government's own figures estimate the tax added A$9.90 to the average household's weekly power bill. The burden to industry has been even greater, exacerbating Australia's loss of competitiveness in manufacturing. The tax was due to increase to A$25.40 on July 1, and then become a cap-and-trade scheme in 2015. In Europe the spot price for carbon hovers around A$7 (€5) per ton.
Some economists we respect support a carbon tax as the most transparent and efficient way to impose a cost on fossil-fuel production. And such a levy might make economic sense if it replaced entirely another kind of tax—say, the personal income tax. But in practice as in Australia, it always becomes an additional tax that puts more of the private economy under political control.
Mr. Abbott's views reflect those of a public that cares about environmental matters but not at the expense of reducing economic growth. Australians also don't want to bear inordinate costs for carbon reduction when they produce only 1.2% of the world's emissions. The climate dogmatists denounce anyone who disagrees as "deniers" or worse, but Australia's vote shows that the real obstacle to their dreams of controlling more of the world's economy is democratic consent.