How Gillard is “greening” Labor with her carbon price: Kohler

Julia Gillard’s target in declaring war on carbon taxation is not the Coalition, but the Greens.

The ALP’s greatest threat comes from erosion of its base by Bob Brown’s Greens. If that continues, Labor’s future as an independent political force looks very dim.

In that sense, Gillard’s announcement of a carbon tax from next year is her ‘Tampa Moment’. (John Howard launched his campaign to stop the erosion of the Coalition’s base by One Nation in August 2001 by refusing permission to land for Norwegian freighter, MV Tampa, with 438 Afghans aboard.)

Just as Howard repainted the Liberals’ brand with a tinge of xenophobia in 2001, Julia Gillard is now slapping green paint on Labor’s logo.

That is intention No.1 of the carbon tax. Intention No.2 is to raise an almighty barrel of pork for the 2013 election. Call me cynical, but I would say carbon abatement is intention No. 3 on the PM’s list, with daylight between two and three.

A tax is a tax. It raises cash. This one has a higher purpose other than that, of course, (ie. recapturing the Green vote) but if the proposed new scheme had been in place last year, and the permits cost $20 a tonne of carbon, then whichever Government department was selling them would have made $9.3 billion.

If the permits were $50 each, as they would need to be to have any effect on carbon pollution, the amount raised would be $23.25 billion.

The PM has said every dollar thus raised will get returned to help households and industries deal with the tax, which, translated, means she decides who gets the money.

This is presumably why the plan is to be implemented a year before the next election and why Tony Abbott is getting so hysterical about it: the carbon tax will be a massive barrel of pork crackling to be sprinkled among deserving voters.

Some of the cash has to go towards keeping factories open and avoiding a disastrous sovereign risk event. That’s because the tax is levied at the point of production rather than consumption.

So, for example, Bluescope Steel has to be paid to continue making steel at Port Kembla, since imported steel doesn’t get taxed, and the foreign owned coal-fired electricity generators have to have their balance sheets restored, since their assets become worthless, or at least worth less, and their shareholders wouldn’t be too pleased.

How much will be left for pork… I mean “compensation for Australian working families”? Quite a lot.

The purest and most effective form of a carbon tax designed only to reduce greenhouse gas pollution would return the cash in equal measure to the citizens who ultimately pay it. If everyone gets the same amount back, no matter what their carbon footprint, there is a big incentive for everyone to reduce their CO2 consumption, and therefore tax payments.

So if everyone over the age of 15 got an equal share of the amount raised from a $50 per tonne tax, that would be $1,321 a year. They would be incentivised to reduce the tax they pay, so they make a profit.

If the purpose of a carbon tax were only to reduce carbon pollution, that’s what you would do.

But the money from Julia Gillard’s carbon tax won’t be equally shared – it will be means tested.

Some will get none; others will get more. The tax will become another method of redistributing wealth… away from Coalition voters and towards actual or, more likely, potential Labor voters.

This article first appeared on Business Spectator.