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Australia’s Carbon Plan Passes as Gillard Faces Asylum Fight

October 12, 2011

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Oct. 12 (Bloomberg) -- Australia’s lower house passed Prime Minister Julia Gillard’s carbon plan today as she struggles to rebound from record-low public support and win backing for a more closely contested vote on immigration policy.

The program to cut Australia’s carbon emissions, announced on July 10, was approved with votes from the Greens Party and three independent lawmakers wooed by Gillard. A legislative victory on the carbon tax, which is contingent on a vote in the upper house Senate next month, will help her Labor Party sell the plan to the public, said Rodney Smith, a professor of politics at the University of Sydney.

“In political terms, this has to be seen as a success,” he said by telephone today, adding that in the longer term people will judge the government on its implementation. “Labor has been grappling with this for years. Now it can move on.”

The momentum from the climate bill may prove short-lived if Gillard loses a vote this week on her amended law for handling asylum seekers. A defeat for the prime minister, who is trying to sway Australians deterred by rising costs associated with the emissions plan, could further erode her popularity, which last month dipped to the lowest of any leader in the past 18 years.

Gillard, whose public approval peaked at 48 percent weeks after she replaced Kevin Rudd in June of last year, got 28 percent in a Newspoll survey published yesterday in the Australian newspaper. She was backed by just 23 percent at the beginning of September, the lowest figure for a prime minister since 22 percent for Paul Keating in 1993.

The latest Newspoll, taken Oct. 7-9, was based on 1,146 interviews and had a margin of error of plus or minus three percentage points. The next national vote is due in 2013.

‘Competent Government’

“There’s a belief out there that this is not a competent government,” said Ian McAllister, a professor at the Australian National University in Canberra who specializes in elections. “Unless they invent a cure for the common cold and distribute it freely forever, I can’t see anything that will save them at the next election, the polling is so bad.”

Australia, the developed world’s biggest per-capita polluter, plans to make about 500 companies pay A$23 ($22.90) a ton for their carbon emissions starting in July 2012, before switching to a cap-and-trade system three years later. Gillard, the country’s first female prime minister, has said she wants to cut about 160 million tons of carbon pollution in 2020.

‘Right Thing’

“I’ll tell you this about opinion polls, we’ll be able to look subsequent generations in the eye and say we did the right thing,” Treasurer Wayne Swan told reporters in Canberra today.

Rudd, who was ousted as head of the Labor party and now serves as foreign minister, kissed Gillard today after the legislation passed in the lower house. Rudd was dumped because of a drop in poll ratings amid a battle with miners over his plans for a 40 percent tax on resource profits and after he shelved his strategy for curbing greenhouse gas pollution.

Gillard will likely counter opposition to the plan by stressing the tax cuts households will receive to cope with rising costs and the more than A$13 billion in funding that will be invested in clean energy, said Haydon Manning, an associate professor of politics at Flinders University in Adelaide. She faces the added hurdle of having promised not to implement a carbon tax during her election campaign last year.

The government today named Jillian Broadbent, a board member at the Reserve Bank of Australia, to help design the A$10 billion Clean Energy Finance Corp., which will provide new financing for renewable energy projects in Australia.

Energy Prices

The government’s climate change program is likely to draw criticism as energy prices continue to rise, Nick Economou, a lecturer at Monash University in Melbourne, said by phone.

“We know the cost of energy is going up,” he said. “The problem for the Gillard government is that if you get a spike in energy prices due to something other than the carbon tax, they’ve set themselves up to be blamed for it.”

Company executives have argued that the tax will threaten mining jobs and drive up airfares and food prices. Anglo American Plc, a coal miner in Australia, said the carbon price would hurt coal investment in the country. Aluminum producers estimate Gillard’s program will add A$120 million in costs in its first year and A$400 million in 2020.

BlueScope Steel Ltd. and OneSteel Ltd., the Australian steelmakers, will get A$300 million in assistance under the bill. The Greens Party will support the plan for steelmakers in both houses of parliament as long as the government considers an amendment to support projects to create “green” jobs, its deputy leader Christine Milne said yesterday in a statement.

Coming Election

The Liberal-National coalition put forward an amendment that would have made the carbon emissions legislation dependent on the result of the next election, opposition climate spokesman Greg Hunt said Oct. 11 in a statement.

The migration law changes would make it legal for the government to send asylum seekers to another nation for processing. Immigration Minister Chris Bowen presented the legislation to parliament after the High Court in August rejected his policy of assessing claims offshore.

The new bill may fail to pass the lower House, Monash’s Economou said.

“If they can’t get it through the lower house, the government has got so many critics that they will go into hyper- drive and declare that the government has lost confidence and we ought to go to a new election,” he said.

--Editors: Patrick Harrington, Peter Hirschberg

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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