Mild package does little to sway opinion

Australian Prime Minister Julia Gillard talks during the government's announcement of the Carbon Tax plan. Photo / Getty Images

Prime Minister Julia Gillard has begun the arduous task of convincing Australia to not only embrace her new carbon tax, but to see it as good cause to return to the fold in sufficient numbers for Labor to survive the next election.

The reaction to Sunday's announcement of the tax and its massive compensation package was tepid at best and hostile among a significant slice of the people she needs to bring on side.

The only small measure of voter response so far has come from the reactions of 200 people watching Gillard's announcement, by pollster Morgan.

Morgan said the details did little to sway opinions of voters of any political persuasion: "While the reactions of the Greens bounced around, there was little movement among Labor and Liberal/National voters."

Polls before the announcement showed most Australians opposed the tax. Gillard has tried to counter this with a package commentators generally described as moderate, based on a A$23 ($29.50) a tonne tax on carbon produced by the nation's 500 biggest polluters, with compensation for households to offset resulting increases in the cost of living.

More than A$9 billion will be spent on assistance to help industries and jobs damaged by the tax, which will be replaced by a market-based emissions trading scheme in 2015.

Although some parts of the package may run into trouble in Parliament, the new tax has the support of the Greens and independents needed to become law by the end of the year.

Opposition Leader Tony Abbott will continue to focus on claims of economic damage and job losses through to the next election, when he wants to hold a referendum on the tax.

Commentators see Abbott as a real threat to Gillard's chances of selling the tax to voters, despite a general belief the Government has done reasonably well.

The Australian said the debate had brought out the best in a leader whose negotiating skills were proving to be her strongest asset and, despite its failings, her package carried the hallmark of an economically rational, reforming Labor government.

"But the fact remains that seeking parliamentary endorsement for the proposal before securing a popular mandate is an error of judgment voters will find hard to forgive," the newspaper's editorial said.

The Sydney Morning Herald said the package would probably surprise by its mildness, supported by the Age: "The sky will not fall in."

Brisbane's Courier-Mail said prime concerns included the Government's ability to deliver assistance to affected industries, while Sydney's Daily Telegraph described the package as a complex web of compromise.

While the Australian's Paul Kelly regarded the tax as Gillard's "finest achievement as a political fixer", the Telegraph's Andrew Bolt said it was "the most brazen fraud perpetrated by an Australian government".

Liberal states have not been impressed. Victoria is furious at the blow it believes will fall on jobs and electricity supplies, while West Australian Premier Colin Barnett said the tax was "east coast-centric".

Gillard's job will be hardest in the mining and electricity-generating regions, where the blow will fall hard on coal, even with promised compensation. The package will mean the closure of some coal-fired generators although the plan calls for replacement with more efficient, gas-fired plants.

The owners of two plants - Hazelwood in Victoria and Playford in South Australia - are already preparing to negotiate their demise.

The problem for Gillard is widespread fear, fuelled by industry groups, of wholesale job losses in a slash-and-burn assault on key sectors.

The Australian Coal Association says the industry will be slugged A$18 billion by the new tax, with thousands of jobs lost, and the Minerals Council claims it will impose the highest carbon price in the world, hitting Australia's global competitiveness without environmental benefit.

The Australian Chamber of Commerce and Industry said the package represented "big pain for little gain", the housing industry warned of job losses and higher building costs and the food industry said grocery bills would rise.

Qantas warned the tax would slice up to A$115 million from its bottom line in its first year, increasing the costs of domestic flights.

Against the doom and gloom, Gillard's support has come mainly from the union movement, welfare organisations and environmental groups, most of which worry the package does not go far enough.

In the months ahead, Gillard will need to shift this balance.