Gillard's carbon tax warm up

Julia Gillard. Photo / Getty Images

Still struggling in the polls, under fierce attack as "liar" and "betrayer" by the Opposition, and running against rising scepticism about climate change, Julia Gillard has launched her campaign for a carbon tax.

Dumping predecessor Kevin Rudd's heavily compromised emissions trading scheme, Gillard went into last year's election promising that a carbon tax would not be introduced.

Last week, after driving her furiously resisted flood tax levy through the Lower House by a single vote, Gillard declared that times had changed and she now intended to be taxing carbon emissions by July next year.

Gillard has won the support of the Greens, who will control the Senate from July, and independents Rob Oakeshott and Tony Windsor joined Gillard for the announcement - but have given no guarantee of their final vote.

Under the plan a price on carbon would be fixed for three to five years as a transition to a cap-and-trade system, with agriculture excluded and compensation provided for families hit by cost of living increases.

Gillard faces a bruising battle. Yesterday she laughed off speculation her leadership could be threatened by Assistant Treasurer Bill Shorten or Climate Change Minister Greg Combet, two rising stars.

Labor is languishing in the polls, and her new plan has come hard on the heels of a Galaxy poll for the Institute for Public Affairs, which found that that only a third of Australians think the world is warming because of human carbon dioxide emissions.

A Newspoll before Christmas said that in the past three years the number of Australians believing in human-induced climate change fell from 84 per cent to 77 per cent, and the Lowy Institute has charted a four-year fall - from 75 per cent to a "bare majority" - in the number of Australians regarding climate change as a crucial foreign policy challenge. But Gillard said she was determined to win.

The Government faces months of tough negotiation and unrelenting attacks by the Opposition before a final package emerges. Discussions on three key issues - compensation for low- and middle-income households, support for emissions-intensive exporters and the treatment of the energy sector - have not even started yet. Compensation will be central to Gillard's plan, with concern growing at already rising energy prices and likely flow-on effects from carbon-tax fuelled rises in production costs.

Estimates of the impact have put the extra household burden at up to a $300 a year for electricity bills alone, although the Government said no real figures could be produced because no pricing details had been decided.

"A price tag on carbon pollution, which is what a carbon price is, is directed at the big businesses that are polluting the most into the atmosphere in our economy and it's from there that the carbon price is paid," Combet said yesterday.

Abbott said Gillard was a liar whose about-face on the tax was a betrayal that would impose huge costs on Australian households, and which would be resisted by a "people's revolt" against an attack on their standard of living.

The tax has been welcomed by the union movement, the clean energy industry, the Australian Council of Social Service and environmental groups. But farmers have yet to be convinced, and the plan has been rejected by retailers, the food industry and coal miners.