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By D. Brady Nelson

The Heartland Institute

Australia’s tax on carbon dioxide emissions faces likely repeal after a coalition led by the Liberal Party seats a Senate majority on July 1. The Liberals swept to victory in late 2013 federal elections after making opposition to the carbon tax their central political message. Under Australian law, the new Senators must wait until July 1 to take their seats.

Broken Promise
Former Prime Minister Julia Gillard and the Australian legislature approved the carbon tax in 2011 and implemented it in July 2012. The carbon tax applies mainly to electricity providers and large-scale industrial activity.

During her 2010 election campaign, Gillard had explicitly ruled out implementing a carbon tax. She broke her campaign promise after the elections when a split legislature forced her to reach out to the Green Party to form a majority coalition. Gillard agreed to placate the Greens with a carbon tax, and her majority coalition voted the tax into law.

Political Price Paid
Political momentum quickly shifted against Gillard, and her problems worsened due to several factors. The carbon tax caused rapid increases in electricity prices, hitting voters in their pocketbooks. Moreover, consumers rather than industry and electricity providers, bore the burden of the tax, as industry and electricity suppliers passed the costs on to consumers even while accepting government subsidies designed to lighten the burden of the tax.

Even worse for Gillard, Australia’s carbon dioxide emissions increased after imposition of the tax, even though the nation’s emissions had been flat for several years prior to the carbon tax.

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