Labor needs a policy ‘circuit breaker’ now

Speaking to Melbourne's 'Herald Sun' on June 18^th, Australian Prime Minister Julia Gillard seemed calm in the face of disturbing poll results. In an article titled, "Why I Rolled Kevin Rudd," the Prime Minister seemed to hold out hope for a Labor victory in 2013. (We will assume PM Gillard did not anticipate the choice of title used by the Herald-Sun, with the usual loaded language and negative connotations).

Specifically, Phillip Hudson reported how Gillard, "warned that poll numbers might not lift until after the tax begins in July next year and anxious voters "live it" and see the effect of the whole package and compensation on their daily life."

What is most crucial at this point is for Labor to implement some kind of policy "circuit breaker," to stop voters from 'switching off' before it is too late.

On 18th June 2011, "popular support for the Federal Government [had] fallen to its lowest level in 39 years, with a…Nielsen poll putting approval for Labor at only 27 per cent." This was a devastating result for Labor.

Gillard cannot afford for everything to hinge upon reception of the carbon, tax a whole year into the future (ie: mid-2012). Even if compensation (and overcompensation) does emerge as intended, voters may already have firmed in their judgements before then.

But a National Disability Insurance Scheme could provide the vital 'policy circuit breaker' needed so desperately by Labor. We will return to this issue later.

The carbon tax is perhaps the most problematic issue for Labor, as fear has been whipped up so effectively by Abbott and by sections of the media.There are also tensions between the Greens and Labor.

The Channel 7 website has published an article reporting a developing impasse between Labor and the Greens on the form any future carbon tax will take.

Specifically, Jeremy Thompson reported that: "It is understood the Greens are unhappy with the Government's preferred deal on industry compensation, including substantial assistance to coal miners."

Here assistance to coal miners seems pointless. Already low and middle income consumers, as well as trade-exposed industries, should be compensated for any increased flow on costs from coal-fired energy.

However, if coal-fired energy plants are directly compensated, then where are the 'market signals' driving a shift to renewables?

The other question, here, is what rate the carbon tax will be set at. Ross Garnaut has argued that a carbon tax at $26/tonne would raise $11.5 billion in its first year.