Gillard Spends A$25 Million on Carbon Campaign as Polls Slump
Australian Prime Minister Julia Gillard
Mark Graham/Bloomberg
Australia's prime minister Julia Gillard.
Australia's prime minister Julia Gillard. Photographer: Mark Graham/Bloomberg
Australian Prime Minister Julia Gillard said her government will start a A$25 million ($27 million) campaign, including television advertising, to explain its carbon tax as support slumps in opinion polls.
“There’ll be A$12 million of television advertising and another A$13 million allocated to getting people the information they need,” Gillard told Channel Nine’s “Weekend Today” program yesterday. “This advertising campaign is about getting people information.”
Gillard, Australia’s least popular prime minister in 13 years, is touring the nation to try to reverse public opposition to the tax announced on July 10. Support for Gillard declined to 38 percent, while 43 percent of respondents said they preferred opposition leader Tony Abbott as prime minister, according to a July 12 Newspoll survey, published in the Australian newspaper.
Australia, which relies on coal to generate 80 percent of its electricity, will require about 500 businesses to pay for pollution. The program will boost annual inflation by 0.7 percentage point in its first year, the government estimates.
The government will provide A$9.2 billion over three years to assist high-polluting businesses such as aluminum smelters, steelmakers and pulp manufacturers, while planning to cut taxes for workers to offset the impact of the levy that is expected to raise prices.
Treasurer Wayne Swan said Australia’s strong economic position with low unemployment, record terms of trade and a strong investment pipeline made the introduction of a carbon tax feasible in the face of global economic uncertainty.
Strong Region
“We’re not immune from global economic developments but our region remains strong -- we have an underlying strength in our economy, we have low unemployment, we have a strong invest pipeline and we have record terms of trade,” Swan told Channel Ten’s “Meet the Press” program yesterday. “Now is the time to put in place this fundamental reform because if we delay it just gets costlier by the year.”
Coal mining companies in Australia, the world’s biggest exporter, will be required to pay for fugitive emissions -- gas emitted naturally from coal operations -- while receiving A$1.3 billion in compensation, with the biggest polluters getting assistance over six years, according to the government. Other so-called trade-exposed industries such as steel producers will also receive assistance.
The tax will make certain projects uneconomical and cost jobs, the Minerals Council of Australia said. The Australian Coal Association said overseas coal buyers may switch to other nations, forcing mine closures.
‘Bright Future’
The coal industry in Australia “still has a bright future,” Swan said in his weekly Economic Note, following the all-cash A$4.7 billion takeover proposal for Brisbane-based producer Macarthur Coal Ltd. from Peabody Energy Corp. of St. Louis, Missouri, and ArcelorMittal in Luxembourg the day after the carbon policy announcement.
“The level of investment shows the confidence coal miners have in the future,” Swan said in the note. “As of April, there was a staggering A$70 billion on the drawing boards or underway for coal-related projects. That’s up by more than four times from the level of just three years ago.”
Australia’s jobless rate is at 4.9 percent, compared with 9.1 percent in the U.S. Record investment in mining projects and commodity prices close to all-time highs helped the local currency in the world’s biggest iron ore, coal and alumina exporter advance 20 percent against the U.S. dollar in the past 12 months. The so-called Aussie bought $1.0653 as of July 15.
Worse Off
While the Labor government has secured support for the tax from Greens and independent lawmakers, whom Gillard relies on for a majority in parliament, 68 percent of Australians say they expect to be worse off under carbon pricing, according to a Galaxy poll published by the Daily Telegraph newspaper last week.
The government’s advertising campaign began on television networks yesterday.
Australia expects to raise about A$27.8 billion in three years by making polluters pay an initial charge of A$23 per ton of carbon dioxide, increasing the price by 2.5 percent a year, plus inflation. The country will switch to a cap-and-trade system in 2015, while providing about A$47 billion through 2020 to help households and industries and spur renewable energy.
To sweeten carbon trading for the public the government has promised that nine out of 10 households will get either a tax cut or increased benefits to help cope with a forecast A$9.90 ($10.53) per week increase in prices from the carbon plan.
The government wants to cut emissions to at least 5 percent below 2000 levels by 2020.
To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net
To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net
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