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Gillard in ‘Uphill Battle’ Over Australia Carbon Tax Fallout

Australian Prime Minister Julia Gillard speaks about the government's climate change plan on Sunday. Photographer: Mark Graham/Bloomberg
Australian Prime Minister Julia Gillard speaks about the government's climate change plan on Sunday. Photographer: Mark Graham/Bloomberg

Prime Minister Julia Gillard will visit every Australian state and regional capital in the next two weeks, and will run ads on popular television shows as part of a campaign to reverse public opposition to her carbon plan.

The government plans to cut taxes for workers as Gillard tries to woo a public deterred by rising costs associated with a climate-change plan opposed by 60 percent of Australians. Presenting the plan in Canberra yesterday, she said it would include pension increases and higher payments for families in the developed world’s biggest per capita polluter.

Having secured the support of Greens and independent lawmakers whom she relies on for a majority, Gillard will need to counter a campaign against the plan by the hardest hit businesses. At stake is her political future, with polls showing she is the most unpopular Australian leader in 13 years, ahead of elections that are due in 2013.

“This has been a long and divisive debate,” Gillard said during a question and answer session on Australian Broadcasting Corp., where she faced a live audience as well as e-mailed questions. “It’s been tough. We will get this through parliament.”

Forty-eight percent of voters said they oppose the government’s proposal to price carbon from 2012, according to an Essential Media poll of 1,899 people published today, with 35 percent supporting it. The poll, taken July 6-10, had a margin of error of plus or minus three percentage points.

Gillard’s tax sweetener means workers will see the amount of their annual salary that is tax free tripling to A$18,200 next July. The move is intended to help households deal with a A$9.90 weekly rise in prices spurred by the carbon plan.

‘Election Campaign’

While “people generally accept they should do something about climate change,” Gillard “has to convince people they will be better off,” said Rick Kuhn, a political analyst at the Australian National University. “It’s an uphill battle.”

Australia expects to raise about A$27.8 billion ($30 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.

“This is like an election campaign,” opposition climate spokesman Greg Hunt told Australian Broadcasting Corp. radio today. “We will visit every corner of this country to tell them that this is not only a bad tax, but one for which people cannot be compensated.”

‘Just Another Tax’

Gillard’s job has been made harder by the fact that the government’s planned tax on coal and iron ore profits at miners like BHP Billiton Ltd. and Rio Tinto Group starts on July 1, 2012 -- the same day as the carbon system.

Some see the carbon scheme as “a way to raise money and get the budget back into surplus and that it’s just another tax,” said Andrew Hughes, who specializes in government marketing strategy at the Australian National University in Canberra. “We have the mining tax, rising taxes on consumer goods, and people will just lump them all together.”

The country, which relies on coal to generate about 80 percent of its electricity, will require about 500 businesses to pay for their pollution under the plan. The government also will more than double aviation fuel excise.

The Australian Coal Association yesterday repeated earlier warnings that 18 coal mines may close in the next decade if the system is introduced and that it will be harder to attract investment. Anglo American Plc said the proposal puts coal investments in Australia and 40,000 industry jobs at risk.

Falling Behind China

Gillard’s government has said emissions trading is needed to reduce dependence on fossil fuels and encourage renewable energy production before falling behind countries such as China in reducing greenhouse gas emissions. It has also argued that the plan will cut pollution and help protect natural icons including the Great Barrier Reef and Kakadu National Park.

“Australia will cut 159 million tons a year of carbon pollution from our atmosphere by 2020,” Gillard said. “That is the equivalent of taking over 45 million cars off the road.”

The carbon plan will increase the inflation rate by 0.7 of a percentage point in 2012-13, concentrated on gas and electricity prices, and 0.2 of a percentage point in 2015-16. The plan is expected to reduce gross domestic product by 0.3 percent by 2020, Treasury projections show.

Gillard’s own support in polls is the lowest for any prime minister since 1998, when John Howard proposed a tax increase. She has not been helped by the fact that after she ousted her predecessor Kevin Rudd, whose popularity plummeted over a carbon tax, she declared she wouldn’t introduce one.

“We have a long race to run,” Gillard told Nine Network television today, the first of three media interviews in the space of 40 minutes today. “We have got to get this done and I am determined to do it.”

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