July 31, 2014 | by Timothy Andrews Print

On July 17 the Australian Senate passed the Clean Energy Legislation (Carbon Tax Repeal), Bill 2013, making Australia the first country ever to repeal a major climate-change initiative.

Five years ago, retreat from such a regulatory regime would have hardly seemed imaginable, let alone possible. There was consensus across the entire political class, with both major parties supporting an emissions-trading scheme (ETS), with the press corps proclaiming that any party departing from the consensus would "face humiliation" and "sign its own death warrant."  Millions of dollars were spent in public campaigns promoting the legislation, and polling showed a clear majority of Australians supporting “action.”

And then the unthinkable happened.

A historically unprecedented grassroots revolt developed. As think-tanks educated Australians about the destructive consequences of such a scheme and activist groups formed and mobilised, public support quickly began to plummet. In particular, the leadership of groups like the Institute of Public Affairs was pivotal in raising public awareness of the damaging nature of climate-change policies. In 2009 Malcolm Turnbull, leader of the (then opposition) Liberal Party was deposed over his support for an ETS after an uprising of party members that no one in the media or political classes had expected.

Shortly after that, Prime Minister Kevin Rudd was forced to withdraw his support for an ETS after plummeting approvals -- too late, however. He too was replaced. The new prime minister, Julia Gillard, was only able to scrape through to a narrow victory in the next election by pledging her opposition to a carbon tax with words that would come back to haunt her: “There will be no carbon tax under a government I lead.

When she broke this commitment and introduced a carbon tax in July 2011, her future was sealed. Repealing the carbon tax -- a “pledge in blood” -- became the key policy of the opposition, delivering a landslide 2013 election victory.

The carbon tax, initially set at the world’s highest rate, was never a sound policy option for Australia, with its heavily resource-dependent economy and small population. Any effect would have been disproportionately severe.

Treasury modelling of the tax, generally considered over-conservative, showed the average household hit with over $550 a year in cost-of-living increases directly attributed to the tax, at a time of already increased financial pressures.  Investment and international competitiveness dove due to increased costs, and power bills increased by over 10 percent.

Furthermore, despite these considerably destructive effects, the carbon tax would have had no actual environmental benefit. With Australia only producing 1.2 percent of global emissions, the pain of the tax was estimated to moderate warming by roughly a meagre 0.004  degrees over the next 100 years.  

The remarkable lesson of the carbon-tax debate in Australia, however, extends far beyond the sphere of climate policy. The lesson is that a small committed group of activists engaging in the battle of ideas can transform the political landscape.

In 2008 a staggering 77 percent of Australians supported action on climate change. But in 2012 support for the carbon tax fell to 33 percent, a dramatic turnaround.

In a political landscape dominated by poll-driven policies, politicians frequently shy away from unpopular yet necessary reforms, spooked by public and media opposition.

Yet the Australian carbon tax experience demonstrates how, with information, public opinion can rapidly shift, and a bipartisan consensus can rapidly break down. Public opinion – once fully informed on an issue – can rapidly shift.

In order for this to occur, however, the intellectual groundwork needs to be prepared by think tanks, activist groups and opinion leaders need to mobilise the grassroots, and political leaders need the courage to act on their convictions. When these three groups work together, change can, and will, occur.

The Australian carbon tax repeal truly was a case where the efforts of a small number of free-market advocates, chronically underfunded and very much in the minority, were able to turn around an entire country.

It is easy to become overly cynical of the political process. However the repeal of the carbon tax in Australia demonstrates that entrenched special interests can be overcome. It also shows just how vital nonprofit organizations are to the process.

All it takes for the public to realise that the emperor has no clothes is a few dedicated persons engaged in the battle of ideas.

If we can do it in Australia, other countries can – and will – too.

Timothy Andrews portrait
Timothy Andrews is the Executive Director of The Australian Taxpayers' Alliance. He is also a graduate of the University of Sydney, graduating with a Bachelor of Economics (Social Sciences), a Bachelor of Laws (Honours) and a Masters of Public Policy. Whilst studying, he served two terms as Federal President of the Australian Liberal Students’ Federation, and in 2007 he was elected to the Board of Management of the HR Nicholls Society, a position he continues to hold today. Learn More about Timothy Andrews >