Price Labor will pay for pricing carbon keeps rising

Legislating the carbon tax only exacerbates Labor's existing crisis of relevance.  And it's not because of a lack of trust over a broken promise.

Being in opposition is demoralising for a major political party.  But it can be fatal if it occurs during a great political paradigm shift against its favour.

Twentieth century politics in the Western world was dominated by the tension between capitalist economic progress and socialist aspirations for equality.  Free market capitalism proved best at addressing both, creating prosperity that tackled the anchor of inequality -- poverty.

The paradigm of the 21st century in the developed world is quickly evolving into a new competitive tension between the environment and economic progress.

And history is already repeating itself.  Though Bob Brown would dispute it, capitalism is proving itself best able to sustainably manage the world's resources by increasing wealth that enables us to demand and afford a better environment.

In the 20th century, the labour movement had relevance.  Today it is not so clear.  Among Labor's core constituencies of workers there are two broad groups.  And the gulf between them is growing.

Recently, Mark Latham called the first group the ''inside the cycleway'' progressives.  They're comparatively wealthy, live close to their work, travel regularly and think economic growth is a cruel process that exploits our environment instead of preserving it.

Beyond the cycleways, where some of the biggest swings in NSW and Queensland state elections were recorded, middle-class suburban attitudes are very different.  These are households where the primary income earner budgets on an average income while trying to pay off a mortgage for both cars and the house.  They don't live close to their work.

They're sick of opening their quarterly electricity bill, seeing it rise again and having to whack it on the credit card that they just thought they had got on top of.  And economic growth is the difference between whether their kids can go to a low-fee independent school and have a five-day package Gold Coast holiday.

Both are generalisations.  But the concept is real.  A Labor Party allied to cycleway insiders cannot appease both.  There's no more emblematic wedge to drive between them than the carbon tax, and the divide will get bigger every year.

The point of a carbon tax is to build a low-carbon economy on the expensive foundations of perpetually more expensive hot gas, with the cost sheeted home to consumers.  Labor's carbon tax creates a class of green workers that needs the extreme climate change policies of the Greens to be implemented if their professional interests are to be advanced.  And for the carbon price to be effective requires its rate to rise and regulation to tighten, adding more costs that harm households.

In this context, the Liberal-National Coalition has a constituency against higher taxes and more regulation.  The Greens have a constituency to increase taxes and extensive regulation.

Labor sits between the two without a clear constituency.  By supporting a carbon price, Labor has committed electoral suicide by literally gifting the paradigm of economic debates to the Liberal-National Coalition and the Greens.  At the moment, Labor sits in the middle, sending a confusing message by perpetuating our carbon-intensive export industries while concurrently seeking to tax the economy into a low-carbon prosperity.  Doing so is neither politically coherent, intellectually consistent or practically achievable.

At the next federal election, the Liberal-National Coalition will almost certainly run television advertisements of Julia Gillard repeating her pre-2011 federal election campaign commitment that ''there will be no carbon tax under a government I lead''.  If the Greens were smart they'd do the same, and highlight it was their leverage that dragged Labor to introduce a carbon tax.

Elections are won in the centre ground.  But parties don't start in the centre.  They appeal to their off-centre base and reach inward.

Without their base and their values, Labor will get smashed between parties who offer clearer choices.  And it will be repeated if the electorate votes for the anti-carbon tax Coalition and Labor is foolish enough to oppose its repeal.  There's no doubt Labor would suffer a huge credibility blow if it unwound its carbon tax.  But it might be the only way to save the party's relevance.

ADVERTISEMENT