Earlier this week, Australia passed the Minerals Resource Rent Tax, a tax of 30 percent on profits of the largest iron ore and coal mining companies operating in Australia. The first, tougher version of this initiative was introduced by former Prime Minister Kevin Rudd, and it ruined him. Unremitting attacks on his environmental policies helped drive his poll numbers down so far that he was dumped by his own party.
His successor, Julia Gillard, took up the charge for the green agenda, in part because after a narrow election victory she depended on green support to get a majority in the Australian Senate. She consulted the companies that would be affected by the tax. She watered down the bill, and gathered support in parliament. The result? A weaker version of Rudd’s original vision that will bring the government $10.6 billion in revenue—only about 0.2 percent of GDP.
Meanwhile, this bill and an equally contentious carbon trading law (plus public distaste for the political squabbling in the party’s leadership contests) have helped the opposition Liberal Party build up a healthy lead in the polls.
The green agenda hasn’t been the Labour Party’s only problem, but with Australia’s economy turning in a strong performance the government should be close to unbeatable. Politicians everywhere take note: carbon taxes and emission controls can turn mandates into millstones. A Machiavellian would say that while looking green helps Australian politicians win elections, governing green helps to lose them.
Public reaction to high gas prices and the Keystone controversy suggests that Australia may not be the only country where it is politically smarter to fake green sympathies than to actually do much about them.
Will American politicians take note?