Coalition of the Unenlightened could repeal carbon tax in 2014

Inside Story

On its first day in office, the newly elected Coalition government instructed the Department of Prime Minister and Cabinet to draft legislation to repeal the carbon pricing scheme that has been operating since 1 July 2012.

The Coalition has promised to approve that legislation within its first month of office and introduce it “on the very first day of a new parliament.” But the Coalition’s ability to repeal the scheme is contingent on numerous factors.

This essay analyses the likelihood of three possible scenarios for the legislative repeal of the scheme. I also consider (in Scenario #3) whether the government could weaken the scheme through executive action alone.

Scenario #1 – Labor backflip:

The first and simplest scenario – and the most desirable from the Coalition’s perspective – involves the Coalition passing repealing legislation through federal parliament as soon as possible within the remaining term of the currently constituted Senate.

The Greens, who hold the balance of power in the current Senate, have vowed to block any repealing legislation. Accordingly, this scenario depends on Labor (yet again) back-flipping on its commitment to carbon pricing.

While the Coalition is heaping on the pressure for Labor to honour the new government’s purported mandate, initial statements from key Labor figures strongly suggest that Labor will retain its commitment to carbon pricing and side with the Greens to block the scheme’s repeal.

Accordingly, this scenario seems unlikely at this stage. But remember, this is the Labor Party: who knows what policy shifts will emerge from the bloodletting, soul-searching and leadership-spilling that is to come?

Scenario #2 – Double dissolution:

If the current Senate rejects the repeal bill later this year, the Coalition must wait at least three months before reintroducing the bill, taking it well into 2014. If the bill is rejected in the Senate a second time, the government will have a trigger for a double dissolution election.

The Coalition has repeatedly promised that it would pull this trigger if necessary to repeal the carbon scheme. Whether it would actually do so is likely to depend on its assessment of the electoral risks and opportunities presented by a double dissolution. Were the Coalition assured of consolidating its power in the House of Representatives and gaining a majority, or a clearer path to pass legislation, in the Senate, this option might prove tempting.

But it has risks and would take time. The first risk is of a legal challenge, since the Constitution is ambiguous as to whether a double dissolution can be called before a newly elected Senate has convened. More importantly, there is a risk that the parliamentary outcome for the Coalition ends up worse than the status quo.

In any case, the repeal process associated with a double dissolution would take months – at least until mid 2014, by which time the Senate elected on Saturday would be due to convene. In all likelihood, the Coalition will shortly be entering discussions with the newly elected senators to ascertain whether passage of the bill would be secured when they take their seats in mid 2014. If passage looks viable under the new Senate (I will suggest it does, below), it is difficult to see the Coalition risking its position by pulling the double dissolution trigger.

Scenario #3 – Executive evisceration:

If the Coalition is unable to secure passage of its repealing legislation in the current Senate, it could attempt to hollow out the scheme as it stands through executive action. But it is unlikely to be able to achieve much in this regard.

The legislation for the scheme leaves it to the executive, via regulations, to set annual scheme caps on covered emissions from 1 July 2015 (when the floating price phase of the scheme is set to begin). But the legislation provides for default caps to apply (in line with Australia’s 5 per cent emissions reduction target on 2000 levels by 2020) if the regulations are not made or are rejected by either house of parliament.

This means that an attempt by the Abbott government to engineer a zero or negligible carbon price by setting the caps overly loosely would likely be thwarted by a disallowance motion in the current Senate.

Scenario #4 – New Senate negotiation:

This final scenario involves the government negotiating with the new Senate to secure passage of repealing legislation after 1 July 2014. At the time of writing, the precise result in the Senate was unclear, but the ABC’s election model was projecting the following results, which I will assume prove to be accurate for the purposes of this analysis:

Projected seats in the Senate from 1 July 2014 33 – Coalition 25 – Labor 10 – Greens 2 – Palmer United Party 1 – Democratic Labour Party 1 – Family First 1 – Liberal Democratic Party 1 – Australian Motoring Enthusiasts Party 1 – Australian Sports Party 1 – Nick Xenophon (independent)

Based on these numbers, in order to pass the repealing legislation the Coalition will need the support of six of the eight “micro parties” that will share the balance of power with the Greens.

At least five of these appear to be in the bag: Democratic Labour Party senator John Madigan (who was not up for re-election this year) has vowed to “repeal the carbon tax at the first opportunity”; the Palmer United Party is, unsurprisingly, keen to “abolish the carbon tax” (though one of the two PUP Senate hopefuls, Tasmanian Jacqui Lambie told ABC radio that a carbon price, albeit a lower one, is needed; she intends to consult her party on the matter); Family First are climate sceptics and opposed to the carbon tax; and the libertarian and climate-sceptic Liberal Democratic Party’s Senate candidate David Leyonhjelm has said he would “wholeheartedly support the removal of the carbon tax.”

The Coalition would thus need only one more vote from the remaining three senators (or two, if PUP candidate Lambie improbably defies Clive Palmer). Senator Nick Xenophon has a complicated position on carbon pricing but has suggested that he would only repeal the current scheme if it were to be replaced with a better one.

The Coalition therefore might have an easier time with the Australian Motoring Enthusiast Party or the Australian Sports Party. Neither of these parties’ websites or public statements contains any explicit policy position on the issue of carbon pricing. Members of the former obviously enjoy petrol-fuelled recreation.

Their underlying philosophy appears to be a mix of libertarianism and nationalism and their attitude towards the environment seems, well, anthropocentric. It’s not exactly a philosophical package that implies support for a cosmopolitan environmental tax on fossil fuels. The Australian Sports Party’s policy-free website reveals nothing about their political philosophy except for the fact that they support healthy living through sport.

These two single-issue parties might hold out for some concessions for their pet causes in exchange for supporting the repeal of the carbon scheme, but it is hard to imagine either of them taking a principled stand against the Abbott government on carbon pricing.

Accordingly, this fourth scenario is the most probable. Were this scenario to eventuate, it would be most fitting.

Abbott’s blood oath would be executed by the Senate’s motley new band of fossil-fuelled dinosaurs and climate sceptics, united by false belief, unreason and self-interest. The carbon tax, culled by the Coalition of the Unenlightened.

Fergus Green teaches Global Energy & Climate Policy at SOAS, University of London. This story was first published at Inside Story. Reproduced with permission.