Julia Gillard’s embrace of pro-business policies seems to know no bounds. It was revealed in early February Labor wants to introduce a carbon price laden with compensation for coal and electricity companies.

Leaked documents in The Australian show that Labor wants to introduce a carbon tax in July next year that will become an emissions trading scheme a few years down the track.

Compensation handed to big business would be similar to that offered by former Prime Minister Kevin Rudd under his abandoned emissions trading scheme (known as the Carbon Pollution Reduction Scheme, or CPRS)—approximately $35 billion dollars in cash and free permits to polluting companies in the first year alone.

The compensation arrangements under the CPRS attracted swathes of criticism; even the Grattan Institute, stacked with advisors handpicked by Labor, said in a report that the compensation arrangements were unnecessary and would slow the transition to renewable energy.

That even despite this Labor still wants to dish out such a stunning amount of money to polluting companies is testament to their slavishness to the oil, coal and gas giants that are responsible for the vast majority of Australia’s carbon emissions.

Under the CPRS, mining company Rio Tinto was to receive $565 million dollars in the first year alone, and would presumably receive a similar amount under Gillard’s scheme. Rio Tinto has just announced a record profit of $14 billion dollars.

Just-released Treasury documents show Gillard forfeited $60 billion dollars when she reworked the mining tax to suit business demands. BHP is boasting that as a result it achieved a half-year profit of $10.6 billion.

The Sydney Morning Herald reported that big business is so emboldened by their victory over the mining tax that “business leaders have warned that the government could face a battle reminiscent of the one over a mining tax if Labor ignores demands for compensation for companies hurt by a carbon price.”

This is a disastrous direction for the climate. A new report by the Department of Climate Change says Australia is not on target to reach the miniscule five per cent emissions reduction target set by Kevin Rudd. They estimate emissions will rise by 24 per cent by 2020.

Gillard’s proposal also shows that any kind of carbon price—a carbon tax or an emissions trading scheme—can be subject to massive rorting by business.

Sweden, Norway and Denmark have all had carbon taxes since the early 1990s, but only one has significantly reduced emissions—Denmark—and research shows that was mainly through public spending on renewables and energy efficiency.

Labor will take their carbon price to the carbon price committee, set up after the election with The Greens and others to determine climate policy. They will need the approval of The Greens and the independents to put any legislation through parliament.

The Greens
Thankfully, The Greens have criticised Labor’s latest proposal. But they have said they will restrict themselves to lobbying to reform the policy inside the carbon price committee.

It was initially a Greens’ proposal for Labor to start with a carbon price and move to an emissions trading scheme. Trying to tinker with Labor’s measures rather than campaigning for solutions that could reduce emissions and provide jobs has now trapped The Greens.

They have promoted their involvement in the carbon price committee and will be under enormous pressure to support whatever comes out of it.

Despite widespread disillusionment with Labor, many people, desperate to see some movement on climate change, support some version of emissions trading or a carbon tax. The Greens face a crucial test: will they give into pressure to support a useless market scheme, or will they argue against it and push a policy guaranteed to reduce emissions?

Instead of money going into the coffers of the people responsible for climate change, it could be spent on building wind and solar power stations, now, providing thousands of green jobs.

Gillard’s proposal shows that Labor has learnt little from its near-death experience at the last election—and does not plan to provide any concrete alternative to the neo-liberal politics that characterised the Howard years. Their refusal to do so has helped give Abbott an election-winning lead.

On the carbon price and everything else, it will be up to the left and The Greens to counter the slide right and put forward a solution that challenges the rule of big business.

Amy Thomas

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