Will the Gillard Labor government survive?

As the details of its long-awaited “carbon tax” package were announced, Julia Gillard’s Labor government plummeted in popularity. Australia faces the real possibility of a landslide victory at the next election for the conservative Coalition under the leadership of the notorious reactionary Tony Abbott.

Opinion polls show a massive decline in support for the ALP. Newspoll suggests a fall from 43% support in April 2010 to just 27% in July 2011. Essential Report records a similar drop, with support for Labor at 30%. Gillard’s approval rating is now just 20%. Both agencies give a two-party preferred result of 57% support for the coalition. An election would result in Labor’s annihilation.

There is little sign of any shift in support to the Greens, whose parliamentarians Labor now relies upon in the Senate and House of Representatives. Their support remains steady at 11-12% of the electorate.

‘Carbon tax’

No doubt the biggest factor in the collapse in support has been the government’s so-called carbon tax. The details finally released on July 10 included a range of compensatory measures aimed at offsetting likely energy and fuel price rises associated with the tax on producers. Yet the scheme is a classic case of Labor carrying out largely token reforms that will benefit corporations rather than the environment and provide some “green cosmetic surgery” for the government.

As Friends of the Earth’s James Goodman explained, “The scheme will not deliver the emissions reductions that we need to restore a safe climate. It is not clear that ‘pricing pollution’ will even deliver the targeted 5% emissions cut by 2020. Internationally there is little evidence that emissions trading reduces emissions …

“The EU’s ‘Europe 2020’ program for green growth now focuses on mandated renewable targets and industry policy for efficiency, not carbon pricing. Australia’s approach is therefore a decade out of date. Worse, the emissions trading scheme announced today is designed to replace any existing regulatory measures. We already know the Renewable Energy Target — the government’s most effective renewables policy — is under threat.

“Australian-based legislation must target at least the 50 polluters that produce half of Australia’s emissions, and regulate to reduce their emissions, with targets set by science rather than politics. The carbon price mechanism in its current form prevents this from happening.”

Targeting polluters with either taxes or tradable polluting rights has little chance of reducing carbon emissions. In fact, the Treasury modelling predicts that even with the carbon tax Australia’s total emissions of greenhouse gases will increase by 12% from 578 million tonnes in 2009-10 to 621 million tonnes in 2020. The supposed 5% reduction in Australia’s GHG emissions is to be achieved through allowing Australian companies to purchase emissions credits overseas. The theory is that “putting a price on pollution” will create incentives for these corporations to invest in less polluting sources of energy. Yet these corporations’ size and control of the market mean they will most likely pass on the additional costs to consumers, who are mostly workers.

Because of this, the mainstream environmental organisations and the Greens have been able to deliver only lacklustre public support for the scheme. The most pointed examples were the June 5 rallies held in most capital cities. These attracted at most 30,000 to 45,000 people and were much smaller than the “walk against warming” events of recent years.

Nominally organised by the “Say Yes” coalition (or Price on Pollution 2011), the rallies were really called by the internet-based campaign group GetUp, without consultation with, or the prior knowledge of, most environmental groups.

As climate change activists David Spratt and John Rice noted on their blog “Climate code Red”, the rallies “were a disconcerting experience, in which the community was effectively taken out of these events, reduced to little more than extras providing a staged backdrop for an inordinately expensive media stunt, led by GetUp”.

The rallies lasted for a peculiarly short time in most cities. There were no marches in all but one case. Activist groups and the Greens were even prevented from bringing signs lest it “not look good for the media”. No movement can be built by this kind of top-down and purely media-centred approach.

Political reaction

With its little likely impact on CO2 emissions and many sections of the public feeling the rising prices of utilities and petrol, it is no surprise that there is limited support for the scheme. According to an Essential Report poll, just 39% of the electorate supported it on July 18.

Labor’s carbon pricing initiative has provided the opening for the political right to go on the offensive. Emboldened by advances by the right in other countries — such as the Tea Party movement in the United States and David Cameron’s Conservative and Liberal-Democrat government’s savage budget cuts in the UK — Abbott has run an opportunistic and populist campaign against the government.

This has even involved turning his back on measures advocated by conservative economists — of which some 85% support measures like the carbon tax, according to a poll by the Australian Economic Association.

Abbott’s campaign craftily combines attacking the government from the left over rising living costs and appealing to both climate change denialists (according to Essential Report, more than half of Coalition supporters reject climate science) and those in favour of taking some action through his “direct action” policy. He has also received extraordinary support from the Murdoch-controlled press.

The Coalition policy is largely based on dubious carbon offsets and pork barrelling to its rural constituents.

Greens in the spotlight

On July 1 the new Senate gave the Greens the balance of power. They will face increasing pressure from the government. Their first act, supporting the carbon tax, does not bode well. Although they secured the formation of an independent agency to oversee the development of renewable energy — the Clean Energy Finance Corporation — this does not guarantee that the best renewables will be developed on the scale that is needed.

The Greens will also face pressure to support retrograde measures such as Labor’s budget initiatives. The May 2011 budget already contained a number of anti-worker cutbacks which the government has attempted to justify by their goal to obtain a budget surplus by 2013.

The Murdoch press has run an increasingly shrill campaign against the Greens. After earlier calling for the Greens to be “destroyed at the ballot box”, the Australian newspaper has run a bizarre series of articles attacking the party. The weirdest so far was a red-baiting article against Senator Lee Rhiannon on July 3. This focused on her parents’ membership of the Socialist Party of Australia and the fact she was involved in producing an allegedly pro-Soviet publication over 25 years ago!

The Australian’s editor Chris Mitchell is a reactionary notorious for running a series of bogus red-scare articles against the eminent Australian historian Manning Clarke in Brisbane’s embarrassing Courier-Mail.

Even more amusing attacks on the Greens have come from Liberal opposition Senate leader Eric Abetz targeting the party’s supposed “extremism”. Abetz is the parliamentary patron of several extreme right-wing groups including the Salt Shakers, Focus on the Family, Lyons Forum, Endeavour Forum, Family Council of Victoria, Fatherhood Foundation, Australian Christian Lobby, Australian Family Association and Right to Life Australia.

While the Greens should be defended against such hysterical and nonsensical criticisms, it is clear that their position of “negotiating” with the government is putting them in a difficult position of their own choosing. Rather than focusing on policy negotiation, the party should be looking at ways it can use its parliamentarians to help campaigns outside parliament to build momentum for real change. Unfortunately, their commitment to the parliamentary and capitalist framework means they will not do this.

World economy and the boom

A deep sense of economic uncertainty underlies the unpopularity of the government and the resurgence of the right. Although Australia largely escaped the consequences of the 2008-09 global recession, it remains vulnerable.

Record high fuel and food prices are already the largest factor underlying a base inflation rate of just over 3%. The Australian Bureau of Statistics, however, suggested in April that real annual increases in living costs were close to 7% for the employed and 7.4% for welfare recipients.

Now a possible sovereign debt default by the United States and pressure on the euro caused by Greece’s economic crisis threaten a new round of global instability. It’s not clear how this will impact on the main export markets in Asia (notably China and Japan) that Australian capitalism’s coal and iron ore industries depend upon.

The uncertainty is already having widespread impacts on the economy, especially in non-mining areas. The high value of the dollar is hurting Australia’s notoriously poorly managed and uncompetitive retail sector. High-profile closures and associated job losses in retail chains such as Borders books are adding to the uncertain climate (although according to the ABS, total employment has consistently risen in the retail sector since late 2009).

More significant are the flat and falling rates of investment. Reserve Bank data show business borrowing has steadily declined from a height of $777 billion in late 2008 to just $678 billion in May 2011. Personal borrowing has fallen from $148 billion to $143 billion in the same period. Households and businesses are “de-leveraging” — reducing their debt in anticipation of falling incomes.

Consumer confidence has also fallen, according to the Westpac-Melbourne Institute Index, as reported on July 13.

Lower immigration, threats of interest rate rises and the withdrawal of “stimulus” spending are also finally calling a halt the long-running residential property price boom. There is evidence that the 0.8% annual and 1.7% quarterly residential property price declines registered in capital cities in March by the ABS have accelerated during the winter months.

Notionally, the economy is in good condition, with low unemployment, booming exports and a current account balance that is possibly heading towards surplus for the first time since the late 1970s. Yet a range of policies are holding back the spread of the benefits of the boom, and anxiety about the world economy is blocking investment.

What’s next?

For the government, this means that the next issue it will face will be passing its long-awaited Mineral Resources Rent Tax. Despite the claims from the opportunist critics of the earlier Mineral Super-Profits Tax, this will not result in the redistribution of the benefits of mineral exports.

Rather it is geared towards reducing corporate taxation in the non-resource sector in the hope that the resulting increase in profits will lead to more investment and jobs. This is far from assured, especially while the international economic climate remains uncertain.

Of course a working people’s government would simply increase the royalties paid by or nationalise the mining firms, but this is not being proposed by either Labor or the Greens.

Meanwhile, the business sector is anxious about finding ways to ensure that the costs of any renewed crisis are paid by workers or the gains of a boom benefit them. There is lingering concern by sections of capital about the decline of productivity growth in Australia (despite a similar trend in the rest of the developed economies).

The Australian Industry Group’s Heather Rideout has led a campaign to claw back even the very limited rights won back by workers through the 2009 Fairwork Act. A decision that allowed the Transport Workers Union to initiate bargaining in the JJ Richards case in June caused a minor panic in the business press.

Sections of business — buoyed by the high levels of support for the Coalition — want to put attacks on workers’ rights more explicitly on the political agenda. The pressure to do this was reflected in the attempt by notorious union-basher Peter Reith to win the federal presidency of the Liberal Party from (the equally abhorrent) Alan Stockdale.

It was only Abbott’s vote that prevented Reith’s victory. Abbott knows that any revival of memories of the Howard government’s attack on workers’ rights could quickly erode his lead in the polls. Leadership rival Malcolm Turnbull also continues to snap at his heels.

The economic malaise and the Gillard Labor government and Greens’ policy agenda are paving the way for Abbott. Short of a big change in the political situation, even if the Gillard government survives its full term, it will almost certainly be replaced by the Coalition. Working people will need to be prepared to resist even more attacks on their living conditions and the environment.