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Revoking mining tax, Abbott dismantles Labor achievements

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If the carbon trading scheme was the signature accomplishment of six years of Labor government, perhaps its second-most important policy achievement was the promulgation of a mining profits tax that came into effect in 2012.australia new

But a month after Australian prime minister Tony Abbott successfully scrapped the carbon scheme, he’s now also managed to repeal the mining tax as well, which levied a 30% tax on mining profits. Ironically, the tax failed to raise anything close to the projections that the Australian Labor Party hoped, due in part a slowdown in demand for Australian commodities as China’s economy decelerates. Eliminating the tax was one of the chief campaign pledges that Abbott made in his campaign to defeat Labor last September.

Nevertheless, with the decision by Australia’s Senate to scrap the tax by a margin of 36 to 33, Abbott will easily pass the repeal through Australia’s lower house, the House of Representatives, where Abbott’s Liberal Party / National Party coalition holds a more solid majority.

As with the carbon scheme, Abbott secured the legislative victory with the support of Clive Palmer, a former mining magnate, and his new Palmer United Party, an alternative to the center-left Labor and to the center-right Coalition. Palmer holds the party’s sole seat in the House of Representatives, but the PUP holds three seats in the Senate, making it a key power broker in enacting Abbott’s policy agenda.  Palmer himself is an often beguiling mix of ideologies, but he seems more at home on the right than on the left.

Palmer, who made millions as the owner of several coal and nickel interests, agreed to the repeal after securing the government’s support for several family-based initiatives. He also received a promise to freeze government contributions to Australia’s superannuation plan for nine years, forcing Abbott to rescind a campaign pledge, thereby halting a planned rise from 9% to 12% — employer contributions  are now capped at 9.5%.

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RELATED: How Tony Abbott killed Australia’s carbon scheme

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Under a policy introduced by former prime minister Paul Keating in the 1990s, agreed with business and labor unions, employers are required to make annual contributions to each employee’s ‘superannuation’ fund. The contribution level began at 3%, rose to 9.5% and was set to climb to 12% before the Abbott government’s latest decision, which would freeze contributions at 9.5% through 2025. That, in turn, has caused Keating and other Labor leaders to denounce the mining tax deal, arguing that it could derail the full potential of the superannuation program, which itself was designed to meet the rise of retirement-age Australians set to expand in the current decade and beyond.

Nevertheless, the deal leaves Labor in somewhat of a quandary under the leadership of former education minister Bill Shorten.

Australian voters aren’t exactly keen on Abbott’s government, which hasn’t had an incredibly easy first year in office — it’s been captive to small parties like Palmer’s in the Australian Senate and Abbott was also forced to shelve his plan to expand paid parental leave, one of his top campaign pledges last summer. 

But it makes the drama of the last Labor government even more pointless. It now seems less relevant than ever if Kevin Rudd or Julia Gillard was prime minister in 2010, because Abbott has, in about one month’s time, dismantled Labor’s two policy cornerstones. To have spent his first months as opposition leader railing impotently on the sidelines doesn’t make Shorten look like a prime minister in waiting, even as Abbott’s government suffers from its decisions on superannuation and paid parental leave.

How Tony Abbott killed Australia’s carbon trading scheme

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In the end, Australian prime minister Tony Abbott didn’t have to call a special, massive ‘double dissolution’ election to roll back Australia’s carbon pricing scheme, the signature policy accomplishment of the six-year Labor government that preceded him.australia new

All it took was some deft maneuvering to cobble together a working majority in the 76-member Senate, where Abbott’s Liberal/National Party holds 33 seats, just short of a majority.

Nevertheless, Abbott (pictured above) won a narrow 39 to 32 victory last month in the upper house of Australia’s parliament, on the strength of six additional non-Coalition votes to repeal the carbon trading market. Having been one of the first countries to adopt a carbon trading market, Australia on July 17 became the first country to repeal a carbon trading market.

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That included the support of a mercurial former mining magnate named Clive Palmer (pictured above), whose maverick conservative Palmer United Party (PUP) became the swing vote in determining whether Abbott’s repeal push would succeed or fail.

The Labor Party’s new leader, Bill Shorten, led an unsuccessful push in alliance with the Australian Green Party, to oppose the repeal. Labor holds 25 seats in the Senate, while the Greens hold another 10. 

Abbott’s resulting victory is primarily a triumphant tactical and policy victory for the Australian right, giving Abbott an easy talking point on reducing the price of electricity for the average Australian voter (though the real long-term impact of the repeal of a carbon scheme that had reduced emissions by less than 10 percent nationally is yet to be determined).

It’s also a narrative about the fragmentation of the country’s two-party system, as far as Australian senatorial elections go, with voters placing increasingly greater power in the hands of independent third-party candidates.

On the global scale, it marks a symbolic victory for opponents of similar climate change legislation worldwide, though the battle over carbon emissions was never going to be won or lost in Australia, a country of less than 23 million. Arguably, China’s decision in June, for the first time, to limit carbon emissions at the national level, will have a much wider impact on global climate change policy.

While British prime minister David Cameron continues to promote a progressive stand on climate change as an issue to pull his Conservative Party to the middle in the United Kingdom, there’s no indication that the UK is set to introduce any major climate change legislation on the scale of Australia’s experiment with carbon pricing beyond the EU’s own carbon trading scheme. Though there was a brief window in 2008 and 2009 when a carbon-based exchange system might have been enacted in the United States with bipartisan support, those days seem long gone. Nevertheless, the administration of US president Barack Obama and the US Environmental Protection Agency, however, introduced executive actions this summer that aim to reduce US carbon emissions by 30% by the year 2030.

Australia’s carbon scheme has its origins as one of the major promises of former prime minister Kevin Rudd’s widely successful 2007 campaign that brought the Labor Party back to government after more than a decade in opposition. It was, in part, Rudd’s decision to back away from climate change legislation that caused his Labor colleagues to dump him in 2010 in favor of then-deputy prime minister Julia Gillard.

After Gillard won a narrow reelection campaign of her own later that year, she enacted a comprehensive climate change bill in 2012, as well as a broader tax on mining profits (that hasn’t raised nearly as much revenue as expected). 

The problem, both in Australia and beyond, is that the global financial crisis of 2008-09 left many national electorates wary of climate change legislation that, almost overnight, suddenly seemed much too costly to introduce at a time when so many developed countries were struggling with the highest unemployment and lowest GDP growth in decades.

That made Abbott’s pledge to repeal what’s popularly become known in Australia as the ‘carbon tax’ one of the most popular aspects of his agenda, which won wide support the parliamentary elections last September that brought Abbott’s Coalition into government. His recent victory in winning Senate support to repeal the carbon scheme will almost certainly rank among the chief legislative successes of his first year as prime minister. Continue reading How Tony Abbott killed Australia’s carbon trading scheme