Carbon tax will be even harder to sell after electricity price hike

The Queensland Competition Authority’s decision today that power prices can increase by 6.6% certainly makes PM Julia Gillard’s job of selling the carbon tax even tougher in Queensland (Power price hike set to cost $118 a year):

Queensland power prices are set to rise by 6.6 per cent next financial year, an increase that is higher than originally expected.

The Queensland Competition Authority, announcing its final decision on benchmark retail power prices today, said the new prices would apply from July 1.

The authority said it would allow price rises of 6.6 per cent, which was above the 5.83 per cent increase foreshadowed in its draft decision.

The 6.6 per cent increase would mean an average annual power bill of $1781.50 was set to rise by $117.58.

The carbon tax is expected to be between $20-30 per tonne of CO2-equivalent emissions. As reported earlier this year (Start price set for carbon tax):

At $20 a tonne, electricity prices would rise about 10 per cent, or $2.70 a week based on Treasury modelling for Kevin Rudd’s abandoned carbon pollution reduction scheme.

That would be an extra $140 per year, or around an extra $35 per quarter. Given the large price increases that are already locked in, it’s not surprising that the carbon tax is unpopular in the community.

Part of the problem, of course, is that the Government has not fully explained to ordinary Australians why it considers a carbon tax is necessary. Why doesn’t PM Julia Gillard buy 5-10 minutes of time from each of the TV networks to present her case on prime-time TV, taking the time to explain why a carbon price is necessary and the differences between a carbon tax, a cap-and-trade scheme and direct action policies?

Currently Australians are confused and worried. All they hear are glib assertions about taxing Australia’s biggest polluters, when everyone except the most daft realises that this means we will end up paying higher prices, because the costs will get shifted on to consumers. We need to be convinced that a carbon price is a good idea.

Paul Keating was arguably the greatest communicator of complex policy ideas that Australia has ever seen. He simplified, but he didn’t treat people like dummies. The PM can still recover her standing and win the debate on climate change, but it will require a great speech.

In her book On Speaking Well,  former White House speechwriter Peggy Noonan observes that at the heart of every great speech is great policy. People want to know what the great policy is, and people can generally be moved by logic. The PM should start working on a great speech and book the time with the networks. It would certainly make for better TV than that lamentable ad featuring Cate Blanchett.

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