Gillard needs a new policy distraction: Gottliebsen

Understanding a problem is the first step to solving it.

Some government numbers people in Canberra are starting to come to the conclusion that even though many voters favour carbon action they are under too much financial pressure to agree to a carbon tax at this time.

If the next election is a referendum on a carbon tax Tony Abbott will win easily and once key government people accept that inevitability a whole new way of thinking will open up.

The Government numbers people are also coming to grips with what it means to have Julia Gillard as prime minister.

She is a brilliant fixer of problems who has sorted out the mining tax, the carbon tax, the cattle fiasco and looks like stopping the boat people via the Malaysian solution.

But the Gillard carbon “fix” which was part of the Greens deal that put her into office was electoral suicide in the current economic environment.  

Had Kevin Rudd or John Howard introduced a carbon tax it might have been accepted because the economic environment was different when they were in office.

But in 2011 Australia’s all-important middle class is bleeding and bleeding badly.

They are being hit by higher utility charges and interest bills at a time when their income is not increasing, so there is simply no tolerance for a carbon tax even though many may not be worse off.

In the next few months there will be an enormous carbon debate but it is a debate Gillard can’t win given the problems facing the middle class. 

On the other hand government optimists say Abbott is akin to Kim Beazley, that he has become a one-issue politician.

Beazley opposed the GST and was geared to fight the 2001 election on the GST. He looked a winner until Howard found other issues to fight about and Beazley lost.

Had Gillard understood that she was really introducing a resources tax plus a carbon tax on local power she could have funnelled the extra money into tax cuts and other middle class benefits that would have made the tax appealing to the middle class.

Instead the export tax on coal and LNG is to be spent on pet Greens projects. 

The Canberra number crunchers say that Gillard must somehow “do a John Howard” and fight the next election on non-carbon issues.

But will there be any such issues? Finding them will be no easy task but the election is two years away so a lot can happen – and the number crunchers have lots of time to think up new issues. 

One fascinating option would be to find reasons to abandon the 2013 balanced budget undertaking and go for middle class tax cuts.

But that would be dangerous given the assurances that have been written in stone.

While the solution might not be apparent now that situation may change if events happen that none of us could have forecast.

This article first appeared on Business Spectator