Driving in two directions on fuel
Two things stand out about the Rudd era of Australian politics. First, there is the Prime Minister's love of slogans - "working families" and "education revolution" are political slogans par excellence. Second, there is the Prime Minister's talent for symbolism. We've had a signing, a summit and an apology.
It was inevitable that the slogans and the symbolism would collide. Climate change policy is the first big test of which of the two will be triumphant. Kevin Rudd has a dilemma: does he maintain his promise to working families and do everything possible to keep down the price of petrol? Or does he implement his election commitment to cut greenhouse gases, which could result in petrol prices going up by 25 cents a litre? That increase is a conservative estimate of the effect of the carbon emissions trading scheme Labor has said it will introduce within the next two years.
Australian politicians are powerless to prevent the petrol price rises of the last few months. Not even Rudd can control the global price of oil. But a climate change tax on petrol is different. If the price of a litre of petrol goes up by 25 cents, it will be because of a Government decision.
The response of some people will be "good". Those who complain about gas-guzzling four-wheel-drives will be particularly pleased if Rudd makes petrol more expensive. The hope of environmentalists, urban planners and politicians is that dearer petrol will force everyone to use their cars less and public transport more. Or better still, car drivers will be forced to walk. But these hopes ignore several realities.
The lesson from overseas is that if petrol prices rise, families don't necessarily buy less petrol. All that happens is that they spend more of their money on petrol and less on other things. And if you think about it for a moment, this makes sense.
When was the last time you drove your car for the fun of it? People drive their car when there isn't a better alternative. Cars provide a convenience that other modes of transport can't match. The effort of taking the children to Saturday morning sport, picking up some shopping and then visiting the grandparents in the afternoon would take on a whole new dimension for many Melbourne families if they couldn't use their car.
The impact of higher petrol prices is felt disproportionately by lower income earners. Someone earning $100,000 a year can more easily afford expensive petrol than someone earning $50,000. There has been talk of the Government providing compensation to make up for the effect of climate change taxes, but invariably such compensation would go only to those on very low incomes. Working families where one or both adults are employed probably wouldn't be compensated.
Melbourne's public transport system is bad enough as it is. There's no way the system could cope with hundreds of thousands of additional commuters. The consequences of overstretching an already failing system are not simply crowded and standing-room-only trains and trams. Delays and cancellations cost commuters time that could be spent at home with their families and that can't be replaced.
Furthermore, not all of Melbourne is served by public transport. Many of Melbourne's newer suburbs have inadequate or no public transport. Rudd hasn't yet explained what will happen to the household budgets of working families if petrol goes up 25 cents a litre and the only way the family breadwinner can get to work is by car. Those budgets will be further stretched because higher petrol prices increase the cost of those things transported by road, such as food.
Whether climate change is real and whether it's caused by humans is not the issue when it comes to examining the impact of climate change taxes on petrol prices. The real issue is that climate change taxes will hurt working families.
Australians think petrol is already too expensive. They resent the fact that one-third of the price of petrol goes to the government in tax, and that when it comes to petrol the government levies a tax on a tax.
At best, the effect of the FuelWatch scheme will be to make petrol cheaper by a cent or two a litre. At worst, FuelWatch could make petrol more expensive in some parts of Melbourne. As interesting as the political debate of the past few weeks has been, if climate change taxes raise petrol prices by 25 cents a litre, FuelWatch will be irrelevant.