Australia abandons disastrous green tax on emissions

A series of environmental disasters Down Under coupled with the Australian Labor Party’s reliance on an uneasy coalition with the Greens forced Ms Gillard – who had come to power after ousting her predecessor and long-term political rival Kevin Rudd – to press ahead with a controversial so called "carbon tax" on emissions.

The tax, which almost cost the Australian government more to collect than it raised in actual revenue, or achieved in terms of a better environment, was politically motivated and poorly thought out in terms of hard economics.

Arguments for the Aussie tax often focused on how the government had to take profound action to reverse changing weather cycles such as droughts that had drained the gigantic Murray-Darling river basin and floods sinking large areas of Queensland under water.

The tax was designed to hit the country's biggest emitters of carbon pollution such as mining and energy companies. Instead it added to the uncertainty hanging over the resources boom, the main driver for the Australian economy.

It also ignored the impact that China is having on global carbon emissions. China's polluted capital Beijing is probably a bigger threat to the world's environment than a small country like Australia.

Unfortunately for Ms Gillard, the carbon tax policy was so unpopular that it contributed to her downfall just weeks ahead of a general election at the hands of her long-time political foe Mr Rudd.

Ultimately, the tax failed in its political objective of holding together Labor's fragile minority government with the Greens, or winning over voters who faced higher costs passed on by the companies that had to pay it.

The tax failed to raise enough funds to help reduce Australia’s budget deficit, or more importantly stop changing weather patterns causing havoc across the country.

Ms Gillard had also hoped that the tax would transform Australia into a global carbon trading superpower instead of the world's biggest mining hub. However, her thinking ignored the fact that carbon trading mechanisms and green taxes have largely been a failure elsewhere and especially so in Europe where they have dragged on investment and threatened long-term energy security.

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