Could the end of the carbon tax spell the end of Abbott?

Could it be that the repeal of the carbon tax is the worst thing that could possibly happen to Tony Abbott?

Such a proposition seems bizarre but consider the following pre-election statements from Abbott and Environment Minister Greg Hunt about the carbon tax’s impact on the cost of living. Then consider what the actual companies concerned now say will happen with their prices.

The carbon tax will damage the economy and harm householders. It will ... create havoc with household budgets as rent, food, electricity, gas and the price of essentials all increase. – Tony Abbott, 23 March 2012

It’s going to hit the price of milk; it’s going to hit the price of fruit and vegetables. ..The reality of the carbon tax is it is small family businesses and it is goods such as milk and fruit and vegetables that are going to be hit. – Greg Hunt, 22 May 2012

We had yesterday an announcement from Qantas and Jetstar that their tickets are going to cost more because of the carbon tax. So everything you do will be more expensive under the carbon tax. Turn on the lights, you pay. Open the fridge, you pay. Get on the train, you pay. Catch a plane, you pay. – Abbott, 3 February 2012

Qantas, Virgin Australia and Woolworths are all refusing to reduce prices once the carbon tax is ditched, while Coles would not guarantee reductions…. Woolworths claimed only five products out of 40,000 rose in price during the carbon tax ­regime and said grocery costs had fallen since 2012. – Daily Telegraph, 10 July 2014

Abbott’s very rise was built on hyperbole about a carbon tax that would be a wrecking ball, undermining our very way of life, hurting our hip pocket at every turn. He rose on a chorus of front page news on the Daily Telegraph, Herald-Sun and Courier Mail screaming about the carbon tax’s impact on the cost of living.

Now it looks like he’ll be hung by his own hyperbole.

The electorate have already found themselves deeply disappointed to find that budgets deficits aren’t lowered by some kind of magically painless “DNA” which only the Coalition possess, which was Abbott's pre-election rhetoric. Rather it has been plain old tax increases and cuts to government benefits and services. Since the May budget, poll after poll has charted an almost unprecedented level of unpopularity for a government and leader less than 12 months into its first term. Some polls have the government trailing 45 per cent to Labor’s 55 per cent on a two-party preferred basis – this would represent electoral devastation for the Coalition.

Now the electorate’s inflated expectations – fed by Abbott’s cheerleaders in the tabloid press – will suddenly crash into a second wall of economic reality, post carbon tax repeal.

After their visits to the supermarket and when they open their next electricity bills, consumers around the nation will be deflated to find very little improvement in their cost of living.

Coming on top of a budget full of surprises (which really shouldn’t have come as a surprise if you knew that DNA doesn’t reduce deficits) the electorate is likely to feel like it's been conned.

In spite of the Coalition’s pre-election screaming and shouting about the price of everything going up – from building a house, Holdens, the lamb roast, Weet-Bix and milk – its proposed legislation, even after Clive Palmer’s interventions, clearly states that the only goods which the ACCC is required to monitor are electricity, gas and refrigerant gases.

There’s good reason for this. The impact of the carbon tax on the retail price of all other goods is inconsequential. Imagine the ACCC demanding Coles drop the price of their $1 a litre milk by a further 1 cent, or that Brumbies and Bakers Delight drop the price of a $4 loaf of bread by maybe 4 cents. As the government now acknowledges in its carbon price repeal bill regulatory impact statement, the reduction in the cost of goods outside of energy are utterly inconsequential and uncertain to be passed through to consumers.

And the sad thing for the Coalition is that households aren’t even likely to notice the saving in their electricity bill. This is in part because they’ve substantially lowered their electricity consumption in response to Abbott’s scare campaign surrounding electricity prices. For the average household, its quarterly bill inclusive of fixed charges with the carbon price in place would be $560 and without the carbon price it’ll be $520. Too small to notice, lost in the noise of variations in a household’s power consumption.

And now the media have caught up with economic reality. Here’s an excerpt of a press conference yesterday after the botched attempt to repeal the carbon price:

JOURNALIST: Can you just explain, Minister, these amendments that you say you support?



How will they be enforced and does it mean that retailers like Coles and Woolies who say today they won't pass on the savings of the carbon tax to consumers and airlines who say they won't pass on the savings of the carbon tax to consumers will be penalised heavily, is that what your Government is supporting?



ERIC ABETZ: Well, amendments speak for themselves, the penalties speak for themselves and we have indicated our support for the regime that was moved by Palmer United, …



JOURNALIST: What does this mean in practice? What will happen to Coles and Woolies if they don't pass on the benefits of axing the tax?



(Hunt then waffled about the ACCC enforcing price reductions on power companies, to which a journalist responded:)

JOURNALIST: Isn't it the case that the amendment put forward today only applies to power and gas companies, it doesn't have any bearing on retailers like Coles and Woolies, or have I misunderstood it? And can you please explain what it does that your legislation didn't already do?

He didn't have an answer and soon the questions will be coming from the electorate at large.