The scary thought for Julia Gillard is that many voters apparently believe her carbon tax is already operating. According to one of her cabinet ministers, this has taken hold as a widespread belief in the community. ''And the problem is, they're experiencing the costs but they haven't seen any benefits,'' the minister says, in a worried tone.
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This anecdote highlights the magnitude of the problem facing the Prime Minister as she attempts to rebuild Labor after the shattering defeat in Queensland, which followed the shattering defeat in NSW.
Just days before the Queensland election, Tony Abbott suddenly declared that it would actually be a referendum on the carbon tax.
That wasn't reflected in the bunting at voting booths. It was a state election conducted on state issues, with the ''it's time'' factor and deception being prominent.
The exit polls identified two sore points - cost of living and privatisation. Both are related and point to problems federally.
The cost of living factor is overwhelmingly due to state government and council utilities - electricity, water, rates and gas. But power prices have been going up much faster than the consumer price index.
One reason is privatisation.
Governments like to impose a freeze on prices when an enterprise is sold to a private operator. At the end of the moratorium, the operator is likely to jack prices up significantly, to catch up on lost revenue and to pitch prices at commercial rates.
Rising prices are anathema to voters facing the polls. They blame the incumbent party.
That's where Abbott's declaration of a referendum on the carbon tax makes a mark. Not because his prediction occurred, but because he continues his fiction unimpeded.
Riding his bike through country Victoria, Abbott says the cost of living and carbon tax are flip sides of the same coin. This is a very dangerous entanglement for Labor.
The Coalition can claim power prices are already rising because companies are preparing for the carbon tax. Wrong, but who's listening to Labor these days?
This association of ideas is the alarming take-out for federal Labor from the Queensland disaster for the party - Abbott is framing the election result as a cri de coeur from battlers already being bashed by the carbon tax.
He is campaigning on the carbon tax as being a cost of living issue. Remember when it used to be about the environment? ''We are going to reduce emissions but we are not going to lay waste our economy in order to do so,'' Abbott says, in typically super-heated rhetoric, which largely goes uncontested.
Newly-elected Queensland Premier Campbell Newman chimes in on cue to give the Prime Minister some gratuitous advice - continue with the carbon tax at your peril.
An Opposition frontbencher says privately Gillard should dump the tax, for the good of the nation, but adds that the Coalition would have a field day with such a significant backflip. It would withhold any praise for ''doing the right thing'' for Australia in favour of blanket criticism for flip-flopping.
Does Gillard get how bad the situation is for federal Labor even if, as she says, the state election had nothing directly to do with her policies?
The lesson for political parties from the election must be about political integrity.
Queensland voters decided way before the election campaign began that they would dump Anna Bligh because she deceived them by not being up front before the previous election about her plans for privatisation.
When that blew up in her face, she made the extraordinary decision of a public float of freight operator QR National. Voters were asked to pay for what they own through the Crown in the first place.
The voters repaid this insult with a slump in Bligh's support, from which she never recovered, apart from a temporary blip during the floods.
New Labor leader, Annastacia Palaszczuk, concedes the deeply unpopular proposal for asset sales without notice so soon after the 2009 election was a ''fundamental breach of trust''.
Wayne Swan, a former Queensland ALP secretary, is eager to argue the campaign was fought on state issues, and that election results there are different. ''In Queensland the tide goes out a long way and it comes in a long way,'' he says, recalling previous disasters on both sides of state politics. Another federal cabinet minister points out that Labor's problems in Queensland were well known. ''No one believed that we were going to win the state election. By the time the voters got into the polling booth they did what they were going to do before the campaign started. We knew that we had real challenges in Queensland but in other parts of Australia as well. It's a reminder but we really didn't need reminding.''
A senior Labor figure says the ''it's time'' factor was impossible to overcome after almost two decades of Labor rule in Queensland. ''There is a deep-seated belief in giving the other guy a go. In a developed democracy like ours, we know the world doesn't end if we change governments.''
Reflecting on the issue of political integrity, the MP believes Paul Keating lost the 1996 election as soon as he delivered the 1993 budget which broke his L-A-W promise on tax cuts. ''I was out there in the electorate and they hated him for that,'' the MP says. ''Now we've got the broken promise on the carbon tax. We are getting some of the worst polling consistently that we've ever had and on top of that there is this underlying hatred for her.''
Gillard is being urged to change her approach, but to what? - the real, real Julia? Gillard has tried to make a virtue of breaking her promise on a carbon tax. Her strategy now relies on time and logic. She believes the ''lived experience'' of Australians with the carbon tax after July 1 will expose the ''silly'' claims of the Coalition.
The 500 (unnamed) companies which are the biggest polluters will be hit with a tax for every tonne of carbon dioxide they emit into the atmosphere, however trade-exposed companies such as smelters will get some free permits. Households will be compensated for the inevitable rise in the cost of living, as those companies feed the cost through to consumers.
In fact, the compensation flows before July 1, the official start date for the tax, so worried is the government.
The tax may have minimal impact on the environment but its financial and psychological impact on the voters cannot be underestimated due to Abbott's successful scare campaign.
Ross Peake is Political Editor.
twitter.com/rosspeakeCT