The term fog of war has become something of a cliche. In domestic politics, from time to time, reality is offset by the fog of delusion.

In Australia most journalists, including most members of the press gallery, believe in the necessity of what is called action on climate change. They maintain that Australia can, and should, take action to reduce global warming. Hence the majority support within the media for Kevin Rudd’s proposed emissions trading scheme and, subsequently, Julia Gillard’s carbon tax, which will transition into an emissions trading scheme.

To some, the present turmoil within the Labor Party involves a personality contest between the Prime Minister and the Foreign Affairs Minister without much policy involvement. All this distracts from one essential truth. Labor’s core problems stem not from personal rivalry but from policy. The handling of the trading scheme de-authorised Rudd and the introduction of the carbon tax led to Gillard’s present discontents. Only Tony Abbott and the Coalition have done well, so far at least, out of Labor’s commitment to act on climate change.

Labor was in a dominant position until December 1, 2009, when Abbott replaced Malcolm Turnbull as Liberal Party leader in the week of the byelections of Higgins in Melbourne and Bradfield in Sydney. On the morning of the polls, Professor Judith Brett predicted that the political ascension of Abbott would see “the Liberals risk becoming a downmarket protest party of angry old men and the outer suburbs”. Professor Brian Costar predicted that the Liberals would be forced to preferences in Higgins.

In fact, Kelly O’Dwyer increased the Liberal vote in Higgins, as did Paul Fletcher in Bradfield. The most important lesson of the byelections was that the Liberals did best in the lower socio-economic areas of both electorates. This provided an early warning that the reaction to Labor’s emissions trading scheme was likely to be greater in the outer suburbs and regional centres, where electors were less well off and employment less secure.

Rudd considered an early double dissolution election on the issue but backed off. Then, on April 27, 2010, Lenore Taylor revealed in the Herald that “the Rudd government has shelved its emissions trading scheme for at least three years in a bid to defuse Tony Abbott’s ‘great big new tax’ attack in this year’s election campaign”.

Since the leak turned out to be accurate, it is reasonable to assume that the reason Taylor gave for Rudd’s decision was also correct. Later reports revealed this decision was backed by Gillard and Wayne Swan. Interviewed on The World Today yesterday, Newspoll’s Martin O’Shannessy spoke of “the record falls in [Rudd’s] personal popularity and the Labor primary vote” that began after the failure of the UN climate talks in Copenhagen in December 2009 and continued after the emissions trading scheme policy reversal.

Gillard led Labor to the August 2010 election promising a people’s assembly on climate change and declaring that there would be no carbon tax under a government she led. The Prime Minister survived the election, albeit as leader of a minority government that signed an agreement with the Greens. In late February 2011, flanked by the Greens and independent MPs, Gillard announced that there would be a carbon tax. Labor’s support, and the Prime Minister’s popularity, went into free-fall from that moment on.

The evidence suggests that first Rudd’s and then Gillard’s leadership was blighted by their climate change agenda. Without the Liberal leadership change in December 2009, there is little doubt Labor would have prevailed over the Coalition at the 2010 election. Abbott’s unequivocal opposition to the emissions trading scheme changed the political landscape.

Ostensibly, Labor’s present leadership dispute is not over policy, since Gillard and Rudd have similar, if not identical, positions on such issues as climate change, asylum seekers, the need to put the budget in surplus and so on. Yet policy is at the very heart of Labor’s crisis – since it was initially caused by Abbott’s opposition to Labor’s climate change agenda.

Bob Brown and the Greens like to rail against the big polluters. Yet in some outer suburbs and regional centres, the so-called big polluters are also the big employers. It just happens that most of the marginal seats the Coalition needs to win to assume office are located in these areas.

It may be the electorate’s apparent opposition to a carbon tax will dissipate when the Gillard government’s scheme is introduced on July 1. But the evidence so far suggests that action on climate change is primarily responsible for Labor’s parlous position. Only the deluded believe otherwise.

Gerard Henderson is executive director of The Sydney Institute.