On the occasion of the first anniversary of Julia Gillard’s so-called assassination of Kevin Rudd, the fact is that it does not matter much who is leading Labor right now. To rephrase Bill Clinton’s missive of recent memory – it’s the carbon tax, stupid.

The Herald’s Lenore Taylor has broken some of the big environment stories in recent years. On April 27 last year Taylor revealed 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 the 2010 election campaign.

Subsequently, Taylor reported that the ALP national secretary, Karl Bitar, and the Labor frontbencher Mark Arbib favoured dumping the ETS altogether and that Gillard and Wayne Swan came to support this position. Those opposed were Penny Wong, Lindsay Tanner and Greg Combet. Rudd was indecisive but eventually went with the deferral compromise (for a minimum of three years).

Labor dropped the ETS just over a year ago because it became convinced that it was an election loser. A carbon tax, in place of an ETS, was also deemed an election loser. Both Gillard and Swan said shortly before the August 21 election that there would be no carbon tax under a government led by them. Gillard has been accused of lying over this broken promise. Most likely she was hoping that Labor would win a majority of seats and, consequently, be able to reintroduce its planned ETS.

It seems likely that Labor’s decision last year to junk the ETS, for a while at least, saved it from defeat at the hands of Abbott. Gillard held on to lead a minority government primarily because Labor won some seats in Victoria and held on in some marginal electorates in western Sydney and on the NSW central coast.

There was also, of course, the decision of the two National Party haters – independent MPs Rob Oakeshott and Tony Windsor – to support Gillard over Abbott.

The polls indicate that Gillard Labor was travelling well enough until the Prime Minister, along with the Greens leader, Bob Brown, announced that the government would introduce a carbon tax leading to an ETS. It has been all downhill since then. Labor’s primary vote is somewhere between 31 per cent (as measured by Newspoll) and 27 per cent (as measured by theHerald/Nielsen poll) compared with the Coalition’s standing at 46 and 49 per cent respectively.

The evidence suggests that if Gillard were replaced by, say, Greg Combet or Stephen Smith, Labor would still struggle. Here the Productivity Commission’s report, Carbon Emission Policies in Key Economies, does not help the cause of Australian action on climate change much. As page 50 indicates, “no country currently imposes an economy-wide tax on greenhouse gas emissions or has in place an economy-wide ETS”.

Since that was published, Liberal MPs Paul Fletcher and deputy Senate leader George Brandis have represented the Coalition on Sky News’s The Nation with David Speers, and have been untroubled in dealing with carbon tax advocates.

It may be that, once the carbon tax is in place, Labor’s fortunes will improve. Gillard may recover. But Labor may be so damaged that it will be too late for political resurrection. Here news from the states is not encouraging for Labor – since the party now seems very unpopular in most, if not all, parts of Australia.

Labor’s dilemma is that a carbon tax/ETS upsets its traditional supporters in the suburbs and regions, who are worried about power bills and secure employment, while not satisfying the inner-city left, who are relatively secure financially and want to see most or at least some of Australia’s coal industry phased out. Needless to say, such a position does not go down well in Queensland’s Bowen Basin, the Hunter and Illawarra regions in NSW, Victoria’s La Trobe Valley or in Western Australia.

This is a story that some journalists miss. In December 2009The Age’s Tim Colebatch predicted that Abbott’s position on the ETS was “the worst threat to Coalition unity in our lifetime”. In fact, when Malcolm Turnbull led the Coalition, Labor looked good. But Abbott’s ability to strike at the contradiction in Labor’s support base is causing considerable harm. Gillard Labor’s essential problem is policy.

Gerard Henderson is executive director of The Sydney Institute.