Julia Gillard and her senior colleagues are confident that Labor’s political fortunes will begin to improve when the carbon tax kicks in on July 1 next year. They believe much of the electorate will appreciate the compensation package, which accompanies the tax, and realise that opposition to Labor’s climate change agenda has been nothing but a scare campaign.

Maybe the Prime Minister and her advisers are correct. However, there is another possible scenario. Namely, that the introduction of the carbon tax, leading to an emissions trading scheme, on July 1, 2012, takes place at a time of rising unemployment at 6 per cent or higher. This could cause serious problems for the Gillard government just more than a year before the scheduled election date in 2013.

At the weekend, the Australian Workers’ Union national secretary Paul Howes warned of a “major crisis in Australian manufacturing” leading to significant job losses. Yesterday, BlueScope Steel announced significant redundancies at its plants in Port Kembla in NSW and Hastings in Victoria. There are likely to be more job losses in manufacturing due to many causes – including the high value of the Australian dollar.

They will come on top of redundancies already occurring in the retail, hospitality and financial services sectors. All four sectors are labour intensive. So it is not unreasonable to assume that unemployment will increase in the medium term. The situation would worsen if there is another significant economic downturn in the North Atlantic.

What was striking about the “Convoy of No Confidence” that rolled into Canberra yesterday was how many protesters looked like one-time traditional Labor voters. Not many employees or independent contractors can find the time or the money to travel to Canberra for a demonstration and the turnout was not large.

Nevertheless, the convoy symbolised how Labor – under pressure from its own left wing, the Greens and the independents – has alienated much of its traditional voting base.

On ABC radio yesterday, Deborah Cameron described the convoy as “anti-everything”. This misses the point. Sure, elements of the convoy oppose the carbon tax and/or the ban on live cattle exports and/or the proposed restrictions on gambling in licensed clubs and/or same sex marriage. But what united the convoy is that – to a man and woman – all the protesters want an election. Now.

Some of the convoy leaders do not understand that the constitutional requirements of a double dissolution have not been met. Yet the conditions do exist whereby the Prime Minister could advise the Governor-General that a normal election should be held.

Judging by the comments from Labor ministers and the press gallery, Tony Abbott has set the political agenda like no Opposition Leader since Labor’s Gough Whitlam in the early 1970s. However, Labor’s essential problems stem from its own policies.

What makes a carbon tax so hard to sell are rising energy prices and the fear that they will increase further under a carbon tax. This is of special concern to individuals in insecure jobs and/or on low incomes. The proposed pokies tax – designed to appease independent Andrew Wilkie – is hitting at Labor’s heartland in the outer suburbs and regional centres where clubs provide much-needed entertainment.

Inner-city types, including some conservatives, tend to favour same-sex marriage and quite a few commentators are quick to sneer at Christians who regard marriage as a union between a man and a woman. But talk to some Labor MPs in suburban seats and they will recount, in confidence, how many Muslims and Hindus are offended by the concept.

Last week there was some excitement when the AC Nielsen poll indicated a slight increase in Labor’s support. But former Labor operative Graham Richardson put the matter in perspective when he commented: “I never thought I would live to see the day when Labor went up two points in the polls and still only got to a miserable 28 per cent.”

Gillard’s support collapsed when the carbon tax was announced in February. Labor may recover. But it is difficult to see how when it seems to be alienating traditional Labor supporters in suburban and regional Australia.

In Canberra and the US, trade union leaders are not advocating an emissions trading scheme. Yet in Australia, ACTU leaders Jeff Lawrence and Ged Kearney are calling for the introduction of a carbon tax at a time of growing unemployment.

Meanwhile the Labor government, by re-regulating the industrial relations system, is making it less attractive to hire workers.

The protesters in the Canberra convoy may not be sophisticated in many ways.

But they do know that, in the present economic situation with the prospect of increasing unemployment, the introduction of a carbon tax doesn’t make sense.

Gerard Henderson is executive director of the Sydney Institute.