Australia's Prime Minister Julia Gillard seeks to calm anxieties over a controversial new carbon tax

Australia's Prime Minister, Julia Gillard, today sought to calm anxieties over a controversial new carbon tax stoked by what she called a “hysterical fear campaign”.

The signs were, though, that the campaign – waged daily for months by the opposition leader, Tony Abbott – has been effective, with an opinion poll today concluding that two-thirds of people oppose the tax and more than half believe they will be worse off because of it.

Ominously, the poll – published in Fairfax newspapers – also found that support for Ms Gillard’s Labor government is languishing at 42 per cent, on a two-party preferred basis, with the conservative Liberal-National Party Coalition on 58 per cent.

The tax, which came into effect yesterday, obliges the country’s 294 biggest polluters – including airlines, mining companies, power stations and local councils – to pay A$23 (£15) for every tonne of carbon they emit. It has triggered noisy street protests, including a demonstration by thousands of people in Sydney at the weekend.

The government, which is aiming to cut carbon emissions by five per cent of their 2000 levels by 2020, says the tax will boost investment in renewable energy sources. It predicts that the cost of living will rise by just 0.7 per cent in the coming year, and is spending billions of dollars compensating households and businesses facing higher electricity prices.

Mr Abbott, for his part, says that the tax will cost jobs, squeeze businesses and drive up grocery bills, hitting “every Australian family’s cost of living”. He has sworn a “blood oath” to scrap it if the Coalition wins power at the next election, which is due by late next year.

The warnings of “doomsday merchants” were dismissed today by Ms Gillard, who said they “would have led people to believe that the Australian way of life was coming to an end”. People would now be able to judge the tax for themselves, the Prime Minister told ABC radio. “And of course the false claims that we won’t be mining any more coal, that your Sunday roast is going to cost you A$100… will be proved false.”

Her Trade Minister, Craig Emerson, meanwhile, employed unusual methods to ridicule Mr Abbott’s prediction that the steel town of Whyalla, in South Australia, would be “wiped off the map”. Striking a pose outside Parliament House in Canberra, he sang – somewhat out of tune – an adaptation of the Skyhooks’ 1975 hit single Horror Movie, which likened watching the nightly TV news to a horror film.

“No Whyalla wipe-out, there on my TV … shocking me right out of my brain,” declaimed the grey-suited Mr Emerson, while performing an awkward head-banging dance, as the original song played in the background.

Australia is among the world’s largest per capita carbon emitters, thanks to its reliance on coal. The EU and New Zealand already have carbon-pricing schemes.

Today nearly 300 big companies issued a statement supporting the tax and accusing the Coalition of creating uncertainty about its future.

Andrew Wilkie, one of the independents propping up Ms Gillard’s minority government, predicted that “once people have realised the sky hasn’t fallen in, they [will] see the sense in the reform”.