The $29-per-tonne tariff on carbon emissions started on Sunday.
The new tax on almost 300 heavy carbon emitters - such as electricity generators and councils - was greeted with praise and protest alike.
It has been labelled by some Australian newspapers as the country's most profound economic reform in more than a decade. Those same reports say the new tax "offers trading opportunities for banks and polluters, but may cost the prime minister her job".
The tax is a result of concern about climate change - a subject which itself has plenty of sceptics. For the next three years, Australian "polluters" will pay a fixed price - up to $32.43 in 2015 on current exchange rates - for carbon dioxide emissions. After July 2015, emissions trading, including auctions for pollution permits, will start. Those labelled "polluters" will from then also be allowed to buy overseas emission reduction offsets.
Some polls show more than 60% of Australians are against the tax.
Many are angry that Prime Minister Julia Gillard broke a 2010 election promise in introducing it. Business and the conservative side of politics are united in their message that the tax will damage the Australian economy, push up prices to consumers, hurt local businesses and see jobs lost. Liberal MP Craig Kelly summed up the anti-carbon tax mood in a statement anything but understated: "This tax is a poisonous, toxic tax ... it will go up and up.
"Every coalition member will sign a blood oath to get rid of this tax."
Ms Gillard rejects claims from Opposition leader Tony Abbott and others who have united against the tax. Mr Abbott says that, if he is elected prime minister (the next election must be held before November 30, 2013), he will repeal the tax; Ms Gillard says he will do no more than tweak it. Mr Abbott says the next election will be a referendum on the tax; Ms Gillard says the public will soon realise it will have little effect on their daily lives and they will quickly forgive and forget.
Regardless of one's position on climate change and carbon taxes, for the Prime Minister, already unpopular and struggling in the polls, it is yet another fire fight.
Australian politics is featuring battles not just over the tax, but over asylum-seekers and the country's immigration policies, over the alleged behaviour of former Labor MP (now Independent) Craig Thomson and Fair Work Australia investigations into the use of his credit cards and other matters, over media ownership, and a host of other positions seemingly decided purely on a partisan basis.
Ms Gillard - who replaced first-term PM Kevin Rudd after a backroom knifing when his popularity slid off the electoral abyss in 2010 - was elected to the top job later that year by the narrowest of margins. In fact, without the votes of three independents, she would not be prime minister.
Many claim she is a de facto head of state and - while calling for an early election - predict Labor will be swept aside in an avalanche of protest votes next year.
Those on the left side of politics are praying the Government's modelling on the carbon tax - which says that while electricity prices will increase by as much as 10%, the overall cost of living will rise by just 0.7% - are accurate.
And they will no doubt try even harder to paint Mr Abbott as a conservative, Catholic, train-wreck-in-waiting. Cabinet minister Anthony Albanese earlier this year told Parliament that when Mr Abbott is put under the spotlight, voters will decide "in your guts, you know he's nuts" - a line used by US Democrats against an extreme-right candidate named Barry Goldwater in the 1960s.
It's unlikely to be the last such insult, nor the worst, as both sides of the Australian political divide get down and dirty before the 2013 vote. For those who enjoy politics as a brutal, bare-knuckle knock-'em down and drag-'em out affair, the next 16 months in the Australian federal arena will be a fascination. For those who despair over personal attacks, cheap shots and negativity, be warned: it is likely to get worse before it gets better.
