Yawning gap between carbon price fears and impacts Media Brief

Jun 24, 2012 - 1:00am

There is a yawning gap between 36 per cent of Australians’ fear that they will be much worse off under the carbon pricing legislation and the likely moderate impacts or benefits.  

The Climate Institute (with consumer advocate CHOICE and the Australian Council of Social Service, ACOSS) commissioned CSIRO and AECOM to do economic modelling on the impacts of the carbon price on households.  

The research puts Australia’s carbon pollution price as adding 0.6% to inflation in 2012-13. This is less of an impact on the economy than estimated by Treasury modelling, and may be even smaller as the modelling assumes a 100% pass-through of costs by businesses to consumers.  

Key findings from the research include:  

+ The carbon price initially translates into 2 cents extra for bread and a litre of milk, 11 cents for a leg of lamb and 14 cents for a weekly spend on fruit and vegetables. Petrol prices will not be impacted.

+ The carbon price will add on average just under 9% to next year’s energy bills (less than 4% in Tasmania, which relies mainly on hydro generation). Based on the average household bill, this works out at $3.20 a week. As this fact sheet explains, energy costs are going up further because of non-carbon price related infrastructure “poles and wires” upgrades. 

+ Estimated total weekly costs are largely covered, when government assistance is factored in. If 100% of the costs are passed through, average households will pay $9.10 while average household support is $10.10 from tax cuts and pension benefits funded by carbon permit revenue.  

+ The research shows that 9 out of 10 households will be compensated for the carbon price.

+ There are simple energy efficiencies that can put households even further ahead. Estimates show many families could be another $12.75 better off per week ($663 per year) by making just four small changes in the home.

+ The research compared the effect of the carbon price with other inflationary events such as the introduction of the GST, Cyclone Yasi and the mining boom. It found that the impact on prices of the 2001 GST was more than four times bigger (2.5%) than the carbon price, while fruit prices, led by bananas, spiked by a massive 70% after the damage of Cyclone Yasi.

+ The research found that without domestic and global action to slow down climate change, the impact on basic food prices is likely be 20 times greater than the carbon price impact by 2050 because of extreme weather events.  

+ Households outside capital cities will incur event lower cost increases, as they tend to have lower incomes and expenditures. The average dollar impact on households outside the capitals is estimated at $8.70 per week, rather than the national average of $9.10 per week and capital cities average of $9.40 per week. 

Examples of impact on household types:

+ The CSIRO-AECOM research puts weekly household cost rises for a couple with two kids aged three and ten and a combined annual income of around $45,000 at $8.60. Estimated government assistance to such households will be $30.80 per week.

+ A single parent with two kids aged four and six and an annual income of about $60,000 will see costs go up by about $8.30 per week. Estimated government assistance to such households will be $10.15 per week.

+ A couple with two kids aged three and ten and a combined annual income of around $110,000 will see their costs increase by about $11.90 per week. Estimated government assistance to such households will be $13.05 per week.

+ A couple with two children earning a combined income of $300,000 will see weekly increases of $17.90. High income families do not quality for government assistance.

+ A single person over 65 with an annual income of $30,000 a year will see costs go up $4.30 a week and will receive approximately $19.20 in government support per week.

The carbon laws at work:

+ The carbon laws have the potential to cut between .68 and 1 billion tonnes of pollution by 2020. That’s comparable to removing 70 million cars of the road permanently.

+ By 2030, the carbon price could help create up to 32,100 new clean energy jobs.

+ Revenue from sale of Carbon Pollution Permits will go towards:

  • Relping unlock $13 billion in renewable energy investment    
  • Restoring vegetation and biodiversity
  • Energy efficiency for communities and councils         
  • Capturing landfill gas for electricity
  • Paying farmers to store carbon in the landscape and reduce agricultural emissions
  • Helping businesses to find ways to reduce emissions

The full CSIRO-AECOM report can be found at http://www.climateinstitute.org.au/cost-of-living

For more information

John Connor, CEO, The Climate Institute 02 8239 6299

Kristina Stefanova, Communications Director, The Climate Institute 02 8239 6299

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