Reality Check: The carbon price and the cost of living Spotlight Report

Nov 12, 2011 - 1:13pm

Launched by consumer advocate CHOICE, the Australian Council of Social Service and policy research organisation The Climate Institute, this study gives households the tools to weigh up their own costs, financial support and potential savings under the carbon price with an independent online tool  -yourcarbonprice.com.au. The CSIRO-AECOM research underpins the figures used in the tool, as well as a national information program available to councils, schools, faith groups, business groups and other organisations.

The CSIRO-AECOM research shows impacts on households are likely to be smaller than anticipated. It calculates Australia’s carbon pollution price will add 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. The study also compares the effect of the carbon pollution price with other inflationary events such as the introduction of the GST, Cyclone Yasi and the mining boom. It finds that the impact on prices of the 2001 GST was more than 4 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 study reports 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.

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