Australian households will see only a “modest” impact from carbon pricing and most citizens will come out neutral or ahead thanks to tax cuts and benefit changes, Treasurer Wayne Swan said.
While the carbon price of A$23 ($23.49) a metric ton, which came into force July 1, will increase electricity bills by 10 percent this year and add 0.7 percent to the consumer price index over the next 12 months, most households will be compensated, he said in a weekly economic note yesterday.
“Australians can now begin judging the price on carbon pollution for themselves,” Swan said in an e-mailed statement. “We’ve moved from rhetoric to reality.”
Australian opposition leader Tony Abbott has promised to repeal the carbon pricing regime if he wins an election scheduled for next year, saying that the policy will raise living costs, hurt jobs, and goes against pre-election promises by Prime Minister Julia Gillard.
“This is the world’s biggest carbon tax at the worst possible time,” Abbott told Australian Broadcasting Corp. television yesterday. “We are exposing ourselves to all sorts of economic damage without doing any environmental good.”
About 6 million households will receive assistance averaging A$10.10 a week to help with power prices that will rise by A$3.30 a week, Swan said, with 4 million households to end up better off.
Swan said that the approval by ConocoPhillips (COP:US) and Origin Energy Ltd. (ORG) on July 4 of the second stage of their A$20 billion Australia Pacific LNG project was evidence that carbon pricing and a separate tax on mining and offshore petroleum profits weren’t hurting resource investment.
“Far from sounding the death knell of the resource sector, investment has skyrocketed since both policies were announced,” Swan said.
Recent data on dwelling approvals, retail sales, services activity and business credit was “encouraging” evidence about the non-mining economy, he said: “We are the standout performer in the developed world.”
Australia’s fixed price on carbon is scheduled to become an emissions-trading program in 2015, similar to systems used by the European Union and New Zealand.
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