PUTTING A PRICE ON POLLUTION the facts for Australian workers and their families

A price on carbon pollution for 294 of Australia’s largest companies and organisations comes into effect on 1 July. This will give companies an incentive to reduce their carbon pollution and help make our economy more energy efficient. The price of $23 per tonne of carbon emissions begins on 1 July.

It’s fair enough that Australian workers and their families are concerned about how the price on carbon will affect them. This leaflet answers some of the most common questions people are asking about the carbon price.

How will the carbon price affect my household bills?

The carbon price is not a tax on all Australians, but on 260 companies and 34 councils.

Nevertheless, some of these costs will be passed onto consumers, at an average of $9.10 a week in 2012-13. 

This is equivalent to a 0.6% increase in inflation – or 60 cents in every $100. The GST was a 2.5% hit on inflation, while Cyclone Yasi had a 0.5% impact.

The cost impacts will be felt most on electricity, gas and food with modelling by the CSIRO-AECOM showing that electricity bills could increase by $2.80 a week, gas by 40c, and food by $1.20.

To minimise the impact of these cost of living changes, the government is giving low and middle income households a mix of tax cuts and increased government payments.

Will the carbon price cost me my job?

Some sectors of the economy are under pressure at the moment from a range of factors, many to do with the high value of the Australian dollar and the multi-speed economy.

However, very few employers will be directly affected by the carbon price, which is on only 294 large businesses and councils.

Heavy industries, especially those that face international competition, will be helped through a period of adjustment to the carbon price to protect jobs.

More than $9 billion of industry assistance has been allocated over three years to help industries such as steel, aluminium, and cement manufacturing maintain competitiveness, while providing incentives to invest in clean energy technologies. Specific programs like $300 million to encourage investment and innovation in the steel industry, and a coal plan of $1.2 billion will help reduce emissions and develop new technologies.

A significant proportion of the money raised from the carbon price will also go towards developing new clean energy technologies to create new jobs and industries and transform existing ones.

This includes the $10 billion Clean Energy Finance Corporation, and the $1.2 billion Clean Technology Program.

Will it be added to my tax like the Medicare levy or added to my shopping bill like the GST?

No. The price on carbon is not a tax on individuals. Only 264 large companies pay the tax, and it will not show up on your tax return or shopping bills.

If businesses claim that they have to increase prices because of the carbon price, how will we know that it is legitimate?

There will be some legitimate initial price rises to utilities, food and some other goods as companies pass on the costs of the carbon price to consumers. 

But households should be wary of claims from businesses that they have had to increase prices significantly because of the carbon price.

The Australian Competition and Consumer Commission (ACCC) will be carefully scrutinising price rises, and has set up a special hotline for people to report scams or misleading conduct. The number is 1300 303 609.

What compensation will I receive?

More than half the revenue raised from the price on carbon, about $15 billion, will be allocated to low and middle income households in the form of tax cuts and increased government payments.

Household assistance from the price on carbon will result in average assistance of $10.10 a week, and means 6 million households will be either no worse off or slightly better off.

From 1 July, every Australian worker earning up to $80,000 a year will receive a tax cut with most receiving $300 a year. 

These tax cuts will be achieved through raising the tax-free threshold from $6000 to $18,200, which will mean a million people no longer having to fill out a tax return. It will be raised again by $1200 to $19,400 in 2015-16.

The increased government payments include lump sum payments equivalent to a 1.7% rise for pensioners and recipients of the Family Tax Benefit, delivered as advance payments in May and June.

Who pays the carbon price?

Only 294 companies and councils individually generating more than 25,000 tonnes of carbon dioxide a year will be required to pay for their emissions under the carbon pricing mechanism.

They include companies that directly emit greenhouse gases, such as power stations, mines and heavy industry, and some public authorities responsible for emissions from landfill.

There are more than 2 million businesses in Australia, so those who will be liable to pay make up just 0.015% of all businesses.

Households, small businesses and other organisations will not have to pay anything under the carbon price. 

Nor will a carbon price apply to agricultural emissions or emissions from light on-road vehicles, like the family car. 

How does it work to cut pollution?

Before the introduction of the price on carbon, big companies could pollute as much as they liked for free. 

But the carbon price puts an economic value on pollution and treats it as a cost of doing business.

This provides a strong financial incentive for big companies to reduce the amount of carbon pollution they produce.

It works by requiring large companies to buy a permit valued at $23 for every tonne of carbon pollution they emit into the atmosphere.

The more that is emitted, the higher the financial cost for the polluter. But by reducing their emissions, big companies can also reduce their financial liability.

In the first three years of the scheme, some free permits will be provided to help companies to adjust.

But over time, it will not just encourage big companies to cut their pollution, but the business case for investing in clean energy, low-pollution technologies, including those that use solar, wind and geothermal power, will be strengthened.

More information:

or call 1300 4 86466


Authorised by Dave Oliver, ACTU, 365 Queen Street, Melbourne, 3000