The Gillard government is examining ways to reduce the impact of a carbon tax on household budgets, as the Coalition ramps up its campaign against the financial impact of the yet-to-be-detailed carbon price.
Many ministers believe the model used in the carbon pollution reduction scheme - to allow the cost to affect consumers but offer them compensation using tax breaks or welfare payments - is still the best policy, if it is explained properly.
They argue the Rudd government failed to communicate the real impact of the scheme, which would have left low-income families better off overall and most middle-income households heavily compensated.
Other ministers are considering an intensity based model - under which the energy sector would only pay for emissions above a certain baseline - meaning the cost of the permits to generators would be far less and the effect on household bills minimised.
This idea was specifically mentioned in the framework paper released last week by the multi-party committee on climate change.
Other sources have mentioned the design of the now-mothballed US cap-and-trade legislation, which included the idea of requiring electricity generators to buy pollution permits but compensating retailers, so that the scheme encouraged a shift to lower carbon generation but made little difference to the price paid by consumers.
The independent MP Rob Oakeshott, who sits on the committee and whose vote will be crucial for the passage of the scheme, said yesterday there were ”a range of models being considered, in particular around how to minimise impacts to the household”.
He would not be drawn on whether or not a carbon tax would be allowed to flow through to petrol prices, or be offset - as was planned under the Rudd government’s scheme. But he said the public should ”rest assured I get the impacts at the bowser and the importance of compensation”.
The government has not announced the carbon tax rate, or details of its compensation schemes but it has promised that households and trade-exposed industries will be shielded from its impacts.
Coalition MPs and senators are publicising and supporting rallies against the carbon tax, to be held later this month. the Opposition Leader, Tony Abbott, was continuing to talk up the impact of the tax yesterday.
”This is an economy-changing and a lifestyle-changing tax. It’s meant to be,” he said.
”It’s meant to make it almost impossible to turn on your airconditioner. It’s meant to make it much more expensive to drive your car. It’s meant to stop people digging up coal and burning it for power. It’s meant to close down emission intensive industries like steel and aluminium. This is the very purpose of the tax,” he said.
Labor attacked the intensity-based approach when it was proposed by the Coalition during the last Parliament because it said it would not deliver sufficient greenhouse gas abatement.
