Adam Morton June 24, 2012
1. What difference will the carbon scheme make when households and businesses are getting so much compensation?
The government argues only big polluters will pay the carbon price, and technically this is true: businesses and organisations that emit more than 25,000 tonnes of carbon dioxide a year will have to buy a $23 permit for every tonne released from July 1.
However, in reality, price increases will flow through to all households and businesses.
With specific industries getting big compensation and six out of 10 households being fully or over-compensated for cost of living increases, it is reasonable to ask: where is the incentive for anyone to change?
Households are not the target of the scheme, but they may have an incentive to become more energy efficient.
If they cut down their electricity use, bills will come down and they can still pocket the payments - an average of $10.10 compensation a week.
2. What role is the carbon scheme playing in the increase in my electricity bills?
Even without the carbon tax, electricity bills in NSW have risen by about 55 per cent in the past three years. Between 2010-11 and 2013-14, household electricity charges will rise 42 per cent, due to the anticipated higher wholesale price of electricity, the upgrade of the distribution network and other costs such as the solar feed-in tariff.
The carbon tax will add 1.94¢ per kilowatt hour to the NSW household electricity price in 2012-13, and another 2.03¢ in 2013-14.
3. Why should singles earning above $80,000 and families earning more than $150,000 get no compensation?
People on lower incomes can do relatively little to lower their utility bills. They already have an inbuilt incentive to cut costs just so they can get by. Many low income people rent and cannot upgrade their homes with better insulation and heating systems.
Because Treasury estimates of cost-of-living increases are only averages, the government has chosen to compensate those on low incomes 120 per cent of the average in a bid to ensure they will not be out of pocket.
People on higher incomes are considered to have greater capacity to change their behaviour, including wearing the short-term cost of paying for efficient appliances and changes to their home that over time will pay for themselves through reductions in bills.
Treasury estimates households face an increase in cost-of-living of about $515 a year.
Payments vary depending on household size, but in crude terms if you are a family on more than $150,000 or a single on more than $80,000 - about 10 per cent of households - the government believes there is room in your life to choose to avoid some of the cost without it hurting your quality of life.
The rest it reckons you can afford.