Climate Institute says about half the figure comprises costs that are not certain to fall such as clothing, food and health

This article is more than 6 years old

This article is more than 6 years old

The federal government’s claim that scrapping the carbon price will provide households with an extra $550 a year has been labelled a “mirage”, amid calls for an independent review of the repeal’s impact.



The Climate Institute, an organisation that advocates a price on carbon, said about half the $550 figure comprised items such as clothing, food and health costs that are not certain to fall in price.



Citing Treasury modelling done on the eve of the carbon price’s introduction, the Climate Institute said electricity, gas and water made up $263.12 of the $550 figure regularly used by Tony Abbott and the environment minister, Greg Hunt, to argue the case for scrapping the scheme.



On Friday, Abbott said Labor was standing in the way of Australians and a “$550 a year bonus payment”.



Amendments proposed by the Palmer United party to the Coalition’s repeal bill would require energy providers to pass on such savings to consumers, but airlines and supermarkets such as Qantas and Woolworths have said they cannot guarantee to do likewise.



“The $550 figure is certainly misleading,” John Connor, chief executive of the Climate Institute, told Guardian Australia. “It’s a misleading interpretation of a very successful reform of tax and pensions which left nine out of 10 households better off as a result of carbon pricing.



“They talk about nanny states, but you’ll need a nanny in every newsagent and every other business to ensure all those savings would be passed on. You’d need the ACCC [Australian Competition and Consumer Commission] everywhere.



“It’s also worse than hypocritical for businesses who said the carbon price would wreck them to now say they don’t have any savings to pass on due to its repeal.”



Connor said electricity providers might end up passing back as little as $80 a year to households. He said there should be an independent inquiry into the impact of the repeal, a stand backed by the former independent MP Tony Windsor, who tweeted that people were “confused about various claims. Should review claims and real impacts on consumers.”



Tony Windsor (@TonyHWindsor) Senate needs time out on climate decision. Community confused about various claims . Should review claims and real impacts on consumers

The Treasury modelling puts the annual carbon price impost at $45.76 for food, $5.72 for alcohol and $28.60 for clothing and footwear.



This was based on a starting price of $23 per tonne of carbon in 2012. The price has risen a further 5% for the 2014-15 financial year, to $25.40 a tonne.



Labor went into the last election with a promise to bring forward the floating carbon price, or emissions trading scheme, by a year to 1 July 2014. The party claimed this move, which would price carbon at about $6 to $8 a tonne, would reduce household costs by $380 a year, on average.



The previous government’s household assistance package, $14.3bn of tax and pension concessions, is estimated to have benefited households by an average of $10.10 a week, nearly offsetting the $550 figure over the course of a year.



Treasury modelling estimated that gross national income would grow at an annual rate of 1.1% to 2050 with a carbon price, or 1.2% without the impost. The modelling found that overall consumer prices would increase by 0.7% under a $23 carbon price.



The Coalition’s budget in May showed that scrapping the scheme would reduce the consumer price index by 0.75%, with the underlying CPI dropping by 0.25% in the year to mid-2015, compared with a $25.40 carbon price.



According to the government, Australians will be better off without the carbon price due to lower bills and also because they will retain the compensation provided by Labor for the scheme.



Hunt told parliament on Monday electricity bills would be “around $200 lower” this financial year, while gas bills would drop by $70.



“These are real savings that will help family budgets,” he said. “Prices for groceries, for household items and for services will also fall because the price of power is embedded in every price in our economy.



“The carbon tax will go, but the carbon tax compensation will stay so that every Australian should be better off.”





