"Terminating" the carbon tax will cost the budget $3.8 billion over the next four years, Prime Minister Kevin Rudd has confirmed.

Mr Rudd has released the details of his plan to switch to a European-style floating price system a year early, saying it would lead to a reduction in the cost of living which would save an average family $380 a year from July 1, 2014.

Speaking in Townsville, he said households would continue to receive financial assistance and businesses would pay less for carbon permits.

The cost will be offset by new savings measures, including $1.8 billion raised by changing the fringe benefits tax for employer-provided or salary-sacrificed cars.

Cuts to fund carbon price policy Abolishing statutory formula for fringe benefits tax on cars - $1.8 billion over forward estimates

Abolishing statutory formula for fringe benefits tax on cars - $1.8 billion over forward estimates Energy security fund: bringing forward free permits, then discontinuing program - $770 million over forward estimates

Energy security fund: bringing forward free permits, then discontinuing program - $770 million over forward estimates Changes to coal sector jobs package to adjust value to new carbon price - $186 million

Changes to coal sector jobs package to adjust value to new carbon price - $186 million Changes to clean technology program and carbon capture and storage program - $586 million over forward estimates

Changes to clean technology program and carbon capture and storage program - $586 million over forward estimates Return unallocated funds from biodiversity fund to budget - $213 million over forward estimates

Return unallocated funds from biodiversity fund to budget - $213 million over forward estimates Cuts to funding for carbon farming futures program - $143 million over forward estimates

Cuts to funding for carbon farming futures program - $143 million over forward estimates Changes to public service including 1 per cent cut in executive staff numbers - $248 million

Some environmental programs funded by the carbon tax are also being scaled back, and new savings measures are being imposed on the public service.

"The Government has decided to terminate the carbon tax to help cost-of-living pressures for families and to reduce costs for small business," Mr Rudd said.

"This is the fiscally responsible thing to do.

"The nation's 370 biggest polluters will continue to pay for their carbon pollution but the cost will be reduced meaning less pressure on consumers.

"Households and pensioners will continue to receive payments calculated on a higher carbon price, providing additional support to meet cost-of-living pressures. These benefits are permanent."

Mr Rudd said the $380 annual saving for an average family would include cuts off $150 on electricity bills and $57 on gas.

Treasurer Chris Bowen said the Government was planning $3.9 billion worth of savings over the forward estimates to pay for the change.

He said that would equate to a contribution to the budget bottom line of $177 million over the next four years.

The Government wants to move from a fixed carbon price of $24.15 a tonne to a floating price of about $6 by July 2014.

Mr Rudd says Labor remains committed to cutting emissions despite the lower carbon price. He says his policy would be more effective than the Coalition's direct action plan, which he argues would cost households $1,200 a year more.

Abbott: Rudd's not the terminator, he's the exaggerator

Opposition Leader Tony Abbott disputed Mr Rudd's claim that he was "terminating" the carbon tax, saying: "He is not the terminator, he is the exaggerator, he is the fabricator, not the terminator.

Sorry, this video has expired Watch: Abbott says Rudd is exaggerator, not terminator

"What Mr Rudd has announced today is not the abolition of the carbon tax, all he has done is simply brought forward Julia Gillard's carbon tax changes by 12 months.

"He has changed its name but he hasn't abolished the tax. All he has done is given Australians one year only of very modest relief."

Shadow treasurer Joe Hockey also disputed the Government's figures.

"The Govt. must release ALL the Treasury modelling on Labor's Carbon Tax statement and his lies about our scheme immediately," he wrote on Twitter.

Rudd to head to Rockhampton for community cabinet meeting

After the Townsville announcement Mr Rudd moved on to Rockhampton in the seat of Capricornia for his first community cabinet meeting since being reinstalled.

Mr Abbott is scheduled to visit the same electorate later this week.

Explainer: Car fringe benefits tax Tax applies to employer-provided car used for work and personal use, or a privately-owned, salary sacrificed car.

Tax applies to employer-provided car used for work and personal use, or a privately-owned, salary sacrificed car. Benefit currently calculated using operating cost method (log book) or statutory formula method.

Benefit currently calculated using operating cost method (log book) or statutory formula method. Operating cost method: cost of running car multiplied by proportion of personal use of car (recorded in log book).

cost of running car multiplied by proportion of personal use of car (recorded in log book). Statutory formula method: cost of car multiplied by 20 per cent, regardless of actual personal use of car.

cost of car multiplied by 20 per cent, regardless of actual personal use of car. Statutory formula automatically assumes significant proportion of use of the car is for business purposes.

Statutory formula automatically assumes significant proportion of use of the car is for business purposes. Removal of statutory formula method will apply to contracts entered into after July 16, 2013. It will be effective from April 1, 2014.

Removal of statutory formula method will apply to contracts entered into after July 16, 2013. It will be effective from April 1, 2014. Government says car log book apps now make operating cost method easier to calculate.

Yesterday Mr Abbott drew the Government's ire after describing the ETS as "a so-called market in the non-delivery of an invisible substance to no-one".

"Ever since Copenhagen, it's been absolutely obvious that the world is not moving towards taxes - whether they're fixed taxes or floating taxes," he said.

"The world is moving towards the kind of direct-action measures to improve the environment which the Coalition has long championed."

Less opposition to carbon price, survey says

Meanwhile, a new survey on Australians' attitudes towards climate change suggests the opposition to carbon pricing has softened to some degree.

The Climate Institute has released its latest annual Climate of the Nation survey, showing two-thirds of Australians accept climate change is real and is having an impact.

Chief executive John Connor says many people were more troubled by the Gillard government's perceived "lie" about bringing in a carbon tax rather than the policy itself.

He says people now seem more open to giving some form of carbon pricing a go.

"We're not pretending that it's become popular... opposition to it has dropped considerably," he said.

"But it's not well understood, and what we do see is when it's explained that all the revenue that comes from carbon pricing goes to households and industry and goes to renewable energy, then we see a majority of people supporting that package."