No big savings to come from repeal of carbon tax, industry group warns

Updated

One of Australia's largest business groups says consumers may not see a big difference in the price of many products when the carbon tax is removed.

The Federal Government has asked for public feedback on legislation aimed at getting rid of Labor's carbon tax.

In its submission, the Australian Industry Group says apart from electricity, many price changes are likely to be limited.

It says many businesses were not able to pass on the cost of the carbon tax in the first place.

The group's chief executive, Innes Willox, says that means price cuts will not be as significant.

"The whole pain of the carbon tax won't go away overnight," he said.

"Consumers will have to accept that business will have to continue to pass through some costs that they have associated with the carbon tax and its leftovers whenever it is repealed."

Will scrapping the carbon tax reduce power bills?



Prime Minister Tony Abbott says abolishing the carbon tax will provide instant financial relief to consumers.



"When this bill is passed, this Government estimates that power prices will go down by 9 per cent, gas down by 7 per cent," Mr Abbott said.



Claiming a precise drop in prices is a dangerous game because the carbon price is only one of many factors that contribute to household utility prices. Prime Minister Tony Abbott says abolishing the carbon tax will provide instant financial relief to consumers."When this bill is passed, this Government estimates that power prices will go down by 9 per cent, gas down by 7 per cent," Mr Abbott said.Claiming a precise drop in prices is a dangerous game because the carbon price is only one of many factors that contribute to household utility prices. Read more

The industry group says the Australian Competition and Consumer Commission (ACCC) should keep these factors in mind when it monitors whether businesses are passing on the savings once the carbon tax is abolished.

The Coalition has repeatedly claimed households would be "better off to the tune of $550 a year" without a price on carbon.

Releasing the draft legislation to repeal the laws last month, Mr Abbott said "the Government estimates that power prices will go down by 9 per cent, gas prices will go down by 7 per cent, and that means that the average power bill will be $200 a year lower and the average gas bill will be $70 a year lower".

This morning, the Treasurer said electricity prices would come down, but did not commit to the predicted drop of 9 per cent given by the Prime Minister.

"Electricity prices will go down as a result of the abolition of the carbon tax, there's no doubt about that," Joe Hockey said.

Speaking to Lateline on Monday night, Finance Minister Mathias Cormann said the tax was a burden on families and businesses.

"The fastest way to reduce electricity prices is to scrap the carbon tax. That is the most immediate way to reduce the cost of electricity," he said.

Meanwhile, Federal Labor MP Nick Champion has changed tack in his attitude to the Coalition's plans to abolish the tax.

He had previously argued the Government should be allowed to repeal the tax in order to expose flaws in the Coalition's so-called Direct Action scheme.

However, he told Sky News he accepts the majority of his party wish to oppose the tax's abolition, unless it is replaced by an emissions trading scheme.

"That's life in a political party, isn't it? You don't always get what you want and your ideas about tactics and strategy aren't always accepted as gospel or wisdom," he said.

"I accept the fact that the majority of my party wants to set up a contest between emissions trading and Direct Action."

The Greens are moving to set up a Senate inquiry into the Government's policy alternative, which includes directly funding companies to find ways to reduce their emissions.

Leader Christine Milne says the Prime Minister has been exposed as "a complete fool".

"We want to expose the flaws in Tony Abbott's plan," Leader Christine Milne said.

"Market-based mechanisms are the best way of dealing with this problem, not Tony Abbott's sham."

John Howard backs nuclear power

Meanwhile, former prime minister John Howard says the claims about global warming are being exaggerated and has advocated the use of nuclear power.

Mr Howard says while he respects the science of climate change and wants to reduce emissions, he is against putting a "ludicrously heavy financial burden" on society in an effort to shift to renewables energy technology.

Sorry, this video has expired Video: Howard advocates use of nuclear power (ABC News)

"When it is affordable and makes economic and political sense to do so, of course, you should use renewables. I am not opposed to using renewables," he said.

"Oil and gas from shale has brought about a dramatic reduction in greenhouse gases in the United States. I am in favour of the use of nuclear power.

"I still think the most exciting thing the world can do in the next 20 years is lift a few hundred million, perhaps a billion people out of poverty by economic growth and globalisation."

Mr Howard's comments came ahead of a speech he is set to deliver to the Global Warming Policy Foundation in London.

Topics: business-economics-and-finance, government-and-politics, federal-government, tax, industry, environment, climate-change, australia

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