A further 2 million households will be no worse off by being fully compensated, while another 2 million will receive something. Of the nation's 8.8 million households, only 700,000 receive nothing. The scheme will operate as a fixed carbon price of $23 from July 1 next year, and move to a full emissions trading scheme on July 1, 2015, when the market will set the carbon price. It excludes petrol and is not revenue neutral as first forecast. It will cost the budget $4.2 billion over four years and will erode the forecast $3.5 billion return to surplus in 2012-13 by $530 million The increases to the cost of living, estimated to be 0.7 per cent, will result from the nation's top 500 polluters passing on their costs of having to pay for the carbon dioxide they emit.

Figures released today show the average hits to households will be $9.90 a week, or $515 a year, whereas average assistance will be $10.10 a week, or $525 a year. Electricity will rise by $3.30 a week, gas by $1.50 a week and food bills by an average 0.80c a week. The tax cuts, worth $8 billion, will result in 60 per cent of earners receiving an annual tax cut of at least $300, or about $6 a week. The tax cuts will operate by lifting the tax-free threshold from $600 to $18,200 on July 1, 2012, and to $19,400 in 2015. This will remove 1 million people from the tax system and be worth $600 a year from somebody on $20,000, and $303 for somebody on $65,000.

On incomes over $80,000 the tax cuts disappears to $3 a year, or 6c a week. For example, a single earning $85,000 will receive $3 a year from the tax cuts but face a $463 increase in the cost of living. Family circumstances vary widely depending on the number of children, whether thee are one or two salary earners, how much each earns and total income earned. For example, couples on dual incomes of up to $95,000 a year with one child aged five and another 12, will be better off. The family will receive $759 a year in assistance – combined tax cuts ad family benefit supplements - whereas the impact of the carbon price will be $615. The same couple earning $100,000 will be fully compensated.

Families on combined incomes of up to $200,000 can still receive compensation if one of the income earners earns less than $80,000 and qualifies for the tax cut. However, a family on $180,000 combined or more, and not eligible for either tax cuts or family benefits, receives only between $3 and $6 a year and faces an average increase in the cost of living of around $1000. Pensions, family tax payments, the dole, student allowances and other benefits will increase by 1.7 percent a year. The first-full year benefit will be paid as a lump sum in May and June next year, before the carbon price starts and then in fortnightly instalments from 2013 onwards.. This will amount to $338 for a single pensioner, $110 per child for a family which receives Family Tax Benefit Part A, $69 for a family which receives benefit Part B

As promised, fuel used by motorists, small business vehicles and tradespeople will be exempt for good. So too, will be diesel and other transport fuels used in the agriculture, fisheries and forestry. Other heavy on-road transport – vehicles weighing over 4.5 tones - will not be exempt and will pay a effective carbon tax on fuel by having the reductions in excise it currently receives being clawed back. But this clawback will not start until July 1, 2014, providing temporary reprieve for truckies. Off-road heavy vehicles, predominantly those used in the mining sector, will have their excise clawed back by about 6c a litre when the scheme starts on July 1, 2012. Excise on aviation fuels will be increased to reflect the impact of a carbon price. These increases will add $930 million to aviation fuel bills over the first four years of the scheme. The clawback of excise reductions will save another $1.9 billion, meaning the total savings on fuel will be $2.8 billion.

Loading This will help offset the cost to the budget which will still be a hit of $4.3 billion over four years. Follow Environment on Twitter