Carbon price and low incomes
A price on carbon is essential to drive the reduction of Australia’s greenhouse gas emissions and contribute to international efforts to address climate change. A fair and equitable carbon price will compensate low-income households. The case for this is watertight: the less money a household has the higher the proportion of it gets spent on energy bills, and the less money there is left over to make homes and transport more energy efficient.
The Brotherhood of St Laurence welcomes the government's announcement of the 'Supporting Australian Households' package, which will ensure that low-income and vulnerable households are not disadvantaged by the 'Clean Energy Future' carbon price.
Implications of the new carbon price for low-income households
There will be some increases in the costs of consumer goods and services as a result of a price on carbon. This will be redressed by compensation for low-income households.
It is estimated that average weekly household expenditure will go up by around $9.90. For example:
- The average electricity bill will increase by $3.30 per week.
- The average gas bill will increase by $1.50 per week.
- Food will increase less than $1 per week per household.
- There will be no impact on petrol prices.
Household assistance will average $10.10 per week.
Direct financial support will be provided by the government through:
- an increase in the aged pension by 1.7% – up to $338 for singles and $510 for a couple
- an increase in other allowances such as Newstart by 1.7% – up to $218 per year for singles, $234 per year for single parents and $390 for a couple
- income tax cuts and changes – an increase in the tax-free threshold from $6000 to $18,200 on 1 July 2012, then $19,400 from 1 July 2015. Every taxpayer who earns below $80,000 will get a tax cut, with most getting at least $300 per year
- a $300 annual low-income supplement claimable by households who are not sufficiently covered by the payment increases or tax cuts
- increases in Family Tax Benefit Part A of 1.7% equal to $110 per child per year and Family Tax Benefit Part B of 1.7% or $69 per family per year
- a special $300 supplement for single-income families who earn between $68,000 and $150,000 per year.
Energy efficiency support will be available for low-income households through the following schemes.
National Energy Savings Initiative
A working group will be established with a timeline to report in the first quarter of 2012. Recognition has been made of the need to explicitly target low-income households.
Low-income energy efficiency program
Up to $100 million will be available in grants for 15–20 trial projects to assist low-income households.
Household energy and financial sustainability scheme
A package of $30 million will assist around 100,000 low-income households to manage their energy consumption.
Charity support for tax Tony Nicholson commenting on carbon tax, Herald Sun, 2 March 2011
Brotherhood says carbon compensation should lay household fears to rest 11 July 2011
Brotherhood says with fair compensation for low income families, carbon pricing scheme is good news 2 March 2011
Articles, reports and papers
Damian Sullivan 2011, Australia's carbon price: looking beyond the hype, Brotherhood Comment, August, p. 9 (PDF file, 310 KB)
Brotherhood of St Laurence and KPMG 2008, A national energy efficiency program to assist low-income households (PDF file, 1.7 MB) (also submitted to Carbon Pollution Reduction scheme green papers)
Bill Unkles and Janet Stanley 2008, Carbon use in poor Victorian households by local government area (PDF file, 409 KB)
National Institute of Economic and Industry Research (NIEIR) 2007, The impact of carbon prices on Victorian and Australian households, prepared for the Brotherhood of St Laurence, May 2007 (PDF file, 319 KB)
See also our previous research on the impact of an emissions trading scheme on low-income households.
Go to research in progress about climate change.