What savings will households see from the carbon tax repeal?
Australian Broadcasting Corporation
Reporter: Sabra Lane
With Government politicians suggesting households will be some $550 a year better off after the repeal of the carbon tax, experts assess just how much that figure might be.
SARAH FERGUSON, PRESENTER: "Stop the boats" and "axe the tax" were the two slogans that drove Tony Abbott's campaign for government last year.
The Prime Minister has already claimed success in stopping the boats and tonight he's on the verge of claiming another win as the Senate moves toward a final vote to abolish the much maligned carbon tax.
The Government has promised the move will save the average family $550 a year, but it's a hotly contested claim.
So just how much can you expect to save?
Political correspondent Sabra Lane has been crunching the numbers.
TONY ABBOTT, PRIME MINISTER (Aug '13): We will scrap the carbon tax so that your family will be $550 a year better off.
TONY ABBOTT (last week): It's a $550-a-year hit on the average household's costs.
TONY ABBOTT (Saturday): It's costing the average Australian families $550 a year. So it must go.
SABRA LANE, REPORTER: It was the twin-sloganeering riff that partnered the promise to scrap the carbon tax: that average families could expect to save hundreds of dollars each year, up to $3,000 over six years when the tax was abolished.
When it's repealed, consumer groups say, the savings should be passed on quickly.
ALAN KIRKLAND, CEO, CHOICE: The impact on electricity bills will be immediate but obviously you won't see that until your next quarterly billing cycle. So there should in fact be refunds for the period back to 1 July and then the price you're paying should go down. But it's important to remember that it's likely to go down about $260 a year. So when you compare that to some of the other factors that have been driving up electricity bills in recent times, like 14 per cent increase introduced in Queensland on 1 July, people aren't going to see all of those other increases disappear.
SABRA LANE: The consumer watchdog, the ACCC, has been given $10 million and extra powers to monitor about 500 companies to ensure they pass on repeal savings, prosecute those who don't and it has the deterrent of big fines to encourage businesses to do the right thing.
The ACCC has been monitoring companies and prices since March, including the airline businesses.
On electricity and gas bills, consumers will know quickly as the savings will be detailed in bills. But on other everyday grocery items, for example, it will be difficult to figure out if there are savings to pass on.
ALAN KIRKLAND: The ACCC's got a really tricky brief here because with grocery prices, they fluctuate from week to week due to a whole range of other factors: seasonal factors, whether goods are local or imported, discounting that happens on a regional basis from week to week.
So it's actually really hard to pick apart what in fact is the difference in price up or down due to the abolition of the carbon tax.
SABRA LANE: The major supermarket chains say they've kept prices low and have absorbed most costs in relation to the carbon tax and will pass on savings if there are reductions to pass on.
The Government's own explanatory notes to the repeal legislation, released late yesterday, admit on some goods - which aren't identified - it will be hard to figure out how much of the tax pushed up prices in the first place:
"The prices of other goods and services are more difficult to estimate. The range and complexity of sector-specific factors, including commercial and contractual arrangements, and the specific features at each point in any given supply chain mean it is not possible to say with any certainty what proportion of the carbon
price may have been passed through or was absorbed by any given sector."
The tax pushed up the price of refrigerant gasses for this Canberra butcher's. Michael Jones says the business both absorbed and passed on some of the costs and is preparing to give back savings.
MICHAEL JONES, BUTCHER: When the carbon tax is repealed it, you know, should. prices should come down and it'll be good for the customer. We absorbed a lot of costs but we should be able to have cheaper prices.
PAT CONROY, Has the Minister found a $100 leg of lamb yet?
(Sound of laughter in Lower House)
BRONWYN BISHOP, SPEAKER: There is no. the Member will remove himself under 94A.
WARREN TRUSS, DEPUTY PRIME MINISTER: The tax is adding to the cost of living. It's adding to the cost of everything we do in this country. Getting rid of it will save the average householder $550 a year.
TONY WOOD, ENERGY PROGRAM DIRECTOR, GRATTAN INSTITUTE: For businesses it was more significant, particularly for those who are not large enough to get some form of compensation.
And so for some businesses who use a lot of electricity in their activities, it would have been a significant cost. Um, it could easily have been, you know, 10, 15 per cent of their business input - and that's not trivial by any means and I'm sure they from a cost perspective will be glad to see the end of it.
And for households, it's also been a non-trivial item because for many people a cost of $200 a year is not trivial. It's quite a significant impost on them.
SABRA LANE: Before joining the Grattan Institute think tank, Tony Wood worked at an energy company for 11 years and was an adviser on the Garnaut climate change review. He says where people live will play a factor in how much they will save through the scrapping of the tax.
TONY WOOD: On balance I think the calculations should look at on average across Australia about $120 for electricity. And then gas varies enormously because in Queensland we use almost no gas. They might save $10, $15 a year. In Victoria it could easily be up to $100 a year.
SABRA LANE: So what about the $550 savings claim? The figure originally popped up in Treasury Department modelling in 2011 when it calculated the cost on average families of putting the tax in place.
The Treasurer's office says the Department's recently crunched the numbers again and, even though three years have gone by, it's come up with the same figure in savings. MPs, even a Government backbencher, have downplayed the expectation that consumers will pocket the $550.
ANDREW LAMING, LIBERAL BACKBENCHER: It will be $550 lower than it otherwise would be. But if other elements have made prices go up by $100, then you won't see a $550 fall on any bill. But you will be $500 better off than you otherwise would have been and that's an important caveat.
ADAM BANDT, DEPUTY GREENS LEADER: If anyone believes that their household is going to be $550 a year better off as Tony Abbott's promised, I've got a bridge to sell you. It's not going to work like that.
ALAN KIRKLAND: Treasury modelling is quite robust. We accepted it in 2011-2012 and we accept it now.
SABRA LANE: Last week the Government claimed Opposition tactics delaying the repeal was adding to the cost.
GREG HUNT, ENVIRONMENT MINISTER: Every day that the carbon tax remains in place, there is a power bill cost to Australians of $11 million.
SABRA LANE: Yet the Government delayed debate on the bills today, citing ongoing talks with the Opposition, Greens and cross-bench about finalising its Senate timetable this week.
It wants 17 pieces of legislation passed before Parliament takes a five-week break. It could sit late tonight and Thursday in order to get it done.
SARAH FERGUSON: Sabra Lane with that report.