Over half the money raised from the carbon price is being used to assist households.
A price on carbon is the most environmentally effective and economically efficient way to reduce pollution. This means our economy can continue to prosper – without our pollution continuing to grow.
Q. Where will the money raised from the carbon price go?
More than half of the money raised will be used to assist households. The majority of households will receive tax cuts, increased assistance payments or both. With the rest of the money, the Government will be supporting jobs in the most affected industries and investing in our clean energy future.
Q. Will I have to pay the carbon price?
No, it’s not a tax on households or small businesses - Australia’s biggest polluters will be required to pay for their pollution under the carbon pricing mechanism. They account for around 60 per cent of our carbon pollution. For more information on Australia’s biggest polluters.
An environmental problem with an economic solution
Putting a price on carbon is the most environmentally effective and cheapest way to cut pollution.
This is a fact that is well recognised by economists from around the world, and respected institutions such as the OECD and the Productivity Commission. Currently, releasing carbon pollution is free despite the fact that it is harming our environment.
A carbon price changes this. It puts a price on the carbon pollution that Australia’s largest polluters produce. This creates a powerful incentive for all businesses to cut their pollution, by investing in clean technology or finding more efficient ways of operating.
It encourages businesses across all industries to find the cheapest and most effective way of reducing carbon pollution, rather than relying on more costly approaches such as government regulation and direct action.
A carbon price means a strong and growing economy
The economy continues to grow as Australia embraces a clean energy future.
Treasury modelling estimates that under a carbon price:
- Average incomes grow strongly under a carbon price. Average incomes are expected to increase by about 16 per cent from current levels by 2020, an increase of around $9000 in today’s dollars. By 2050, the increase is expected to be more than $30,000.
- National employment is projected to increase by 1.6 million jobs by 2020.
Breaking the link between emissions and economic growth
The carbon price is the first element of the Government’s plan for a clean energy future: it triggers a broad transformation of the economy. Our economy has successfully handled comparable structural changes over its history. In fact, transformative changes – new products and technologies, and the integration of our economy into the global economy set in train by the reforms of the 1980s and 1990s – have underpinned rising prosperity and sustainable growth in Australia.
Treasury modelling shows that, under a carbon price, the economy continues to grow.
Figure 1: Gross National Income with and without the carbon price
For more information see: Chapter 3 – Putting a price on carbon pollution.
For further details about a carbon price see: