Over half the money raised from the carbon price is being used to assist households.
- Australia needs to cut pollution
- … and move to a clean energy future
- What does it mean for me and my family?
- Millions of households will be better off
- How much will I get?
- Assistance will be permanent and will increase
- Tax cuts for millions of people
- Over a million taxpayers out of the tax system
- Increased payments for age pensioners
- Tax cuts and increased payments for families
- Tax cuts and extra payments for self-funded retirees
- Supporting people with disability and carers
- Assistance for students and low-income earners
- Strong jobs growth
- You can play your part and save money too
Australia needs to cut pollution
Australia’s carbon pollution
Australia generates more pollution per person than any developed country, including the United States. We produce significantly more pollution per person than India and China.
Australia’s carbon pollution is high because our electricity is mainly generated by burning coal. Transport, mining, industry, farming and deforestation also contribute.
Our carbon pollution is continuing to grow at a rapid rate. Without action, it is expected to continue to grow by almost 2 per cent a year to 2020.
Reducing our carbon pollution means we have to produce and use energy in a cleaner, smarter way.
Our climate is changing
The CSIRO, the Bureau of Meteorology, and Academies of Science from around the world have all advised that the world is warming and high levels of carbon pollution risk environmental and economic damage.
In Australia and across the globe, 2001 to 2010 was the warmest decade on record. Each decade in Australia since the 1940s has been warmer than the last.
Climate change risks damaging our environment and way of life
Australia faces significant environmental and economic costs in a warmer, more unstable climate. Climate scientists advise that extreme weather events, such as droughts, heatwaves and bushfires, are likely to become more frequent and severe. This threatens our homes, businesses and communities, and vital industries such as agriculture.
Scientists agree that the worst effects of climate change can largely be avoided if we reduce carbon pollution to an acceptable level.
The world is moving to a clean energy future
Countries around the world are already taking action on climate change. 89 countries – representing 80 per cent of global emissions and 90 per cent of the world’s economy – have already pledged to take action on climate change.
Globally, more money is now invested in new renewable power than in conventional high-pollution energy generation. China is now the world’s largest manufacturer of both solar panels and wind turbines.
Acting now is cheaper than acting later
Australia has an opportunity to move to a clean energy future and cut pollution before the task becomes more difficult and costly.
… and move to a clean energy future
A carbon price
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.
The Australian Government is building a clean energy future
The Government has a comprehensive plan to move to a clean energy future. This includes:
- introducing a carbon price
- promoting innovation and investment in renewable energy
- encouraging energy efficiency
- creating opportunities in the land sector to cut pollution.
The Government’s plan to move to a clean energy future will:
- dramatically cut pollution
- our clean energy plan will cut pollution by at least 5 per cent compared with 2000 levels by 2020, which will require cutting net expected pollution by at least 23 per cent in 2020
- this is equivalent to taking over 45 million cars off the road by 2020
- by 2050 we are committing to cut pollution to 80 per cent below 2000 levels
- unleash innovation and investment worth billions of dollars in renewable energy
- large scale renewable electricity generation, excluding hydro, is projected to be 18 times its current size by 2050. Total renewable generation (including hydro) will comprise around 40 per cent of electricity generation in 2050
- transform our energy sector away from high polluting sources, like brown coal
- the Government will negotiate to close down around 2000 megawatts of high-polluting coal-fired power generation, creating space for new clean energy supplies
- store millions of tonnes of carbon in the land through better land and waste management
- between now and 2050, around 460 million tonnes of carbon pollution will be reduced or stored instead of entering our atmosphere under the Carbon Farming Initiative.
What does it mean for me and my family?
Price impacts of introducing a carbon price
The impact of the carbon price will be modest compared to other price increases.
The carbon price will increase prices by 0.7 per cent over 2012-13, as measured by the consumer price index (CPI).
This is much smaller than the:
- 2.5 per cent increase from the GST and related tax changes
- 2.9 per cent average annual inflation between 2001-02 and 2009-10.
The impact on prices will be modest
The carbon pricing mechanism will apply to around 500 of Australia’s largest polluters. They will need a permit for every tonne of carbon pollution they produce. The cost of that permit is the carbon price.
Some businesses will pass on the carbon price, leading to modest rises in prices. In 2012-13, this is expected to increase the cost of living by 0.7 per cent. The GST and related changes to the tax system pushed up prices more than three times as much as the carbon price is expected to.
Many prices, particularly food, will hardly be affected. On average food will go up by less than $1 per week for households.
The carbon price will not directly apply to the price of fuel that households pay at the petrol bowser.
Average weekly household expenditure will go up around $9.90, including $3.30 per week on the average electricity bill and $1.50 per week on the average gas bill. On average, households will receive $10.10 per week in assistance.
Appropriate action will be taken against businesses that use the carbon price as an excuse to put up prices beyond the cost of carbon.
Price impact from the introduction of a carbon price compared to history.
Millions of households will be better off
Over 4 million households get assistance worth 120 per cent of their expected average price impact
A typical couple with no children, with one person earning just under $60,000 and their partner earning around $25,000 will get assistance that is $288 per year more than their expected average price impact.
A self-funded retiree couple with a single taxable private income of $50,000 will get assistance that provides $524 per year more than their expected average price impact.
A low income single person earning $30,000 will receive $94 per year more than their expected average price impact.
A couple, both earning $35,000, with two children, will get $247 per year more than their expected average price impact.
The Government will ensure that those Australians that need help the most, particularly pensioners and low-and middle-income households, will get assistance for the cost of living impact of the carbon price.
On average, households will see cost increases of $9.90 per week, while the average assistance will be $10.10 per week.
By 2012-13 Australia is expected to have almost 9 million households.
Over 4 million households will be better off compared to their average price impact
This means they will receive assistance that provides a buffer of at least 20 per cent over and above their average price impact.
Almost 6 million households will be assisted to meet their average price impact
This means they will receive assistance that covers at least the average price impact of the carbon price on their cost of living.
Around 8 million households will get some assistance
This means they will receive some assistance through payment increases and/or tax cuts.
Households that improve their energy efficiency can help the environment and save money. Because households that do use less energy will still get to keep all of their tax cuts and payment increases, the carbon price will still provide them with a financial incentive to do their bit for the environment.
How much will I get?
More than half of the revenue raised from polluters will go to households to help meet price impacts and help them do their bit for climate change
There are two ways that households will receive assistance:
- increases in pensions, allowances and family payments that they may receive and
- income tax cuts on top of these increases.
The assistance will mean:
- pensioners and self-funded retirees will get up to $338 extra per year if they are single and up to $510 per year for couples, combined
- families receiving Family Tax Benefit Part A will get up to an extra $110 per child
- eligible families will get up to an extra $69 in Family Tax Benefit Part B
- allowance recipients will get up to $218 extra per year for singles, $234 per year for single parents and $390 per year for couples combined
- on top of this, taxpayers with annual income of under $80,000 will all get a tax cut, with most receiving at least $300 per year.
On average, households will see cost increases of $9.90 per week, but receive assistance of $10.10 per week.
Assistance will be permanent and will increase
Moving to an emission trading scheme
For the first three years, the carbon price will be fixed like a tax.
From 1 July 2015, Australia will move to an emissions trading scheme which caps carbon pollution.
The carbon price will be set by the market and the Government will ensure that assistance remains adequate.
The Government’s household assistance is permanent.
Extra payments will be permanent and will increase
Payment assistance will start from May-June 2012, to help households to get ready for the carbon price.
Payment assistance will automatically rise in line with price changes in the economy to keep pace with the cost of living. This includes any price impacts from when Australia moves to an emissions trading scheme, and beyond.
Tax cuts will be permanent and will increase
The Government will deliver a first round of tax cuts when the carbon price starts in 2012-13. In 2015-16, there will be a second round of tax cuts.
Combined, the two rounds of new tax cuts will typically deliver a tax cut of at least $385 to most taxpayers with incomes up to $80,000.
The Government will ensure the ongoing adequacy of household assistance.
Tax cuts for millions of people
Tax cuts for working Australians
Damien is 25 and single and working his way around Australia.
He earns around $670 a week – that’s an annual income of $35,000.
From 1 July 2012, the Government’s tax cuts will mean that Damien will have an extra $300 a year to cover his expected average cost of living impact of $250 per year.
The higher tax-free threshold means Damien’s employer won’t have to take as much tax out of his regular pay each fortnight – which means Damien will have more in his pocket from week to week.
To find out how you might benefit, go to the online estimator.
The revenue from the carbon price will pay for new tax cuts for millions of Australians. These tax cuts will be permanent.
This builds on the three rounds of substantial tax cuts already delivered by the Government.
A first round of tax cuts in 2012
From 1 July 2012, all taxpayers with income up to $80,000 will get a tax cut, with most receiving at least $300 per year.
This means around 60 per cent of taxpayers will get a tax cut of at least $300.
No one will pay more income tax.
Tax cuts grow, with a second round in 2015
Further tax cuts will be delivered in 2015 for all taxpayers with incomes up to $80,000, with most receiving a tax cut of up to $385 in total.
These tax cuts will provide assistance to cover the projected impact of the carbon price out to the end of the decade.
The Government will ensure the ongoing adequacy of household assistance.
Over a million taxpayers out of the tax system
Tax cuts and simplification
Eugenie is married to Steve and has just returned to the workforce after many years at home with the kids.
Eugenie has found a part-time job paying $340 a week, or $17,680 per year.
In 2012 she will get a tax cut of $177 per year.
This means better returns from working.
Just as importantly, a higher tax-free threshold means she gets to keep all of her wages from week to week and may not have to lodge a tax return.
In 2012, people will pay less income tax because the Government will more than triple the tax-free threshold, from $6,000 to $18,200.
This means that regular wage earners with incomes below the new tax-free threshold will get to keep all of their wages in their regular pay packets, and need not go to the effort of lodging annual tax returns.
Up to one million Australians will be freed from having to lodge a tax return.
In 2015, further tax cuts will increase the tax-free threshold to $19,400.
This will free up to a further 100,000 Australians from having to lodge a tax return.
While some statutory tax rates will be higher, the combined changes mean this will better match the effective rate that a lot of taxpayers are actually paying at the moment. All taxpayers under $80,000 will pay less tax, and those on higher incomes will pay no more tax than they do now.
No one will pay more income tax.
Increased payments for age pensioners
Assistance for age pensioners
Leslie and Alex are both retired and receive the full age pension.
They often look after their grandchildren, and help at the local community centre, but don’t receive any extra income from this work.
The introduction of the carbon price is expected to increase their average cost of living by $284 per year.
They will receive an increase in their pension of $510 per year to help them with these increased costs.
On average, Leslie and Alex will be $226 per year better off after the introduction of carbon pricing.
To find out how you might benefit, go to the online estimator at www.cleanenergyfuture.gov.au
Age pensioners will be eligible for household assistance that at least offsets all of their expected average price rises under a carbon price.
Age pensioners (including part-rate pensioners) will receive assistance equal to a 1.7 per cent increase in the maximum rate of pension. This is an annual increase of up to $338 for singles, and $255 for each member of a couple.
Assistance to pensioners will be automatic and will start before the carbon price starts, through an advance payment of $250 for singles, and $190 for each member of a couple paid in May-June 2012.
From March 2013, assistance will be delivered through extra fortnightly payments.
This assistance builds on the Government’s pension reforms which have seen the age pension increase by $128 per fortnight for single pensioners and $116 per fortnight for pensioner couples on the maximum rate, since September 2009.
Veterans will receive assistance through service pensions and other payments such as disability pensions and war widow/widower pensions.
Increased payments for pensioners
Tax cuts and increased payments for families
Annette and Pete have two little boys, Jack and Harry. Pete works full-time as a call centre manager and earns just under $60,000. Annette looks after the boys and is a part-time childcare worker, earning just over $25,000.
Their expected average cost of living impact from the carbon price is $570 per year.
Annette and Pete will get about $948 from the household assistance package, made up of $806 in tax cuts and $142 in increased Family Tax Benefit payments.
Annette will get a tax cut worth $503 per year, increasing the rewards she gets for returning to work.
Overall, they are $378 per year better off under the carbon price, based on their expected average price impact.
To find out how you might benefit, go to the online estimator.
Millions of families will receive new tax cuts and increases in cash payments.
Around 90 per cent of households will receive assistance to help meet the impact of the carbon price on their costs of living.
Payments will increase for every family that receives Family Tax Benefit
All families receiving Family Tax Benefit Part A will get an increase of at least 1.7 per cent. This is worth up to $110 per child per year.
All families receiving Family Tax Benefit Part B will get assistance equal to a 1.7 per cent increase in the maximum rate. This is worth up to $69 per family per year.
Tax cuts will help working families
All taxpayers with annual income below $80,000 will get a tax cut, with most receiving at least $300 per year. No one will pay more in personal income tax.
These tax cuts are on top of any increases in Family Tax Benefit.
Single income families with a primary income earner income between $68,000 and $150,000 will also receive a new supplement of up to $300, which recognises that they get less tax assistance, compared with a dual income family.
Assistance will be permanent, and will start before the carbon price
Extra assistance through Family Tax Benefit will start before the carbon price with a lump sum payment in May-June 2012, to cover the first year of the scheme. There will be an ongoing increase in fortnightly payments from 1 July 2013.
Tax cuts and extra payments for self-funded retirees
Assistance for self-funded retirees
Cynthia and Andrew retired a few years ago. They’re spending time with their two dogs and working in their garden. They are worried about climate change, and feel that it is important to do their bit to help.
Cynthia receives around $50,000 and Andrew around $20,000 in investment income. Their expected average cost of living increase is around $466 per year. They are not eligible for a pension, but they are Commonwealth Seniors Health Card holders.
The tax cuts will mean that Cynthia and Andrew have an extra $303 per year. They will also get an extra $510 through the Seniors Supplement.
In total, Cynthia and Andrew will receive $813 in assistance, which is $347 more than their expected price impact.
To find out how you might benefit, go to the online estimator.
Support for self-funded retirees
Self-funded retirees who hold a Commonwealth Seniors Health Card will receive the same amount of assistance as age pensioners.
This will be worth $338 for singles and $255 for each eligible member of a couple.
Self-funded retirees may also benefit from new tax cuts.
Combined with increases to the Senior Australians tax offset, a single person over 65 with taxable income of $35,000 will get tax cuts of $502 per year from 1 July 2012.
They would also receive an additional benefit thanks to an increase in the Medicare levy low-income threshold, providing an extra $160.
Support for aged care residents and providers
Arrangements will be introduced to ensure that assistance is shared fairly between aged care residents and providers.
Aged care providers bear many costs for their residents, including electricity, and will receive around half of the assistance paid through the age pension. Age pensioners living in aged care will receive the balance of the payment, to help them with increases in their other costs of living.
Supporting people with disability and carers
Assistance for people with medical needs
George uses a kidney dialysis machine for about 5 hours a day. He hasn’t been able to work for a while, so his only income is the Disability Support Pension (DSP).
George will receive $338 in assistance through a higher DSP payment.
In addition, because George has a recognised medical condition with high energy use requirements, and is a concession card holder, he can apply for an extra $140 of assistance under the Essential Medical Equipment Payment.
George pays his own electricity bill. But if George has a carer who incurs the expense for George’s electricity bill, then his carer would be able to apply for the payment instead.
More information on the Essential Medical Equipment Payment can be found at www.cleanenergyfuture.gov.au
Carers and people with disability will receive assistance through their Carer Payment or Disability Support Pension, or tax cuts, or both.
Disability Support Pension and Carer Payment increases
People who receive the Disability Support Pension or the Carer Payment will be eligible for household assistance that at least offsets the expected average price impact under a carbon price.
Pension payments will increase by an amount equal to 1.7 per cent of the maximum rate. This will be an increase of up to $338 for singles, and $255 for each member of a couple.
Assistance will be automatic and will start before the carbon price with an advance payment in May-June 2012 which will provide assistance to cover the first nine months of the carbon price. Fortnightly payments will increase from March 2013.
People with essential medical equipment needs
People holding a Commonwealth concession card who have high home energy costs because they rely on essential medical equipment will also be able to claim the Essential Medical Equipment Payment of $140 through Centrelink. This is in addition to their other assistance.
This extra payment is to ensure they do not incur extra costs for using their medical equipment under a carbon price.
Assistance for students and low-income earners
Support for students
Katherine moved away from home about two years ago to go to university.
She’s hoping to complete her engineering degree next year, but at the moment she works part-time in a restaurant, and earns $18,000. Katherine will benefit from the Government’s tax cuts.
Because she is receiving Youth Allowance, she will also receive increases in her payment to assist her with the impact of the carbon price on her cost of living.
Katherine’s tax cut will be around $560 per year, and her Youth Allowance increase will be around $177.
Students and jobseekers
To assist students with the expected impact of carbon pricing on their cost of living, student allowances such as Youth Allowance, Austudy and Abstudy will increase by an amount equal to 1.7 per cent of the maximum rate.
This is an increase of up to $177 for singles – and more if they have dependent children.
Jobseekers will also be assisted with an amount equivalent to a 1.7 per cent increase in the maximum rate of Newstart Allowance, worth up to $218 for singles and $195 for each member of a couple.
Parenting payment single will also increase by an amount equivalent to 1.7 per cent of the maximum rate, which is an increase of up to $289.
Assistance for students and jobseekers will start before the carbon price, with a lump sum payment in May-June 2012.
Students in part-time work and jobseekers who find a job will also receive tax cuts. A person earning $25,000 per year will get a tax cut of $503 per year from 1 July 2012.
Low Income Supplement
Some low-income households might not receive enough assistance through tax cuts or Government payments to offset their average expected cost impact under a carbon price. These households will be able to claim the new $300 annual Low Income Supplement to ensure they receive enough assistance as they adjust to changes in their costs of living after the carbon price is introduced.
Public housing tenants
Assistance is not intended to be included in state government public housing rent setting calculations so that public housing residents get the full benefit of assistance.
Strong jobs growth
The Government has carefully designed a number of measures to support jobs and competitiveness as we move to a clean energy future.
Jobs in industries like aluminium, steel, cement and coal will be supported.
These measures are designed to ensure that Australia continues to experience strong jobs growth while at the same time providing incentives to cut pollution in our economy.
Moving to a clean energy future will provide new economic opportunities for Australian workers.
The carbon price will impose no red tape on small businesses.
All small businesses will be eligible for extra tax concessions.
The most important thing for households is a secure and growing economy
The cost of cutting pollution and transforming our economy to cleaner energy sources is very modest. Carbon pricing is expected to slow Australia’s average income growth by around 0.1 of a percentage point per year.
Under a carbon price:
- 1.6 million jobs will be created by 2020
- average incomes will grow by about 16 per cent by 2020, an increase of about $9,000 in today’s dollars
- by 2050 we will be able to produce the things we make today, with half the pollution.
Treasury modelling shows that we can have strong economic growth and jobs growth while making substantial cuts to Australia’s pollution levels.
The carbon price will support Australia’s competitiveness in the decades to come, as we become a clean energy economy.
Incomes per person with a carbon price Job creation with a carbon price
You can play your part and save money too
A carbon price is designed to change production processes of large polluters, so they pollute less.
The carbon price also means that there is a financial incentive for households to consider changes to improve their energy efficiency.
Household assistance does not blunt these incentives.
People who make these changes can still keep all of their household assistance, and end up ahead.
There are many small changes that Australian households can make to help the environment, and save money at the same time.
And households that make these savings will still get to keep all of their extra payments and tax cuts.
For example, it is estimated that for a family of four, in just one year:
- washing clothes in cold rather than hot water can save around $90
- a solar hot water system (replacing an electric system) could save over $400
- getting rid of the second fridge could save around $180
- using a clothesline instead of an electric dryer once a week could save around $55
- switching off appliances at the power point could save up to $100.
Go to LivingGreener for more ideas on how to reduce your energy use and save money.
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