THE
HON WAYNE SWAN MP TREASURER, THE HON JENNY
MACKLIN MP MINISTER FOR FAMILIES, HOUSING,
COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Media release
25 November 2009
The Government is determined to act in the
national interest to help protect families
from the worst effects of dangerous climate
change.
Action on climate change
is in the national interest because the
cost of inaction on climate change is higher
than the cost of action.
The cost to Australian
families of lost jobs, less rain, more heatwaves,
more days of extreme fire danger and more
extreme weather events associated with dangerous
climate change will be higher than the cost
of acting.
The Carbon Pollution
Reduction Scheme (CPRS) is the cheapest
and most efficient means of reducing carbon
pollution.
The average cost of
living for households will be $624 more
in 2012-13 than it otherwise would have
been, without a CPRS.
To help deal with this increased cost, the
CPRS contains a substantial package of financial
assistance for low and middle income families.
This household assistance
package – worth $49 billion over ten years
- will ensure all low and middle income
families are assisted with the cost of acting
on climate change.
There is no cost free
way to tackle climate change and that is
why the Government is providing household
assistance to ensure low and middle income
Australian households do not foot the bill
for action on climate change.
The Rudd Government’s household assistance
package provides:
ASSISTANCE FOR LOW INCOME
HOUSEHOLDS:
All low income households
will be fully compensated for the overall
cost increase they face.
Around 90 per cent of all low income households
– or 2.6 million households - will receive
assistance equal to around 120 per cent
of the overall cost increases they face.
Pensioners, seniors, carers and people with
disability will be fully compensated for
the overall cost increase they face.
ASSISTANCE FOR MIDDLE INCOME HOUSEHOLDS:
Around 97 per cent of
middle income households will receive some
form of direct cash assistance under the
Scheme.
Around 50 per cent of middle income households
– that will be 1.7 million households -
will be fully compensated for overall cost
increases flowing from the CPRS.
Once the scheme commences, household assistance
will continue in perpetuity. Because these
assistance payments are indexed to CPI,
upfront assistance will automatically increase
in line with the increasing carbon price
as it affects household costs.
BACKGROUND EXAMPLES
A family earning $100,000
(with a 50:50 income split) with two children
(aged 10 and 13) would be more than fully
compensated. In 2012-13, this family will
receive $1014 in assistance from the Government
even though the cost impact of the CPRS
would be $976 for the year.
A family earning $120,000
(with a 50:50 income split) with three children
(aged 4, 6 and 8) will also receive full
assistance. The cost impact of the CPRS
for this family in 2012-13 will be $1088,
and they will receive $1240 in assistance
for the year.
See www.climatechange.gov.au/government/initiatives/cprs/who-affected/households.aspx
IMPACT ON HOUSEHOLD
PRICES
The Treasury modelling
found that the CPRS would increases household
costs by 1.1 per cent - as measured by the
consumer price index (CPI).
This occurs over two
years:
0.4 per cent in 2011-12
– based on a $10 per tonne fixed carbon
price in 2011-12
0.7 per cent in 2012-13 – based on a flexible
carbon price in 2012-13, which is estimated
to be $26 per tonne.
Household food prices are expected to rise
by less than 1 per cent over these two years.
Price increases will be greatest for emission
intensive goods.
Household electricity
prices could rise by 7 per cent in 2011-12
and 12 per cent in 2012-13. Gas prices could
rise by 4 per cent in 2011-12 and 7 per
cent in 2012-13.
The overall price impact to households is
estimated to be $12 a week or $624 a year
by 2012-13.
