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Tax gone but savings unclear

Carbon tax
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It could be $550, just half that, or nearly nothing at all.

• Where can you save after the abolition of the carbon tax

Clive Palmer would like us to think his party has ensured savings from scrapping the carbon tax are passed onto consumers.

But there’s no consensus about just how much households will benefit from its repeal.

Prime Minister Tony Abbott insists the average household will get a one-off saving of $550, or $10.50 a week this financial year.

That figure is based on Treasury modelling which estimates the consumer price index, or inflation, will drop by about 0.7 percentage points.

Only half the savings come from lower power and gas bills, which Treasury says will fall by seven to nine per cent, or about $270 a year.

What’s harder to estimate is the carbon tax’s impact on the cost of goods and services, with other economic factors having an influence on prices.

The Australia Institute says households will experience some small savings, predominantly from slower growth in their power bills.

Of the $746 increase in power bills since 2007, only $172 could be attributed to the carbon tax, the left-leaning think tank says.

“It’s not why their electricity bills have gone up so rapidly, and it’s certainly not why the cost of the other things that have gone up have increased,” executive director Richard Denniss told ABC radio on Tuesday.

Stephen King, a former member of the Australian Competition and Consumer Commission dismisses the Palmer United Party consumer guarantees in the repeal bills as “populist hokum”.

“If you’re expecting to see your power bills go down when the carbon tax is eventually repealed … get ready to be disappointed,” the Monash University economics professor says.

Supermarket giant Woolworths has dampened expectations of cheaper groceries, claiming it didn’t increase prices when the carbon tax was introduced.

Ditto domestic airlines Qantas and Virgin.

Even government MP Andrew Laming has a caveat on the $550 figure.

“It will be $550 lower than it otherwise would be,” he said this week.

But if “other elements” made prices go up by $100 then you won’t see a $550 fall on any bill.

Labor has had some fun by ridiculing coalition claims about price rises when it was in opposition, honing in on Barnaby Joyce’s scary prediction of a $100 leg of lamb.

“It was all a falsehood. It was all overreach,” opposition environment spokesman Mark Butler told parliament on Monday.

Greens MP Adam Bandt estimates household savings will be closer to $250 than $550.

“If anyone believes that their household is going to be $550 a year better off as Tony Abbott has promised, I’ve got a bridge to sell you,” he said.


* $550 in 2014/15, or $10.50 a week

* Electricity and gas bills down by up to nine per cent

* Electricity bills $3.80 a week lower, or $200 for the year

* Gas bills $1.40 a week lower, or $70 for the year

(Source: Australian Treasury, based on a carbon price of $25.40)