Effect of abolishing carbon tax debated
Opposition Tony Abbott has declared his plans to scrap the carbon tax if his coalition wins the national elections in 2013. Mr Abbot aims to reduce electricity bills by 10 per cent with this tax repeal. This was echoed by Greg Hunt, the Opposition’s climate action spokesman when he declared that electricity bills should fall starting on day one once the tax is abolished.
“We expect, on the basis of what the regulators have said, that the bills would fall by the full amount of the carbon tax charge,” Mr Hunt said following a regulator announcement last October. According to SA energy regulator Pail Kerin, removal of the carbon tax will result in a drop of 4.5 to eight per cent from the wholesale price of power, which would lead to an adjustment in the retail price.
However, these claims were refuted by the Energy Retailers Association of Australia. ERAA chief Cameron O’Reilly responded that such instant decrease in electricity bills won’t happen once the carbon tax is repealed for various reasons. Before retailers could review and amend pricing, several legislative and regulatory changes would have to happen first.
Even if removal does result in a price decrease, the amount will vary for all customers as not all customers are on the same contract. Additionally, retailers pass on increases to wholesale electricity prices, which originate from several energy sources with different carbon intensities.
Image credit: Troy Constable Photography