Carbon tax black hole looms for budget or households

Australians face a growing black hole – to either the federal budget or household budgets – that is being kept secret by Labor’s refusal to thoroughly model the impact of its carbon tax, according to the Acting Shadow Minister for Climate Action, Senator Simon Birmingham.

 

Answers to Senate Estimates questions on notice confirm Labor is refusing to model the budget impact of its carbon tax beyond 2014-15, with Treasury citing “uncertain factors including variations in international carbon prices, the terms of trade and the value of the Australian dollar” as reasons such forecasts would have “low reliability”*.

 

“The 2015-16 financial year is a critical year for the carbon tax, as it is the first year of a variable price and the first year in which billions of dollars in international carbon permits will be purchased by Australian companies,” Senator Birmingham said.

 

“Julia Gillard has promised that so-called carbon tax compensation will keep up with the rising cost of the carbon tax, but how Labor intend to do this when billions of dollars of carbon tax costs go offshore rather than into the federal budget is a mystery.

 

“Ultimately, somebody will be short changed. Either the carbon tax will cause an even bigger black hole in the federal budget or Labor will be forced to break its promises that so-called compensation will keep up with the ever-escalating costs of this tax.

 

“We already know that more than three million households will be worse off under a carbon tax and that the carbon tax creates a multi-billion dollar deficit over its early years.

 

“Labor should now confess how many more households will end up worse off and/or how much worse the budget deficit will be.

 

“Labor’s modelling is already based on the flawed assumption of comparable international action. This must be updated to reflect the real world situation of delayed international action until at least 2020 and the longer term impact of a variable carbon tax on households and the budget.”