Carbon compo 1$1.6bn' Families need protection from emissions trading

Daily Telegraph
Monday 23/6/2008 Page: 10

THE Rudd Government faces a massive payout of more than $1.6 billion a year to families, to offset rising energy and fuel prices under a new emissions trading system (ETS). Annual payments of about $500 million alone will be needed to protect the poor and the aged from a projected spike in electricity and gas prices.

A landmark CSIRO study, to be released today, reveals the high costs of going green and comes just weeks before the Government releases a crucial discussion paper on carbon trading. The study also finds an emissions trading system to be introduced from 2010 will raise more than $8 billion in additional revenue for Canberra. This will give the Government plenty of financial scope to deliver tax cuts and other payments to soften the blow of rising weekly bills.

The CSIRO report, commissioned for the Climate Institute Australia, found average families will face price rises of up to $10 a week for electricity, gas and petrol. If the Government wants to compensate families on average incomes, it will have to pay out up to $336 million by 2015, rising to $557 million by 2020. But, with struggling families battling to contain rising petrol prices, the Government will be under pressure to extend payments to most families.

This could see the Government paying out $1.7 billion in compensation by 2015, rising to $1.9 billion by 2025. The CSIRO report argues that "deep cuts in greenhouse emissions" are possible in Australia without reducing living standards. "Well-designed policy measures can protect low and middle-income households from potential short-run declines in energy affordability," it states.

The carbon trading scheme will start within two years as the centrepiece of Kevin Rudd's commitment to curb damaging greenhouse gases. Under the "cap and trade" scheme, heavy polluters will have to buy permits - increasing the incentive on business to embrace low-emission technologies. Higher energy costs are inevitable, with low income families particularly vulnerable.

The CSIRO report says a yearly payment of $185 by 2015 "would fully insulate low-income households from the impact of very high carbon prices on household energy consumption."

For low income families, concerns about the increased costs of energy and other goods and services are real," said Climate Institute Australia policy director Erwin Jackson, adding they could be overcome with "a fair and effective distribution of the multi-billion dollar bonus to government coffers provided by the ETS."