$6bn fund to compensate households

Age
Tuesday 16/12/2008 Page: 7

HOUSEHOLDS facing increases in the cost of living because of the emissions trading scheme will be compensated with $6 billion worth of tax breaks and up-front payments. The compensation package, targeted mainly at low to middle income earners, will offset an estimated 1.1% increase to the cost of living that was revealed in details of the Federal Government's emissions trading scheme yesterday. The 1.1% increase includes a $4-a-week increase in electricity and a $2 increase in gas and petrol.

Those on income support and in low-income households will get the largest compensation, and in most cases will receive a net increase to their income above the costs from a carbon trading market. Social service groups welcomed the package, saying it ensured marginal people in society would not be disadvantaged by the emission scheme.

Damian Sullivan, manager of equity and climate change at the Brotherhood of St Lawrence, said the package addressed equity concerns. "The direct financial assistance is very good, it is a very comprehensive package and we support that," he said. "We are also supportive of the tax and transfer model that has been used." But Mr Sullivan called for the wholesale funding of a retrofitting program, such as insulation and water tanks, for low-income households to mitigate the costs of an emissions trading scheme and climate change itself.

Claire Martin, chief executive of the Australian Council of Social Services, said while ACOSS was disappointed with the Government's 5 to 15% 2020 target, it also welcomed an increase in payments for those on income support, and supported a "substantial retrofitting program'. The $6 billion will be taken from money gained by auctioning of carbon permits. The compensation package will be implemented in the 2010-11 federal budget and tax benefits and payments will be tied to the price of carbon.

Compensation to Australian households will be delivered through an increase in one or more of the Family Tax Benefits A & B, the Low Income Tax Offset, and the Dependency Tax Offset. Aged and disability pensioners, carers, and people on income support will get an immediate 2.5% increase, or $382 for singles and $320 for each person in a couple. Youth Allowance, Newstart and Austudy payments will be increased up to $307 a week.