Parliament Must No Longer Delay in Cutting Carbon Tax Cost

The parliament must no longer delay in repealing the carbon tax, as new analysis for the Business Council of Australia shows electricity prices have doubled in the past decade, with the carbon tax now accounting for up to 20 per cent of the electricity bill of a large business and six per cent for a typical household, President Catherine Livingstone said.

“Repealing the carbon tax must be the first step in reducing Australia’s electricity prices and developing a coherent and integrated national energy and climate change policy that maintains our competitiveness and energy advantages while helping Australia to contribute to global emissions reductions,” Ms Livingstone said.

Ms Livingstone released analysis done for the Business Council by Synergies Economic Consulting and Roam Consulting showing the carbon tax and other green energy policies now account for a total of 40 per cent of the electricity bill of a large business that does not receive government assistance.

“This analysis clearly shows the high cost of the carbon tax and other green energy policies on business and the community, and underscores why business is increasingly frustrated at the delays in the Senate this week in removing this major economic impost in a timely manner,” she said.

“Extending the carbon tax for an uncertain period of time simply is adding huge costs to electricity bills for both business and the community at a time when the economy can least afford it.

“Failure by the parliament to repeal the carbon tax by next week will create significant uncertainty for businesses, particularly electricity retailers, with flow-on consequences for consumers.

“Delaying repeal beyond next week also risks not achieving Royal Assent by 1 September, which would impose huge costs on the budget bottom line due to compensation arrangements under the legislation,” Ms Livingstone said.

The BCA analysis of actual electricity prices across the mainland states of the National Electricity Market shows that, combined, the carbon tax, the Renewable Energy Target (RET), and state-based energy schemes now account for:

  • up to 40% of the total electricity bill for a large business customer that does not qualify for government assistance
  • 25% of the total electricity bill for a business that qualifies for moderately emissions-intensive government assistance
  • 17% of the total electricity bill for a business that qualifies for highly emissions-intensive government assistance
  • 11% of a typical household electricity bill.

The RET is estimated to cost up to almost 10 per cent of a typical electricity bill for a large business that does not receive any exemption, and three per cent of a typical household electricity bill.

To reduce the cost of the RET on consumers, the BCA is calling for the RET to be amended to a true 20 per cent of Australia’s electricity demand by 2020 and then wound up once all obligations under the scheme are met by 2030.

State-based schemes, including feed-in tariffs and energy efficiency schemes, meanwhile account for two per cent of a household bill and up to 12 per cent of a large business bill.

“The Australian community expects the parliament to act in the long-term national economic interest, and that must include working together to wind-up the various green energy schemes which are driving up the cost of electricity and are a high-cost way of reducing Australia’s greenhouse gas emissions.

“What is also essential is that discussions about possible amendments to other climate change legislation come out from behind parliamentary closed doors so the impacts on business, the community and economy can be considered as part of a transparent and consultative process.

“Anything short of this will fail the national interest and adversely affect both business and the community.

“Australians, businesses and the economy should not be again subjected to an emissions reduction policy development process where critical detail is worked out behind the scenes as part of a political negotiation leading to unworkable policies for businesses and the economy.

“What we want to see is good policy design and process with any new or amended greenhouse gas reduction legislation subjected to a green paper and white paper process that is fully transparent and consultative.

“It is time for this parliament to act in the national interest, and for this not to be compromised by political interests,” Ms Livingstone said.

The report, Impact of Green Energy Policies on Electricity Prices, was prepared for the Business Council of Australia by Synergies Economic Consulting and Roam Consulting.

Impact of Green Energy Policies on Electricity Prices (Summary of Report)

Impact of green energy policies on electricity prices (Final)