Carbon Tax Plan Supports Low Income Australians

Not for Profit organisations have welcomed the Gillard Government’s carbon tax plan, applauding the compensation measures aimed at low income Australians who will be the ‘first and worst’ impacted by climate change.

The Gillard Government plan – which introduces a carbon tax of $24 per tonne – contains $15 billion in compensation for Australian households to help offset the impact of the tax.

Under the ‘Supporting Australian Households’ package, the Gillard Government says the average household will be 20 cents a week better off, with extra payments for pensioners and families with kids, and a clean a ‘clean energy supplement’ increase in pensions, allowances and family payments.

The Government says the tax is projected to cut 159 million tonnes of carbon pollution from the atmosphere by 2020 – the equivalent of taking 45 million cars off the road.

Australian Council of Social Service says it welcomes the announcement, provided it really does have the effect, over time, of reducing greenhouse gas emissions and encouraging the transition to a clean energy economy.

ACOSS Acting CEO Dr Tessa Boyd-Caine says ACOSS is pleased to see people with the lowest income levels will be assisted through compensation delivered through the social security and tax systems and by measures to support greater energy efficiency.

Dr Boyd-Caine says ACOSS has long argued that people on the lowest income levels will be impacted first and worst by the effects of climate change, includes people reliant on income support such as pensioners, people with disabilities, sole parents, and the unemployed, who have less ability to adapt and spend a greater proportion of their disposable income on necessities like food, energy and shelter.

Dr Boyd-Caine says ACOSS is disappointed that compensation levels have been determined based on household income and not expenditure. She says this means that existing inequities in Australia's income support system will continue through the carbon price mechanism as those on lower allowances receive the lowest levels of compensation.

For example someone on Aged Pension, Carers or Disability Support Pension will receive an increase of $338 per year compared to $218 for someone on the unemployment Newstart Allowance. Boyd-Caine says this is unfair and brings a level of inequity into the compensation aspects of the scheme.

She says in effect, the so-called ‘battlers buffer' builds in a $33 difference in the annual compensation between single pensioners and single unemployed people.

ACOSS also said that making allowance recipients ineligible for the $10 per week Utilities Allowance adds to the inequity in the face of surging power prices.

Under the Gillard Government’s plan, a new Clean Energy Supplement will be paid, equal to a 1.7 per cent increase in pensions, allowances and family payments. The assistance will mean:

• Up to $338 extra per year for single pensioners and self-funded retirees, and up to $510 per year for pensioner couples combined. 
• Up to $110 per child for a family that receives Family Tax Benefit Part A.
• Up to $69 extra for families that receive Family Tax Benefit Part B.
• Up to $218 extra per year for single income support recipients and $390 per year for couples combined for people on allowances.
• Up to $234 per year for single parents in addition to the increased family payments they receive.

The Brotherhood of St Laurence congratulated the Government for supporting vulnerable households, and in particular for increasing the tax-free threshold to $18,000.

Brotherhood Executive Director, Tony Nicholson says this will bring relief to many low-income households and increase incentives to participate in the paid workforce.

Nicholson says government support for energy efficiency programs targeting low-income households, and the development of the National Energy Savings Initiative, are most welcome.

Nicholson says energy efficiency remains the best way to assist households cope with rising energy prices that are increasing irrespective of a carbon price. The Brotherhood’s experience shows that low-income households are in particular need of support because they often lack the upfront cash to improve the efficiency of their homes and appliances.

Energy Program Director with the Grattan Institute, Tony Wood says the package provides certainty for businesses and the community to decide how to reduce emissions at low cost.

CPA Australia says the carbon price policy provides business with much needed certainty around which to plan for operation in a carbon-constrained future – which also applies to the Not for Profit sector.

Pro Bono Australia would like to hear how you think the government’s Carbon Tax plan will affect your organisation. Please drop us a line at editor@probonoaustralia.com.au