Households
The Carbon Pollution Reduction Scheme (CPRS) will change the prices of the goods and services that all households use. Goods that are emissions intensive to produce will generally become more expensive. This is consistent with the intent of the CPRS to motivate people to change their behaviour and use products which are less emissions intensive to produce. Ultimately, this will assist in reducing Australia’s emissions.
The CPRS will affect Australian households, but the overall impact will be modest. It is anticipated that the CPRS will result in increases in the cost of living of around 1.1 per cent across the first two years of the CPRS, with much smaller increases in subsequent years.
There is no cost free way to tackle climate change but the Government is providing household assistance to ensure low- and middle-income Australian households do not foot the bill. The Australian Government is committed to assisting all households, and particularly low income households, to adjust to the carbon price. Every cent raised from the CPRS will be used to help Australians adjust to its impacts and invest in clean energy options.
The household assistance package under the CPRS – worth nearly $50 billion over ten years – will ensure all low- and middle‑income families are assisted with the cost of acting on climate change through direct cash assistance and tax offsets. In the case of most low-income households, increases in Government payments will more than offset the increase in costs they face. For example,
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A single income couple earning $50,000 with two children (aged 2 and 7) would be more than fully compensated for the rise in costs flowing from the CPRS. The estimated average cost impact of the CPRS for this family in 2012-13 will be $680, but they will receive an additional $802 in assistance from the Government. This household would be $122 better off under the CPRS, and better off still if they reduced their energy and electricity use.
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A family earning $120,000 (with a 50:50 income split) with three children (aged 4, 6 and 8) will also be more than fully compensated. The estimated average cost impact of the CPRS for this family in 2012-13 will be $1088, but they will receive an additional $1240 in assistance from the Government. This household would be $152 better off under the CPRS, and better off still if they reduced their energy and electricity use.
The following tables show the estimated cost impact of the CPRS in 2012-13 and the assistance that will be provided to a wide range of different household types.
How this affects your household
The Australian Government’s household assistance package provides:
Assistance for low-income households
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All low-income households will be fully compensated for the overall cost increase they face.
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Around 90 per cent of all low-income households – or 2.6 million households – will receive assistance equal to around 120 per cent of the overall cost increases they face.
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Pensioners, seniors, carers and people with disability will be fully compensated for the overall cost increase they face.
Assistance for middle-income households
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Around 97 per cent of middle-income households will receive some form of direct cash assistance under the CPRS.
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Around 50 per cent of middle-income households – that will be 1.7 million households – will be fully compensated for overall cost increases flowing from the CPRS.
Once the CPRS commences, household assistance will continue in perpetuity. Because these assistance payments are indexed to the Consumer Price Index, upfront assistance will automatically increase in line with the increasing carbon price as it affects household costs. Each year, the adequacy of household assistance will be reviewed in the context of the Budget.
Additional things households can do
Households will face higher prices for the emissions‑intensive goods that they buy. However, they will be motivated to reduce their purchases of these goods and to change their behaviour to reduce their exposure to the carbon price.
For low- and middle-income households, this action will allow them to benefit further from the CPRS household assistance package because it will mean they will experience less of an impact of the price increases flowing from the CPRS, but receive the same level of assistance.
We can all reduce our emissions and save money on energy bills by making a few small changes around the house. Things as easy as taking shorter showers, switching off lights when they are not in use, reducing use of air-conditioners and heaters, and hanging out the washing instead of using a dryer are all ways to help the environment and reduce the amount of money you spend on energy bills. Read more.
What else is the Government doing to assist households?
To further ease households’ transition to a low carbon future, the Australian Government will protect motorists from higher fuel costs resulting from the CPRS through cent-for-cent reductions in fuel tax over the first three years of the scheme. Read more.
Beyond these direct support measures, the Australian Government will also provide assistance through the introduction of energy efficiency measures and consumer information to help households take practical action to reduce energy use and save on energy bills. Read more.