On 15 October 2013, the Prime Minister and the Environment Minister released for public consideration draft legislation repealing the carbon tax. The repeal is a specific election commitment of the Government. The carbon tax is directly applied to a limited range of inputs, and is paid by a relatively small number of businesses or ‘liable entities’. The carbon tax directly increases the cost of: electricity and gas; managing landfill and wastewater; liquid fuels for off-road use; synthetic greenhouse gases. However, because these products and services are inputs to a wide range of other processes through the economy, the price of many other goods and services are indirectly increased as a result of the tax. The repeal of the carbon tax is likely to have two main effects:
- Reduction of both the input prices faced by business and household living costs. It is estimated that consumer price index will fall by around 0.7 percentage points, and reduce the annual household cost of living by around $550 in 2014-15.
- Elimination of compliance costs faced by liable entities. The carbon tax regime requires liable entities to monitor and report on carbon emissions, as well as acquire and surrender emission permits. In addition, large carbon emitters are required to have these activities independently audited/verified. The repeal of the carbon tax will remove the need for these businesses to incur such costs. The compliance cost is estimated to be $94.8 million lower as a result.
An options-stage Regulation Impact Statement (RIS) was prepared by the Department of the Environment. Consistent with the Government’s best practice regulation requirements, alternatives to the election commitment were not considered in the RIS. The RIS focussed on the commitment and how the commitment should be implemented. Consistent with the July 2013 Australian Government best practice regulation requirements, the options-stage RIS was certified as adequate by a Deputy Secretary from Department for the Environment.
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