Innovation

How much will the carbon tax change the price of cake? Try 10c… or 0.38%

Myriam Robin /

Most businesses have no clue how much the carbon tax will impact their business. But bakers (and politicians) can rest easy: an energy economist has found the price of making a birthday cake will rise 0.38% from July 1.

In a paper presented this week to the International Association for Energy Economists, Adam McHugh of Murdoch University found that a $25 birthday cake should be 10c more expensive under a $23 a tonne carbon tax. Most of this cost came down to the increased cost of energy under the tax.

The finding will be a relief to Labor politicians. On a February episode of ABC program Q&A, Labor frontbencher Bill Shorten struggled to explain just how much the price of a birthday cake was likely to go up, or if it would at all.

“I don’t know how many candles it will have,” he said.

The question harked back to a similar one asked of then Liberal opposition leader John Hewson in 1993, when his election platform included the introduction of the GST. Hewson’s stumbling and confusing response to the price of a cake is often credited with having lost him the election.

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Myriam Robin

Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.

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