Finance, Legal

Treasury unveils carbon tax impact for businesses

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The Government has released new economic modelling of how a carbon price would affect the prices of everyday items such as milk, cheese and beer, in response to criticism and pressure from opposition that such a tax would increase living standards beyond a reasonable amount.

 

The modelling, released through Treasury, shows that while most food products are set to remain about the same in price, utilities will suffer the biggest increases.

 

“While the modelling is intended to provide the best possible indication of how the price of different categories of goods will change on average, it is important to recognise that price impacts for specific items will depend on aspects particular to the product,” Treasury said in the modelling.

 

The modelling comes as the Opposition has continually threatened to repeal that tax if it wins government in the next election, slated for 2013.

 

The modelling shows that most food products including milk, cheese, dairy, bread and cereals will only see an increase of less than 10 cents, while meat and seafoods will see about a 10 cent increase, along with fruit and vegetables, resulting in an increase of just 0.4%.

 

Restaurant and take-away meals will increase by about 20 cents, according to the modelling, will eggs, jams, tea, coffee and food additives will see an increase of less than 10 cents as well, along with most clothing products, which will see prices rise by just 0.2%.

 

Sporting goods and other recreational products including toys and pet services will see a 20 cent increase, along with communication products, including telecommunication and postal services.

 

However, there are some areas where prices will see more of an impact. Housing costs will rise by 90 cents, with home purchases, property rates, repairs and maintenance included in the modelling.

 

Rents are also tipped to rise by 40 cents, Treasury has said. Holiday travel and accommodation are also expected to be hit, with prices set to rise by 0.5% or 30 cents.

 

Utilities will see the biggest increase, jumping 7.9% or $4.60 per week, equating to roughly $240 per year. Other charges including higher prices for general consumer items will come to $510 per year, although the Government has planned compensation for most households.

 

The modelling is a preliminary release of more figures set to be released this week that are expected to demonstrate the impact of a carbon tax on the wider economy.

 

This comes after several business groups, including the Council of Small Business of Australia, called for economic modelling on how the tax would affect certain industries more than others.

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