A prominent economist has criticised Opposition Leader Tony Abbott for saying a $40 tax on carbon would double the price of electricity.
The University of Queensland’s John Quiggin says such a tax would double the price of wholesale electricity.
But he says that does not mean consumers would pay double.
He says household electricity bills mostly cover the cost of the poles and wires, and those costs would not change as a result of a carbon tax.
“A doubling of that wholesale price would only add four or five cents – perhaps 20, 25 per cent – to the cost paid by retail consumers,” he said.
“So really that whole statement by Mr Abbott shows that the Coalition’s done no thinking at all about climate policy.
“The big bulk is the distribution cost, the cost of the poles and wires that take the electricity from the power plant to our house that’s more than half of the total cost, and that’s a regulated cost that’s been increasing quite a bit, so retailers certainly have no possibility of passing on a big increase in those costs.”
Meanwhile Energy Efficiency Minister Penny Wong has announced a 50 per cent tax break for building owners who make efforts to reduce their energy emissions.
The Federal Government will also provide $100 million in funding to the Australian Carbon Trust, a Commonwealth company that promotes energy efficiency to businesses.
Senator Penny Wong says the Carbon Trust will work with the private sector to retro fit buildings.
“One thing we want them to do is to co-invest with building owners to make projects like this viable, so that we get building owners around Australia investing in retro-fitting their buildings to make them more energy efficient,” she said.