Last month, the Treasurer handed down the 2012/13 Federal Budget in Parliament. The cornerstone of the Budget this year appears to be about the carbon tax, and in turn, helping households deal with the cost increases associated with this tax. In this edition of Keeping in touch, we wanted to look at the carbon tax as well as bring you up to date with the new Household Assistance Package recently announced by the Federal Government in its latest Budget proposals and the ways it can financially assist Australian households.
What is the carbon tax?
As part of its plan for a clean energy future, the Australian Government has introduced the ‘carbon tax’. Around 500 of the biggest polluters in Australia will pay for their pollution under the carbon pricing mechanism. The idea is that polluters will pay per tonne of carbon they release into the atmosphere. This cost will initially be set at $23, and increase gradually until 2015, when we will shift to a trading scheme that will let the market set the cost. This is widely thought of as the most effective and least costly mechanism to reduce carbon output and reduce the level of climate change that is occurring.
At the moment, when you purchase a product that relies on carbon-intensive materials or manufacturing processes, the price you pay does not represent the cost incurred by the environment.
Introducing the Household Assistance Package
The Household Assistance Package is part of the Australian Government’s plan for a clean energy future. It has been brought in to offset the carbon tax by assisting households to help meet price increases which have passed on by businesses.
The Household Assistance Package starts from May 2012 with an initial payment, followed by tax cuts in July 2012 and then ongoing assistance added to regular entitlements from March 2013.
According to the official Federal Budget website:
‘The estimated impact on consumer prices of a $23 carbon price is 0.7 per cent in 2012‑13, or around $9.90 on average per week for households, which includes $3.30 per week on average electricity expenditure and $1.50 per week on average gas expenditure. Nine out of ten Australian households will benefit from assistance through tax cuts, increases in pensions, increased allowances and family payments or a combination of the above, worth an average of $10.10 per week per household.’1
To be eligible for a payment under the Household Assistance Package, you are:
- receiving a pension or other income support payment
- receiving Family Tax Benefit Part A and B, or Parenting Payment
- a Commonwealth Seniors Health Card holder or a DVA Gold and White Card holder who receives the seniors supplement
- covered by a Commonwealth concession card and have high energy costs associated with using essential medical equipment at home, and either you or the person you are caring for is covered by a Commonwealth concession card, and/or
- a low income household and do not receive adequate assistance through other means, as per the Government’s income test.
Your adviser will be able to assess your situation and provide you with personal advice to help you make the most of these changes, if eligible.
For more information, please visit the official government website at www.australia.gov.au/householdassistance.
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1Source: Federal Budget website – www.budget.gov.au