By Lenore Taylor
Tony Abbott has taken his ''great big new tax'' campaign on tour this week, using his annual fund-raising ''Pollie Pedal'' bike ride to do off-Broadway renditions of his ''no tax'' gig all the way down the NSW coast.
On Monday he was in Coffs Harbour, appearing at Russell's Prime Quality Meats.
''I was just at Russell's butchery talking about the impact that the carbon tax will have on everyone's cost of living. Russell's electricity bill is something like $22,000 a year. Julia Gillard's carbon tax will put four or five thousand dollars on that, and that's just for starters. That means that your meat, your sausages, your lamb, your beef, your pork, it all goes up in price,'' he told reporters, , leaving the actual price rises on the lamb, beef, sausages and pork unquantified.
The Herald spoke to the owner of Russell's Meats, Russell Greenwood, who confirmed his annual power bill. It would in fact go up by $4000 a year under the 18 per cent price rises that were predicted for the first two years of the Rudd government's carbon pollution reduction scheme.
For Greenwood, that is undoubtedly a significant extra cost. But he also told us his rough annual turnover, which allowed us to calculate that in order to pass on all that extra cost to his consumers, he would have to raise his prices by about 0.187 per cent.
For Greenwood's customers in Coffs Harbour that would mean T-bone steak at $22 a kilo would now cost … wait for it … . $22.04. Minced meat at $11 a kilo would now cost $11.02.
The indicative Treasury modelling released last week under freedom of information shows the average cost of a household weekly shop would rise by somewhere between 80 cents and $1.70, depending on whether the carbon price was set at the upper or lower end of expectations and whether it was allowed to flow through to the cost of petrol.
If Greenwood's customers can afford to pay the extra two to four cents a kilo - and they will surely be able to do so, given all of them on low to middling wages will get full compensation for the effect of the new tax - then his business should be able to continue with its bottom line unaffected.
Greenwood is feeling the pressure of rising business costs, but none of them is caused by the prospective carbon price. Like everyone else in the state he is already feeling the pinch from rising electricity costs. He says it is also costing him more to buy his meat because of the recent floods.
And some households are also struggling, especially due to increases in their power bills that have nothing to do with pricing carbon.
The political genius of Abbott's campaign is to focus all that anxiety, all the anger about all the existing price pressures, on to the carbon price which has not even happened yet. Coalition strategists are absolutely blunt about it. ''We are going to blame the carbon price for absolutely everything,'' they say.
The challenge for the Gillard government is to try to explain what the carbon price is and is not responsible for, and to try to limit price rises due to other factors on the bills that the carbon price definitely is going to force up - gas and power.
That is why the Climate Change Minister, Greg Combet, is trying to find a way to wind back further the incentives and subsidies for rooftop solar cells, which are putting pressure on power prices.
Solar subsidies are by no means the biggest factor pushing up electricity - things like replacement of ageing infrastructure, the need to service massive peaks in electricity demand on a few very hot or very cold days and higher costs of coal and gas have a much bigger effect. But the solar subsidies are something that governments can change.
As anyone who has seen the aggressive marketing from rooftop solar companies would know, there are several incentives to buy them. You get to sell renewable energy certificates for the power you generate to electricity retailers under the federal government's renewable energy scheme and you get to sell excess power back into the grid at lucrative rates set by state and territory governments.
But the cost of your incentives is spread across everyone's bill. The Queensland government last year wrote to Canberra expressing its ''shock'' at the fact that the federal Renewable Energy Target would push state power bills up by an extra 3 per cent this year.
Solar cells on the roof are good for their owners but they are an expensive and inefficient way of reducing the country's greenhouse emissions (costing about $200 or $300 a tonne of abatement, compared with $20 to $30 under a carbon price).
The government has already moved twice to try to rein in the runaway growth in rooftop solar, but government sources say it is not enough and it will have to do more.
Abbott is right when he says the carbon tax will increase your electricity bill. For households, bills could go up by anything between $2.70 and $4.20 a week. The government has promised low- and middle-income earners full compensation. We have not yet seen the detail but in the current political situation they seem likely to err on the upside.
Abbott must have known he was very likely to be wrong when he told reporters in Coffs Harbour that ''pensioners will be saddled with higher prices but there's not much they can do to lift their pensions. Now, the government will tell you that they are going to compensate you but, take it from me, I know a little bit about this, the tax will be permanent, the compensation will be temporary and that's why you can't trust the government on this point.''
Under the carbon pollution reduction scheme, the Rudd government proposed a permanent increase in pensions of 2.5 per cent - 1.4 per cent more than the 1.1 per cent expected increase in prices. That still leaves them living on a pretty small amount. But the new tax is definitely not going to price anyone out of the market for a T-bone steak.