CARBON PRICING FREQUENTLY ASKED QUESTIONS


On 1 July 2012, the Australian Government introduced a $23 per tonne carbon price on greenhouse emissions, to be paid directly by Australia's largest greenhouse gas emitting companies, together with compensation and incentive packages. Carbon pricing changes the relative prices of high and low emission-intensive goods. The extent that any carbon costs translate into general increases in prices depends on a range of factors. Carbon pricing will be occurring at the same time as normal variations in prices are occurring driven by productivity, the terms of trade or changing preferences. The extent to which businesses pass on the carbon price will depend on their consideration of issues such as operating costs, margins, and other economic factors (such as degree of competition).

The Australian Bureau of Statistics (ABS) released an Information Paper: Recording emissions reduction schemes in ABS statistics (cat. no. 5257.0.55.001) on 30 July 2012. This information paper summarises the nature of emissions permits measures introduced under the Clean Energy Act 2011, and how the ABS expects to include estimates of various carbon credit schemes in economic and environment statistics, commencing with the September quarter 2012.

The ABS will not be able to quantify the impact of carbon pricing, compensation or other government incentives and will not be producing estimates of price change exclusive of the carbon price or measuring the impact of the carbon price. Any changes in the prices charged by companies for their outputs, paid by companies for their inputs or paid by consumers, will be reflected in the suite of price indexes compiled and published by the ABS. Further information on the expected impacts of the introduction of carbon pricing is available in the publication Strong Growth, Low Pollution - Modelling a Carbon Price (The Treasury, 2011).

• Will the ABS be producing a carbon exclusive Producer Price Indexes (PPI)?

The ABS will not be able to quantify the impact of carbon pricing, compensation or other government incentives and will not be producing estimates of price change exclusive of the carbon price or measuring the impact of the carbon price. As a result of the introduction of the carbon price, businesses may adjust their prices which will be reflected, as appropriate in the suite of price indexes compiled and published by the Australian Bureau of Statistics (ABS).

• How will the carbon price be reflected in the PPI?

The PPI measures changes in the prices paid or received by Australian businesses, excluding any deductible taxes such as the Goods and Services Tax (GST). The carbon price is not a deductible tax. Therefore, any changes in the prices paid by Australian businesses as a result of the introduction of the carbon price will be reflected in the PPI.

• When will the carbon price be introduced and when will this impact on the prices measured in ABS statistics?

The carbon price was introduced on 1 July 2012. To the extent that any changes in prices occur, these will be measured in the period that they occur. Some businesses have indicated that their prices will increase from 1 July 2012. This will be reflected in the appropriate September quarter 2012 price index publication.

• Will the introduction of the carbon price be a one-off impact on the PPI?

The ABS is unable to measure the impact of the carbon price. It is therefore not known if the changes in prices are a one-off impact or continuing into future quarters. Further information on the estimated impacts on prices can be found in the publication Strong Growth, Low Pollution - Modelling a Carbon Price (The Treasury, 2011).

• What industries will be affected by the carbon price?

Companies operating large pollution emitting facilities, particularly those that generate in excess of 25,000 tonnes of carbon dioxide each year, will be liable to pay the carbon price. When prices change, other industries may be impacted indirectly when they consume products produced by industries directly affected by a carbon price. This may in turn create a flow-through effect to other businesses as they consume those products in subsequent periods. Further information on the estimated impacts by industry can be found in the publication Strong Growth, Low Pollution - Modelling a Carbon Price (The Treasury, 2011).

• Is the carbon price treated differently to the GST in the PPI?

Yes. The PPI excludes the GST as it is a deductible tax on consumption, whereas the carbon price is a price levied on the biggest polluting companies in Australia and therefore included in the prices received and paid for by businesses.