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Fact checker: Coalition's $15b carbon price claim 'mostly false'

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Carbon number wrong

A Politifact check of the Opposition's costing of an early switch to a floating carbon price has found the figure to be almost four times as high as the likely real cost.

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The Coalition's claim that moving swiftly to a floating carbon price would cost the budget up to $15 billion has been rated "mostly false" by the fact-checking service PolitiFact, which partners with Fairfax Media from Monday.

During the 40 days leading up to the election, PolitiFact will publish a checked fact a day on The Sydney Morning Herald and The Age websites.

The claim the change would mean "a black hole of up to $15 billion in the budget" was made by shadow treasurer Joe Hockey on the Channel Seven Sunrise program on Friday, June 28, two days after Kevin Rudd retook the Labor Party leadership.

Joe Hockey's claim was found to be mostly false.

Joe Hockey's claim was found to be mostly false.

Now at $24.15 a tonne, Australia's carbon price was set to plummet to the European price (currently $6 a tonne) on July 1, 2015.

Doing it two years earlier "could have a $15 billion impact on the government's revenue over the forward estimates", according to the Coalition's climate change spokesman Greg Hunt, who provided the figures used by Mr Hockey.

"Forward estimates" is budget terminology for the current financial year plus the next three. But this impact would be over two years because the fixed carbon price was set to end in July 2015 in any event.

Mr Hunt's office said it arrived at the $15 billion figure using Table 3.2.7 of the Clean Energy Regulator's budget statement, which showed the government expected to receive $8.34 billion from the carbon tax this financial year and $9.27 billion the next. The cost to the budget from a much lower carbon price of $6.50 would be $6.1 billion this financial year and $6.9 billion the next, by that reasoning. It was not quite the $15 billion claimed by Mr Hockey, but it was close.

But the figures Mr Hunt relied on applied to gross income from the sale of carbon permits. The net income, listed in the same table, was much lower because more than 40 per cent of the permits were given away. The gross income was a notional rather than actual figure, since a huge chunk of it would never be received. And what will not be received cannot be lost.

Table 7 of Budget Statement 5 outlined what the government actually expected to receive: $6.26 billion this financial year and $6.39 billion the next.

Moving straight to the current European carbon price of $6 a tonne this financial year and the projected European price of $6.15 next financial year would cost the budget $4.7 billion this financial year and $4.8 billion the next, a total of $9.5 billion.

And that was an upper estimate. The lower carbon price would cut costs for some of the businesses that had been paying the carbon tax and had been unable to pass it on. With lower costs should come higher profits, boosting the budget's company tax takings.

Australian Industry Group estimates suggested the government would get an extra $800 million a year as a result of moving earlier to the lower European carbon price. The total hit from moving to the floating price immediately would be about $8 billion, the total cost from moving in July next year would be about $4 billion.

Politifact rated the Coalition's $15 billion claim "mostly false".

More details are available at politifact.com.au.

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180 comments

  • And is anyone surprised?

    Commenter
    Alistair
    Date and time
    July 15, 2013, 6:37AM
    • Yea Alister, what's a few billion dollars between friends. 8 or 15 doesn't matter
      it's all grows on the money tree in the courtyard of parliament house doesn't it.

      Commenter
      J Walker
      Date and time
      July 15, 2013, 7:33AM
    • Joe Hockey is propagating false statements in order to become a minister in a government led my Mr Perennial Negative.
      Why do the politicians have to lie? Do they have no conscience? Do they not think of the younger generation for whom they are required to set a standard.

      Commenter
      Malcolm
      Date and time
      July 15, 2013, 7:48AM
    • only one fact a day? Guess our concentrations span must be fairly news limited

      Commenter
      ian
      Location
      brisbane
      Date and time
      July 15, 2013, 8:52AM
    • I'm surprised since the coalition planned to do the identical thing. Then again, I'm not surprised as politics is mostly theater anyway.

      Commenter
      Good Logic
      Date and time
      July 15, 2013, 8:58AM
    • No surprise at more BS from the Liberals. They are masters at it.

      Commenter
      Tone
      Location
      Melbourne
      Date and time
      July 15, 2013, 9:03AM
    • Whether true or false, that is irrellevent. I still believe our cost of living is not going to go down. Our electricity prices will still stay the same as well. If there is no fixed price on carbon, what are the electricity companies going to charge us? Come on, they will keep the same amount and keep the balance in their own pockets.

      Commenter
      J.G.
      Date and time
      July 15, 2013, 9:14AM
    • It is important to note that the current Federal Budget is projecting a carbon price of $25.40 out to 2018-2019. So even if the European price is projected at $6, the budget still has $25.40 which means a hole bigger than $15billion over 3 years. Looks closer to $20billion over 3 years based on PolliFacts calculations...

      'The Budget's revised carbon price methodology projects carbon prices above $25.40 in 2018‑19.'
      http://www.budget.gov.au/2013-14/content/bp2/html/bp2_revenue-10.htm

      Commenter
      Monko
      Date and time
      July 15, 2013, 9:39AM
    • $9B still seems like a lot of money to me, and is well over half the figure Hockey gave. Surely it should have been described as 'mostly true'?

      Commenter
      Folly
      Date and time
      July 15, 2013, 10:09AM
    • No par for the course for KRudd.

      The greatest Moral Challenge of our time became the greatest moral squib of our time.

      The Gillard did the Greens' business with KRudd in support in Cabinet and introduced the greatest carbon tax of our time WHICH WAS THE ALP GOVERNMENT SAID GOING TO HAVE MINIMAL EFFECT ON JOBS AND THE PRICE OF ELECTRICITY.

      Now KRudd HAS CHANGED HIS MIND AGAIN has decided that the great big carbon tax HAS HAD an effect on electricity prices and jobs.

      So Abbott is VINDICATED wiith KRUDD admitting these effects.

      And Krudd is hailed a hero??

      You people have the memories of goldfish .

      Commenter
      Andie
      Date and time
      July 15, 2013, 10:32AM

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