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 today.
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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.
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.
