“Australians are ready for this:” Households could get paid under new plan to price pollution

Australia could raise $35 billion a year by putting a price on pollution and help households and businesses by sharing the revenue, a report has found.

Every Australian household and some small businesses could receive hundreds of dollars a year to cover rising energy costs under a plan to tax fossil fuel companies. 

Two levies could be applied to companies that mine or import coal, gas, oil, petrol or diesel under the proposal that could raise $35 billion a year until 2050. 

The Superpower Institute revealed the plan on Thursday, in a report that found taxing companies responsible for pollution could boost the nation’s budget, reduce carbon emissions and support consumers.

The proposal comes two years after the organisation called for Australia to introduce a refreshed carbon pricing scheme, and months after the federal government announced its goal to reduce emissions by 62 to 70 per cent in 2035. 

The institute’s 90-page report, called The Case for Pricing Pollution, found Australia was not cutting emissions fast enough to reach net zero by 2050 and needed to strengthen the national budget. 

To address these issues, the report recommended introducing a charge called the Polluter Pays Levy that would apply to companies that extract fossil fuels or import them into the country. 

The levy would affect about 140 mines operated by fewer than 60 companies, the report found, and would raise an average of $22 billion a year. 

A second tax, called the Fair Share Levy, would apply to gas company profits and would lift their effective tax rate from 30 per cent to 58 per cent. 

The levy could raise $13 billion per year on average, the report found, which Superpower Institute chief executive Baethan Mullen said would give Australians more revenue raised from the nation’s assets.

“Australia’s oil, gas and coal belong to all Australians but right now we’re letting companies extract these resources while paying some of the lowest taxes in the developed world,” he said. 

“Norway taxes its oil and gas at around 78 per cent while remaining an attractive destination for investment.”

Revenue raised by the levies could be used to offset the energy costs for consumers, with the study’s modelling recommending an average annual household payment of $330 and $325 for small businesses. 

Low-income households could be paid an additional sum between $490 and $1300 a year, it found, depending on government targets. 

The report proved Australia could reduce emissions without hurting household budgets, Superpower Institute chair Rod Sims said, and could use the additional funds for investments in low-carbon industries. 

“Australians are ready for this,” he said. 

“If it’s designed properly, the revenue it raises can be returned to households to provide significant cost-of-living relief while still leaving billions to strengthen the economy.”

More than 50 countries have introduced a carbon pricing instrument to reduce emissions, including Europe, the UK, New Zealand and China. 

Australia repealed its carbon pricing mechanism in 2014 and introduced the Safeguard Mechanism that sets emissions limits for heavy industry. 

AAP