Carlos and Peita Dobson, of East Ballina, with two-year-old son Kyan, are prepared to do their bit to help save the planet from damaging climate change, but are concerned about the cost of life essentials such as food with the planned introduction of an Emissions Trading Scheme 2011.
Carlos and Peita Dobson, of East Ballina, with two-year-old son Kyan, are prepared to do their bit to help save the planet from damaging climate change, but are concerned about the cost of life essentials such as food with the planned introduction of an Emissions Trading Scheme 2011. JAY CRONAN

The price of ETS

LIKE many families, the Dobsons of East Ballina don’t know much about the Rudd Government’s proposed Emissions Trading Scheme (ETS).

However, in order to help make the planet a better place to live they are willing to pay a price, as long as it is evenly spread across households and large polluting industries.

“Someone has to pay, but it has to be fair,” said Carlos Dobson, the father of a young son and with another child on the way.

While the Government has estimated the introduction of its ETS in 2011 would cost typical families like the Dobsons $976 a year, Climate Change Minister Penny Wong yesterday assured households they would be compensated.

Ms Wong said low-income earners would be more than fully compensated, while many middle-income families would also receive assistance, promising households would receive $1000 through the tax and welfare systems to offset higher prices under an ETS.

“That certainly relieves our concerns,” Mr Dobson said yesterday.

As an average-income family with two cars, Mr Dobson said he was particularly worried about the possible increase in the cost of fuel and food.

Economists yesterday told The Northern Star government compensation would take the sting out of the ETS for most families.

“I don’t think people should be overly worried about it,” AMP Capital’s chief economist Shane Oliver said.

He said the system was designed to encourage households and industry to use alternative sources of energy.

While much of the scheme was still up in the air, making predictions about its possible impact was difficult to quantify, Mr Oliver said.

He said it was likely to add about three cents a litre to the cost of petrol.

“But the Government is talking about reducing excise (tax on petrol) by the same amount, so motorists won’t see a difference,” he said.

And despite industry claims food prices would jump by more than 5pc, Mr Oliver believes the rise would be closer to 1 or 2pc.

“Some food will be impacted because of increases in fuel and transport costs, but it will be modest,” he said.

University of Queensland economics professor John Quiggin agrees.

“Price rises will be very modest,” he said.

In fact, the Government estimates the ETS will only add 1.1pc to inflation during the first two years of the scheme.

“The rise in petrol will be less than the fluctuations we have seen in the price over the last year,” Prof Quiggin said.

“Food prices are unlikely to rise, they could actually fall.”

Prof Quiggin also disputed suggestions that energy prices would soar under the ETS.

He said while NSW households were already digesting massive recent jumps in electricity prices approved by the state pricing tribunal in July, increases caused by the ETS ‘would be nothing in comparison’.

The NSW Farmers’ Federation also downplayed possible price rises for foods. Board member Kath Robb said while farmers may face higher prices for things such as fertiliser, it was not guaranteed this would be passed on to the consumer as farmers were permitted to earn carbon credits under the scheme.

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