Australia's peak energy body has backed Tony Abbott despite doubts over the prime minister's promise that household power bills will fall with the abolition of the carbon tax.
The Energy Supply Association of Australia (ESAA), which represents major suppliers and retailers across the nation, says savings from scrapping the tax will be passed on to electricity and gas consumers.
“Just as the carbon tax increased power prices when it was introduced in 2012, they will fall once it is removed,” Association boss Matthew Warren said in a statement on Wednesday.
However, the ESAA stops short of reassuring households electricity costs would fall by nine per cent and gas prices by seven per cent – as Mr Abbott claimed during the election campaign.
The Australian Industry Group (Ai Group) warns consumers are unlikely to see an immediate change in prices because it would take time to unravel the carbon tax at the business level.
“The proportionate impact of removing carbon costs will likely not match the impact of their introduction,” Ai Group said in a submission to the government carbon tax repeal taskforce.
Mr Abbott has flagged a $550 per household saving on utility bills but the federal opposition says the government may not deliver on promises to consumers.
“Very serious doubts are already being cast by electricity companies and many other businesses about Tony Abbott’s reckless promise that he’d be able to cut power bills for millions of households,” opposition climate change spokesman Mark Butler told ABC Radio.
Treasurer Joe Hockey says there was no uncertainty about the price effect of scrapping the tax.
“Electricity prices will go down as a result of the abolition of the carbon tax, there’s no doubt about that,” he said in Sydney.
But Mr Hockey did concede businesses which hadn’t already passed on expenses related to the carbon tax were likely to try and recoup the money at some point. This would most likely be done by increasing consumer costs.
The coalition government will introduce legislation to repeal Labor’s carbon pricing regime in federal parliament next week.
The bills will have a smooth passage through the lower house but face hurdles in the Senate, where Labor and the Australian Greens are expected to reject them.
The government may have to wait until after mid-2014, when the conditions in the Senate may be more favourable.
Meanwhile, the Greens want a Senate inquiry into the government’s alternate Direct Action climate plan to investigate its capacity to cut greenhouse gas emissions.
“Everyone knows the Direct Action plan is just a sham designed to hide the government’s climate denialism,” Greens Leader Christine Milne said.