With the release of the Gillard Government plan to put a price on carbon pollution, the Australian prime minister has promised that more than half of the revenue raised on the new levy will go to households to help meet price impacts. This assistance will be through increases in pensions, allowances and family payments, and personal income tax cuts.

Nine out of ten households will receive assistance through tax cuts, extra payments or both, Ms Gillard said.

“For two out of three households, this assistance will be enough to cover their entire average price impact.”

“Over four million households will receive assistance that exceeds their expected average price impact, leaving their household budget better off.

“Almost six million households will receive assistance that covers all of their average price impact, and around eight million households will get some assistance.”

The assistance will be permanent and will rise over time through indexation. On average, households will see cost increases of $9.90 a week, while the average assistance will be $10.10 a week. Households won’t pay the carbon price on the price of fuel as the Government recognises filling up the petrol tank is a major expense for many family budgets.

Households that improve their energy efficiency can help the environment and save money. They can do this by cutting power use and buying less carbon-intensive products, which will become relatively cheaper under a carbon price. Households that make savings in their budget in this way will still collect their full entitlement of carbon price assistance.

The tax reforms being introduced as part of the package will increase the tax-free threshold from $6,000 today to $18,200 from 1 July 2012, and to $19,400 from 1 July 2015. This will mean that over a million Australians will no longer need to lodge a tax return.