Councils’ carbon price revealed

By Bill McArthur, MAV President
The analysis of data from 38 councils showed the carbon price design had lowered the impacts on councils compared to the 2009 proposed Carbon Pollution Reduction Scheme.
Excluded from the carbon price are heavy on-road fuel use, legacy waste and smaller landfills within a prescribed distance of larger landfills, which have all reduced the overall cost impacts for local government.
If all council cost increases were to be collected through rates, which is unlikely, it would result in a median 1.5 per cent increase – or around $22 a year or 42 cents a week.
However, for over a decade Victorian councils have been actively working to lower their greenhouse gas emissions, and two thirds have adopted a formal greenhouse gas mitigation strategy.
Actions have included changes to vehicle fleets, improved building and street lighting energy efficiency, landfill methane gas capture, green purchasing programs and use of GreenPower.
This means that in many cases municipal expenses and any flow on impact to rates will be lower than our estimates, as councils find cost savings rather than pass on cost increases to ratepayers.
The carbon price is expected to primarily impact on local government’s electricity, gas and petrol costs; the generation of municipal wastes; and costs related to construction of buildings and infrastructure.
The Federal Treasury has modelled the economy-wide impacts of a carbon price, estimating that an increase in the Consumer Price Index attributable to a carbon price would be 0.7 per cent across the economy.
The MAV Carbon Pricing survey shows the estimated impact on council expenses will range from 0.3 to 1.9 per cent with a median of 0.8 per cent.
Potential flow on increases to council rates can be expected to range between 0.7 and 3.3 per cent, with a median of 1.5 per cent.
A similar study by the MAV in 2009 on the impacts of the Carbon Pollution Reduction Scheme estimated an increase in council costs of two per cent with a $25/tonne carbon price and around three per cent with a $40/tonne carbon price – equivalent to rate increases of between three and five per cent.
Cr McArthur said that Victorian local government was well placed to address the carbon price impacts on council operations and services.
By mid-April we will have completed carbon management training sessions for 41 municipalities, attended by more than 120 council staff to help them understand and reduce their carbon price exposure.
One of the significant challenges still facing many municipalities is measuring and properly costing landfill waste emissions now and into the future.
Up to 10 Victorian landfills could be directly included under the carbon price. Gas capture technologies and diverting waste from landfills will be a priority to lower councils’ costs and emissions liability.
We welcome support the Australian Government will provide to help councils take advantage of opportunities under the carbon farming initiative.

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