The prospects of most local governments reducing their rates or providing refunds or discounts after the abolition of the Carbon Tax look all but dead.
Big funding cuts from Canberra and a raft of cost shifting contained in the federal Budget appears certain to chew-up any cash windfall that most Australian councils might have given back to ratepayers.
Now legal experts suggest it will be largely impossible to force councils to give back money under existing legislation (unless they want to) because the relevant legislation only obliges electricity and gas companies as well as suppliers of synthetic greenhouse gasses (and related equipment) to pony-up.
A key assessment on the Implications of Carbon Price Repeal for Local Government by law firm Norton Rose Fullbright, commissioned by the Australian Local Government Association, frankly concedes it will essentially be down to individual councils to decide how they respond financially to the abolition of the carbon price.
“At present, there are no specific legal obligations on, or requirements of, councils in relation to such decisions,” the paper from the law firm said.
The document notes that as rates for the2014-2015 “will already have been set, councils may need to reflect lower costs arising from the CPM repeal into their rate setting process for the next financial year.”
The question of what to do following the scrapping of the Carbon Tax is especially relevant to local governments that own or operate landfills and became “Liable Entities” under the discarded law.
Landfills (which are a major greenhouse gas producer thanks to methane released by rotting matter) had been a major focus in pricing carbon for local governments.
Many councils and shires were forced to not only increase fees and dumping charges at the local tip, but also find new eco-friendly ways of diverting material from the local dump, like substantially increasing recycling.
However Norton Rose’s legal assessment for councils suggests that it’s now largely up to local governments themselves to decide on landfill compliance requirements as well as “satisfying liability, pricing implications, and refund obligations and future abatement obligations and opportunities.”
But putting a carbon price on rubbish, then removing it, means that trash really can turn into treasure.
The law firm points out that because of the repeal, the extra carbon money collected from landfill is now looking for a loving new home.
“The only emissions that now attract a liability are those that occurred in the [2013-2014] compliance year,” the Norton Rose Fullbright paper said.
“Consequently, landfills now hold funds for which they have no associated payment obligation.”
Yet just how much extra cash is buried in surplus landfill fees and other carbon pricing hikes is rather difficult to assess.
Local government representatives Government News spoke to suggested it was unlikely any cumulative national figure had been collected and cited the high and ongoing costs of administration both in terms of set-up and dismantling of the mechanism.
One source suggested that for smaller councils, there would essentially be next to nothing to give back after costs associated with administration, compliance and other measures were taken into account, adding that the cost of administering refunds would be significant in its own right.
Left over money would be better reinvested in measures to bring down council operating costs, like solar panels or low consumption LED lights that also acted to reduce emissions.
South Australia puts suppliers put on notice
With council finances already battered by the cuts in the Budget, the push to get industry and suppliers to rein in their prices is also mounting, especially in regions where there are fears or suspicions that artificial price inflation or gouging has been occurring.
As a number of large businesses including Qantas, have already indicated, they don’t anticipate passing-on price reductions, so now there’s a push on to try and get suppliers to government to share cost reductions on rather than just banking them.
The South Australian Local Government Association (LGA) says it has told its member councils to “to check that their suppliers reduce bills appropriately in line with the repeal of the carbon price” and advised councils “that that the Australian Consumer and Competition Council (ACCC) has existing and new powers to investigate suppliers who do not do the right thing.”
David O’Loughlin, Mayor of Adelaide’s City of Prospect and president of the LGA said councils “would probably not know in many instances the impact of the repeal of the carbon price on prices charged by their suppliers.”
“Councils across SA will be working hard with their suppliers and energy providers to bring to account any savings associated with the repeal of the carbon price,” he said.
Mr O’Loughlin also played down the likelihood of prices falling as opposed to rises being delayed.
“Savings may take some time to achieve as the effect of the change rolls through the supply chain. In some instances they may not appear as savings but as deferred or lower annual price increases,” Mr O’Loughlin said.
“Ultimately the impact will be exactly the same for State and Federal governments – they won’t know the precise impact the carbon price had in 2012 when applied nor in 2014 when repealed.”
Brisbane City Council stumps-up
If the promise to axe-the-tax helped Tony Abbott win the September 2013 election, nowhere has the political pressure to show results from the removal of a price on carbon been greater than in Liberal National Party (LNP) held councils in Queesnland.
At Brisbane City Council, Lord Mayor Graham Quirk has pledged that ratepayers in the so-called super-council will get “a one-off carbon tax refund on their rates to return the estimated cost of the scrapped carbon tax from Council’s 2014/15 Budget as well as refunds from previous years related to landfill carbon emissions costs.”
Due to be delivered in October, Brisbane City estimates that the reimbursement will “provide the average residential ratepayer with a $36 refund on their next quarterly rates bill.”
Having campaigned against the Carbon Tax since it came into being in 2012, Mr Quirk has insisted that pressure on prices will now be pushed down.
“The abolition of the carbon tax will apply negative pressure on inflation, which will be reflected in Council rates in future years. The more that cost pressures can be reduced on Council, the more we can keep rate increases down,” Mr Quirk said.
“We are committed to only seeking the money needed to provide the necessary services across the city, to continue building infrastructure in line with growth and providing our city with appropriate economic development to secure the future of Brisbane for our residents.
“Future rates will reflect the removal of the carbon tax and we know that the removal of carbon taxes will apply negative pressure on inflation, due to downward pressure on costs.”
Comment below to have your say on this story.
If you have a news story or tip-off, get in touch at firstname.lastname@example.org.
Sign up to the Government News newsletter