TONY ABBOTT said its impact on the cost of living would be "almost unimaginable". Joe Hockey said it would "drive up the price of everything". The Senate leader of the Nationals, Barnaby Joyce, said it would force working mothers to pay "over $100 for a roast".
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Yet the first figures in on the price impact of the carbon tax show its effect contained and inflation surprisingly low.
The privately compiled TD Securities-Melbourne Institute price index barely moved as the carbon tax began in July. The total increase for the month was 0.2 per cent, taking the annual rate of inflation to just 1.5 per cent - the lowest in three years.
TD Securities compiles the data monthly because the Bureau of Statistics will not. It has a good record of tracking the ABS consumer price index.
If what it has discovered is borne out in the official survey, Australia will not have much inflation at all when the impact of the carbon tax is officially tallied.
The findings of negligible price rises are not because energy prices did not rise. The index reports a jump in electricity prices of 14.9 per cent and a jump in household gas prices of 10.3 per cent, almost all of which would have been due to the carbon tax.
But the reality of consumer spending is that, by themselves, electricity and gas are not very important in household budgets. Combined, they make up 2.7 per cent of spending. Meals out and takeaway food account for 5.5 per cent and alcohol for 4.8 per cent.
While electricity and gas prices were going up, other more important prices were falling. Petrol slid 2.7 per cent, insurance and financial services 0.7 per cent and travel within Australia 2.7 per cent, mainly because of cheaper air fares.
Economist Stephen Koukoulas, who helped create the TD Securities index, said the carbon tax appeared to have pushed up the cost of living 0.4 per cent, meaning without it the inflation gauge would have fallen 0.2 per cent in July. The outcome is consistent with the Treasury forecast of an inflation impact of the tax of 0.7 per cent over 12 months.
"The immediate impact was always going to be on electricity and gas prices because they are things that can be adjusted with a keystroke," said the head of Asia-Pacific research at TD Securities, Annette Beacher.
"In future, we will be looking at delayed first-round effects, which could include things such as airfares, which at some stage will have to reflect the increased cost of emissions."
