The new Carbon Tax announced last week by the Labor Government will take a $4 billion toll on the federal budget over the next four years. The $23 a tonne starting price for the carbon tax is set to rise to more than $100 per tonne to meet the Labor government’s more ambitious target of reducing Australia’s greenhouse gas emissions by 80% by 2050. This new tax will add 0.7% to consumer prices.

Electricity prices are likely to soar by 10 per cent and gas by 9 per cent under the carbon tax. Leaving the average households costs to rise by $9.90 per week, with the average assistance for households coming to $10.10 per week.

With the new carbon scheme in place most single people earning more than $75,000 a year and most couples earning more than $100,000 will find themselves paying more because their compensation will not cancel out the higher prices.

More than 631,700 pensioners in Queensland will receive an extra $338 a year if single and up to $510 a year for couples.

Doubts have quickly emerged about how effectively Labor’s scheme would limit growth in emissions and whether it was being unrealistic in assuming a global climate deal by 2020.

The government has structured the package to appeal to low-income families and pensioners, ensuring that 4  million households will be significantly better off despite an increase in energy and other prices. “There is no money tree – there is no endeavour to try and pretend that everybody is better off,” Ms Gillard said.

But Opposition Leader Tony Abbott said: “This is a redistribution pretending to be compensation. It’s a tax increase pretending to be an environmental policy. It’s socialism masquerading as environmentalism.”

The majority of political talk has been about the cost to individual households and the impact for big business. What about the impact for small business owners, who when combined are the largest employer group within the Australian economy?

Small businesses should start working now to reduce their energy footprint to help reduce future power bills. This can be done by the location of your building, is it close to public transport? Does your building have natural daylight and good ventilation which will save you money on electricity and air conditioning. Installing sensor driven lighting in low traffic areas, i.e. bathrooms. Installing teleconferencing systems to cut down on business trips or switching to energy efficient equipment. Encourage employees to turn off lights and computer monitors when not in use.

The Flashpoints from The Australian Financial Review