A leading economic forecaster has downplayed the impact of the carbon tax on businesses, as a new poll reveals public support for the scheme has risen 6% since its details were announced.
According to a Deloitte Access Economics report, the economy grew by 1.6% in the past quarter and will continue to expand at or above 1% a quarter for the rest of the year.
The report predicts that annual gross domestic product will reach just 1.9% this year but will accelerate sharply to 4% next year before settling at an average pace of 3.3% in 2013.
Consequently, jobs growth is predicted to jump to an annual rate of 3% next year, pushing the jobless rate down to 4.4% and earnings above 4% a year.
Although households can look forward to a stronger job market and higher wages, this is likely to be accompanied a rise in underlying inflation, which could lead to as many as three rate rises by mid-2012.
DAE partner Chris Richardson says although conditions for many households and businesses are tough, there has been an overreaction to international developments and local concerns, namely the carbon tax.
“[The tax] certainly will have an impact, yet that may well be rather smaller than the huge headlines would have it… The initial impact is unlikely to come with a bang,” Richardson says.
The report comes on the back of the latest Newspoll, which shows public support for the carbon tax has risen 6% since the details were revealed by Prime Minister Julia Gillard.
Based on Treasury modelling, Gillard claims the tax will increase consumer prices by just 0.7% a year and add only an average $9.90 to a household’s weekly cost of living.
The Newspoll indicates that 36% of voters now support the carbon tax. Opposition to the tax has fallen from 59% to 53% since the beginning of the Government’s advertising campaign.
The findings are in stark contrast to recent comments made by shadow small business minister Bruce Billson, who argues Gillard has “no idea” how the carbon tax will affect small businesses.
“The Government has not undertaken any meaningful analysis and engagement with the small business community,” Billson said in a statement.
“To make matters worse, small businesses will risk being fined if they are asked to explain price rises to consumers.”
“Instead of a proper and credible assessment of her carbon tax impact by sector, business type or specific product or service, Julia Gillard has issued a threat of a $1.1 million dollar fine for businesses that dare to contradict her political spin.”