Robin Barlow and Ben Ellis undertook an assessment of the likely budget impacts of the carbon tax for a government department to inform discussions with State Treasury about the need for additional funding. Our review included assessment of the likely impact of the carbon tax on service costs as well as the impact on the significant infrastructure spend that was delivered by the department each year. The review considered:
- The likely impact of the carbon tax on input prices of both entities that provided services to the Department as well as the Departments own input.
- The contractual provisions in supply agreements between the Department and its suppliers and in particular, the ability of the suppliers to pass on cost increases to the Department and over what time period
- The impact of any break points (for example, if contracts came to an end during the analysis period) and what the impact of those break points might be
- The impact of the different rules for diesel fuel rebates between road and non-road uses
- The likely price increases in the Department’s own services that were delivered to the public in order to compensate them for any increase in costs.
Our report provided a 10 year view of the likely impacts across the Department’s service delivery and infrastructure delivery business and provided a base case for discussions with funding agencies.
