The purpose of carbon pricing is to change human behaviour towards reducing carbon pollution of the atmosphere.
It's not meant to be easy. In fact, the more painful it is, the more successful it's likely to be.
But political reality demands that the Government makes it easier to swallow by offering relief in the form of tax cuts and other compensation. Then because compensation eases the pain, it works against changing behaviour. It makes the Federal Government's carbon pricing scheme appear pointless.
Imagine if the Government compensated smokers for higher tobacco taxes that were designed to stop them smoking. They would be able to afford to pay the higher cost of cigarettes, and it's likely many would. There would be no pain and no gain.
It follows that if the Government compensates us for higher electricity bills, there is little incentive for us to use less electricity.
That is unless the point of pain is isolated from the point of relief. In other words, if the bill arrives and the compensation has been forgotten or spent on something else, those with tight cash flow will experience hardship and feel compelled to reduce their use of electricity.
This could be the point at which the scheme works. But it will be thanks to the poor, who are usually those with the tightest cash flow. Australians on higher incomes are more likely to have a larger cash flow and will therefore lack the motivation to change their behaviour.
So the poor will share the greater part of the burden of carbon pricing.
Last week the St Vincent de Paul Society issued a statement indicating it was 'particularly concerned about very low-income households living in rental accommodation'.
'These families have absolutely no room to move when it comes to choices about energy consumption, and little ability to manage the price shock of higher utility bills.'
Gavin Dufty, Vinnies' Victorian Manager of Policy and Research, said the proposed compensation package fails to capture some of the significant variations in impact due to utility billing cycles, household location, household type and household needs.
He advocates a 'percentage offset on energy bills' for the poor, rather than forcing them to rely on a form of compensation that is removed from the point of pain.
'Given our regular encounters with people already experiencing the threat of energy disconnection, we want to work closely with both the Government and the energy retail industry to ensure that all Australian households are