The " Bunfight " begins !

The Carbon Tax is no more !    Now the public eagerly await the dividend it's passing will deliver and some price reductions are inevitable.   Heading the list will be electricity and gas, and already suppliers are falling over themselves to go to press with price reductions.   The average household can expect electricity prices to drop by at least $ 171 a year and gas by $ 78.

There are obvious targets for many price decreases.   The airline industry has openly applied a surcharge to it's ticket prices for the effect of the Carbon Tax and travellers will expect that to be lifted immediately.   Australia's 560 councils were slugged a $ 270 million impost on their landfills and consequently tip fees rose accordingly.  The removal of this tax should see tip charges return to a lower level - and that change should be immediate.

The big question is what will happen to grocery prices.   The duopoly that has nearly eighty percent of the market claims that they " absorbed " the impact of the Carbon Tax.   In reality, it seems that they leaned heavily on their suppliers for better price deals and trimmed operating costs by making economies that still made them very profitable companies for their shareholders.    The dividends they pay support a Woolworths share price of $ 35.84 and Wesfarmers $ 43.29.

When the average customer walks into one of their stores and counts the size of the lighting, the huge array of refrigerated produce and the general power use to serve the electronics that run everything from the scanners, cash registers and computer systems - it becomes immediately apparent how big the electricity saving will be compared to the $ 171 that will be carved off their home power bill.   It will be near impossible for the big end of town to ignore passing on a saving to the public under those circumstances.

There will be a public expectation that Carbon Tax savings will trickle down across the entire trading spectrum.  It is more realistic to expect that some savings will forestall price increases and stabilize price structures for the immediate future.   Mundane items - such as paying for a haircut - are unlikely to bring a price drop, but it would also be reasonable to expect no price rises to allow for a Carbon Tax dividend.

The media will be vigilant in looking for those evading passing on savings to the public.   We can expect shirkers to be named and shamed and in today's competitive world public image is important.