The carbon tax has hit Australia, with the Federal Government passing legislation to put a price on carbon emissions. However, despite the information campaign currently being run by the government, people are still confused about the $23 per tonne carbon price and its implications for both the household budget and the environment.

While the Federal Government are calling it the carbon price, most people still refer to the new scheme as the carbon tax. The price on carbon does not have to be paid directly by individuals however, instead being covered by about 500 of the biggest polluting businesses in the country. The effects of the new tax will still be felt outside these circles however, with a massive compensation program now put in place to offset the passed-on increases in household costs.

Treasury estimate the carbon price will increase the consumer price index by only 0.7 percent, although the true effects are unlikely to be known for some time. Overall, the government estimate that average household costs will increase by $9.90 per week, including about $3.30 in electricity, $1.50 in gas, and $1 in food. In an effort to balance the increase in living costs, the government are compensating nine out of every ten households in the country.

With the average compensation estimated at $10.10 per week, the government are hoping to offset the carbon price for the vast majority of households. Kevin Parton, Professor at the Institute for Land, Water and Society at Charles Sturt University, is one of many experts in favour of the scheme, saying: "The research that's been done confirms that most families will actually be net beneficiaries from the whole package remembering that families not only have got to pay the tax, but also get direct payments from the government and also receive income tax cuts."

However, with over half all money raised going towards compensation in an attempt to offset pain caused, the carbon price in its current incarnation does not seem like the most streamline solution to what is a serious problem. While half of all money raised though the tax will be spent on things like clean energy programs, environmental jobs, and incentives, it is easy to understand why some people think this scheme is crippled from within.

Initial reactions to the carbon price have been mixed, with people fearful of the economic impact and critical of the scheme as too inefficient and ineffective. In many ways, the carbon tax seems like a thinly veiled compromise designed to stop complaints from within, however, absolutely no-one is in danger of becoming overjoyed.

This middle-of-the-road approach by the government has not been successful however, with the ALP and its leader continuing to suffer in a recent Nielsen poll published on July 4. Both the ALP and Ms Gillard's individual approval rating are down by 1 percent, with support for the carbon price down by 4 points at 33 percent. While the government will be hoping that the reality of life under the carbon price will improve its popularity, only time will tell if this is likely.