Day one of the carbon tax and the sky failed to fall in.

That was the message from Australian Prime Minister Julia Gillard and her Cabinet, who have tried to paint Opposition leader Tony Abbott's claims about the tax as dishonest.

The A$23-a-tonne price on carbon emissions started yesterday, directly affecting 294 electricity generators and other companies.

The federal Government is aiming to cut carbon emissions by 5 per cent by 2020, with the carbon tax shifting to an emissions trading scheme in 2015.


Abbott says the carbon tax will push up prices for consumers, hurt local businesses and cost jobs.

Gillard spent much of yesterday rebuffing Abbott's claims.

"Is the Sunday roast now costing A$100?" Gillard asked reporters in Melbourne. "Has the coal industry closed down? Is my weekly shop now 20 per cent more expensive? Has Australia entered a permanent depression?"

She said the debate on the carbon tax resembled the debate on GST when it was introduced by Prime Minister John Howard in 2000.

"I was opposed to the GST," Gillard said. "But once it was in operation, it was clear to all that there was no going back."

She said Abbott's plans to repeal the carbon tax if elected would see him strip tax cuts from millions of families, and would be revealed as "fiddle and fudge".

But Abbott said he "could be believed when I say there will be no carbon tax under a government I lead".

"On day one of the new Parliament, the carbon tax repeal legislation will be introduced," he said in Melbourne.


Abbott said the carbon tax was based on a lie.

"[The carbon tax] will hit every Australian family's cost of living, it will make every Australian's job less secure and it won't actually reduce emissions."

Treasurer Wayne Swan said yesterday was the day "that Tony Abbott is going to get mugged by the truth".

He said the tax would have a modest impact on prices overall but many households would be assisted financially. The financial assistance, which also starts from yesterday, includes the tripling of the tax-free threshold from A$6000 to A$18,200, more money for carers and greater support for pensioners.

Rain could not extinguish the fury of anti-carbon tax protesters as they rallied on the steps of the Victorian Parliament calling for the Prime Minister's head. About 150 protesters braved rain and an 8C chill to vent their anger at the carbon tax and the "fraudulent" Labor Government.

Protesters also came out in force in Sydney, where more than 2000 gathered in Hyde Park then marched down to Belmore Park chanting "axe the tax".