Prime Minister Julia Gillard has embarked on a spirited campaign to sell a carbon tax as the opposition vows to bring it down.

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She took on a fired-up Macquarie Radio broadcaster Alan Jones, who repeatedly played audio of her during the 2010 election campaign vowing there would be no carbon tax under her government.

In the heated confrontation, he told her that angry voters were calling the prime minister “Ju-liar”.

Gillard said Jones was ‘caluclated’ and misleading.

She said the election quote was taken out of context, arguing she had been a consistent believer in tackling climate change with a carbon price.

The government has vowed to help households adjust to a carbon tax, as newspapers run headlines suggesting a $300-a-year increase in annual power bills.

“The single biggest use of money from the money raised from pricing carbon will be to assist households with cost of living,” she said.

But Opposition Leader Tony Abbott said no one should assume the carbon tax would get up, likening it to the shelving of the Rudd government’s original mining tax.

“There will be a people’s revolt against this,” he told ABC Radio.

“I don’t think anyone should assume that this tax is going to get up.”

The government’s multi-party climate change committee is yet to nominate a carbon price, but economists have modelled a $26 per tonne figure based on the Rudd government’s aborted emissions trading scheme.

The Australian Greens are against giving compensation to the coal industry but Climate Change Minister Greg Combet said the government remained committed to giving support where it was necessary.

From July 1, 2012, industry will pay a fixed price to emit greenhouse gas emissions.

A market-based emissions trading scheme, with a floating carbon price, would start after an interim three to five years.