Businesses struggle with power cost rises after carbon tax

Stephen Drill, Steve Lewis
January 29, 2013
Herald Sun

VICTORIAN businesses are paying up to 17 per cent more for electricity since the introduction of the carbon tax and fear jobs may be lost as costs continue to rise.

A report from the Australian Industry Group found that, on average, business energy costs have soared 14.5 per cent since the tax came into law on July 1.

The manufacturing sector, which is already struggling with the impact of the high Australian dollar, was the hardest hit by the new tax, with 61 per cent of businesses reporting they had higher input costs since its introduction.

Greg Northrop, who runs electrical cabling manufacturer Tycab Australia in South Dandenong, said his company power bill had increased by $120,000 a year to almost $700,000.

“We put out a letter to our customers and told them about the carbon tax effect and we were told quite clearly they were not going to accept price increases,” he said.

Julia Gillard introduced a carbon tax on July 1, last year.

Pat Italiano, who runs his second-generation family business Essendon Fruit Supply, said his costs had increased and his profits declined since the carbon tax began.

“The cost doesn’t come out of nowhere. It has to come from somewhere,” he said.

“We’re not going to compromise on quality, there’s a lot of competition.”

The AIG report, based on a survey of 485 businesses, described the carbon tax as a “significant slug.”

The industry lobby estimates about 60 per cent of its members are unlikely to pass the carbon tax on to customers, placing many businesses “under considerable pressure”.

AIG chief executive Innes Willox said the impact of the carbon tax on “niche groups” such as food manufacturers was “probably greater than anticipated”.

Federal Opposition industry spokeswoman Sophie Mirabella said the Government had underestimated the tax’s impact.

“The carbon tax has pushed some businesses over the edge,” she said.

Mark Davis, a spokesman for Climate Change Minister Greg Combet, said the AIG report confirmed that carbon pricing is a “manageable economic and environmental reform”.