Carbon tax raises costs, cuts jobs

ACCI chief economist Greg Evans has lashed out at the carbon tax, saying it has "encouraged a de-industrialisation trend in the economy" Source: News Limited

THE carbon tax has slashed hundreds of millions of dollars from company profits and forced struggling manufacturing firms to shift production - and jobs - offshore.

A national survey of Australia's $110 billion food processing industry has revealed nearly 30 per cent of businesses reported cost increases of 5 per cent or more since the carbon tax was introduced.

And 67 per cent of companies - including many small businesses - have been unable to pass on these higher costs to their customers.

Instead, they have been forced absorb the price hit on their bottom line.

Another audit by the Australian Chamber of Commerce and Industry reveals 82 per cent of businesses report the carbon tax has reduced profits - a year since the greenhouse scheme was introduced.

Around 30 firms were surveyed by AFGC with several deciding to shift production overseas to escape the carbon impost.

While higher energy bills is the biggest expense, the carbon tax has also added to rising packaging, transport and other expenses.

One food processing firm said the carbon tax had added nearly $5 million to operating expenses - including $500,000 in packaging and $240,000 in freight and storage fees.

Murray Goulburn, Australia's largest dairy firm, says the carbon tax has added $14 million to its annual expenses for the year to June 30.

Kevin Rudd has accelerated plans to shift to a floating carbon price in order to reduce the impact on business. Source: News Limited

Robert Poole, general manager, shareholder relations, said Murray Goulburn "cannot pass on these costs" because the price of dairy was "primarily" set by the global market.

But higher energy bills remains the biggest cost burden for manufacturing with nearly 50 per cent of those firms surveyed reporting their electricity bill had jumped 15 per cent or more.

One of Kevin Rudd's first decisions after ousting Julia Gillard as Prime Minister was to accelerate by a year plans to shift to a floating carbon price - in order to reduce the impact on business.

But AFGC chief executive Gary Dawson said it was already too late for a number of companies who are "reassessing their production planning in response to high costs".

"For a big energy user the additional cost of the carbon tax on their energy bill alone runs to millions of dollars a year so of course it forces an assessment of whether there are lower cost options (offshore)," Mr Dawson said.

ACCI chief economist Greg Evans lashed out at the carbon tax and other green programs which he said "have encouraged a de-industrialisation trend in the economy".

"We are already seeing an impact on jobs and investment in industries reliant on energy. This includes food processing, plastics and chemicals, metal manufacturing and oil refining, where we have seen successive announcements of winding back investment or relocating production facilities offshore," Mr Evans said.

Innovation and Industry Minister Kim Carr said the Government's decision to move from a fixed to a floating carbon price one year early "will link Australian businesses with international markets, reduce carbon liabilities from 1 July next year and provide certainty for firms looking to invest in Australia's future".

"The food processing sector stands to benefit substantially from the Asian Century and Labor will do everything it can to see business realise the opportunities on offer," Senator Carr said.

Source: http://feedproxy.google.com/~r/newscomauthenationndm/~3/p258BMTDTGs/story01.htm

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