Tuesday, January 29, 2013

Carbon Tax - Price Rises

Ai Group came up with the estimate from 485 surveyed businesses, but the heated debate over the carbon pricing reforms adopted last July may have been behind that result in the November survey.

A survey that shows businesses have estimated a 14.5 per cent jump in energy costs due to the carbon tax underlines why the impost must be scrapped, Tony Abbott says.

The federal opposition leader says the Australian Industry Group (Ai Group) survey shows company power price rises are well above the 10 per cent increases the federal government has so far been prepared to concede.

He says the additional cost is an example of how the carbon tax is worsening job uncertainty and elevating the cost of living.

"It just goes to show that if you want to get this economy going again, if you want to make people's jobs more secure, (and) families' cost of living lower, get rid of the carbon tax," Abbott told reporters in Melbourne on Tuesday.

"That will be the first thing that an incoming coalition government does."

Pointing to Australian Bureau of Statistics figures showing a smaller 6.7 per cent increase in power prices for the September quarter, the Ai Group report said "the high profile of the carbon tax appears to have led to some over-estimation by business (of its impact)".

The lobby group's report is based on a series of surveys conducted with businesses in the construction, manufacturing and services sectors.

In another survey, 49 per cent of businesses said their energy and other input costs had risen since the July introduction of the tax.

The impact across the economy has been uneven, with 61 per cent of manufacturing businesses, 36 per cent of service businesses and 52 per cent of businesses in the construction industry reporting a rise in costs.

Ai Group chief Innes Willox said food manufacturers were hardest hit and were restricted from passing on the increased costs to consumers due to a host of factors, including competition from imports unaffected by carbon pricing.

"Food manufacturers do not qualify for the trade-exposed industry assistance program and are currently facing substantial resistance to price rises from the major retailers," he said in a statement.

Of those surveyed, he said just 42 per cent intended to increase their prices.

A spokesman for Climate Change Minister Greg Combet said a previous Ai Group study had found most businesses spent just two per cent or less of their total revenue on energy expenses.

"This makes the carbon price impact on total costs an increase of around 0.2 per cent of revenue," the spokesman said.

"The Ai Group report confirms that carbon pricing is a manageable economic and environmental reform.