Written on the 12 October 2012


THE Federal Minister for Climate Change and Energy Efficiency and Minister for Industry and Innovation, Greg Combet, has written to Gold Coast Business News following our hugely successful Carbon Tax edition.

He describes our special 12-page liftout as “very helpful’’ for businesses and praises our tips to help increase efficiency and reduce operating costs.

The Minister also provides some additional sources of carbon tax information for business owners.

Here is his full letter:

Dear Editor,

I read last month’s 12-page feature on the carbon price with interest. It’s good to see the Gold Coast Business News take an interest in the carbon price and how it will affect business.

There were some very helpful tips for businesses like taking advantage of off-peak tariffs to run machinery, shopping around for the best deal from suppliers for cooling products and servicing equipment regularly to ensure maximum efficiency. These tips can really help increase efficiency and reduce operating costs.

I was however concerned about some of the information provided on price impacts from the carbon price and wanted to provide your readers with some extra information.

The carbon price does not apply to small businesses. It applies to less than 500 of Australia’s biggest emitters – mainly large companies like electricity generators and aluminium smelters who run facilities which emit more than 25,000 tonnes of greenhouse gases a year.

Small businesses won’t have to fill out a single extra form due to the carbon price nor pay any additional taxes to the Government.

They will face some increases in electricity prices – but a significant contributing factor for rising electricity prices is the cost of upgrading the electricity distribution networks, an area of State Government responsibility, not the carbon price.

To help small businesses the Government is providing tax relief by increasing the small business instant asset write-off to $6500. This delivers a tax break when small businesses buy items of equipment worth up to $6,500.

And to ensure small businesses are informed about the carbon price and about how to reduce their energy costs, the Federal Government has established a $40 million program to provide information to small and medium enterprises and community organisations.

To assist small businesses further the Government is providing $27.5 million to extend the successful Small Business Advisory Service program for a further four years and $5 million over four years to provide clean technology advice to small business.

Data provided to the Government by the Council of Small Business of Australia shows the electricity cost of a typical small retail business makes up less than 2 per cent of total costs. On the basis of the Treasury modelling the carbon price impact on electricity costs for such a small business would therefore be only a 0.2 per cent increase in its overall costs.

The Gold Coast Business News provided a list of potential costs impacts. These ranged from quite moderate estimates to extremely high estimates which overstate the impact of the carbon price.

The Commonwealth Treasury has modelled the impact of the carbon price on a range of products and services and, since the carbon price started on 1 July this year, these estimates have proven to be accurate and reflected in actual price changes in the marketplace. These include, for example:

  • Electricity: Electricity and gas prices are expected to increase around 9 to 10 per cent due to the carbon price with electricity increasing by 2 to 2.5 cents per KWh.
  • Transport: There will be no change to diesel prices for small commercial vehicles or passenger cars at all and no change to diesel prices for heavy road vehicles in 2012-13. For off-road use, there will be an increase of 6.21 cents per litre in 2012-13. Rail and shipping will pay an additional 6 cents per litre in 2012-13.
  • Refrigerant gases: the price of a domestic refrigerator would increase by around $4 as a result of the equivalent carbon price. There have been increases in refrigerant gas prices recently, but the Australian Competition and Consumer Commission has confirmed that it is incorrect to attribute all of these price rises to the carbon price.
  • Prices for water, recycling, construction, rent, retail and aviation will rise by less than 1 per cent due to the carbon price.
  • Tourism, cleaning products & communications (telephone and postal) prices will rise by 0.5 per cent or less.
  • Most large manufacturers that are directly liable for the carbon price will receive significant numbers of free permits, reducing their liability to as little as $1.30 per tonne of emissions.
  • All manufacturers are eligible to apply for grants to install new equipment to improve their energy efficiency under the $1 billion Clean Technology Investment Programs.

There is more information about the impact of the carbon price in the Treasury modelling or the Council of Small Business Online Calculator.

I encourage your readers amongst small and medium sized businesses to question suppliers about any price increases which seem out of the ordinary. The ACCC has been given the power to tackle businesses that make misleading claims about the impact of the carbon price and any concerns about misleading price claims can be reported to the ACCC hotline on 1300 303 609.

Greg Combet AM MP
Minister for Climate Change and Energy Efficiency
Minister for Industry and Innovation






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