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Carbon tax winners and losers

Monday, 11 July 2011 | By Oliver Milman
Budding entrepreneurs will have been forgiven for being confused by the increasingly shrill carbon tax debate, with plenty of contradictory assessments of its impact bandied around in recent months.


With Sunday's unveiling of the carbon price at $23 a tonne start-ups are at least now dealing with solid facts rather than speculation.


As predicted the tax is aimed at 500 of the nation's largest carbon emitters, with around $15 billion raised from the tax handed back to households.


But what will be the impact on emerging businesses?


The details are still murky, to the chagrin of the likes of Peter Strong, executive director of the Council of Small Business of Australia, who says: "We want to know how this will affect the retailer in the shopping mall, what it means for a pharmacist.


"At the moment, it's simply everyone yelling at each other.


"Will it increase costs and by how much? It's difficult for businesses to plan if they don't know how much they'll be impacted."


To help you peer through the gloom a little better we have compiled five winners and five losers from the carbon pricing plan.


Hopefully the former list will prove much longer than the latter when the scheme comes into effect on July 1 next year.






1. Energy efficient businesses

Do you take energy efficiency seriously in your business? If yes, you are set to do better than your competitors when electricity prices rise, by a predicted $3.30 a week.


If you haven't embraced energy efficiency, the carbon price plan gives you a helpful shove towards doing so. $40 million has been set aside in grants to aid small businesses and community groups become less wasteful in their energy consumption.


2. Renewable start-ups

Despite being blessed with the natural resources to launch thousands of profitable green-tinged businesses Australia has fallen behind mainly due to an unfavourable investment environment.


The $10 billion Clean Energy Finance Corporation will go a long way to remedying that, providing a much-needed leg-up to start-ups with great renewable ideas but unwilling investors.


The success or failure of the fund will go a long way to determining whether Australia will derive 20% of its energy via renewables by 2020.


3. Heavy car users

Following a handy boost at the last Budget start-ups that rely heavily upon their cars have been given further help, with small business fuel use exempt from the carbon tax.


The exemption was widely predicted, but the confirmed inclusion will be a relief to companies that clock up the kilometres on the road.


4. Investors in equipment

The instant asset tax write-off for businesses with turnover less than $2 million is to be increased from $5000 from $6500.


This means that assets bought after July 1 next year will receive a larger deduction, aiding start-ups that want to invest in equipment at this time.


The government says for example, a café owner who purchases a freezer for $6000 could claim the entire $6000 due to the increase in the asset write-off limit.


5. Low income groups


Low income Australians are undoubtedly the clear winners in the plans revealed on Sunday, with around four million households set to be better off as a result of the scheme.


There will be a tripling of the tax-free threshold from $6000 to $18,200 from July next year. That will move to $19,400 in 2015. Those earning under $80,000 will fare best, with pensions set to rise by 1.7%.


Businesses will hope this will spur an uplift in consumer spending among a persistently cautious lower-income Australian public.







1. Retailers


While lower-income consumers may be better off under the carbon price retailers aren't jumping for joy.


ARA executive direct Russell Zimmerman says Labor's carbon pricing plan spells disaster for the retail sector.


"Retailers are at the very end of the manufacturing and supply chain and cost increases along the line will ultimately be caught by them," Zimmerman says.


"The government's planned carbon tax fails to offer retailers any compensation for being the catchment point for price rises, leaving them no choice but to pass these costs onto customers."


2. Research and development

Given that Australia's cut in emissions has just been hoisted from 60% to 80% by 2050 it's perhaps surprising that just $3.2 billion has been set aside for research and development of new clean energy technologies.


While the US seeks to lead the way with the production of electric cars and China becomes the home of solar panel manufacturing Australian innovators will have relatively little funding to fight back in the emerging green economy.


3. Exporters


With the Australian dollar at historic highs against its US counterpart exporters haven't had it easy in recent months.


The mining industry, which ironically fuelled the strength of the dollar with its boom, is worried.


"We are deeply concerned the proposed carbon tax fails to shield Australia's export sector and leaves it at a disadvantage compared to international competitors," Rio Tinto managing director David Peever says.


4. Electricity-intensive companies

It goes without saying that if you're a business that uses a lot of electricity you aren't looked upon favourably by a mechanism that seeks to lower emissions by 160 million tonnes a year.


Sectors such as the IT industry, which uses a lot of power, are likely to be among those that have to pass on increased costs to consumers.


5. Manufacturers

The carbon price will do little to help what remains of Australia's manufacturing base, with the Australian Industry Group warning that the sector will lose jobs. But the government will hand a $1.2 billion "clean technology" package to manufacturers.