Impact of the carbon tax on Australian industries
The introduction of the carbon tax is expected to produce mixed results for retail industries over the next three to five years.
As part of standard lease agreements, retailers located in shopping centres are often required to contribute towards centre management costs, such as air conditioning, cleaning and electricity. From July 1, 2012, shopping centre retailers can expect an increase in centre management costs, as shopping centres enact leasing agreements and move to recoup the higher cost of electricity.
While the Australian Retailers Association claims the carbon tax will be detrimental for the retail industries, small businesses are not expected to be materially affected by the introduction of the carbon tax.
In fact, the Australian government has extended the threshold for instant asset write-off by small businesses to $6,500 and allocated $40 million in funding via grants to allow small businesses to reduce their energy costs and become more sustainable.
Specific retail industries expected to be affected by the introduction of the carbon tax include those selling foods that require refrigeration, such as supermarkets and takeaway food shops. This will stem from the anticipated rise in re-gassing costs for refrigeration equipment.
Retailers of fruit and vegetables will also be hit by higher electricity costs, as they are required to run irrigation systems and provide cold storage for produce.
The Jobs and Competitiveness Program aims to encourage industries to keep jobs within Australia and maintain the competitiveness of Australian goods.
The program provides for payments totalling $8.6 billion to be paid over the first three years of carbon pricing to allow a smooth transition into the carbon tax. It is directed towards those expected to be hit hardest by the carbon tax, and those that are constrained in their ability to pass on costs to the global market.
Depending on the level of emissions, businesses will be eligible for assistance to meet carbon costs.
The heaviest emitters will receive assistance measuring 94.5 per cent of carbon costs, and moderate emitters will receive 66 per cent of carbon costs. This will be reduced by 1.3 per cent per year over the next three years.
Although the construction sector produces relatively little carbon emissions directly, the sector is likely to be significantly affected by the introduction of the carbon tax from 2012-13. The tax principally falls on the 500 companies that are large users of fossil fuels and emitters of carbon. This includes companies manufacturing building and construction materials such as clay bricks, cement, concrete products, steel and glass, and the firms transporting these materials.
Many studies have been undertaken to gauge the probable effect of the carbon tax on the construction markets, but there is likely to be substantial variation based on the type of buildings, the distribution of materials used, the impact of low-cost imports and product substitution, and the demand trends in the market.
Professional service providers are adopting a whole new set of rules and practices that will ultimately underpin their performance over the coming five years. New services relating to changes in the tax system, defining responsibility for carbon emissions, building environmental sustainability strategies and renewing company images as 'green operators' will create new revenue streams for the sector.
Initial spikes in demand were realised by public relations firms, environmental scientists and engineering consultants, although after the initial rise they will all return to their long-term trend