Businesses want more details on Government’s carbon price plan

Business groups have called for more information about government’s plan to introduce a carbon price from July 2012, saying that without key details – including the price of carbon and compensation measures – it is hard to assess the impact of the scheme.

The Australian Chamber of Commerce and Industry warned that the early move to a carbon price will particularly expose small and medium businesses, making it harder for them to compete with international rivals.

Prime Minister Julia Gillard announced yesterday that the Government would introduce a fixed carbon price from July 2012 despite saying before last year’s federal election that there would be no carbon price under her government.

The carbon price will be fixed for the first three to five years after which the government plans to move to an emissions trading scheme.

Under the plan businesses in the energy, transport, industrial processes, mining and waste management sectors will need to buy permits – at a price to be set – from the government for each tonne of pollution they produce.
 
The scheme is designed to force those industries to reduce carbon emissions and force consumers to change their behaviour.

Gillard acknowledged yesterday that the scheme will force up prices. “It’s meant to,” she said.

Opposition leader Tony Abbott attacked the government decision to break its pre-election promise and tipped a “people’s revolt” against a tax he says will increase household energy bills by $300 a year.

Business groups reacted a little less dramatically to the announcement. 

While most groups appear to have accepted that some sort of carbon pricing mechanism had been coming they want more details before they can assess the impact on the business community.

Australian Industry Group chief Heather Ridout suggested the carbon pricing policy “will live or die on the detail which will be of fundamental importance to Australian industry”. 

“The sharp end of the debate is yet to come,” she said.

“These missing details will impact on key questions such as the continuity of electricity supply and preventing the erosion of competitiveness for large and small businesses.”

Acting chief executive of the Business Council of Australia, Maria Tarrant, agreed.

“Until details such as the scale of the fixed price, the criteria for moving to emissions trading and the transition and implementation arrangements are known business will not be in a position to evaluate what is proposed nor will it be given any greater certainty for future investment,” Tarrant says.

Australian Chamber of Commerce and Industry head Peter Anderson says the Government, the Greens and the independent MPs backing the carbon pricing plan have effectively ignored the potential impact of higher energy prices on small businesses people.

“Whether they are exporting or import competing, small and medium sized enterprises will face higher energy costs while having limited capacity to pass on this impact through higher prices,” he says.

“The continuing failure by government to recognise the vulnerability of small and medium businesses is a serious omission in the announcement.”

Anderson says manufacturing businesses – many of which export and are already being hit by the high Australian dollar – will be particularly hard hit.

Council of Small Business of Australia chief Peter Strong is approaching the debate in a different way – he wants to ensure SMEs are at least heard in the debate.

“Small business people are individuals and they represent the views of Australians generally. There would be deniers, there would be believers and there would plenty of people who are confused like the rest of us,” Strong says.

“Our experience is that governments don’t take into account small businesses. They’ve got to get the process right and they’ve got to get the communications right. We wanted to be included in this all the way through.”

Strong says many small business owners have taken steps to improve the energy efficiency of their homes and workplaces in recent years, and would likely welcome incentives to continue to do so.

He says the SME community will want to be involved in compensation the government is to provide to households and businesses under the scheme.