Carbon tax price details delayed until ‘mid-year’

Small businesses groups will continue to negotiate with the government over the impact of the carbon tax after it was revealed that the pricing model won’t be finalised until mid-year.

Speaking at the National Press Club yesterday, Climate Change Minister Greg Combet says the price impacts of the carbon tax still haven’t been completed.

“Treasury modeling has been commissioned but still has some time before completion, likely to be mid-year,” Combet said.

“The Productivity Commission work that examines the effective carbon prices in the economies of our trading partners is due in late May.”

Combet said the government is engaged with business on the design of transitional assistance for emissions intensive, trade-exposed industries as well as the treatment of the energy sector.

“For the carbon price to take effect from July 1 next year… I am aiming to finalise the detailed design in time to introduce the legislation into the parliament in the third quarter of this year,” he said.

The government has vowed the carbon tax won’t affect households, with pensioners and low to middle income earners to be made a priority for assistance with rising costs associated with the tax.

But Peter Strong, executive director of the Small Business Council of Australia, says there has been no mention of how the tax will impact small businesses.

“They’ve said no household will suffer but in between [households and big businesses] is the small business community and it looks like we’re going to wear it,” Strong says.

Strong welcomes the delay of the price impacts but says the government must compensate by facilitating more in-depth discussion with the small business community.

“We’ve got no idea what’s happening, we’ve got no idea what the impact will be. They don’t know what the impact will be because they haven’t consulted with us,” he says.

“They’ve got consultative committees going now and we’ve been invited on to them but what I think is missing is a consultation around the impact upon the broader community.”

“Early on, I saw some announcements saying that families and small businesses won’t suffer but in the last couple of weeks, small business seems to have dropped off the agenda… I find that really disturbing.”

Strong says one of the main questions surrounding the tax is the level of compliance businesses may have to adhere to.

“For example, am I going to have to do a report every month on how many bits of paper I use? Those questions haven’t been answered and in my experience, there’ll be plenty [of compliance demands] and we’ll be told about it at the end and we’ll be fined for not doing it,” he says.

Bruce Billson, the Coalition’s small business spokesman, went further, stating: “Clearly, the Gillard Labor Government is not on the side of Australian small businesses who lack the market power to push back on input cost increases, are in no position to absorb more costs and have been completely left out in the cold by the government compensation plans.”

“Labor’s attitude is that small business needs to either suck up the cost impacts or pass them on to consumers, ignoring the fact that very difficult trading conditions small businesses are facing will be made even worse by the imposition of a carbon tax that will push up costs at each and every stage of business inputs.”

The Australian Chamber of Commerce and Industry also noted the lack of specific assistance for small businesses.

The lobby group’s CEO, Peter Anderson, says: “Under today’s proposal, small and medium business will effectively carry a larger proportion of the tax burden as some larger businesses and low income households get compensated, leaving those in the middle under a tighter squeeze.”

“This is a serious equity issue for the community and governments to grapple with, and remains unresolved.”

While the government has not yet set the level of its carbon tax, it has indicated petrol is likely to be an offset.

A recent Treasury analysis estimates households could pay $863 annually in higher food, power and petrol prices under a $30-a-tonne carbon price.

The modeling found that electricity bills for the average household would rise $4.20 a week, gas bills $2.20 a week, petrol $3.60 and food $1.70.

If petrol is completely offset, the total annual falls to $608 a year. The Treasury has said the modeling is still early-stage.