Julia Gillard was right earlier this week when she said her government had a lot of explaining to do about its proposed carbon tax.
Julia Gillard was right earlier this week when she said her government had a lot of explaining to do about its proposed carbon tax.
While both major parties have launched phoney election campaigns, travelling the length and breadth of the country selling their arguments for or against the policy, business is working overtime to understand it what means for them.
For months we have been calling for the detail of the package. On Sunday we finally got it. We now know the price of carbon, the extent of tax breaks for low and middle-income households and the level of industry assistance.
What we don’t know is how it will affect the real economy outside of what has been estimated by a Treasury model.
The government needs to very quickly start explaining to the business community why it wants to impose yet another tax on them. They don’t have a lot of time to waste in doing so. In just over 11 months, if the government has its way, a price on carbon will be introduced.
The government claims that only 500 of the nation’s top emitters pay the tax directly.
What we need to know is which are these businesses and how many are located in Western Australia? It’s only then that we will start to properly understand the true impact of this tax on our economy.
The prime minister has since conceded that those higher costs will be passed on to many other businesses across the country. The cost of doing business in WA is already too high. We don’t need this made any worse.
One can’t help but think that we have been here before.
This time last year WA employers were voicing their opposition to the government’s proposed mining tax. It was, and still remains, a poorly designed tax that threatens to damage the international competitiveness of our world-class resources sector.
Fast forward to today and business is again raising legitimate concerns about the government wanting to impose a poorly designed tax on key parts of our economy, which has the potential to damage our international competitiveness and not achieve its policy intent to reduce carbon emissions.
This is the wrong policy at the wrong time.
It’s the wrong policy because no other country is considering introducing an economy-wide price on carbon. It’s the wrong time because many businesses are still finding conditions tough, and don’t need the burden of further costs on their operations.
The Chamber of Commerce and Industry WA is not a climate change sceptic. We accept the science that climate change is real and it is caused by people. Our members agree that reducing emissions does not just make good environmental sense, but is good business sense as well.
What we don’t accept is that Australia, with less than one per cent of total global emissions, needs to be a climate change pioneer by imposing a costly and damaging tax on key sectors of our economy.
We are not the only one making this point.
The recently released Productivity Commission report found that “no country currently imposes an economy-wide tax on greenhouse gas emissions or has in place an economy-wide ETS”.
By definition, global warming is a global issue. This is why Australia going alone with an economy-wide carbon tax is a mistake.
The government’s own climate change adviser, Ross Garnaut, projects that over the 10 years to 2020, China’s emissions will rise by an extra 6 billion tonnes a year.
To put this in perspective, the increase in Chinese emissions alone is expected to be more than 100 times as large as our reduction under the carbon tax.
The solution lies in collective global action, especially by countries that emit a lot of carbon. That’s not Australia. We must play our part, but that must be part of a co-ordinated international response.
Australia may be an island continent, but our economy is part of a global community. Businesses are competing with companies around the world for work, and competition is fierce.
Our biggest concern is reserved for the well-being of the bulk of our 6,500 members, which collectively employ hundreds of thousands of Western Australians.
Small business has largely been forgotten in this debate, with the vast majority of attention centred on the hip pockets of households and industry assistance for heavy industry.
Assistance for these groups is important, but not to the detriment of small business.
The knowledge gap about carbon pricing and what it will mean for small employers is considerable.
A recent survey conducted by CCI of the WA business community has found that most local employers are not prepared for the introduction of a price on carbon. The Commonwealth Bank – CCI Survey of Business Expectations revealed that three quarters of those who responded were not planning for the introduction of a price on carbon.
Almost 80 per cent of small businesses have not factored carbon pricing into their business plans.
• John Nicolaou is chief economist of the Chamber of Commerce and Industry WA.
