Carbon Tax - Making it easy to understand

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Transcript - Carbon Tax - Making it easy to understand

It's very likely that from the 1st of July 2012, Australia will put a price on emissions of carbon dioxide and other greenhouse gases from activities like power generation, industry and mining. The Government has reached an agreement and has the numbers. The best working assumption is that it's going to happen.

What does that mean for your business? Ai Group is not only heavily involved in negotiating for better business outcomes with all sides of politics: we're also strongly focussed on helping you understand and minimise your exposure.

We have run a number of forums around the country, making extensive information available online, and we're always ready to take your calls and emails when you have questions.

There's something like 2 million active businesses in Australia, and only about 500 of them would be expected to be directly included in the carbon pricing system. If you're not sure, your business is probably not one of them - but we can help you make certain.

Directly impacted businesses would have to hold a permit for each tonne of emissions they make each year. Permits would initially be sold by the Government at a fixed price, starting at $23 a tonne and rising slightly each year. Then in 2015 the permits would start to be auctioned, with prices set by the market. Fewer permits would be offered for sale each year, in line with the national emissions reduction targets for 2020 and beyond.

The rest of us would be affected indirectly, through increases in the prices we pay for goods and services that involve emissions. The largest impacts would be on electricity: an increase of about $18-20 per megawatt hour, which translates to a 10% increase in household electricity bills and a 10-20% increase in bills for businesses.

There is assistance available for these impacts: an allocation of free permits for the most emissions intensive trade exposed companies; $1.2 billion in grant funding specifically for manufacturers to invest in energy efficiency and emissions reduction; improvements to the instant asset write-off provisions for small businesses; assistance for severely affected electricity generators and coal mines; and a combination of tax cuts and benefit increases for lower and middle income households.

As we consult with members about this package, we're simultaneously working to ensure you can make the most of the assistance on offer.

With most energy sector players projecting strong electricity and gas price increases over the next few years even without carbon pricing, it's a good idea to take a fresh look at your energy efficiency options.

If you haven't already had an energy audit done, now might be a good time. If your previous audits identified possible projects but the paybacks were too long, run the numbers again and factor in a carbon price.

Manufacturers should consider whether a potential grant of 25% of the capital cost of a project would change the investment decision.

The Commonwealth's Department of Industry is administering the grants to manufacturers. They're developing the guidelines right now, and may be open for applications by the end of 2011. Having a well-developed project ready to go will stand you in good stead when that happens.

The Government's climate policy package is not just about carbon pricing; it's big and has many parts. As it moves through the Parliament, and very likely into implementation, there may be hiccups and there will certainly be lots of questions. Get in touch with us - we're here to help you in any way we can, any time.