Carbon tax spells doom for small truckers, Opposition warns, as Inverell Freighters questions whether it can survive under the scheme
By Brad Gardner | September 19, 2011
The Federal Government’s planned carbon tax has sparked dire predictions for the viability of small trucking companies when the scheme is applied to fuel in July 2014.
Seizing on claims from the Australian Trucking Association that the tax will cost the industry $510 million in the 2014-15 financial year alone, Opposition MP Sophie Mirabella has warned of a demise in competition because small operators will not be able to absorb cost increases.
Although given a two-year exemption from the carbon tax when it begins on July 1 next year, trucking operators will pay the tax through a 6.85 cent-per-litre reduction in the fuel tax credit from July 1, 2014.
“It means there will be higher costs for everyday goods at the supermarket and every store. It also means that there will be less competition in the transport sector because smaller trucking companies will not be able to absorb those costs as easily as the bigger players,” Mirabella, who holds the shadow industry, innovation and science portfolio, claims.
“That will mean greater concentration in the transport industry, and we know that when you have a smaller number of players in a particular industry that tends to make it easier for those players to put up their costs.”
Mirabella’s comments follow Inverell Freighters Managing Director Keri Brown’s appearance before a parliamentary inquiry last month, where he raised serious concerns over the ability of his company and other small businesses to survive post-carbon tax.
Brown, who told the inquiry his profit margins have been zero for the last three years, expects the almost 7 cents-a-litre more in fuel to add an extra $350,000 to his costs.
“With another $350,000 it is goodbye,” Brown says.
He says he will use the two-year exemption to talk to his major customers about the tax, but he indicated to the inquiry it would be next to impossible to convince them to accept a higher fuel levy to offset reductions in the fuel tax credit.
“The one increase they will not accept in a fuel levy nearly across the board is when you get a reduction in the diesel fuel rebate. You end up having to absorb that yourself, so in effect that is a fuel increase as a cost that we cannot pass on,” Brown says.
Brown, whose business employs 40 people and operates 25 prime movers on the road, also told the committee the carbon tax might tempt many smaller companies into cutting corners to save costs– starting with pulling back on maintenance.
“One of the issues when your profit is under attack is you look at ways you can minimise it,” Brown says.
“The temptation is too great and the temptation will be even greater on those smaller operators – the guys that own two or three trucks. That is where the real hit will be on them first because those are the ones we see leaving the industry in droves at the moment.”
Brown claims the trucking industry will be “a sitting duck” when the carbon tax is applied to fuel because it cannot do anything to reduce its exposure. He took his argument to Independent MP Tony Windsor earlier this year.
“Mr Brown convinced me that towns wouldn’t suddenly become closer together, so trucks couldn’t just travel 100km less,” Windsor says.
Inverell Freighters already has Euro engines in its fleet, but the emission reductions from the units come at the expense of greater fuel consumption compared with older trucks.
Brown says he will revert back to older vehicles unless the government offers an incentive to use Euro engines.
“We will get rid of all our new trucks and go back to old ones because they are more fuel efficient and there is no incentive under this to stay with the new technology,” he says.
“We currently run eight of these new motors in our fleet. Unless we can get some sort of compensation for the extra fuel that we are using there is no point to it.”
The government introduced its carbon tax bills into Parliament last week. Prime Minister Julia Gillard says she is “determined” to apply the scheme to trucking to make sure the road, rail and shipping industries compete on even ground.
The Australian Trucking Association is pushing for the industry to be exempted altogether, a move Windsor and fellow independent Rob Oakeshott support.