Carbon tax warning, but govt committee thinks otherwise

Carbon tax on trucking to have detrimental effect, according to Coalition-dominated committee, which claims jobs and businesses will not survive

Carbon tax warning, but govt committee thinks otherwise
Carbon tax warning, but govt committee thinks otherwise
October 10, 2011

A carbon tax on heavy vehicle fuel will have a detrimental effect, according to a Coalition-dominated Senate committee, which claims jobs and businesses will not survive.

With a vote on the Federal Government’s carbon tax legislation due this week, a Senate inquiry into the scheme says it should be opposed because "the economic pain will not lead to any environmental gain".

The findings directly contradict a government-dominated inquiry, which urged the Parliament to pass the tax, scheduled to begin on July 1 next year.

Relying on evidence from regional operator Inverell Freighters and the Transport Workers Union (TWU), the Senate inquiry consisting mainly of Coalition members says around 200,000 businesses will be affected when heavy vehicle fuel is included in the tax from July 1, 2014.

"The committee considers that the introduction of a carbon tax by a reduction in the fuel tax credit in 2014 will result in the loss of jobs and businesses and that the impact of this will be felt particularly in regional areas given their reliance on road transport," the committee report says.

"The committee acknowledges that over the years the heavy vehicle on-road transport industry has taken action to reduce their emissions through the adoption of better engine technology."

While the carbon tax legislation before the Parliament does not include the provision, the government intends to cut the fuel tax credit by 6.8 cents per litre from July 1 2014. It plans on introducing subsequent legislation for the fuel tax credit after the carbon tax is introduced.

But while the Senate inquiry argued for the tax to be opposed, a report from another committee involving mostly government members recommended both houses of Parliament vote in favour of the legislation.

In evidence provided to the inquiry, the Australian Trucking Association (ATA) said 47,000 trucking businesses would effectively pay a carbon tax from July 2014. ATA CEO Stuart St Clair says it will be "exceptionally difficult" for operators to pass on the costs.

The ATA reiterated its view that trucking operators should be permanently exempt from the tax.

"They are no different to the other small businesses that are permanently exempt from the carbon price, except they happen to operate trucks weighing more than 4.5 tonnes," he says.

The committee says the scientific evidence on climate change is well-founded and that the impact of a carbon tax had been exaggerated.

"In many cases the claims made about these impacts are overstated, reflecting misunderstandings or the arguments of specific interests," MP Anna Burke, who chaired the committee, says.

Unlike the Coalition-dominated inquiry, the committee accepted the Treasury modelling showing modest price increases once the tax begins.

"During the inquiry, the committee did not receive any alternative comprehensive modelling that was at variance with the Treasury’s work. Therefore, the committee concludes that there is no evidence of significant errors in the Treasury’s analysis and that its findings are generally sound," the report says.

As well as calling for bipartisanship on the tax, the committee recommended the government increase its efforts to raise awareness about the reform.

It says delaying action will only increase the cost of dealing with climate change. The report also stated that passing legislation will give business certainty to invest.

"Passing the bills will provide certainty for business and will allow firms to start pricing risk and determining which investments provide a sufficient return over the cost of capital," it says.

TWU National Secretary Tony Sheldon told the Senate inquiry the scheme would amount to a "death tax" for small trucking operators unless they were given a safe rates scheme to recoup their costs.

Inverell Freighters boss Keri Brown believes the tax could add an extra $350,000 to his running costs from July 1, 2014, forcing him to walk away from the industry.

Brown believes some companies might be tempted to cut back on maintenance costs to try and maintain their profit.

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