Industry still uncertain about carbon tax

Australia’s logistics industry has expressed caution and uncertainty about the impact of the federal government’s carbon tax decision

Industry still uncertain about carbon tax
Industry still uncertain about carbon tax

By Anna Game-Lopata | July 11, 2011

Australia’s logistics industry has expressed caution and uncertainty about the impact of the federal government’s carbon tax decision

Prime Minister Julia Gillard yesterday announced a $23 dollar per tonne price on carbon emissions to be paid by about 500 of the country’s biggest polluters from July 1, 2012.

While the government says transport is a key contributor to carbon emissions, households, tradespeople, farmers and small business will be exempted from the tax at the petrol pump.

They will continue to receive fuel tax credits from July 1, 2012 while others, such as larger businesses, the aviation, rail and mining industries will pay the tax when their fuel tax credits are reduced.

The Productivity Commission will conduct a review into fuel excise arrangements.

At first, the tax will be fixed, increasing at 2.5 percent a year but it will eventually transition to an Emissions Trading Scheme (ETS) where the price is determined by the market.

Heavy transport operators will be exempt from the reduction in fuel tax credits, and therefore the carbon tax, until 2014.

Australian Logistics Council (ALC) CEO Michael Kilgariff reacted with some uncertainty to the announcement, describing the carbon tax as a "scheme within a scheme" for Australia’s freight transport and logistics industry.

"Australia’s freight transport and logistics industry is not particularly impacted by the headline carbon tax, rather by the way in which fuel tax credits and excise changes," he says.

"These forecast changes will be felt differently across industry, as there are inconsistent tax treatments across the various transport modes," he says.

"While the changes will impact on companies to varying degrees, they will increase the cost of moving freight around Australia. These costs cannot be absorbed by operators and will need to be passed on to consumers.

Chartered Institute of Transport and Logistics of Australia (CILTA) CEO Hal Morris says members don’t understand the implications of the carbon tax.

He says he’s not yet prepared to make a full comment about the implications of the tax on behalf of CILTA, which covers both freight and passenger industries, until a better understanding of the tax is gained.

"I would question whether the tax is about changing behaviour to enable business and industry to become cleaner, or is it about giving with one hand and taking with the other," Morris says.

"CILTA understands there will be a government process to inform those impacted more completely about how the system will work and we’re looking forward to participating in that process."

The ALC's Michael Kilgariff is
also calling on the Government to ensure that all available information is promptly produced.

"This will ensure, as promised, the cost paid by carbon price exposed members is ‘in step’ with the carbon price payable by those having to purchase carbon permits," he says.

"ALC also notes the Government has attempted to price the effect of carbon on the Australian economy on a ‘whole of economy’ basis.

"The Government must now ensure the same externality, in this case carbon, is not priced into any other different taxation mechanisms, giving rise to double taxation, or a tax on top of a tax.

"ALC firmly believes externalities flowing from the movement of freight should only be priced once - a point ALC hopes it will be able to make at the table when the Tax Forum meets in October," Kilgariff says.

Kilgariff says the Productivity Commission review needs to investigate generally the economic effect carbon pricing has on all elements of the freight supply chain as a whole, including the level of transport costs and the manner by which costs to customer goods have been impacted.

"Whether Australia achieves the emissions reduction targets outlined today by Prime Minister Julia Gillard remains to be seen," he adds.

"The introduction of a carbon price, and its eventual transition to an ETS, may turn out to be the best way to achieve these long term objectives.

"One thing is sure however, the most effective way to tackle climate change is through a comprehensive and sustained commitment on behalf of industry – and that is exactly what the logistics industry is doing.

"A large proportion of industry members are proactively investing in new technologies and equipment to reduce their carbon output and to improve the energy efficiency of the sector.

"ALC calls on the Government to ensure it fully supports industry efforts in this area by providing greater support for and investment in initiatives such as smart fuel technology and low emission equipment and facilities."

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