In his weekly Business Finance blog post our CFO Greg Taylor looks at how small business can minimise cost impacts arising from the introduction of the carbon pricing mechanism.
The carbon pricing mechanism is now in place, requiring Australia’s biggest polluters, around 300 businesses, to directly pay for their carbon pollution under a carbon price.
Whilst no small business will directly pay a price on carbon pollution directly, there are indirect impacts. How can you manage potential cost impacts?
According to the Government, carbon pricing is expected to add around 10 per cent to electricity prices in 2012-13 but there will be no carbon price charged on fuel for the typical small business car or van. Some companies will pass on carbon pricing costs through the supply chain. Householders are being compensated through the Household Assistance Package, which in theory means that they will be able to maintain their spending and support for businesses.
There is help for businesses to manage carbon price impacts, and incentives to invest in cleaner technologies. Tax changes that I wrote about in a previous column such as the increase in the asset write off, increases to the tax free threshold, and the ability to carry back losses will give improved cash flow to some businesses for investment in clean energy or to absorb price impacts.
The Government has established a program to provide information to businesses and community organisations on measures they can take to reduce their energy costs. Key costs are heating and cooling, lighting and office equipment. You can find tips at www.cleanenergyfuture.com.au. Low Carbon Australia provides financial solutions and advice to businesses to help them become carbon neutral. The Clean Technology Program provides assistance for Australian manufacturing businesses to reduce emissions and support investment in clean technology innovation across industry.
A word of warning. The Australian Competition and Consumer Commission (ACCC) has additional funding to investigate and take action against any business that makes misleading representations about the impact of the carbon price on the prices they charge customers.
This article also appeared in this week's Newcastle Post where Greg writes a weekly Business Finance column.