Checking in on the Carbon Tax

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Australia’s much-debated carbon tax has been in effect for just over six months now, so we have to ask the crucial question: has it truly been effective? Who has benefited? And how have SMEs fared through the adjustment process?

 We checked in with Jason Croston, Director of SRJ Accountants and a member of the Walker Wayland Australasia network, to fill us in on the story so far.

Your division specialises in consulting with SMEs about the effects of the tax. Generally speaking, how hard have these businesses been hit with the “trickling down” of price increases from the Top 500 companies?

A lot of businesses are probably not fully aware of specifically how much the tax has impacted them. Since it’s an indirect tax, not a line on an invoice, it’s more subtle.

The ACCC (Australian Competition & Consumer Commission) didn’t allow anyone to say the price was going up because of the carbon tax; they say there’s been some “price increases in certain areas.”

So, has anything really changed?

Over the past six months, it’s been interesting because it seems that people have just continued on with life. From where I’m sitting, it doesn’t look like it’s had much of an impact.

In terms of the carbon tax, what we’re seeing is that a lot of SMEs are really focusing on their energy efficiency and improving the way they do things.

Sure, I believe those were considered the “benefits of the tax.”

Right, but it’s not necessary a result of the carbon tax [being implemented] – it also has to do with the economy. These businesses are trying to maximise their profits as much as possible and to maintain a profit. They’re looking for ways to rationalise their costs.

Have there been any other benefits?

Well, one of the key things that happened, from a taxation point of view, was that [the Government] increased the tax-free threshold. It’s quite an increase, from $6,000 to $18,200.

It’s widely known that Opposition Leader Tony Abbott wants to end the tax immediately if he wins the election later this year. Would it actually cost more to end it before 2015?

If someone was going to make the decision to abolish it, they would need to make sure they assess the costs and benefits associated with that. I don’t think that making a statement at this stage about simply abolishing it is the right thing to do without doing some proper analysis about how it’s working.

And whether it’s having an impact.

That’s right.

How has the tax’s implementation impacted your business?

The tax hasn’t impacted us in terms of the way we do things. We work with a group called Pangolin Associates who [perform] lot of carbon/energy audits and provide advice on reducing energy. There has certainly been an increase in their audit activity. There have been an increasing number of businesses who promote themselves as being ‘carbon neutral.’ The ‘national carbon offset standard’ was developed [in 2010] by the Government to add credibility to those sorts of claims.

We have talked to SMEs about the impact on their supply chains. Often, there’s a flow affect where [the Top 500 taxed businesses] are putting pressure on their suppliers to help them reduce their own carbon footprint. We’ve seen that from time to time, through tendering for new projects, questions being asked about carbon management programs, how they’re managing their carbon footprint, etc.

This has provided us with opportunities to those businesses on the supplier side to take on a new contract and increase their business. It’s a risk for those who stick their heads in the sand and don’t address it.

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