Carbon Down

After the Senate voted to approve the Government's carbon pricing and clean energy package on 8th November, Australia will join New Zealand and 30 other European countries who have also applied a price on carbon emissions.

When the carbon tax becomes effective on 1 July 2012, small to medium-sized enterprise (SMEs) will not be directly taxed on their carbon emissions, nor will they have to report or monitor their electricity use.

This may come as a relief to small businesses contemplating how to cope with the scheme come next year. However, SMEs will be susceptible to price rises from carbon intensive purchases and will need to prepare for the introduction of the tax next July.
The aim of the Federal Government's Clean Energy Future package is to reduce emissions by 5 per cent based on 2000 levels by 2020. The package will allow Australia to begin reducing emissions, develop and foster new technologies in renewable energy and encourage energy efficiency.

What you can do in your small business

Improving energy efficiency already makes financial sense and will be even more important in the next few years. To prepare for changing business environments and to make your business stronger:

• Make your business more efficient by taking simple actions to reduce energy consumption and improve business efficiency. Commonsense will help deliver energy savings, with simple measures like turning off your standby appliances which will make a big difference to power usage and therefore cut energy costs.
• Review your exposure to increased prices and other climate change adjustment costs, and the exposure of your local and overseas competitors. Keep an eye on your suppliers - some businesses may try to overstate the impact of the tax on prices.
• Review your electricity plan. Seek out a retailer that provides a product that doesn't attract the carbon tax. This will have the added benefit of using cleaner energy as well.
• Consider your pricing. Although the bulk of energy price rises (27%) will be mainly due to maintenance and upgrades by energy retailers, the Government has flagged a rise in energy prices of up to 10% under the tax. SMEs should consider how much of the rise they are willing to wear and how much they will pass on, given the Government will deliver billions in compensation through increased pensions and tax cuts to pay for increased prices.
• Consider GreenPower and/or offsetting. SMEs looking for the marketing and branding benefits of being an environmentally friendly business should consider Government-approved GreenPower or offsetting emissions.
• Be careful what you say. The Australian Competition and Consumer Commission (ACCC) is warning businesses about using the carbon tax as an excuse for excessive price rises. The consumer watchdog is warning that on-the-spot infringement notices will be issued to companies or individuals found to have made false, misleading or deceptive claims.
• Consider the future. With the world heading towards a low-carbon future, investors and consumers will be concerned about high-polluting companies, including SMEs. Taking action now leaves you better placed to attract investors, consumers and protect shareholders.

The Federal Government's Clean Energy Future package will extend the instant asset write-off threshold from $5,000 to $6,500 per item for small businesses with turnover less than $2 million a year, from 2012-13.

VECCI has developed a range of fact sheets designed to assist Victorian SMEs understand the impact of climate change related policies on their business. For more information, visit http://www.vecci.org.au/sustainability

For more information about the Government's Clean Energy Future package visit www.cleanenergyfuture.gov.au and www.ret.gov.au

Source: Clean Energy Future & Dun and Bradstreet