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Companies yet to gauge levy's impact

29 Jan 2013 SYDNEY MORNING HERALD - PETER HANNAM



ABOUT half of Australian companies have either seen little impact from the introduction of the carbon tax on their energy costs or are yet to calculate the effects, according to surveys by the Australian Industry Group.

About 49 per cent of businesses in the manufacturing, construction and services sectors reported an immediate increase in prices of at least some of their inputs after the introduction of the carbon price on July 1, the AiGroup report found.

A follow-up survey of 485 businesses in November, however, found that a third of manufacturers and construction firms and as many as one half of service sector respondents "did not yet have enough information" to gauge the impact of the new tax.

Businesses estimate energy costs have increased by an average of 14.5 per cent because of the levy. Some of that estimate, though, may be because firms incorrectly blamed the tax for wider increases in power bills, such as for new poles and wires.

For instance, manufacturers attributed 85 per cent of the total electricity price increases since July on the carbon prices. "However, other data suggest that for smaller electricity users, network will account for close to one half of the total electricity cost increase from 1 July 2012," the report found.

Innes Willox, the chief executive of the Australian Industry Group, said some of the over-estimation of the carbon price effect was because of "a real sense of apprehension" about its impact.

"We put it down to the publicity around the tax ... so companies were bracing for the worst, " Mr Willox said. "They're still getting hit by big rises - it's a matter of where the rise comes from."

The AiGroup did not estimate the contribution of higher energy prices to total costs, although its findings indicate the increases from the carbon price are in line with Treasury forecasts.

"The [AiGroup] report confirms that carbon pricing is a manageable economic and environmental reform - in contrast to Tony Abbott's scare campaign that it would be the death of entire industries and regions," a spokesman for the federal Climate Change Minister, Greg Combet, said.

"[AiGroup's] survey found the impact of the carbon price on electricity costs for most businesses is an increase of around 2¢ per kilowatt hour - which is exactly what the Treasury modelling predicted," the spokesman said.

According to the Bureau of Statistics, producer price figures show electricity costs rose 6.7 per cent in the September quarter. Some of the increase is still in the pipeline, though, as firms assess the full effects, Mr Willox said.

Energy bills are likely to rise further as higher electricity and gas costs flow through, much of which are unrelated to the carbon prices.