Media Release

AiG report confirms carbon tax blow to manufacturing

Manufacturers have been slugged by even higher than predicted increases in energy costs, according to an Australian Industry Group (AiG) analysis of the first six months of the carbon tax.

The report found that manufacturing businesses estimated an average rise of 14.5 per cent in energy cost increases (defying Labor Government predictions of a 10 per cent increase), with many unable to pass on cost increases.

“The Coalition has consistently warned that trade-exposed Australian manufacturers would be unable to pass on the cost increases imposed by the carbon tax,” said Sophie Mirabella, Shadow Minister for Industry, today.

Innes Willox, Chief Executive of AiG, said:

More broadly, businesses face strong barriers to passing on costs arising from the carbon tax to their customers. The first survey in our multi-stage research program, which we conducted in June before the carbon tax took effect, suggested that just 42 per cent of businesses intended to pass on their increased costs. The barriers they face include; pricing power among their customers; local demand conditions; and competition from imports produced in countries that do not impose similar carbon costs.  

“Food manufacturers have been particularly hard hit, reporting a 90 per cent increase in their input costs,” Mrs Mirabella said.

“Over 27,000 jobs have been lost in the manufacturing sector since the announcement of the carbon tax.

“Now we see clear evidence that the carbon tax is part of the government-imposed costs facing our manufacturers.

“The carbon tax is a reverse tariff on Australian industry and is resulting in a significant loss of competitiveness for those that are trade exposed.

“This is the worst possible time to impose a carbon tax on Australian industry.

“The Coalition has a clear plan to provide a stable Government and strong economy. We will repeal the carbon tax, cut red tape compliance costs by at least $1 billion, reduce government waste and provide businesses with the certainty they need to prosper,” Mrs Mirabella concluded.