25 July 2011

Australian carbon tax threatens closure of thousands of businesses

Tourism-related business are struggling to keep afloat as the carbon tax is enforced and energy prices rise.

The enforcement of Australia’s carbon tax could see thousands of tourism-related businesses close, eliminating tens of thousands of jobs and impacting the economy, according to the Australian Tourism Export Council (ATEC).

The Australian tourism industry has suffered greatly due to the strengthening AUS dollar and a significant decline in domestic tourism, meaning the slightest increase in expenditure could see the foreclosure of many businesses.

In a statement to the Australian Herald Sun, ATEC managing director, Felicia Mariani, said: "The impact of a price on carbon is yet another hit to these businesses and forcing them to question their ongoing viability. If these businesses go down they take with them the jobs and livelihoods of tens of thousands of individuals and communities."

Responding to the allegations by ATEC, the Australian government claimed the tourism industry is misleading both businesses and consumers with its alarmist claims. A spokeswoman for the Federal Climate Change Minister, Greg Combet, denied the allegations of significant job losses, stating: "Claims of significant job losses in the tourism industry as a result of the carbon price are completely unfounded. While the industry is suffering from the high Australian dollar, the Tourism Export Council's alarmist claims about the carbon price are misleading."

Countering the government’s statement, Ms Mariani believes the Government's promise to assist small-to-medium enterprises (SME) explore additional avenues to minimise energy consumption will have little-to-no effect as many business are devoid of the capacity to switch to energy efficient systems. "There are thousands of tourism operators across Australia with profit margins so low that any increase in operating costs will push them over the edge," Ms Mariani said.

The audit, tax and advisory firm BDO believe tourism-related businesses will be crippled by the increases. Dylan Byrne, BDO spokesman, is quoted in ATEC’s statement, saying: "There is an urban myth that the tourism industry will only feel a slight impact from the introduction of a carbon price. The reality is some of the proposals will have major direct and indirect impacts on the costs incurred by tourism operators."

The cost of electricity is set to skyrocket up to 30 per cent by 2013, due in part to the Australian government's renewable energy scheme which accounts for 11 per cent of the increase, according to reports by the government's chief energy adviser.

The costs to fund the Renewable Energy Target - which provides substantial subsidies for rooftop solar schemes and large-scale renewable energy projects - will explode by 360 per cent by 2013, as utilities attempt to meet the renewable sourcing targets rates of 20 per cent by 2020.  These costs, however, are set to rise with or without a carbon tax.

Speaking to the Australian Herald Sun, Federal Tourism Minister Martin Ferguson said about  the price increases: "According to treasury modelling, carbon pricing is expected to add around 10 per cent to electricity prices in 2012-13."The Government ... will assist smaller businesses to identify energy efficiencies to help reduce energy costs."

Article by Diva Rodriguez | Climate Action

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