Modelling highlights vulnerability of SMEs to Carbon Costs
24 June
Queensland's small and medium-sized businesses (SMEs) will be hit hard by increases in the price of energy and transport as a result of the Carbon Pollution Reduction Scheme (CPRS).
Chamber of Commerce & Industry Queensland President, Beatrice Booth, said the price hikes would likely lead to significant reductions in profitability and employment.
"This is worrying given more than 95 per cent of the state’s businesses are either small or medium-sized," Mrs Booth said.
"These businesses are the driving force behind the Queensland economy, generating substantial economic activity, contributing to exports and creating employment opportunities for hundreds of thousands of Queenslanders."
Mrs Booth said independent economic research on the impact of the CPRS on SMEs, commissioned by ACCI, highlighted the need for public debate on the CPRS to focus on the impact of the CPRS on the entire business community, not just emissions-intensive, trade-exposed industries and electricity generators.
"The findings of the study confirm our view that SMEs are particularly vulnerable to cost increases following the introduction of the CPRS," Mrs Booth said.
"SMEs frequently have limited capacity to pass on costs, particularly if they supply larger businesses or government, and those involved in manufacturing have little ability to adjust prices as they need to stay competitive with the price of equivalent imports.
"The vast majority of SMEs will receive limited compensation for the additional energy, transport and trade costs and will therefore need to offset these additional costs by reducing investment, delaying expansion plans or decreasing their employment levels.
"Clearly, the results of the study reinforce that the design of the CPRS needs to be fine-tuned to strike a better balance between the desired environmental outcomes and the adverse economic impacts. It also underscores the very significant downside risks of unilateral action on carbon pricing."
Mrs Booth also said the decision to act ahead of Australia’s major trading partners runs the risk of hurting the country's own businesses for little outcome.
"Most of our major trading partners are not likely to adopt carbon pricing measures within the same timeframes and their schemes are generally not as broad in their coverage," Mrs Booth said.
"If we do not act in unison with our major trading partners on this issue, we run the very real risk of damaging our own businesses for very little, if any, reduction in emissions.
"The production will simply shift from Australia to other countries. This is not a positive outcome for the Australian economy, affected communities or the environment.”
The study, Securing SMEs in Australia's Low Carbon Future, was undertaken by economic consultancy firm, Castalia. It examined the impact of the CPRS on businesses in the food processing, plastics & chemicals, and machinery & equipment manufacturing sectors.
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Media contact
David Argus
General Manager - Public Relations & Media
Chamber of Commerce & Industry Queensland
t: 07 3842 2263