Accounting for the cost of carbon: Price for small and medium business not sky high

• Scott McKenry, and others
• National Centre for Sustainability (NCS)

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09 March 2010The Rudd Government’s proposed Carbon Pollution Reduction Scheme (CPRS) would not significantly impact most Australian businesses, according to this research report. 

The Swinburne University-based centre recently completed an industry study to model the potential financial impact a carbon price would have on businesses with fewer than 200 staff. 

The authors found that under the scheme, the likely cost increase for these small-to-medium enterprises (SME)s would be minor, flying in the face of the Opposition’s claims that it would be a ‘big new tax’.   

According to study leader Scott McKenry, the price signal would in fact, be lost against a background ‘noise’ of other cost increases. 

“Under a CPRS the likely cost increase for most businesses is really small. For some businesses we are talking a few hundred dollars a year,” he said. 

“So claims that an emissions trading scheme would have a dramatic negative impact on small business owners simply cannot be substantiated.” 

However, according to McKenry this easy ride for small business owners is actually not a good thing. 

“The problem with this is that the cost increase would be so minor for most businesses that it won’t act as a strong driver for industry to modify its behaviour. 

“This means we’ll be relying on organisational culture to drive businesses to become more sustainable. Businesses won’t do it as a cost incentive,” he said.

Despite this, the NCS still endorses the notion of a carbon price and trading scheme. 

“We feel that an emissions trading scheme is the right mechanism to reduce Australia’s carbon footprint,” McKenry said. 

“However, we believe it needs to go a lot further. In its current form, a 5% emissions reduction target and carbon price of $10 per tonne is not going to be enough to drive investor and consumer change.”  

The NCS’s study included online surveys distributed randomly across Australia; surveys of participants within Swinburne’s accredited carbon accounting course; focus groups and interviews with carbon accountants; an analysis of the carbon footprints of over 170 businesses and economic modelling of CPRS costs to SMEs.  

The study was supported by Sensis and peer-reviewed by Adjunct Professor, Alan Pears AM.