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

Business Climate change Economics Australia

The 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.

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