Carbon tax: food industry rallies against carbon tax despite $150m package

Food manufacturers and retailers are fast crunching numbers to see how they stack up in the new carbon tax world of higher prices.

The average cost of living will rise about ten dollars a week in a carbon priced economy and weekly grocery bills are expected to rise by 80 cents a week in the first year of the new tax.

However Treasury’ estimates that while food prices will rise nominally has food manufacturers questioning the accuracy of the Government’s projections.

Under the Government’s carbon tax package, the food industry will receive $150 million over six years to assist industry to become more energy efficient as part of as part of the Clean Technology Food and Foundries Investment Program.

The Australian Food and Grocery Council (AFGC) chief executive Kate Carnell welcomed the assistance package but stressed that the $150 million may not be enough.

“We are particularly pleased the Government acknowledged this amount of money may not be enough and indicated if it’s expended, industry will be able access extra funding,” Ms Carnell said.

Carnell said AFGC lobbied the Government to increase the $150 million package that was also part of the CPRS, as we believed it would not be sufficient for a $102 billion industry, which is already investing heavily in technology to reduce environmental impacts.

Under this program, funding will be provided on a co-investment basis, with industry contributing three dollars for every dollar from Government.  “This could make it difficult for smaller manufacturers as the cost of becoming more energy efficient are often very high.”

“At the end of the day, there will still be price increases right across the supply chain and this will impact on the competitiveness of industry,” Carnell said.

According to chief executive of the Australian National Retailers Association, Margy Osmond who spoke with ABC’S AM, any price rises in the food retail space is more likely to be the product of what is happening with the manufacturers of the food products.

Carnell said the cost increase will predominantly result from the high price of power.

“The Government carbon tax will increase the cost of Australian manufactured goods – but will not affect imports, which are already cheaper due to the high Australian dollar,” Carnell said.

“AFGC is perplexed by Treasury figures announced [Sunday] by the Prime Minister, regarding the price rises of food and grocery products on supermarket shelves.  The Treasury modelling appears not have been released – we urge them to release these figures.”

However economists are saying the figures do stackup as the effect of the tax on households will be limited, because households will be compensated, including lump sum payments to millions of households before the tax starts mid-next year.

Taking effect on 1 July 2012, the carbon tax will target about 500 of the highest polluting companies with the aim of cutting 159m tones of carbon pollution by 2020.

Companies that produce 25, 000 tonnes of carbon dioxide per year or more will be penalised, although certain industries will be exempt, including agriculture and forestry.

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