What does the carbon tax repeal mean for Australia’s manufacturers?

Sage Business Solutions Managing Director Mike Lorge explains the implications of the recent
repeal of carbon tax for Australia’s manufacturers.

The repeal on 17
July was preceded by months of discussion and debate with several industries
including manufacturing affected by the decision.

Reducing cost pressures

The manufacturing
industry, like many other industries, has been facing the brunt of rising
production costs, with the impact directly on their bottom line. The removal of
the carbon tax is expected to reduce energy costs, which is good news for this
sector.

Unlike some
industries, manufacturing is at the mercy of trade and export strategies,
making it more important than ever to keep costs under control. International
trade accounts for a major part of the business for many manufacturers;
however, the carbon tax burden increased costs, forcing their trading partners to
go in search of alternative arrangements.

Consequently,
manufacturing companies found themselves unable to pass on the tax through
higher costs, leaving them little choice but to shoulder the burden presented
by the carbon tax. The situation forced them to adopt alternative cost cutting
measures, which had the potential to impact quality of the product
offering or customer service provided.

Increasing efficiency

The repeal of the
carbon tax is also expected to improve business productivity with one less
regulatory burden to manage, enabling business owners to focus on other areas
of their operations.

According to the Clean
Energy Regulator, manufacturers still need to adhere to several other
environmental regulations. For instance, the National Greenhouse and Energy
Reporting scheme will remain in place for large-scale manufacturers, which
requires them to report carbon emissions, as well as energy consumption and
production.

The Emission
Reduction Fund has the potential to open up new funding to manufacturers and
other industries.

Even though the
carbon tax has been withdrawn, companies still face reporting obligations until
October. Final payments should be made by February next year and non-compliance
penalties will continue to be in force.

The repeal of the
carbon tax means the manufacturer can focus more heavily on keeping their environmental
credentials in check.

How ERP software can help

With or without the
carbon tax, manufacturers must have continued focus on keeping costs down and
improving efficiency as much as possible.

ERP solutions can help
businesses have a complete overview of every part of the operation in a user-friendly
and intuitive way.

A key requirement
for a good ERP system is flexibility that would allow it to adapt to changes in
the legislative environment, which may become more important as issues such as
the carbon tax continue to be addressed. The Renewable Energy Target is already
up for discussion at the moment, which means the business should be ready to
adapt as and when it’s necessary.

A sure-fire way to
be well prepared in business, regardless of a constantly changing policy
environment, is by ensuring the use of ERP software in manufacturing
operations.