Carbon tax a dud, say lobby groups

Farm lobby groups will continue to oppose the Federal Government's carbon tax package and try to further quantify the potential costs to the farming community of the introduction of the clean energy legislation.

The package will impose a $23 a tonne fixed price on carbon emissions from July 1 next year and introduce an emissions trading scheme in 2015.

It is expected to pass through the Senate on November 21 after being ratified in the House of Representatives last week.

Research has shown five years after the introduction of a carbon price, grain farming businesses could be facing increased costs of 2.4 to 5.7 per cent per year - worth $12,000 to $52,000 - compared with a business-as-usual scenario.

The Australian Farm Institute (AFI) analysis carried out in June 2011 found these additional costs would be driven by higher on-farm and processing costs that were assumed to be fully passed back to farmers.

AFI modelling showed sheep producers could be hit with 2-5.5 per cent annual cost increases - amounting to about $4000 to $13,000 - five years after a carbon price was introduced, again resulting from extra on-farm and processing costs.

It predicted the annual cost increases to beef producers after the same period would be 1.7-4.6 per cent, or about $3000 to $13,000.

The AFI said the Government's carbon policy represented a major challenge for Australia's grain, sheep, beef, cotton and rice producers.

WAFarmers, the Pastoralists and Graziers Association and the National Farmers Federation agreed, saying the passing of the carbon tax package last week was disappointing, although expected.

WAFarmers senior vice-president Dale Park said his group opposed the tax scheme but, now that it was a reality, would attempt to help members understand the impacts and any potential upsides from carbon farming initiatives.

He said it was difficult to quantify the effect the carbon tax would have on farmers because the level of production and processing costs that would be passed back to them from further up the supply chain was unknown.

"Of concern to us also is that it appears to be ALP policy to remove the carbon tax exemption on the heavy haulage fuel rebate after the next election and we will be watching that closely," he said.

Mr Park said farmers would ultimately pay the price of the carbon tax in higher processing costs that would be passed back to them.

"The only upside of the tax for farmers that I can see is the minimum tillage rebate of 15 per cent," he said.

"In the longer term, there could be benefits from carbon farming initiatives, such as storing carbon on-farm or reducing methane emissions, but any innovations will incur costs."

PGA president Rob Gillam said he failed to see what benefit the carbon tax would bring to agriculture, or the community at large, and PGA would continue to voice its opposition to the tax package to all politicians.

"Under this tax, farmers will face increased direct and indirect costs for a range of inputs - from fertilisers to tyres and fuel," he said. "I suspect these will be creeping cost increases that will never be able to be identified but will squeeze producers' margins even tighter and negatively impact on their international competitiveness."

Mr Gillam said there were no potential upsides of the carbon tax package for WA's agricultural producers and extra costs would outweigh any longer-term benefits.

NFF president Jock Laurie said the federation was disappointed that the Federal Government could legislate a scheme that would adversely impact on every Australian farmer and burden them with additional costs that could not be passed on through the supply chain.

"We have been analysing the impacts of a carbon price on the farming community for many years and lobbied all politicians hard to oppose it, so it is frustrating that it has been passed," he said.

Mr Laurie said the NFF would continue to investigate the effects of carbon pricing, especially focusing on the meat processing sector and costs that could potentially be passed back to meat producers.

He said there would also be further analysis of carbon initiative R&D packages and any potential benefits these could have for farmers.

An amendment to the carbon tax package proposed by WA Nationals MP Tony Crooks to allow businesses in rural areas to keep their diesel fuel rebates was defeated by the House of Representatives last week.

The amendment was specifically targeted at rural and regionally-based mining, services, tourism, manufacturing and retail businesses, such as roadhouses and mining camps, and would have allowed them to receive the full fuel tax credit.

Opposition leader Tony Abbott said a future coalition government would scrap the carbon tax as its first order of business.

Fast facts *

·Carbon emissions tax for 500 biggest polluters starts July 1, 2012

·Rate is $23 a tonne

·Tax to rise by 2.5 per cent a year until 2015

·In 2015 tax changes to an emissions trading scheme

·Will not apply to agricultural emissions

·Will not apply to light on-road vehicles under 4.5 tonnes

·$400 million to be invested in agricultural carbon mitigation R&D

·Goal is to cut pollution 80 per cent by 2050