Processors eye off carbon bonus
Two of WA's biggest sheep processors say the industry could save millions as a result of the repeal of the carbon tax.
Last month, the Senate voted in favour of scrapping the Australian Labor Party's controversial carbon-pricing scheme.
WAMMCO International and Fletcher International have claimed the move could save each business $400,000 a year on packaging and electricity alone.
WAMMCO chief executive Coll MacRury said it was "early days" but the company is confident the savings could be made.
"It will take a bit of time to extrapolate the costs associated with the tax because we are bound by existing contracts with many of our suppliers," he said.
"So, we expect it will be at least six months before we see some adjustments."
Mr MacRury said he looked forward to meeting lamb suppliers about the adjustments.
"We expect the costs associated with the carbon tax to be fully extrapolated and we'll talk about the easiest way to do that for all the parties involved in the process," he said.
Fletchers general manager Greg Cross said it should be relatively simple to identify costs associated with the carbon tax.
"For example, our electricity account identifies the carbon tax component," he said.
But Mr Cross also said bringing suppliers to the table would not be so simple.
Since the repeal, the Australian Competition and Consumer Commission announced the Carbon Tax Price Reduction Obligation, which is designed to deter supply chain price exploitation and ensure all cost savings attributable to the carbon tax repeal are passed through the supply chain for regulated goods.
The commission has threatened penalties of up to $1.1 million for corporations and $220,000 for individuals, where the price for a supply of a regulated good cannot be adequately justified.
"When the carbon tax was introduced we received letters from many of our suppliers outlining carbon-tax based price increases, but interestingly enough, since the tax has been repealed we have not had a single letter from our suppliers outlining carbon tax repeal-based price decreases," Mr Cross said.
"So we will be reviewing all of our supply contracts to make sure that we keep the bastards honest," he said.
The abattoir operators have both expressed a need for the Federal Government to address climate change.
Both men said the industry welcomed the savings but they recognised the importance of finding solutions to enable Australia to reach its emissions targets.
Meanwhile, Western Meat Packers executive Andrew Fuda said his company would welcome any savings that could be passed on by the repeal but "would not be holding his breath" about it happening in the short term.
Mr Fuda said the tax was a significant impost on the business because the price of beef remained the same but the price of cardboard and plastic packaging rose sharply with the introduction of the tax.
"We were forced into a position where we had to be very creative with our costs," he said.
"At the time, a large supermarket chain we deal with told us they would not accept price rises as a result of the tax so we had to find cost savings efficiencies within the business to offset the price rises. So what we can say is if any price reductions occur, we will pass the savings on to our consumers."
Get the latest news from thewest.com.au in your inbox.
Sign up for our emails