How much has the carbon tax increased manufacturing energy costs? > Check the facts
Who: “I was speaking to a major manufacturer in NSW the other day… [the energy bill for his NSW plant was] 52 million dollars a year. Of that 52 million, 12 million is the carbon tax….the biggest input cost at the moment which is detracting from manufacturing is the carbon tax” Shadow Treasurer Joe Hockey.
The claim: The carbon tax has greatly increased the cost of energy and is currently the biggest input cost for manufacturing.
The facts: The price impact of the carbon tax claimed by Joe Hockey, $12 million of a $52 million energy bill, is 30 per cent. In a survey of manufacturing businesses undertaken by the Australian Industry Group (AIG) it was reported that manufacturing energy costs had increased on average by 14.5 per cent as a direct result of the introduction of the carbon tax. This is half the amount claimed.
The finding: Since July 2012, when the carbon tax was introduced, energy costs for manufacturing have reportedly increased by an average of 14.5 per cent, half the 30 per cent figure claimed.
Discussion of evidence: It may be true that the manufacturer Joe Hockey spoke with has seen a large increase in energy costs since the carbon tax was introduced. However, it is unlikely that all these costs are a direct consequence of the carbon tax. Electricity prices have been increasing rapidly for the past two decades with an increase of 170 per cent from 1995 to 2012. There have been other factors putting pressure on energy prices since the introduction of the carbon tax. For example, costs associated with poles and wires have had a large impact on prices. When stating the price rises associated with the carbon tax, only costs attributable to the carbon tax should be considered.
I sure hope your fact checkers actually understand some statistics before they start judging these claims. Perhaps the average increase due to the carbon tax is not the best measure. I think the median increase would have been a better measure. You should have at least shown us a distribution or given the variance so we could do a proper comparison.
pretty irrelevant to something like electricity I’d suspect
it is not 30%, it is 23%. Do the math on 12 divided by 52 multiplied by 100. And since the average is 14.5% it is quite concievable that one specific example is 23%.
simple math error – you are finding a proportion of the end result instead of the starting level if the price of an apple goes from $1 to $2 we say it is a 100pc increase, not a 50pc increase
The original post is partly to blame here: “$12 million of a $52 million energy bill, is 30 per cent”. It should have said “$12m on a $40m energy bill is a 30% increase”. Since this is being compared with a 14.5% increase, it is the correct measure to use.
Paul, the claim is that the price without the carbon tax was $40m. An increase of $12m is 30% of 40 (12/40 = 30%). Of course, this fact is not verifiable unless hockey names his source, so it shouldn’t have a bearing on the public debate. I am sure there are examples of companies who use only renewable energy and have had no price rise due to the carbon price.
The discussion is missing the point in my viee The carbon tax is not a tax – it is a charge for consumption of community resources. For too long corporations have consumed land, resources and air quality. Given the scientific evidence the price is incredibly cheap to put the glbal environment at risk.
It is truly rediculous that we give aw
Away our community resources to corporations for free. Businesses make the rational decision of consuming out environment, air quality etc – its free why spend any money on being more efficient. The carbon charge simply imposes a very small cost on companies that will hopefully encourage the management to minimise the community resources they consume.
Please don’t post some crackpot scientist view that carbon does not cause global warming. That discussion is over – it does.
Apologies for the spelling – crappy phone.
Andrew, you write as if Corporations have no value, as if making them pay more is a victimless activity. As if putting a cost on Corporations does not cost real people. Corporations actually are owned by people, people like you and I. Corporations have lifted our standard of living, lengthened our lives and brought a billion people out of poverty. Taxing corporations costs real people. Hurting corporations hurst mankind and the human condition. The tax is not a rac on corporations it is a tax designed to reduce consumption. How do you reduce consumption and therefore reduct CO2 production. What you do is make things more expensive, so we all have to pay more and therefore to reduce our standard of living. Don’t pretend the Carbon Tax is victimless. The victims are you and I and also people who need to be lifted out of poverty and for lives to be improved.
I would question if the average is truly reflected in what a company is paying for electricity and materials – household electricity bills have risen substantially, but only a small percentage of such can be attributed to the carbon tax, and another small percentage to inflation. The rest is difficult to trace, though many claim that it is the result of energy companies passing on the costs of constructing infrastructure to the consumers. (I would also add ‘shareholder greed’ and ‘energy is a resource we cannot do without’ to that. The same with petrol prices – I am sure that much of the price increase is only because we do not have the option of not buying fuel, and the majority of us use petrol. Industry likewise primarily uses diesel, and they simply don’t have the option of not purchasing fuel.)
And I would not be surprised to hear that manufacturers and other companies are also being deceived by energy companies and led to believe that the price increases are justified by the carbon tax.