Carbon Tax produces economic uncertainty

Printing Industries believes that the announcement of the Federal Government’s Carbon Tax strategy will fuel greater economic uncertainty and exacerbate weak business and consumer confidence for the foreseeable future.

The announcement on the weekend confirmed that the new tax would bring cost increases to business.

Bill Healey, CEO of Printing Industries says the printing industry was already operating in a challenging environment that now had a new dimension of increased operating costs and uncertainty to deal with.

“The industry already operates under reduced margins. It would appear that the two-speed economy has put a break on spending in a number of areas that traditionally have generated demand. This has been exacerbated to a degree by surplus capacity in the industry and the shift to new online delivery channels.

“The industry will now face rising energy costs, raw material costs and possibly freight and transport costs. This will be a major disincentive for investment.

“Industry profit margins are already stretched beyond acceptable levels and companies are also under pressure from other communication channels. On top of that competition from offshore manufacturers is having a two-fold impact.

“Imported print, mainly from Asia, is costing our industry work. Offshore competition in the retail and consumer goods sectors is hurting Australian manufacturers and having a flow-on effect to our industry which produces the packaging, advertising and other promotional printed matter for them.”

Healey says that while the printing industry was not among the 500 top emitters of greenhouse gases, the indirect impact of the Carbon Tax on an industry with manufacturing businesses in every electorate of the country would be significant and drawn out, affecting profitability and future viability.

Printing Industries National Manager for Policy and Government Affairs, Hagop Tchamkertenian said the assistance measures announced by the government were unlikely to ease the carbon tax pain.

“The proposed Clean Technology Investment Program, designed to assist manufacturers modernise their equipment and upgrade to less polluting equipment and cleaner technologies, is likely to be a competitive based grants program.

“An inherent disincentive is the requirement that for every dollar contributed by the government, printing businesses need to contribute three dollars. There is also the requirement that the business must have facilities that use more than 300 megawatt hours of electricity or five terajoules of natural gas a year.

“This latter requirement effectively restricts the program to certain size printing businesses,” he said.

Tchamkertenian says Printing Industries’ initial assessment was that at best, only up to 20 per cent of printing industry businesses may be eligible for funding.

He said the government had heeded Printing Industries calls for sectoral economic modelling and had released analysis as part of the carbon price package showing positive growth forecasts for the printing industry.

“The Treasury economic modelling shows that the printing industry is expected to continue to grow over the long term under the government’s proposed Carbon Price Mechanism and global emissions action scenarios.

“The modelling shows that less ambitious emission reduction targets (core policy) will have no impact on the industry’s gross output by 2020.

“If Australia and the global community pursue more ambitious emission reduction targets, (high price scenario), then the printing industry’s gross output is expected to be impacted marginally,” (-0.1 per cent).

Tchamkertenian says that under both the core and high price scenarios, the Treasury modelling showed that the printing industry’s gross output would be 14 per cent higher in 2020 when compared to the 2010 level.

By 2050, the core policy scenario would cause the printing industry gross output to increase by 1.6 per cent and under the high price scenario by 2.0 per cent.

“Compared to 2010 gross output levels, printing industry gross output is forecast to be 147 per cent higher under the core policy scenario and 148 per cent higher under the high price scenario,” he said.

(Similar forecasts for the ‘Communication Services’ sector forecasts gross output growth at 312 per cent and 319 per cent respectively; Business Services at 241 and 243 per cent respectively; Iron Ore mining 408 and 430 per cent respectively.)

He says that reflecting the shift of resources from manufacturing to services, the printing industry’s economy wide employment share was forecast to fall from 0.8 per cent in 2020 to 0.6 per cent by 2050.

According to Healey, the forecasts underlined the importance of businesses continuing to find ways of reducing costs, a very well known scenario for the printing industry.

“Our surveys have confirmed that industry costs are increasing to a point beyond the capability of many businesses to absorb them,” he said.

“We must also remember that the industry has made a major effort over the last decade to improve production and environmental efficiencies. These are being further promoted through programs including Sustainable Green Print (SGP) and competitive manufacturing promoted by the Association

“Printing Industries is working to raise community awareness that print is one of the most effective, trusted and environmentally friendly forms of communication the world has and that this won’t be changing anytime soon.

“We aim to help members meet the challenges that will no doubt arise from the new tax in order to ensure that print continues to be a vital and affordable part of the communication mix and one of Australia’s important sources of employment and business opportunity.

We are already working on a number of initiatives in the bulk power purchasing, workers compensation, business and environmental sustainability areas,” said Healey.