Carbon tax would make business less competitive

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Carbon tax would make business less competitive

A carbon tax will tend to make New Zealand enterprises less competitive and less able to afford energy efficient technology.

This is the inference Business NZ is drawing from a case study of the impact of carbon tax on seven New Zealand businesses.

Business NZ, the Coal Association, the Seafood Industry Council and the Vegetable and Potato Growers’ Federation, commissioned a PriceWaterhouseCoopers study to find how much the carbon tax policy would impact on the bottom line of ordinary businesses, large, medium and small. The businesses surveyed were a greenhouse tomato grower, a brick and tile manufacturer, furniture maker, iron foundry, sawmill and two seafood companies, all of which are exposed to international competition.

The study showed energy input costs increasing between 11% and 35% for the seven companies as a result of the tax, causing a decline in competitiveness especially against Australian, US and Chinese competitors.

All companies surveyed could apply for an NGA (negotiated greenhouse agreement) to help them remain competitive, but the cost of developing a ‘world best practice’ benchmark as required for an NGA was prohibitive for most.

Business NZ Chief Executive Phil O’Reilly said the experience of the enterprises surveyed should act as a warning that the carbon tax, like any other unnecessary tax, would be very unhelpful for New Zealand companies.

“At a time when our exporters are struggling with a very high dollar, the imposition of a new tax on their energy inputs is the last thing they need.

“Businesses are serious about managing environmental impact, but the carbon tax will leave them less able to invest in the technologies that improve energy efficiency.

“This study indicates that New Zealand should seek some way other than a carbon tax to meet their Kyoto commitments - perhaps by way of assistance to help companies invest in energy efficient technology - instead of purchasing carbon credits on the international market.”