Carbon tax countdown begins

Date: 13.04.2012

It is now less than three months until the Federal Government’s carbon tax begins and its initial impacts are felt throughout regional communities and rural economies, Queensland Farmers’ Federation President Joanne Grainger says

Carbon tax countdown begins
The carbon tax will hit farmers hard, QFF predicts

She says that in the coming weeks, the Government will focus on the first of the compensation payments being rolled out for pensioners and families with children.

But as people begin receiving these payments, farmers will be asking them to remember the high cost that the carbon tax will impose on food and fibre production, and upon agricultural supply chains, Grainger says.

"In addition, it would seem wise to remember that the full impacts of the tax will be phased in over several years, eventually dwarfing the initial compensation. 

"Farms, and especially the intensive farms represented by QFF's members, are reliant on energy-based inputs, including electricity, freight, fuel, and fertilisers. 

"With the exception of fuel used on farm and for transport, the carbon tax will impact all of these inputs to varying degrees, adding up to costs that will be measured in the thousands of dollars or tens of thousands of dollars for individual farmers, and much greater numbers for food processors." 

Grainger says that for some agricultural commodities, this will inevitably lead to extreme pressure on their supply chain, which will be passed on as higher prices for consumers; while for other commodities it will put further pressure on farmers' profitability. 

"Just a few months out from the introduction of the carbon tax, one of the biggest problems facing agriculture is the inadequate modelling and lack of understanding of the impact of the carbon tax among rural communities," she says. 

"The Australian Farm Institute has worked on some useful commodity-based analyses, but for many farmers and industries, the precise impact at a farm level both immediately and over the coming years is still not known. 

"This yawning gap and the responsibility for it rests at the feet of the Federal Government. As the impact of the tax becomes clearer the Government will continue to be blamed for keeping industries in the dark and designing a tax that will have increasingly adverse effects."

Farmers are told the Carbon Farming Initiative (CFI) will act as an offset to the impact of the carbon tax, but Grainger suggests this is an inadequate mechanism for doing so.

"I make this statement not to question the benefits or downsides of particular CFI activities in terms of providing market-based mechanisms for reducing carbon emissions, but simply to question whether any of these activities can be adopted on a noteworthy scale for the majority of farms, and particularly for more intensive operations. 

"The flipside to all of this is that the new State Government is seeking to double food production by 2040, which will more than likely require a lot more emission-intensive inputs. 

"The new State Government is also shutting down a number of costly 'green' energy programs, most of which did little for primary producers but more importantly on the basis that the carbon tax should pay for these types of initiatives. 

"It seems that the politics of this tax is not over, and the various contradictions will be played out over several years. Nonetheless, the tax is a legislative reality and as it stands we will have little choice but to deal with it," she says. 

Ultimately, Grainger says farmers will be looking for a greatly increased understanding from the Government and the public about the cost of this tax, both to farmers and consumers. 

"Much more work will be needed to ensure that agriculture can continue to innovate and grow in the new and challenging environment in which we are about to be placed. 

"It will then be up to the Australian public to determine the efficacy of the carbon tax as a mechanism for reducing climate change and subsequently the future of this tax," she says.


LINK: Queensland Farmers' Federation