As the Government’s Carbon Price received another hammering in Parliament in the last week, attention changed from those who are directly liable for the Carbon Price, towards those who were going to be indirectly liable.
Speaking at the Local Government Shire Associations Sustainable Choice Conference in Wagga Wagga yesterday CEO of the Sustain Group, Matthew Tukaki, told Council leaders and executives representing local body jurisdictions from New South Wales, Victoria and South Australia that attention now needed to be paid to ensuring organisations were ready for directly liable companies when they came knocking with price increases. Mr Tukaki also outlined the opportunities open to Councils when it came to carbon farming initiatives; carbon offset programs and attracting new industries to rural Australia.
“At the moment there is a lot of focus on those organisations and sectors who are going to be directly liable by the new legislation – however, once those calculations and assessments have been completed they will then turn their attention to how and who they pass through the costs on to as opposed to absorbing them. Putting compensation packages aside, if your annual spend was $1 million on power consumption and the average (shared) emissions related to that spend were about 6,800 tonne then the liability cost they may pass on to a Council could be between $50,000 and $100,000. The question is, can the energy company pass the cost directly through and what do your current supply agreements say about the ability for the supplier to pass the cost on?” Mr Tukaki said.
“It stands to reason that while a supplier may want to pass through an element of the liable cost, there is then nothing stopping the customer, in this case Councils, from saying this is what we are prepared to wear, and if that is not acceptable then we will potentially find another supplier. That is the case for a range of pass through suppliers, and not just the energy sector.” Mr Tukaki said.
“Here we are in Wagga Wagga, only a five or so hour drive from Sydney. Yet the cost of land in Sydney is higher, the cost of doing business is higher, the cost of labour and the availability of it are constrained. Here in Regional and Rural areas there is a lot more available land open for business investment as opposed to metropolitan areas which indicates, if I was in the business of establishing clean technology and energy infrastructure, I may in fact be more prepared to establish in the regions than in the cities. The current Council clusters provide an existing centralised working group that can also been channelled into marketing the regions investment credentials.” Mr Tukaki said.
“In addition, one of the largest clusters of landholders in Australia is Local Government Authorities. If I were running a Council in rural and regional Australia I would be taking a close look at how I can take advantage of carbon offset programs. On the one hand we have a certain amount of available land with a carbon sink on it while on the other there is the possibility for Councils to see this as the opportunity for the development of a brand new revenue line – one that does not currently exist. Surely this can only benefit ratepayers” Mr Tukaki said.
“You know, we can debate the science, discuss the policies and argue about who is right and who is wrong. Putting all of these things to one side, and looking at the opportunity cycle: Firstly we have the ability to defend the pass through costs or negotiate a better outcome for ratepayers while on the other hand we have the ability to attract new investment and revenue opportunities into the regions.” Mr Tukaki said.
About the Sustain Group: the Sustain Group is a privately held corporation operating across 9 country jurisdictions and with its head office in Sydney Australia. The business focuses its work on sustainability education, recruitment and consulting.