The retail industry has breathed a sigh of relief this week following the decision by the Senate to abolish the carbon tax, although when retailers will start to see the effects of the repeal remains uncertain. The decision by the Federal Government to abolish the carbon tax is a welcome relief, coming during a month most retailers would like to forget. Since the start of July, retailers have been hit with four basic increases to their bottom line, including increases to the minimum wage,
penalty rates, and superannuation.
Inside Retail PREMIUM understands the tax will be abolished retrospectively to July 1, 2014.
Retail lobby groups are hoping the move will have a flow on effect on the retail sector, reversing the damage done two years ago when the tax first came into effect in July 2012.
Russell Zimmerman, executive director of the Australian Retailers Association, told Inside Retail PREMIUM he’s confident the scrapping of the tax will drive consumer spending.
“It is going to take a little bit of time until people start to see the rebates come back through on their electricity,” said Zimmerman.
“When their bill comes in and consumers see they have saved money against their bill from last year people will be relieved and start to spend that money.”
Australian Chamber of Commerce and Industry CEO, Kate Carnell, called the carbon tax a dead weight on the Australian economy, and said abolishing it is a win for consumers, energy users, and business.
“Australia’s carbon tax was one of the highest in the world, making our key industries less competitive and providing very little by way of environmental benefit,” said Carnell.
“Abolishing the carbon tax should help stimulate business and economic growth and help restore all important investment confidence,” she said.
High energy retailers such as bakeries and supermarkets are expected to benefit most from savings associated from the tax’s demise. Since its introduction, bakeries have reported additional energy costs of more than $20,000 a year.
Baker’s Delight executive chairman, Roger Gillespie, told Inside Retail PREMIUM the tax has been a strain of the franchise since its inception, with sales dropping almost overnight when the carbon tax was first introduced.
“When the tax was first announced confidence dropped in retail,” Gillespie said.
“We saw a small percentage drop almost overnight, particularly in the bigger centres. Consumers lost confidence going to the larger shopping centres and were scared to spend money because they weren’t sure of the impact it was going to have, so it was a general fear across the community.
“We hope that now there will be a reversal of that and an increase of sales across the board.”
Gillespie is unsure if Baker’s Delight’s prices will drop, but says it may be a possibility.
“It’s been estimated that it costs around $20,000 per annum for a bakery, and then there’s also an increase on everything else – new equipment, flour, repairs and management, and electricity.
“We’re hoping to get most of that back, but time will tell whether we get it all. We’re excited to see the change and hopefully the whole country is better off without it.”
This article first appeared in Inside Retail PREMIUM issue 2007.