Business uncertain whether carbon price repeal will lead to falls in prices

The carbon tax has been repealed and big business is rejoicing, but will prices fall and will they be passed onto consumers?

Not necessarily, according to one business group.

Australian Industry Group chief executive Innes Willox said many businesses were not able to pass on their higher energy costs to customers when the carbon tax was introduced.

Instead, he said, they had to absorb them, and those businesses saw an erosion of their margins.

"[So they] should not be required to have to pass on the drop in energy prices to their own customers," Mr Willox told Fairfax Media.

But Australian Chamber of Commerce and Industry chief executive Kate Carnell said she was hopeful any price reductions would be passed on.

"We have no reason to believe that that won't be the case. It's a competitive market out there," Ms Carnell said.

Green groups and left-leaning think tanks were quick to criticise parliament's decision to repeal the carbon tax.

Richard Denniss, director of the Australia Institute think tank, warned that any businesses that wanted ''certainty'' on climate policy – and which therefore argued for the repeal of the carbon tax – had not got what they wanted.

"The irony is that for all their talk about the need for certainty all they've done is lengthen the time for uncertainty," Mr Denniss said.

"There will be a carbon price in Australia in 10 years' time. I just don't know whether there will be one in three years' time."

The Business Council of Australia – which represents the 100 biggest companies that do business in Australia, including the big banks and miners – issued a joint statement with the Minerals Council and AIG on Thursday saying the government ought to now concentrate on developing a ''cost-effective'' emissions reduction fund.

"Today's repeal of the carbon tax [is] the first step in moving towards an emissions reduction policy that works for the economy and the environment," the joint statement said.

But John Connor, the chief executive of The Climate Institute, was scathing of parliament's vote to repeal the tax.

"Today's repeal of laws that price and limit carbon pollution is an historic act of irresponsibility and recklessness," Mr Connor said.

"With the Senate's vote today, Australia not only lurches to the back of the pack of countries taking action on climate, but sees the responsibility of emission reductions shift from major polluters to the taxpayer."

Ms Carnell says the repeal of the carbon tax does not spell the end of Australia's emissions reduction effort.

ACCI would support an emissions trading scheme if it did not affect the competitiveness of Australian businesses, she said.

"Though that shouldn't happen until our major competitors have a similar system and a similar price," she said.

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The story Business uncertain whether carbon price repeal will lead to falls in prices first appeared on The Sydney Morning Herald.

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