The competition watchdog has put business on notice, warning it will take enforcement action if cost savings linked to the government’s carbon tax repeal are not passed on.
The warning from the Australian Competition and Consumer Commission followed the passage of the government’s repeal legislation in the upper house by a margin of 39 votes to 32.
The Abbott government secured the support of all Senate cross benchers for the measure, including the Palmer United Party who last week blocked its passage. Labor and the Greens opposed the repeal.
The government has touted the benefits of the step, saying it will save the average Australian household about $550 a year and reduce the average power bill by about $250. Consumers with a major electricity retailer can expect to receive a refund on any carbon tax they have paid since July 1.
Prime Minister Tony Abbot yesterday said the carbon tax was a $9bn a year hit on the Australian economy. He said business had been forced to absorb the tax or pass it on to consumers through higher prices.
“Scrapping the Carbon Tax will take a cost burden off Australian businesses. It will make it easier for them to compete and create more jobs,” he said.
The government has estimated that electricity prices will drop by about 9 per cent and that gas prices will drop by about 7 per cent as a result of the repeal.
The Australian Competition and Consumer Commission is now charged with the task of ensuring that savings from reduced power prices are passed on to consumers.
ACCC chairman Rod Sims has already put business on notice. Those who will be under most scrutiny include businesses that supply regulated goods including electricity, natural gas and refrigerant gases.
“When the new law takes effect and the carbon tax is repealed, these businesses must pass through all cost savings from the carbon tax repeal,” Mr Sims said. “If they fail to do so the ACCC will take enforcement action against them and seek serious penalties from the courts.”
The costs are severe. Corporations that fail to pass on savings face penalties up to $1.1 million per contravention. Individuals face up to $220,000 per contravention. Some businesses will also be required to prove to the ACCC that they have passed on cost savings.
Australian Chamber of Commerce and Industry chief executive Kate Carnell said the repeal of the carbon tax would stimulate business confidence and economic growth.
“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,” she said.
Australian Industry Group chief executive Innes Willox said he hoped the ACCC would take a “reasonable and responsible stance” in carrying out its enforcement duties.
Master Grocers Australia chief, Jos de Bruin, said the carbon tax repeal would save independent supermarkets about $70 million a year across the nation. He said that energy consumption and refrigerant gas replenishment was the second biggest cost behind wages for independent supermarket owners.
“On average a small independent supermarket of around 500 square metres in size will save approximately $17,500 per annum and a large store of around 2000 square metres will save approximately $51,000.”
The Australian Retailers Association Executive Director Russell Zimmerman said many in his sector would celebrate the repeal. He said that some bakeries reported additional costs of over $20,000 per annum as a result of the carbon tax.