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Carbon Tax Hurts, Say Ailing Firms

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Steve Lewis and Phil Jacob, The Telegraph

THE carbon tax is contributing to a record number of firms going to the wall with thousands of employees being laid off and companies forced to close factories that have stood for generations.

Rising energy bills caused by the Government’s climate change scheme have been called the “straw that broke the camel’s back” by company executives and corporate rescue doctors who are trying to save ailing firms.

New data from the corporate regulator reveals insolvencies have hit a record high over the past 12 months, led by widespread failures in manufacturing and construction, which accounted for almost one-fifth of collapses.

The Australian Securities & Investments Commission reports there were 10,632 company collapses for the 12 months to March 1 – averaging 886 a month – with the number of firms being placed in administration more than 12 per cent higher than during the global financial crisis.

While the high Australian dollar is seen as the main factor behind manufacturing closures, experts say the carbon tax is adding to increasing cost burdens for many firms struggling to stay afloat.

Peter Macks, principal of Adelaide-based insolvency firm Macks Advisory, said the carbon tax was “quite debilitating” for a number of hotel operators who he said had been “struggling for a long time”.

“It is very tough operating at a profit,” Mr Macks said.

Todd Gammel, a partner with HLB Mann Judd, likened the carbon tax to pulling a leg out from underneath a chair.

“For companies which have exposure to energy, and other factors which are affected by the carbon tax in a significant way, the carbon tax and the costs related to it are having a significant impact on the ability of these companies to continue,” Mr Gammel said.

His firm was brought into help rescue Grain Products Australia, which called in the administrators late last year before being liquidated.

Around half of the firm’s 68 employees will lose their jobs and GPA’s former managing director Rob Lowndes said the carbon tax and other environmental levies had added “significant” costs, of around $500,000 a year.

Mr Lowndes said the company which exported wheat gluten to Japan and other markets had suffered from increased costs for wheat and electricity.

The carbon tax, he said, was not the “primary factor” why GPA went belly-up but it was “certainly an added cost” which was making it hard for manufacturing to survive in Australia.

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