Earlier this month, the Gillard Labor Government unveiled its Clean Energy Future package, and in it, the long-awaited details on the carbon tax policy. The proposed scheme, which will start by July next year if all goes to plan, will see a fixed carbon price of $23 per tonne set as a tax upon 500 of Australia’s largest polluting companies.
The carbon price is not expected to apply to agricultural emissions, but the Government has high hopes that up to 160 million tonnes of carbon pollution could be cut by 2020 via the introduction of the tax. However, despite noble intentions, the carbon tax is also likely to instigate some nasty-side effects for the Textile Clothing Footwear and Leather (TCF&L) industries – a danger of which the Council of Textile and Fashion Industries of Australia (TFIA) is well aware. The organisation recently formed an alliance with a raft of other industry bodies and filed a submission addressing the impacts of a carbon tax on the Textile Clothing Footwear and Leather (TCF&L) industries and its workers – arguing that the proposed carbon tax could pressure and crush frail businesses within the sector.
The concern stems from claims the proposed carbon tax could increase the price of electricity and other certain running costs by up to eight per cent – which would decrease discretionary spend for consumers and add yet another burden to small to medium-sized businesses who are already struggling under the weight of increased labour and fabric costs in China, increasing interest rates and an exodus of customers who have joined the online shopping craze. Given these negatives, TFIA chief executive Jo Kellock said the Gillard government’s carbon pricing policy has ignored the TCF&L industries and is eroding an important sector of Australian industry, which also provides a large percentage of employment for regional candidates and unskilled female workers.
“Textiles, Clothing and Footwear (TCF) is one of the most important employers in this country, but its profitability has been undermined by successive governments,” she says. “Manufacturers [in particular] have been hit from all sides – with rising Australian dollar, increase in cost of raw materials, the rise in labour costs and the heavy competition from imports. There are so many factors that are making it incredibly difficult to keep manufacturing here.” In agreement are The Australia Association of Leather Industries, Council of Textile and Fashion Industries of Australia, Footwear Manufacturers Association Australia, Technical Textiles and Nonwoven Association, Textile, Clothing and Footwear Industries Innovation Council, and the Textile Clothing and Footwear Union of Australia, which also believe that the carbon tax will have a negative impact on their members and the broader sector. These organisations have joined the TFIA in its stand against the scheme and they are not alone. Gary Black, executive director of the National Retailers Association (NRA), is also convinced the carbon tax will have negative flow-on effects for the TCF&L sector and the retail businesses connected to it.
“While it is too difficult to deal in absolutes or to be particularly forensic, in my view, the carbon tax will increase costs across the supply chain. We can’t forecast or measure at this time what those costs will be, but it will increase costs, put upward pressure on prices and make it harder for Australian retailers to compete,” he says. “There is also discussion around which retailers will be able to recover those increased costs through increased prices, and what impact the carbon tax will have on consumer’s discretionary spend and the retail categories [such as fashion] that rely on this spend. “Some retail categories are now experiencing negative growth in double digits – up to 10 to 20 per cent negative growth – and we know that that’s not sustainable, so looking forward, the carbon tax may make the environment tougher for retailers, which does mean that the future viability and sustainability is in serious doubt. Additionally, I think anyone who is in direct competition with foreign/online retailers now has really got some very difficult times ahead. And this carbon tax announcement does not assist going forward.” Bernie Brooks, chief executive of department store giant Myer, also recently confirmed that the retailer would be hiking its prices up to combat the running-cost increases caused by carbon tax.
“Myer supports the principle of a global effort towards reducing pollution, however, any impost by government over and above the existing tax burden on consumers will impact discretionary spending so we don’t agree with that,” he says. “Additionally, our analysis indicates that our prices will have to increase in the medium term as a result of increasing electricity costs and also a result of the carbon tax. As we have little scope to reduce our costs and we won’t reduce our service, we will have to pass on the costs as increased prices for consumers.” Smaller boutiques are also in the firing line – perhaps more than the larger retail chains – and while certain industry bodies strongly support a sustainable low-carbon approach, Kellock is adamant that the current carbon pricing policy will submit the industry to further cost pressures that it has no option but to absorb – and smaller retailers may be forced to close because of it. However, Alice Euphemia boutique owner Karen Rieschieck has a different spin. “As a business owner I have to move with the climate. I see the carbon tax as part of the true cost of a garment and I don’t believe it will negatively effect my business, it will enhance it. If consumers are more educated about the true cost of products, they are more likely to consider quality and value. We aim to provide quality and value in design and production; we can compete with clever design.”
