Carbon Tax Updates: Australian Food Manufacturers Want More Compensation

The Australian Food and Grocery Council (AFGC), the national association which represents the country's $108-billion food, drink and grocery manufacturing sectors, is demanding for additional compensation from government.

This came about as the council's officials claimed that the average profit of AFGC members will be cut by more than 4 per cent when the implementation of the Carbon Tax begins in the middle of 2012.

The Lower House has approved the passage of the tax early this week.

ABC News reported that Kate Carnell, chief executive of the council, emphasized that the bottom line is that costs will increase so the key factors are to strengthen the food and grocery manufacturing industry.

"It is also necessary to create a good environment for these companies to invest in improving their facilities both from an energy perspective and general efficiency," Ms Carnell said in an interview with ABC News.

The carbon tax will be levied directly on enterprises that emit carbon dioxide, a natural byproduct that is generated as combustion of fossil fuel.

It is considered more of a pollution tax meant to penalise businesses that are responsible for carbon dioxide emissions. Government imposes a carbon tax on a company by measuring the amount of fossil fuels it utilises. The business is taxed based on its amount of usage.

Proponents of a carbon tax stress that a carbon tax will encourage businesses to reflect on changing their formula and seriously consider shifting to alternative fuels while those against it contend that the duty forces a quandary for industries.

If businesses prefer a status quo and continue to emit carbon dioxide, they will be faced with a carbon tax. If they opt to change to alternative, green fuel sources, they will be compelled to invest in new products, services, and operations that are reliant on green fuels.

The federal government has already proposed $150 million worth of assistance for manufacturers but Ms Carnell said, "on its own it won't be enough to make the business model work for many food and grocery manufacturers to spend significant amounts of money upgrading their facilities to become more carbon efficient but also to make their facilities generally more efficient."