How much has the carbon tax increased manufacturing energy costs? > Check the facts

Who: “I was speaking to a major manufacturer in NSW the other day… [the energy bill for his NSW plant was] 52 million dollars a year. Of that 52 million, 12 million is the carbon tax….the biggest input cost at the moment which is detracting from manufacturing is the carbon tax” Shadow Treasurer Joe Hockey.

The claim: The carbon tax has greatly increased the cost of energy and is currently the biggest input cost for manufacturing.

The facts: The price impact of the carbon tax claimed by Joe Hockey, $12 million of a $52 million energy bill, is 30 per cent. In a survey of manufacturing businesses undertaken by the Australian Industry Group (AIG) it was reported that manufacturing energy costs had increased on average by 14.5 per cent as a direct result of the introduction of the carbon tax. This is half the amount claimed.

The finding: Since July 2012, when the carbon tax was introduced, energy costs for manufacturing have reportedly increased by an average of 14.5 per cent, half the 30 per cent figure claimed.

Discussion of evidence: It may be true that the manufacturer Joe Hockey spoke with has seen a large increase in energy costs since the carbon tax was introduced. However, it is unlikely that all these costs are a direct consequence of the carbon tax. Electricity prices have been increasing rapidly for the past two decades with an increase of 170 per cent from 1995 to 2012. There have been other factors putting pressure on energy prices since the introduction of the carbon tax. For example, costs associated with poles and wires have had a large impact on prices. When stating the price rises associated with the carbon tax, only costs attributable to the carbon tax should be considered.

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