Billions wiped from blue-chips as carbon tax hits Australia’s top companies

Billions wiped from blue-chips as carbon tax hits Australia’s top companies

STEVE LEWIS AND STEPHEN MCMAHON

NEWS LIMITED NETWORK

AUGUST 30, 2013 1:07PM

Virgin Australia CEO John Borghetti said the carbon tax had added nearly $50 million to the company’s 2012/13 expenses. Source: News Limited

VIRGIN Airlines has blamed the carbon tax for contributing to a $98 million full-year loss, adding to corporate concerns that Labor’s climate change scheme is wiping billions of dollars off blue-chip profits. Australia’s second biggest airline on Friday morning announced the carbon tax had added nearly $50 million to its 2012/13 expenses – around half the amount booked by Qantas, which said the green impost added $106 million.Chief executive officer John Borghetti explained the $47.9 million cost could not be recovered by Virgin, “due to strong competition in the market” – a common complaint from businesses facing a carbon squeeze.

A week from polling day, the impact of Labor’s greenhouse scheme on corporate balance sheets can be revealed – with the carbon tax costing the country’s four biggest energy companies close to $1.7 billion.

And while Kevin Rudd is pitching his campaign message on creating jobs, coal miner Glencore Xstrata claims the carbon tax will cost it $200 million and is undermining investor confidence in new projects.

Soon to be privatised Macquarie Generation, owned by the NSW government, was whacked with a $469 million carbon tax bill, for the year to June 30.

Regional airline Rex on Thursday blamed the carbon tax for a 45 per cent nosedive in profits – from $25 million to $14 million in 2012/13 – with executive chairman, Lim Kim Hai, claiming that sales plunged “almost immediately” after its introduction just over a year ago.

“(Transport) Minister (Anthony) Albanese’s claim that the impact of the carbon tax would be little more than the cost of a cup of coffee became the understatement of the aviation year,” Mr Lim said.

AMP Capital Investors chief economist Shane Oliver said Australian companies are paying a “high price in terms of their international competitors” because of the carbon tax.

“It has certainly cost jobs over the past 18 months,” Dr Oliver said.

But the Rudd Government – which sought to neutralise the issue by announcing plans to bring forward a floating emissions trading scheme, by 12 months – maintains the carbon tax is a modest cost for business.

Speaking about the impost on the flying kangaroo, Climate Change Minister Mark Butler said: QANTAS’ annual fuel bill is around $4.2 billion, which means the price they pay for their carbon pollution is just over 2 per cent of their fuel costs – a minuscule impact for a $16 billion company with a massive operating budget.

“That’s why QANTAS CEO Alan Joyce has said he’s more worried about the fuel price than the carbon price,” Mr Butler said.

While millions of households have received compensation, many businesses are being hit by higher energy costs and other expenses due to the carbon tax. Major polluters – particularly those in trade-exposed industries – received partial compensation in the form of free permits, but these are not enough to offset the entire cost.

Energy giant AGL admitted that its carbon costs “in 2012-13 were approximately $580

million” with the company receiving compensation of $240 million for its Loy Yang generators in Victoria.

Mining giants BHP Billiton and Rio Tinto are yet to disclose the impact of the carbon tax on their full year profits. But the scheme is expected to add hundreds of millions of dollars to expenses.

Likewise, energy companies – Origin and Energy Australia – will each incur carbon tax bills of hundreds of millions of dollars.

Glencore Xstrata – which has extensive mining operations in the battleground election states of NSW and Queensland – says the carbon scheme imposes “significant costs on Australia’s economy for no environmental benefit”.

“Under the existing fixed price period, the cost to our business is around $200 million per annum,” a company spokesman said.

Opposition leader Tony Abbott seized on the comments from business about the carbon tax, describing it as “an act of economic self harm”.

“Not only will scrapping the carbon tax help Australian families get ahead, it will also help to secure more Australian jobs, boost exports and make Australia’s businesses more competitive and productive,” Mr Abbott said.