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INTRODUCTION


Climate is changing due to high level of carbon pollution and it is damaging our
environment and economy. Certain businesses have certain implementation
which involves emission of gasses which impact global environment. On 1
st

July 2012, the Australian government introduce carbon tax with a concept that
pricing carbon tax is a major step towards a clean energy future and it is the
most efficient way to cut pollution and build a clean energy economy for the
future. The purpose is to reduce the emission of gasses by pricing the carbon
through carbon tax. The introduction of carbon tax is hard to believe and it has
made the Australian firms to totally change their strategies for moving ahead.
The carbon tax has affected almost every Australians life as it has increased the
price of everything e.g. electricity, patrol and travel expense etc. In this essay, I
have firstly discussed the impacts of Carbon Tax on the strategies of Australian
firm as strategies have been changed in result of carbon tax, advantages and
disadvantages of Carbon tax and at the end; I have given a conclusion by
supporting my arguments. (Bode. J. & Horstink.M., 2012)



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Australian business have reacted to the newly carbon tax and have done a lot of
changes in the strategies of their firm. Businesses are preparing for the
transition to a low carbon economy because Stakeholders are also interested to
know that how much carbon tax is paid by the company on poor environmental
performance and most of the corporate organisations annual report includes
environmental statement to let their stakeholders know about their
environmental performance. Now carbon tax is also directly involved in the
investment decision-making process so businesses have changed their strategy
by starting benchmarking on the basis of carbon performance. Businesses have
undertaken abatement efforts for use of energy and it will reduce the energy
cost which will ultimately saves carbon tax. Before 1
st
July 2012, firms were
using inexpensive techniques for reducing this emission but with the
introduction of carbon tax they have changed their strategy by attempting to
even expensive techniques for saving carbon tax. (Looi.K., 2010)

Before 1
st
July 2012 Australian firm were carrying on their operational activities
with paying attention to the external cost but once the carbon tax introduced,
they changed their strategy and did their best to reduce the internal cost to
maximise their profit. In the new strategies, firms are becoming very
environmental friendly and trying control the internal cost as it will help to
reduce the external cost of carbon tax. Strategy makers of most of the firms in
Australia has accepted that world need to be free from greenhouse gases and
they have started planning the business with low carbon economy. As a result
many companies are developing products and investments that are appropriate
for a carbon constrained world. There is also a changed in the strategy of
methods of production as companies are forced to adapt the physical impact of
global warming. (Measures on International Competitiveness, , june 2010)

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As everyone know that Carbon tax is not been implemented in the whole world
and is only been introduced by some countries of the world and as a result its
introduction in Australia has created some good and bad points on the economy.
As carbon tax is not implemented in the whole world so firms in Australia have
been affected badly not only at domestic level but also at international level. As
countries that are not paying carbon tax are doing their production activities
without paying carbon tax which lead their production to be cheaper than the
production of countries that are paying carbon tax. Hence, this has put the
international competiveness of Australian exporter in a big problem. Australian
exports have been negatively affected. With the implementation of carbon tax
all the prices have gone up like patrol, electricity etc. this will create
disadvantages situation and will take away their competitive edge for countries
that are not paying carbon tax. This is one of the major reason of adopting new
strategies. (htt3)

Australians opposition leader is also against the carbon tax from the date of its
introduction and he has given statement that he will scrap the carbon tax, once
he will become the prime minister in the next general election. I also agree with
his views that carbon tax is not good for the economy because Carbon tax will
also affect the purchasing power of the people as carbon tax is an additional
payment added to the manufactures buying the raw materials. As a result of this
tax cost of production will be increased and at the end of the day consumers will
have to pay this price in the shape of increase in prices of the goods.

As Australia is not been affected by recession and there is low unemployment
rate from last many years as compare with other developed countries but the
carbon tax is an additional tax burden which would result in employment losses
in many sectors. It will terribly affect the Australian economy but as the tax
collected will be invested in the economy will create jobs. Many manufactures
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of Australia have stopped the production activities and started importing the
finished product from the countries that are not paying carbon tax. It has also
raise the unemployment level and affected the economy by shifting the
production units overseas but it is being more cost effective for them to import
the product rather than carrying on the production activities. (Looi.K., 2010)

Carbon tax feels like purely burden on the society or the economy of the
country but, in my opinion there are also some following positive results of
carbon tax in the long term like the manufactures will try their best to compete
with their competitors by reducing carbon tax payments. In achieving this they
will continue their effort to generate energy which produces less greenhouse gas
emissions and in the long term they will advantage themselves with least cost of
production and will gain completive advantage. (horstink, 2012)

Putting a price on carbon is the cheapest and most efficient way to cut pollution
and build a clean energy economy for the future. A carbon price is not a tax on
households or small businesses. Australias biggest polluters are now required
to pay for the pollution they emit under the carbon pricing mechanism. Small
businesses are not liable under a carbon price.More than half of the revenue
raised from the carbon price assists households to help meet price impacts
through tax cuts, increased family payments and pensions, benefits and
allowances this assistance is permanent. With the rest of the money, the
Australian Government is supporting jobs in the most affected industries and
investing in our clean energy future.A carbon price cuts the amount of carbon
released into our atmosphere by Australias biggest polluters. Less carbon
pollution helps limit the environmental impacts of climate change. Australia
will cut at least 159 million tonnes per year of carbon pollution by 2020 thats
the equivalent of taking 45 million cars off the road.The carbon price starts at
$23 a tonne in 2012-13. For the next two years it will rise in line with inflation
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and from 1 July 2015 the carbon price will no longer be fixed by the Australian
Government but set by the market. (Measures on International Competitiveness,
, june 2010)

Less than 500 of Australias biggest polluters are required to report on their
carbon pollution. The carbon pricing mechanism covers the direct emissions of
a range of large business and industrial facilities which currently emit at least
the equivalent 25,000 tonnes of carbon dioxide a year.The Government is
helping industries strongly affected by the carbon price to support jobs and
competitiveness through programs such as the Jobs and Competitiveness
Program, Clean Technology Program, Steel Transformation Plan and the Coal
Sector Jobs Package. Australia is not acting alone on climate change. Countries
like the United States, China, India and Brazil are also acting to reduce their
carbon footprint. Voluntary action, including by Australian households and
businesses, is an important part of Australias climate change strategy. The
carbon price is just one part of the suite of measures under the clean energy
future program. (Horstink, 2012)

I think Carbon tax is very useful in the reduction of dependency on fossil fuel
with is a very positive and environment friendly. As many Australian
companies have changed their strategy and started generating electricity though
windmills as source of energy instead of fossil fuels so carbon tax is reducing
dependency on the manufactures on fossil fuel. Fossil fuel is used in production
activities and contributes the increase of the greenhouse gases but as now
carbon tax is involved so producer will try to implement environment friendly
techniques like companies are using windmills as alternative. Another plus
point of carbon tax is that manufacturers are paying for the betterment of
external environment in the form of carbon tax. Before the introduction of
carbon tax firm were not paying this tax but now with the introduction of carbon
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tax this cost will be beared by the manufactures. Now firms are changing their
strategy with the impact of competitiveness to reduce this carbon tax and this
will be advantage for the whole society. (Bode. J. & Horstink.M., 2012)

In the conclusion I would like to say that Carbon Tax have more negative
sides than positive side for the firms in Australia but it is also good for the
environment as I believe that climate is changing. There is no clear answer for
carbon tax as it has disadvantages on the firms at national level and
international level for Australian firms. After discussing carbon tax and its
impacts on strategies of firms and its good and bad sides and impact on the firm
at national and international level I would like to add that policy makers need to
re-evaluate their policies about carbon tax.
















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References:

Bode. J. & Horstink.M.,2012, How do companies do business in a carbon constrained
world?
http://www.sciencedirect.com
http://www.ey.com
Clarke.H.,2011,Some Basic Economics of Carbon Taxes, Australian Economic Review;
Jun2011, Vol. 44 Issue 2, p123-136.Retrieved from:
http://web.ebscohost.com
King.M., 2012, The carbon tax explained, Big Pond
Economics for today
http://www.bigpondmoney.com.au
Looi.K.,Hong.M.& Muthukumar.M.,2010
http://www.miningweekly.com
Sheinbaum.C., & Masera.O.,2000, MITIGATING CARBON EMISSIONS WHILE ADVANCING
NATIONAL DEVELOPMENT PRIORITIES
http://www.springerlink.com
Siriwardana.M., Meng.S. & McNeill.J.,2011, The Impact of a Carbon Tax on the Australian
Economy: Results from a CGE Model, School of Business, Economics and Public Policy
Faculty of the Professions, University of New England, Armidale. Retrieved from:
http://www.une.edu.au
http://www.abc.net.au/local/stories/2012/05/16/3503909.htm
http://www.cleanenergyfuture.gov.au/clean-energy-future/our-plan/