Sage Business Solutions Managing Director Mike Lorge explains the implications of the recent repeal of carbon tax for Australia’s manufacturers.
The repeal on 17 July was preceded by months of discussion and debate with several industries including manufacturing affected by the decision.
Reducing cost pressures
The manufacturing industry, like many other industries, has been facing the brunt of rising production costs, with the impact directly on their bottom line. The removal of the carbon tax is expected to reduce energy costs, which is good news for this sector.
Unlike some industries, manufacturing is at the mercy of trade and export strategies, making it more important than ever to keep costs under control. International trade accounts for a major part of the business for many manufacturers; however, the carbon tax burden increased costs, forcing their trading partners to go in search of alternative arrangements.
Consequently, manufacturing companies found themselves unable to pass on the tax through higher costs, leaving them little choice but to shoulder the burden presented by the carbon tax. The situation forced them to adopt alternative cost cutting measures, which had the potential to impact quality of the product offering or customer service provided.
The repeal of the carbon tax is also expected to improve business productivity with one less regulatory burden to manage, enabling business owners to focus on other areas of their operations.
According to the Clean Energy Regulator, manufacturers still need to adhere to several other environmental regulations. For instance, the National Greenhouse and Energy Reporting scheme will remain in place for large-scale manufacturers, which requires them to report carbon emissions, as well as energy consumption and production.
The Emission Reduction Fund has the potential to open up new funding to manufacturers and other industries.
Even though the carbon tax has been withdrawn, companies still face reporting obligations until October. Final payments should be made by February next year and non-compliance penalties will continue to be in force.
The repeal of the carbon tax means the manufacturer can focus more heavily on keeping their environmental credentials in check.
How ERP software can help
With or without the carbon tax, manufacturers must have continued focus on keeping costs down and improving efficiency as much as possible.
ERP solutions can help businesses have a complete overview of every part of the operation in a user-friendly and intuitive way.
A key requirement for a good ERP system is flexibility that would allow it to adapt to changes in the legislative environment, which may become more important as issues such as the carbon tax continue to be addressed. The Renewable Energy Target is already up for discussion at the moment, which means the business should be ready to adapt as and when it's necessary.
A sure-fire way to be well prepared in business, regardless of a constantly changing policy environment, is by ensuring the use of ERP software in manufacturing operations.