Debate rages over whether the carbon tax regime is an appropriate response to the environmental challenges we face.

Does it adequately address environmental sustainability – and at what cost to business and economic sustainability?

Whichever side of the ‘fence’ you sit on, there is no question that the new carbon tax regime will have an impact on every industry sector and level of society.

For primary producers in particular, increasing input costs such as electricity, chemicals and fertiliser and the introduction of new taxes in the supply chain will ultimately have a significant impact on the bottom line. 

The Australian Farm Institute has forecast that the profitability of a Queensland cattle property will decrease by approximately 8.7 percent under the carbon pricing regime.  This decrease is expected to be driven by increased input costs, lower volumes of beef product (as a result of grazing activities being reduced in an attempt to gain carbon offset credits) and pricing volatility in a market that will be facing uncertainty on all fronts.

With these looming threats to profitability however come opportunities – and farm operators need to understand the options that may be available to them under the new legislation.  It’s important to note that there could even be rewards for those who change their operating methods to reduce carbon emissions.

For example, there may be opportunities for savings under the legislation through the creation or acquiring of carbon offset credits.

Possible avenues for creating or acquiring carbon offset credits include:

• Credits will be created for each tonne of carbon which can be stored or reduced on the land
• Income may be generated by credits arising from actions such as:
• Reforestation and revegetation
• Reducing methane emissions from livestock digestion
• Reducing fertiliser emissions
• Native Forest Protection.

Time (and opinion polls) will tell if the carbon tax regime is effective (and fair) in its objective of creating a cleaner, greener future.  Let’s hope that Government is dedicated in its approach to monitoring the impacts – both environmental and economic – to ensure that future decision making surrounding this issue is well informed.

• Bentleys is an association of independent accounting firms in Australia with specialist expertise in taxation, business and financial advisory services for the rural and agribusiness sectors. Brendon Murray can be contacted via enquiry@bris.bentleys.com.au