The ETS and grocery prices: ARA concerned about potential impact

Posted by James Ferre on 12th September 2008

Peak retail industry body the Australian Retailers Association (ARA) yesterday submitted to the Carbon Pollution Reduction Scheme Green Paper calling on the Rudd Government to recognise retailers as high energy users and accurately calculate price impacts on consumers.ARA Executive Director Richard Evans said it is irresponsible for the Government to move forward to implement an Emissions Trading Scheme (ETS) with ideological haste when they are failing to provide accurate analysis around the price impacts on retail goods and groceries for working families. “The price impacts of the ETS are passed through the supply channel to retailers and will ultimately be borne by the consumer,” he stated. “As yet there is no answer to the simple question: ‘What is the impact of ETS on a basket of groceries?'”

“The current impact analysis of the ETS on Australian households also fails to take into account the price impacts on agriculture emissions which will increase the costs of products containing fresh fruit, vegetables, grains, meat and dairy and impact on the price of a basket of groceries for all Australian households when this category is added,” Evans added. “The ARA’s submission is calling on the Government to accurately establish the impact prior to finalising any plans for consumer income support and compensation. The Government should allow for an annual consumer ETS impact review until 2015 with the thought to further provide compensation to consumers if deemed appropriate.”

Mr Evans said that retailers were worried about the impact of the ETS, with cost increases possibly needed to be passed onto the consumer. “Retailers are also extremely concerned that as the catchment point for the flow on effects of ETS price impacts through supply channels and as high energy users, they have not been recognised for any government support or compensation,” he reported. “The retail sector’s direct contribution to national CO2 emissions is greater than that of petroleum and coal products combined and for Australia to experience a successful ETS, government funded financial assistance must be considered for the retail sector. Otherwise the price impacts will be directly transferred on and the consumer will pay.”

“This debate is not about the environment – retailers support carbon reduction measures. It’s about economic modeling and as yet retailers and consumers who will wear the burden are yet to be adequately considered,” Mr Evans claimed.