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Impacts of the Implementation of Australia’s “Carbon Tax” Report

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Updated: Jun 19th, 2021


The increased need for environmental sustainability within the global perspective has made countries to adopt robust strategies. The effects of global warming and high production levels of carbon have particularly drawn a lot of interests. Countries have extensively debated on the growing concern. Evidently, there have been development and ratification of several policies that have influenced the operations of most global firms.

Australia includes one of the countries that have adopted robust measures towards reducing its carbon production levels (Kenrick, 2011). Through this initiative, the operations of most of its firms have been greatly influenced. Observably, this has occurred within the domestic and the international platform.

Carbon tax refers to the government’s initiative for minimizing the level of carbon emissions. Basically, this initiative places a permanent price for the quantity of pollution. The federal government is the sole initiator of the carbon tax principle. Although the policy may have positive implications, it is also notable that there are negative effects (Kreiser, Sirisom, Ashiabor & Milne, 2011). Particularly, this might be applicable to the firms.

The focus of this paper is on the examination of the Australia’s Carbon Tax and its impacts on the strategies of firms within the country. It also examines the impacts of this policy on the firm’s local as well as global competiveness. In supporting the discussions, corporate examples drawn from particular industries and nations are given.

Impacts of the Implementation of Australia’s “Carbon Tax”

It is evident that Australia’s manufacturing industry will be grossly affected by the carbon tax initiative. Most corporate leaders have projected that from this policy, nine out ten corporations will bear negative effects from the tax policy. Approximately close to one million manufacturing personalities admit that they are facing pressure. This is mainly because of the carbon tax (Siriwardana, Meng & McNeill, 2011).

The additional taxes imparted on the raw materials have had severe financial implications on the operations of these firms. Most firms have to incur huge expenditures in obtaining locally available raw materials. In effect, this has minimized their level of competitiveness within the global scenery.

Because other global firms do not have to face the same taxes chargeable on the locally available raw materials, they have gained a remarkably competitive edge. Therefore, Australian firms are increasingly getting distinct within the global market place. Already, there are suggestions from the “Australian Trade and Industry Alliance” to have the government employ the persons severely affected by the tax policy (Reid, 2012).

Such initiatives indicate that the policy has made most firms to lose the grip of their human resources. Due to the severe financial impacts of the firms, they cannot maintain the employment of a large pool of employees. Therefore, the government has been the last resort for reliable employment. The government’s “Jobs and Competitiveness Program” has been widely criticized despite its potential benefits (Rourke, 2012).

The program was established to help the industries, especially the manufacturing as well as the alumina production. These industries have been eminently affected by the tax policy. There is also an indication that approximately 40 per cent of the revenue drawn from this tax policy will be ploughed back into the business and other affected industries. This is proposed to support them to adopt cleaner production technologies.

Generally, this tax policy has drawn very mixed reactions from within the industrial community and other allied stakeholders. Indeed, there exist contradictory arguments as well as opinions across the general industry. Finance, housing and some government agencies also depict conflicting tendencies towards the matter.

Australia hosts the globe’s giant aluminum corporation. Rusal has high employment capacity and holds about 20 per cent of Queensland Alumina Refinery. However, eminent complaints as a result of the carbon tax policy are already observed from the company. The company’s management has indicated that intensive projects that have the capacity to offer several job opportunities are already negatively affected by the policy (Fukasaku & OECD, 2012).

In fact, they indicate that these projects already have to be halted due to the impacts of the carbon tax policy. Concurrently, this has impacted negatively n their international business. For instance, the corporation has continually faced a minimized production and supply capacity within the global marketplace. Some of the projected expenses on the carbon tax policy include an approximate of $40 million annually.

Most officials have indicated that this huge expenditure could be constructively used in the expansion of the firm as well as in other future energy initiatives. There are expectations that this policy is bound to make Australia stand out to be more environmentally sustainable. The country is likely to depend minimally on the fossil fuels.

There are other potential industries that are yet to gain from this policy. For instance, the engagement of the “Clean Energy Finance Corporation” will be critical in funding other industries for clean energy options (Smith, Vromen & Cook, 2012). There are also indications that the policy is yet to open doors for the development of several greener industries and employment opportunities. Some of these will include the renewable energy development, carbon farming as well as other sustainable designs.

There have also been indications that the observance of the tax policy by the companies might hinder their potential for future expansion and investment. This is because of the heavy and intensive financial impacts of the tax policy. The other industries to be grossly affected include the coal as well as the iron ore industry. Notably, Australia remains as the world’s largest exporter of the coal. Coal is meant for the generation of electric power.

Apart from these, there have been approximations that over 500 companies are bound to be affected by the carbon tax policy in Australia. Amongst some of the highlighted corporations and institutions to be grossly affected include the power generators and the mining companies. Others are intensive industry firms. Institutions that were highlighted include Crown Melbourne as well as La Trobe University, all of which produce their personal electricity (Harrison & Sundstrom, 2010).

The high power generators are also grossly affected by the carbon tax policy. These include the notable firms such as the Latrobe Valley giants. Amongst some of these companies that are top in the list include Loy Yang and International Power. TRUenergy is also bound to be affected. Other potential mining firms that are considered to bear negative implications from the policy include BHP and Rio Tinto. It is also important to note the intensive industry firms like the Alcoa.

The effects of the policy on the operations of these companies may either be realized at the local level or within the international market. Ideally, these impacts are both applicable particularly for companies with a global presence. Because the raw materials are bound to be potentially expensive, the production capacity of these companies will significantly reduce. Consequently, their ability to produce and supply huge stocks within the international marketplace also reduces.

This will decrease their competitiveness and lead to massive losses within the international scene. At domestic level, these companies have projected losses associated with high production costs and lack of funds to maintain skilled and unskilled workforce (Watson, 2012). There are also bound to be huge tax implications on the production systems.

The need to redefine and design new production technologies to be compliant with greener technologies will also require additional funding and finances. From these observations, it is clear to note that severe financial implications must be incurred. Of particular interest is the impacts of this tax policy on the performance and relationship of East Timor with the Australian government. Discussion is already underway on issues concerning the carbon tax policy and its impacts on East Timor.

Generally, it can be noticed that East Timor is more likely to be affected to the tune of millions of dollars annually. This is majorly due to the effects of carbon policy on the “Joint Petroleum Development Area “. This is co-owned by the two nations. Generally, it is evident that carbon tax policy has significant impacts in almost all sectors of the Australian economy (OECD, 2010). There is an observation that the Queensland small as well as medium level businesses are yet to pay very elevated charges due to carbon tax policy.

The small scale businesses are also bound to suffer intensive losses. This is because of the reduced spending realized on the side of the general consumers. The high costs chargeable on basic utilities such as electricity can never be passed by the small domestic enterprises. This explains why they must be severely influenced or affected by the carbon tax policy. There have been indications that levying high tax rates for the sole bread winners of the country in Queensland will have severe long term economic implications for the entire nation.

Top mining firms such as BHP Billiton have indicatively begun to outlay most of their potential employees. Basically, this is observed mainly due to the impacts of the carbon tax policy (Wroe, 2012). The difficulty in transition for most Australian firms during the period of implementation of the carbon tax policy is also observable. This is mainly due to the financial implications that will be involved in the adjustment process.

Most specialists have indicated the likely effects of the carbon policy on the potential miners. Although the policy costs will not terminate the operations within the minor mines managed by a majority of producers, there will be potential effects. For instance, this will make the firms to evaluate the locations in which the projects are to be situated. They have to reconsider their next locations for investment. The raw materials and the mining sector feel the pressure of competition realized from the presence of the dollar.

It is notable that due to this policy, several firms are presently reviewing the long term sustainability and profitability of some particular operations and investments that they have. There are potential indications that the most Australian producers are disadvantaged. This is relative to some of the potential global competitors who have the capacity to dilute the Australian expenses on carbon as a proportion of the international revenues (Jain, 2011).

It is critical to observe that the carbon tax is bound to have severe direct as well as indirect impacts. There have been other arguments that within the long run, the carbon tax policy is more likely to increase the international dominion and profitability of the Australian firms. In this view, most governments have lauded the initiative and are already implementing likewise policies within their countries.

The arguments supportive of this system indicate that the global business is more likely to favor greener technologies in the future (Wroe, 2012). This is majorly due to the increasing need for economic and environmental sustainability. Other industries to be affected by the policy include the building and construction as well as the firms involved in tourism and hospitality. It is projected that this policy will have severe impacts and increase the costs involved real estate investment.


There have been numerous debates regarding the potential impacts of the Australian carbon tax on firms and citizens. The involvement of politics on the issue has particularly led to conflict of interests. It is observable that both long term and short term impacts of the carbon policy must be comprehensively reviewed.

Although most short term impacts might be detrimental, it is vital to note that the long term impacts are largely beneficial to the whole society. This also extends to the international domain due to the significant cut-offs in the quantities of carbon produced into the system.

Environmental sustainability has become an integral part of sustainable economic development. Therefore, the recognition and adoption of greener technologies must be encouraged. There is evidence that these impacts are severe both at the domestic and international level. Therefore, it is appropriate for the affected firms to apply robust measures towards minimization of the impacts and adoption of greener technologies.


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Jain, S. (2011). Enhancing global competitiveness through sustainable environmental stewardship. Cheltenham: Elgar.

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Kreiser, L., Sirisom, J., Ashiabor, H. & Milne, J. (2011). Environmental taxation and climate change: Achieving environmental sustainability through fiscal policy. Cheltenham, UK. Northampton, MA: Edward Elgar.

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Watson, P. (2012). Australians Face Huge Fines For Speaking Ill Of New Carbon Tax. Web.

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IvyPanda. "Impacts of the Implementation of Australia's "Carbon Tax"." June 19, 2021. https://ivypanda.com/essays/impacts-of-the-implementation-of-australias-carbon-tax-report/.


IvyPanda. 2021. "Impacts of the Implementation of Australia's "Carbon Tax"." June 19, 2021. https://ivypanda.com/essays/impacts-of-the-implementation-of-australias-carbon-tax-report/.


IvyPanda. (2021) 'Impacts of the Implementation of Australia's "Carbon Tax"'. 19 June.

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