“We are doing an RRP (recommended retail price) review at present which is projected to be in line with CPI (Consumer Price Index), but take the opportunity to make some moves in June and July. Let the carbon tax take the blame, after all, your costs will be going up due to it.”
Busted. Brumby’s managing director Deane Priest is likely to face the wrath of the competition watchdog for his letter to franchisees — first reported by The West Australian overnight, and later obtained by our friends at SmartCompany — exposing how some businesses are using the carbon price to swindle a public already deeply sceptical about the tax.
But they’re not the first. Crikey has unearthed a Tasmanian legal firm increasing its hourly rates because of the carbon tax (despite the fact the state is hydro-powered), insurance giant AAMI telling customers that premium rises are due partly to the carbon tax (and withdrawing that statement when challenged), and Gold Coast iPad accessory firm CaseBuddy offering a discount for the code word “JULIAR”.
Social media abounds with tales of pools levying a 20 cent “carbon dioxide tax”, coffee prices up by 30 cents, claims of laundry bills rising significantly and widespread confusion around what electricity retailers are doing with their prices.
The carbon tax will push up prices in some sectors — that’s what it’s supposed to do. But using the tax as a front for price gouging and profiteering does the public no favours and should be exposed for what it is.
Opponents of the carbon tax have made a great deal out of accusing Julia Gillard of lying in bringing in the tax when she had promised, pre-election, that she wouldn’t. Hiking prices and blaming the carbon tax for it — well, that sounds like lying to us.
Given the conduct of business with the LIBOR ( maybe it should be Lyining Bank Rate) News Ltd, Enron etc etc etcetc is there any surprise.
Yet these champions of free enterprise/free press scream at the very mention of any govt intervention.
I usually like to be first in line for a bit of lawyer bashing, but they may have been wrongfully convicted in this instance:
“From today Tasmanians will pay 10.56 per cent more for power. The carbon tax accounts for 5.6 percentage points.”
The Mercury, July 1
This is essentially because Tasmania is plugged into the (largely fossil-fuelled) national electricity market via the Basslink cable, irrespective of most local power being hydro-generated.
Hey Mark Duffett – what proportion of a lawyer’s costs would relate to electricity? I doubt it would be more than 1%. Almost all their expenses would be premises and salaries. A 5.6% increase in a cost contributing 1% would increase their costs by 0.056%.
Their costs (prior to profit distributions to partners) would be unlikely to be more than 50%, so the carbon tax would be less 14 cents on a $500 hourly rate. I reckon they could probably absorb that.
Resume lawyer bashing!
Mr Duffett,
So, in a legal firm, how much would a 10.56% increase in power rates contribute to their total expenses?
If power costs are 5% of their expenses, say, which I guess to be a very conservative & excessive estimate, that means that it would add 10.56 x 0.05 = 0.528% to there expenses. Remember, their other expenses will include (big!) wages, rent (at commercial rates), internet & computing, paper, postage & couriers (even in these modern times), taxis & other transport costs, etc., etc. And don’t assume expenses relate directly to the rates they charge, which have a large profit margin so the firm’s partners can receive their rather fat bonus at year’s end.
So, IF, and it’s a big “if”, Tassie power rates do increase by as much as you & the Mercury state, then conservatively, this might translate to something under 0.5% of their charge rates. That’s less than 20% of the current annual CPI increase.
Let’s put that into dollars:
A typical charge rate for a lawyer might be $400 p.h., and a 3.5% CPI increase would take it to $414 p.h, and to cover the increase power cost, there’s another 400 x 0.005 = $2 p.h. So, for the year ahead, instead of a charge rate of $414 p.h., they might be justified in increasing it to $416 p.h (at the most!)
Not very big bickies, if you ask me, and bugger-all for a measure designed to protect this, the only planet available to ALL known life forms, both intelligent and the not-so-intelligent.
Cheers, Alex.
Mark Heydon: Snap! (and you won the hand, I was too slow!).
Alex