How the rich list could be hit by the carbon tax
Working out which companies are going to be hit directly by the carbon tax has become something of a sport in the past week.
The Government is keeping the official list confidential because it is apparently required to do so by law but we can get some idea of who might be affected from a recent report into our top carbon emitters from 2009-10.
The list is not the ready reference is might seem to be. Harvey Norman for example is listed as the 232nd highest emitter but is not expected to be directly affected because its emissions are spread across the chain’s stores.
The list suggests that the empires of a number of rich list members are going to be hit by the introduction of the carbon tax either as payers of the tax or at least payers of higher energy prices.
Here’s a sample of those who could be potentially affected:
The Barro family
Melbourne’s Barro family owns the Barro Group, one of Australia’s largest building materials companies and is a major shareholder in cement maker Adelaide Brighton, which this week said the hit from the carbon tax will be around $5 million in the 2013 financial year. The company will receive some compensation under the Federal Government’s carbon tax package.
Sir Richard Branson
Branson is a noted environmentalist and as the biggest shareholder in Virgin Australia he will be directly affected by the carbon tax, with the airline saying it will add $45 million to costs in 2012-13. Like Qantas, Virgin will pass on the tax via higher prices or a surcharge but it is worth noting that Virgin shares dropped after the announcement.
The Millner family
Like Adelaide Brighton, building materials group Brickworks will be hit hard by the carbon tax and the company’s major shareholder, the Millner family, isn’t happy. “We’re only one small part of the building industry so this is going to flow right through the sector,” Brickworks executive chairman Robert Millner said. Brickworks says the carbon tax will cut the building materials company's earnings before interest and tax by $12.8 million and by $9 million after tax in its first year of operation.
Australia’s golden garbo may have lost his shine in recent years – he fell out of the billionaire’s club a few years ago – but he still has a fortune just under $600 million thanks mainly to his stake in waste management giant Transpacific Industries. According to Climate Change Minister Greg Combet 190 waste disposal sites will be hit with a carbon tax – as one of Australia’s leaders in that sector surely Transpacific will be among them.
Coal mines will be hit hard by the carbon tax and Clive Palmer will surely have to factor those costs into his plans to build the giant China First mine in Queensland. Palmer owns the Queensland Nickel plant near Townsville which he has conceded will be hit hard by the new tax, putting 1000 jobs at risk. The always strident Palmer said Australia could become an “economic basket case” because of the tax.
Mark Rowsthorn, Lindsay Fox and Paul Little
The transport sector received something of a reprieve in the carbon tax package with emissions from heavy vehicles not taxable for the first two years. But Toll Holdings (where Paul Little is the biggest shareholder), port operator Asciano (Mark Rowsthorn’s main source of wealth) and Linfox (owned by Lindsay Fox) will all be examining cost bases closely before the tax is introduced.
Anthony Pratt and family
The list of Australia’s biggest emitters includes Pratt Consolidated Holdings, the parent company of the Pratt family’s Visy Industries. While that suggests the family’s paper and packaging interests will be hit by the carbon tax the business is taking steps to reduce the impact by investing up to $500 million in clean energy plants at various facilities, with the plants to be powered by waste from the firm’s manufacturing process.
Dick Honan’s company Honan Holding – the parent company of agricultural goods processing giant Manildra Group – is another member of the list of big emitters. The food processing sector will receive generous assistance under the carbon tax package but companies like Manildra will be working hard to quantify the impact of the new regime.
Fortescue Metals Group is on the list of Australia’s biggest emitters in 2009-10 but incoming chief executive Neville Power says the tax will have an impact of just 1% on the company’s bottom line. But taken together with the mining tax it is clear that Fortescue is going to have a few regulatory burdens to carry in the coming years.
Bob Ingham and the Baida Family
Chicken groups Baida and Ingham Enterprises feature on the list of Australia’s biggest emitters but it is unclear whether either will be directly hit by the carbon tax. If they are assistance for the food sector will soften the blow but in an industry where margins are notoriously thin cost increases will need to be carefully thought through.
The carbon tax isn’t all bad news. Some rich list members who may benefit in the long term include:
- Gordon Merchant, who last year bought out the shares he didn’t own in bio plastics manufacturer Plantic Technologies.
- Ralph Sarich, who has pledged to invest $300 million in a wind farm that will use his revolutionary “linear” wind generation technology.
- Trevor St Baker, whose company ERM Power builds and operates low emission, gas-fired power plants.