Australia’s auto industry is becoming increasingly concerned about the effect of the federal Labor government’s plan to introduce a carbon tax in July 2012.

The Victorian Automotive Chamber of Commerce says the unspecified levy will permanently scar businesses. “This tax will leave not so much a footprint, but a permanent stamp on small business,” VACC Executive Director David Purchase says in a statement.

The VACC represents 5,500 small to medium businesses in the retail, service and repair sector of the automotive industry in the states of Victoria and Tasmania.

Prime Minister Julia Gillard says her 2-stage plan for a carbon-price mechanism will start with a fixed-price period for three to five years before transitioning to an emissions- trading scheme.

“A carbon price is a price on pollution,” she says in a statement. “It is the cheapest and fairest way to cut pollution and build a clean-energy economy. The best way to stop businesses polluting and get them to invest in clean energy is to charge them when they pollute.”

But Purchase says Gillard is missing the point.

“The Prime Minister and her policy advisers have overlooked the fact that small business owners will be hit from one side by big businesses passing down their costs and from the other by consumers reacting to higher household electricity and gas bills,” he says.

Purchase also notes that depending on the nature of the business, automotive firms will face much stiffer competition from overseas suppliers and others that will not have to pay the punitive tax.

He says the VACC is fully supporting the Australian Chamber of Commerce and Industry’s campaign against the introduction of the carbon tax.

The ACCI’s Economics and Industry Policy Director Greg Evans says the decision to introduce a tax assumes a carbon price is the only means available to reduce greenhouse- gas emissions and encourage investment in low-emissions technologies.

“A carbon-pricing regime will be an addition to, and not replace, other existing regulatory measures to address climate change, including a renewable-energy target and other green policy initiatives,” he says.

“From a business point of view, it makes no sense to unilaterally damage our economic performance and competitiveness, and yet deliver barely discernible benefits to the environment.”

Toyota Australia President Max Yasuda says the auto industry needs much more detail about the tax.

Yasuda, whose company has received millions of dollars in subsidies from the federal government, says Toyota supports the discussion of a carbon price to motivate the community and business sector to reduce consumption and to support future investment choices that favored low-emissions alternatives.

But he says future carbon-tax policy settings, including carbon trading, need to take into account the climate work already being done, the impacts of providing offshore competitors with an unfair advantage and the link with other proposed policy directions.

“Australia’s automotive industry has many of the necessary technologies to operate in a low-carbon economy,” Yasuda says in a statement. “These include the production of hybrid and other fuel-efficient vehicles and engines and manufacturing processes designed to minimize or eliminate environmental exposure.”

For many years, Toyota Australia has reduced greenhouse-gas emissions across its operations, he says, adding that since 2006 the company has cut manufacturing emissions 28% and emissions per vehicle by 22%.

“To do more, Toyota Australia needs to know what the price of carbon will be, when emissions trading will commence and what transitional assistance will be provided to industry to protect important export markets and Australian manufacturing jobs,” he says.

“For example, in Toyota’s case, the carbon footprint of a locally built Camry is 8.7 t (9.6 tons).

“Multiply that by last year’s production volume of 119,455 units and a carbon price of $25 a tonne, and the total cost to the business would be approximately $25 million each year. This number increases as the output of GM Holden and Ford (Australia) are taken into account.”

Yasuda says business already is under competitive pressure from overseas vehicle importers, and Toyota Australia’s capacity to invest in low-emissions technology relies on the profit the company makes.

“If under a carbon price, the business is trade exposed and it cuts into our profit, we could struggle to find the capital to invest.”

Toyota, along with the industry through the Federal Chamber of Automotive Industries, is willing to work with the government on these and other issues, he says.

“The Australian automotive industry is regaining its footing after a challenging three years, and the last thing we need now is to be put in a corner with nowhere to go.”