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Labour tax break policy to help businesses slash energy bills

A new Federal Labor policy that gives an immediate tax deduction to businesses that invest in energy saving equipment would help slash energy bills, says the Energy Efficiency Council.

Under Labor’s “Australian Investment Guarantee’ policy, businesses will be able to immediately deduct 20 per cent of an investment in eligible depreciable assets over $20,000, including those that lower energy use and improve energy efficiency.

Council CEO Luke Menzel said the policy was timely, and recognised that Australia is in the midst of a massive economic transition that will require businesses to use energy more efficiently and productively.

“We know from a raft of reports over many years that Australian businesses use more energy than their competitors overseas, and Aussie manufacturers are at the back of the pack when it comes to energy productivity.”

“That was fine, even five or six years ago. But now manufacturers and other large energy users are caught in a pincer movement between rising electricity and gas prices. And in some cases these cost pressures are threatening jobs and business viability.”

Labour’s policy commitment comes following recent news from the International Energy Agency that Australia’s manufacturing sector is the most energy intensive of nineteen advanced economies, and a recent Federal Government report that found Australia’s rate of energy productivity improvement is slowing.

Ecosave’s Chief Operating Officer Robin Archibald said that larger businesses with extensive energy requirements are particularly vulnerable to current market conditions and warns industry that have to look elsewhere.

Industry can’t rely on government policy alone and must look at ways at creating efficiency improvements in production processes and facilities in general as that’s the simply the most effective way to reduce large market utility bills.

 

There are a number of cost saving strategies  that specialist energy services companies can propose which can help manufacturers alleviate the burden of escalating energy prices.   The good news is that businesses can quickly slash their energy bills with ambitious energy upgrades that bring their operations in line with our global competitors. This new policy from Federal Labor will help businesses make an investment decision, that may have otherwise been hesitant to do so, which can bring down their energy bill straight away.

While the tax incentive (assuming it gets passed into legislation) will make energy efficiency retrofit projects much more attractive, it doesn’t address the fact that some businesses simply don’t have the working capital to shell hundreds of thousands of dollars for energy upgrades. Fortunately however, there are several funding options in the market,one of which being an Energy Services Agreement that doesn’t require any debt, up-front capital or end-of-term balloon payments (i.e. off balance-sheet) to achieve immediate energy savings.

Mr. Menzel said that politicians also need to bring energy prices down, but that that is a medium term proposition at best.

“We need to sort out the supply side of the market and bring down the unit cost of energy. But unfortunately that will take years. In the meantime, we can get serious about energy efficiency, and bring down bills straight away.”

 

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