Australian retailer Wesfarmers challenges carbon-tax price rise by suppliers
02 Jun 2012
The introduction of the $9-billion carbon tax could send shock waves through Australia's food manufacturing sector, following the most powerful retailer in the country warning yesterday that it would challenge proposed price increases from its suppliers and would resist passing the cost of the new tax on to consumers.
According to Wesfarmers chief executive Richard Goyder, the company, which owned the Coles supermarket chain and the Kmart and Target discount chains, hoped its customers would not be impacted greatly with the introduction of the tax because of the company's own cost mitigation strategies and negotiations with suppliers.
"Coles is the biggest emitter within the Wesfarmers Group. We hope through less energy consumption to take away any impact for our consumers. (But) the key thing within Coles will be what our suppliers bring to the table," Goyder told The Australian & Deutsche Bank Business Leaders Forum in Perth yesterday.
"We are going to look after our consumers' interests on that. Any cost increases that come from our suppliers, we will want to be justified. As, by the way, will the ACCC. We are hoping consumers will not see a big impact come July 1."
It is said that major retailers had been resisting price increases proposed by suppliers flowing from the introduction of the tax, which could lead to a squeeze on margins through supply chains in the retail industry.
It is believed energy-intensive paper and packaging companies such as Visy Industries and Amcor were preparing to push through price increases to their customers over the coming weeks to offset the impact of an expected 10-per cent increase in electricity prices.
However, many of these customers were concerned that it they may not be able to pass on the increases further down the supply chain, which could significantly add to their costs.
Harvey Norman executive chairman Gerry Harvey had earlier claimed most retailers could not afford to pass the carbon tax on to customers, given the fierce competition and tepid consumer spending.
