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How Australia’s medical appliances industry has been hit by the carbon tax

AUSTRALIA’S medical appliances market is expected to fall by almost half by 2020 as a result of the carbon levy and is set to shrink by a fifth this year, according to new research.

Key points:The medical appliances sector is expected fall by more than 25 per cent by 2020 and is expected shrink by more like a quarterSource: AAPAAPThe Australian Medical Appliance Association (AMI) said the tax will affect more than 100 million people and that the impact could be “catastrophic”The association, which represents about 10 per cent of the Australian market, is warning the impact of the tax could be devastating and it could shrink the sector’s market by almost 25 per half by 2021.

“The impact of this tax is expected in 2020-21 to be at least a 25 per to 30 per cent reduction in sales volume, and potentially as much as a 40 per cent cut,” AMA chief executive officer Tony Fauci said.

“There are some parts of the industry that are already experiencing an impact, but there are many others who will have to face even more severe and negative consequences.”

The AMA has been warning that medical appliances could see a loss of over $1 billion in the first half of the year, with an average loss of $200,000 a year.

The organisation’s research also found that medical appliance sales in the six months to July were down $7.8 billion on the same period last year, although it expects the fall to be smaller.

“In the first six months of 2020, medical appliances sales declined 7.8 per cent compared to the same time last year and are expected to drop further in 2021,” the AMA said in a statement.

“Sales volume has been on a decline for many years, with the average sales volume falling for the last four quarters, and is now expected to decline further in the year ahead.”

Mr Fauccio said the AMA was confident the industry would be able to weather the impacts of the new tax, with a new levy expected to take effect next year.

“We expect a more stable and predictable period in the coming months for the industry as we have seen some very positive results,” he said.

Mr Fucci said medical appliances were not expected to be affected directly by the tax, but that there would be a cost to the industry and the GST rate would have to be increased.

“I think the biggest impact will be in the medical appliance business, where sales volumes are already being impacted by the increased GST rate, and this is where we see the biggest concern for the sector,” he told AAP.

“Medical appliances sales have already been impacted in the past by GST increases and there is no guarantee that the same will not happen with the carbon price.”

Our concern is that the business may not be able afford to maintain the same level of investment to sustain sales growth.



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