Westfield introduces new carbon tax clause to pass on costs, report claims

Property giant Westfield has warned its tenants it will pass on any higher costs due to the carbon tax, with other landlords expected to foist similar clauses on retailers soon, a News Limited report has claimed.

The warning has placed even more pressure on the strained retail industry – suffering its weakest conditions in years – with experts suggesting any move towards higher prices will erode confidence even further.

However, the Shopping Centre Council has suggested this clause is nothing new, and that this was included in leases when debate began over the need for a charge on emissions.

“The reality is the carbon tax…will inevitably increase electricity charges in shopping centres (and elsewhere), and if the lease permits the recovery of such outgoings, this will mean some retailers will be paying higher prices for their electricity.”

“If the lease does not permit such recovery, the higher charges will be borne by the landlord.”

The council says this is no different to what happens in office buildings, if a lease permits the recovery of electricity charges.

“There should be no surprise…that certain business costs, both for landlords and tenants, are going to increase after 1 July and therefore, the prices of some goods will inevitably rise too.”

The News Limited report claims the “carbon or greenhouse gas emission charge” allows the landlord to pass on any “carbon or greenhouse gas emission-related charge and recovery the same from the lessee at cost”.

SmartCompany contacted Westfield this morning, but a reply was not available prior to publication.

Managing director of Leasing Information Services, Simon Fonteyn, told SmartCompany that while he could not comment specifically on the reported Westfield clause, similar clauses would weigh on the industry’s already fragile confidence.

“There was always an issue that this would increase retailers’ costs, and it was anticipated this would cause additional charges, particularly in the food preparation and food storage businesses.”

“On the sales side, there has been an assumption this would be another factor that makes consumers a bit more cautious with regard to their discretionary spending.”

“It’s just another one of those factors that adds to the consumer tightness. On both sides, it was always going to be negative.”