Table 8 Estimated cost of Option 1 – PCBUs
Cost Estimated cost – 10-year appraisal period ($ m )
Engineered stone PCBUs
Sole traders
Small Medium Total
Business exit and switching costs Business closure costs $ 0.3 $ 0.2 $ 0.04 $ 0.5 Redundancy payments $ 0.0 $ 0.0 $ 4.3 $ 4.3 New equipment purchase costs $ 0.0 $ 0.0 $ 2.1 $ 2.1 Sub-Total $ 0.3 $ 0.2 $ 6.4 $ 6.9 Other industry PCBUs
Licensing framework for work with legacy products
Sole traders
Small
Medium- Large
Licence application costs $ 26.2 $ 24.2 $ 0.7 $ 51.1 Licence renewal application costs $ 16.0 $ 14.8 $ 0.4 $ 31.2 Licence compliance costs ( audit preparation ) $ 25.9 $ 24.0 $ 0.7 $ 50.6 Sub-Total $ 68.2 $ 63.0 $ 1.8 $ 133.0 Total $ 68.4 $ 63.2 $ 8.2 $ 139.9
Total
4.4.1.1 Engineered stone PCBUs
Total costs to engineered stone PCBUs of Option 1 are estimated to be $ 6.9 million over the appraisal period ( Table 8 ).
Costs associated with business closure
Under Option 1 , it is assumed that 10 % of sole traders ( 44 ), 10 % of small businesses ( 42 ) and 5 % of medium businesses ( 7 ) would exit the industry due to a prohibition on the use of all engineered stone . The number of PCBU closures is smaller than that estimated for Option 6 in the Silica Decision RIS as result of data received through the consultation on the Prohibition Decision RIS . Of engineered stone PCBUs who responded to the consultation on the prohibition options , 95 % indicated they also work with natural stone , meaning the transition to work with natural stone would likely have less impact than previously assumed .
It is expected that more sole traders and small businesses would leave the industry than medium sized businesses under this option as they have less ability to pivot to non-engineered stone products .
Business closure costs ( e . g . financial wind up or liquidation costs ) and redundancy payments paid to workers have been estimated at $ 4.8 million across all engineered stone PCBUs for Option 1 . Redundancy costs have been assumed to be paid only by medium businesses , with displaced workers from smaller businesses eligible for government income support ( covered in Section 4.4.2 ).
Testing costs to engineered stone PCBUs at different business closure rates
The estimated costs to engineered stone PCBUs is relatively low , compared to the total estimated cost of the prohibition described for Option 1 . This is because the majority of costs are associated with the licensing framework for work with legacy products which are assumed to impact other industry PCBUs
DECISION REGULATION IMPACT STATEMENT Prohibition on the use of engineered stone Page 36 of 107