THE financial year has turned and federal parliament has risen for its winter recess. Both events herald extra costs and red tape for business.
From July 1, the carbon tax kicked in. It got a reaction in the business community as icy as the Canberra winter. It’s not only costly, but environmentally ineffective. Australia going alone cannot turn around global warming.
No government should be imposing a tax on any of its citizens if the purpose of the tax cannot be delivered.
For small and medium businesses the tax is especially unfair. Like households, they get higher energy costs imposed with no bargaining power against the big energy companies. But unlike households, small businesses get no compensation, not an iota. They are left fully exposed to the extra costs.
None of these small business blows were costed by the government or parliament before the carbon tax was made law. Independent research the private sector commissioned to fill the gap said that energy intensive small businesses would face reductions in profitability of between 10 per cent and 20 per cent at the starting $23 per tonne carbon price.
For our trade exposed industries, the tax is not just a rise in electricity costs but also a drain on competitiveness. As a member of the Gillard government’s Business Roundtable on Climate Change I heard loud and clear the calls for compensation by globally competing industries. Their calls were understandable, but compensation only masks the symptom, not the cause. Most compensated industries now prepared to accept or go quiet on the carbon tax are only doing so because of the compensation. If and when the compensation dries up, they’re exposed, like my small business members.
What this means for Australia is more pressure on jobs. The carbon tax lowers incomes, reduces living standards and weakens job security. That’s why it’s objected to by business. And the broader community doesn’t believe that governments should trade off Australian jobs for the environment, or vice versa. Governments are elected to do the right thing on both fronts and we should hold them to that expectation.
The negative impact of the carbon tax won’t appear overnight or even in the first energy bill a small business receives after July 1. The economy does not work like that. The tax is a slow burn that seeps higher prices like ink through tissue, and creates uncompetitiveness over many weeks and months.
Claims the sky hasn’t fallen in so things must be OK are shallow. The fact that I didn’t go broke when a thief recently stole my wallet doesn’t make this wrong a right.
Adding insult to injury is the fact that promised company tax cuts from July 1 were ditched by the government in the May federal budget. That was a breach of faith because the funding basis, the mining tax, was up and running from July 1. The Prime Minister told business at the recent Economic Forum that these cuts are back on the table. Problem is, the fine print said they would have to be funded “from the business tax envelope”. In other words, if business wants a tax cut, it has to tax itself more. That’s hardly tax relief, let alone tax reform.