SMEs wary on carbon tax as business continues to negotiate with Government

SMEs are strongly opposed to the Federal Government’s plans to introduce a carbon tax next year, with just one in five chiefs behind the tax and a majority tipping it would hurt their business.

A survey of 300 SMEs bosses, who are members of the peer-to-peer mentoring group the Executive Connection, shows 19% support the Government’s plans to introduce a carbon tax in July next year, and an emission trading scheme down the track.

Fifty-five percent of respondents say their business will be adversely affected by the tax, despite the Government failing to name the price on carbon, and 86.5% say they are concerned about electricity price rises under the tax.

“The results of our survey show that SME leaders are genuinely concerned about the introduction of the carbon tax, with rising electricity costs appearing as the top concern,” says Executive Connection chief Chris Gorman.

And while the Government has promised that many individuals will be better off after the tax is introduced, the SMEs were not so confident about compensation, with 60% saying they expected to be compensated for associated costs.

“The SME community is clearly concerned that the carbon tax will impose another obstruction in their path, effectively preventing them from running a productive and profitable business,” Gorman says in a statement.

The results follow complaints by Council of Small Business Organisations of Australia that it had not been included on the Government’s three peak industry groups to discuss the introduction of a carbon tax.

COSBOA’s Peter Strong told SmartCompany this morning the concerns of small business are worth heeding, given the reduced flexibility of SMEs to pass on price increases.

Strong says COSBOA has requested to participate in the Government’s next round of discussions, having not been invited to a swanky dinner with Prime Minister Julia Gillard this week.

On Wednesday, Gillard had high-profile business leaders for dinner to discuss the Government’s plans, after a number of large companies issued public complaints about the tax, and business bodies offered just lukewarm support.

Gillard recently called on the Business Council of Australia to clarify its position on a market price on carbon, after the body spoke out against its plans despite supporting the Rudd Government’s 2009 push for an emissions trading scheme. The BCA responded that it did support a price on carbon, while the Australian Chamber of Commerce and Industry has warned of job losses should the tax go ahead.

Other supporters of the Government’s plans include Linfox, BP, GE Australia, Fujitsu, AGL and Pacific Hydro.

Linfox Group Manager of Sustainability, David McInnes, says despite criticisms of the Government’s hybrid model – a carbon price first, and then an ETS – introducing a carbon tax is a “big step in its own right.”

“Rather than waiting around for the ultimate model, we think it’s important to make a start,” McInnes has said.

Westpac chief Gail Kelly this week said while she supported a fixed price on carbon, an emissions trading scheme should be pursued sooner rather than later.

Vocal opponents to a price on carbon include steelmaker BlueScope, which has been hit hard by the record Australian dollar, oil and gas giant Woodside Petroleum, and global resources giant Xstrata.