Government must get carbon message right

The carbon tax debate yesterday moved to COSBOA’s national congress and shadow small business spokesperson Bruce Billson was sure he’d got one over Labor Small Business Minister Nick Sherry.

Just hours after the two participated in a debate on the issue, Billson raced home to fire off a press release claiming Sherry was “out of touch” because he proclaimed SMEs won’t be directly affected by the carbon tax.

“Referring to the carbon tax, Senator Sherry said ‘it will not have a direct operational impact on small business’, while moments later admitting small business operating costs will rise and this new cost impost will be passed on to consumers,” Billson said.

It’s not quite the “gotcha” that Billson is making out – Sherry is right to say that SMEs will not be directly affected by the carbon tax. Remember, only the 500 biggest polluters will actually have to buy permits to pollute.

But Billson does have a point that the Government needs to do a much better job of showing that it appreciates that the SMEs will be on the frontline of this massive structural change.

Energy costs will rise. The price of raw materials will go up. All down the supply chain, higher costs will be passed on.

And then SMEs will face a difficult question: Can these costs actually be passed on to consumers?

Right now, with an interest rate rise looming and consumers likely to retreat further into their shells, the thought of passing on anything other than a discount would be weighing heavily on the minds of entrepreneurs.

We’ll have to see how easy or difficult it is to pass on costs, but right now Sherry and other Government ministers need to appreciate that SMEs see themselves as being stuck between the heavily-compensated consumers and heavily-compensated households.

Telling SMEs they will not face a direct impact from a carbon tax might be technically true, but it doesn’t tell the whole story.

As COSBOA chief Peter Strong sensibly continues to say, SMEs are desperate for data on the carbon tax.

They want to be shown how the carbon tax will impact their specific industries. They want to see Treasury modelling. They want to know if there are incentives to reduce energy consumption and assistance to make their businesses more sustainable.

The Government says the impacts on SMEs will be modest. Now would be a great time to prove it with some detailed modelling and case studies.

If Labor can’t do this, it should at least drop the “no direct impact” line.

It might be technically right, but it’s simplistic and SMEs will see through it.