No mention for small business in Garnaut’s carbon plan, lobby group calls for more detail

The Council of Small Business Organisations of Australia says the release of Professor Ross Garnaut’s climate change report does nothing to explain how SMEs will be affected or compensated under a carbon tax and trading system, but the group has tentatively welcomed calls for the tax-three threshold for low-income earners to be increased.

The report by the Government’s chief climate advisor called for 55% of the tax revenue to be delivered to households. Business compensation should account for 35% of revenues raised, Professor Garnaut said, while the remaining 10% should be put towards innovation.

With carbon priced at $26 per tonne – well above business body calls for just $10 per tonne – the carbon tax would raise $11.5 billion in 2012-13.

Garnaut also said individuals earning up to $80,000 will be the only individual taxpayers eligible for compensation. He has recommended increasing the tax-free threshold for these taxpayers from $6,000 to $25,000. Pensions would be increased 1.3% as a part of compensation plans.

But while the 222 page report details how heavy industry should be compensated, it makes no mention of small business.

Peter Strong, executive director of the COSBOA, says there is still a question mark on how a carbon price would affect small business, and whether increases in electricity and petrol prices will simply be passed on by large businesses.

Strong says transport, retailers, manufacturers and the services industries are the most likely to be hurt by a carbon tax, because they’re the businesses in offices and shopping malls.

“On the other side, what we’ve been told is that the price increases will be minimal,” Strong says.

“But small business is sceptical of what they’re told by government and big business.”

“They’ve got to engage with us and convince us that what they’re saying is true.”

“If it’s true that there’s going to be minimal impact, communicate that.”

On Garnaut’s calls for the tax-free threshold for low-income earners to be increased to $25,000, Strong says anything that frees up more cash for people sounds like a good thing.

The Climate Change Minister Greg Combet has said there seems to be a “lot of competing demands from all sectors of the economy for some share of the carbon price revenue and we are all taking that into account.

“But I would not rely on Professor Garnaut’s percentages or divisions of the revenue.”

A cross-party climate committee will finalise recommendations within months.