Emissions trading scheme assistance must include small business

Small and medium sized business must receive their fair share from any Federal Government scheme to assist those facing increased costs under a carbon trading scheme, industry groups say.

Small and medium sized business must receive their fair share from any Federal Government scheme to assist those facing increased costs under a carbon trading scheme, industry groups say.

The Garnaut Climate Change Review’s draft report released on Friday argues that the Government should use around 30% of the revenue it earns from selling carbon emission permits – likely to be in the billions – to help business adjust to the trading system.

Few small businesses are likely to be directly affected by an emissions cap, but almost all will face increased costs for things like energy and transport under the scheme.

It is vital that small and medium sized business are included in any adjustment or compensation scheme set up by the Government, Council of Small Business Organisations of Australia chief executive Tony Steven says.

“It is absolutely paramount that the section of our economy that represents 95% of all businesses in Australia isn’t ignored if we are to achieve the goals of reducing carbon emissions and reduce the impact of the scheme in economic terms,” Steven says.

Higher petrol and electricity prices and the flow-through of extra costs for services and products purchased from other companies will affect business. “Its affect will be almost universal,” Steven says.

The Garnaut Review suggests “broad based, efficiency raising tax reductions” could be used to help businesses offset increased costs with productivity gains.

Steven says it is important all businesses – including those that do not pay federal company tax – receive some benefit from any tax cuts.

“Income tax or other federal taxes that affect the community universally should be cut,” Steven says, “or company tax credits could be used to relieve the burden on unincorporated small businesses”.

The report also argues that trade exposed industries – sectors that compete in an international marketplace – should be the main focus of government spending directed to business.

This view is backed by a broad range of Australian business groups. The Australian Industry Group, which represents many trade exposed manufacturers, says getting this aspect of the scheme right will be vital.

“Australia should adopt measures to ensure there is no loss of competitiveness on the part of Australia’s trade exposed emissions intensive businesses,” AIG chief executive Heather Ridout says. “Any action that simply results in an Australian business closing down its operations here and moving them to another country would be an exercise in futility.”

Victorian business are likely to be at the sharp end of any scheme, with many of the nation’s manufacturing exporters and transport firms and a large coal fuelled energy sector.

VECCI chief executive Wayne Kayler-Thomson says the Government must look at the effect the end of cheap brown coal-based energy will have on Victorian businesses.

“Unless competing industries in other countries are exposed to the same price pressures, an increase in energy and transport prices associated with the introduction of an Australian emissions trading scheme could lead to a loss of competitiveness by Victoria’s manufacturing industry,” Kayler-Thomson says.

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