No, Treasurer, this is what’s holding us back

Even Qantas’ own sums highlight the minimal impact of the carbon tax on Australian business. Why more pressing concerns rank lower in economic debate will have historians scratching their heads.

Historians will wonder in years to come how a fourth or fifth order problem for businesses and consumers came to dominate politics in Australia for so long.

An ‘unprecedented’ joint statement from four industry lobby groups yesterday calling for the current Senate to back Tony Abbott’s carbon-tax repeal legislation was revealing -- not so much for the content of the statement as for the group that was not asked to join the united front against the tax.

That group is the Council of Small Business of Australia -- the umbrella group that represents 34 other groups with a deep and broad knowledge of their own SME memberships.

Those groups include the National Independent Retailers Association, the Pharmacy Guild of Australia, the Real Estate Institute of Australia, the Australian Livestock and Rural Transporter Association and Master Grocers Australia, just to name a few (see the full list below).

COSBOA executive director Peter Strong told Business Spectator this morning that he had not been approached to back the joint statement.

The reason is obvious. Strong has long argued that while the carbon tax is an issue for some businesses, it is very low on the list of priorities for his organisation’s lobbying efforts.

He went even further today: “No small business has gone bust because of the carbon tax.”

So what are the problems facing the ‘backbone of the economy’ that his member groups are worried about?

Strong names four issues, all of which are more important to small businesses than the portion of their energy bills due to the carbon tax (and the lion’s share of recent power price rises are due to other factors -- ‘gold plating’ of energy grids, and a complex myriad of state and federal subsidies for things such as roof-top solar).

Strong’s list is:

  1. Competition policy (particularly around Coles/Woolies market power)
  1. Fair contract laws
  1. Workplace relations (particularly around penalty rates)
  1. Access to finance

These issues are on the Abbott government’s agenda, and Strong’s group is actively lobbying on all of them to expedite change. The difference is they do not dominate political debate in the way the carbon tax does.

It is not only at the small end of town that the carbon tax issue is blown out of proportion. Yesterday, Qantas released a statement saying the carbon tax was “among the most significant challenges we face”.

A week ago, the airline said the opposite: “Qantas’ current issues are not related to carbon pricing.”

So which is it? Here are a few facts to help readers make up their own minds:

-- Qantas put its carbon tax liability for 2012-13 at $106 million.

-- In its 2012-13 final results Qantas put its operating expenses, excluding fuel, at $9.273 billion, with the fuel bill being $4.243bn.

-- Qantas’ carbon tax liability was 0.78 per cent of its operating expenses.

-- Over the course of the 2012-13 financial year, fuel prices increased from $2.81 to $2.94 per gallon, and at January of this year were at $3.29. If those prices hold, Qantas’ fuel bill this year (which does not affect its carbon tax liabilty) will be in the order of $700m to $800m more than in 2012/13.

-- Qantas intends to strip $2bn a year from operating expenses, aided by 5000 job cuts.

It should be obvious to any numerate person that the effect of the carbon tax on Qantas’ business is not ‘significant’ when compared to its other cost blowouts -- mainly wages, fuel bills, and the losses incurred by slashing fares to compete with the Virgin Blue-led ‘capacity wars’.

Both Virgin and Qantas say they cannot pass on their carbon tax liabilities to customers. Really? My last trip to Perth cost $485 return (thanks, capacity wars!). Based on Qantas figures, the carbon tax would have added $3.80 to that fare.

At both the small and big ends of town, the carbon tax is a small impost that is virtually irrelevant to Australia’s continued prosperity.

Why it became a national obsession, and prompted four of our five major business lobby groups to issue a joint statement yesterday, will have historians scratching their heads for years.

And how Joe Hockey could repeat the tired assertion during his national accounts press conference yesterday that it was the carbon tax holding back the economy (with data showing the economy returning to trend growth), will puzzle them even more.

The Treasurer has enough numerate staff at his disposal to calculate the costs of penalty rates, unfair contracts, uncompetitive markets and the cost to the economy of the 200,000 small businesses that Peter Strong says are currently denied access to finance to grow their businesses and create jobs.

He should put those numbers alongside the hyperbole of the carbon tax rhetoric, and get on with the real job of growing this economy.

The paid-up members of COSBOA, as they appear on the group’s site, include:

Australian Booksellers Association, BPW Australia, Business Enterprise Centre, FSV, Institute of Public Accountants, National Independent Retailers Association, Pharmacy Guild of Australia, Real Estate Institute of Australia, Stocktakers Institute of Australia, Tasmanian Small Business, Convenience and Mixed Business Association, University of Western Sydney, Australasian Association of Convenience Stores, The Australian Digital Television Industry Association, Australian Hairdressing Council, Australian Livestock and Rural Transporter Association, CITT, Fitness Australia, The National Financial Services Federation, Independent Retailers Organisation, Australian Equipment Lessors Association, Commercial Asset Finance Brokers Association of Australia, ETREC, Australian Institute of Business Brokers, Australian Newsagents' Federation, Australian Human Resources Institute, Institute of Certified Bookkeepers, Australian Women Chamber of Commerce & Industry, Master Grocers Australia, National Security Association Australia, Outback Business Networks, The Hub, Rebuild Foundation, Post Office Agents Association Limited.

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