Arthur Sinodinos (NSW, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Wong. I refer the minister to a survey reported in today's media which finds that 66 per cent of small businesses are absorbing the impact of the government's carbon tax rather than passing the impost on to consumers. Will the minister now concede that the carbon tax is having an adverse economic impact on small business? Does the minister agree with statements such as that by small business owner Doug Cush, the owner of Bellata Gold Pasta, that the carbon tax will force some small businesses to the wall?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

First I think it is important to get some facts on the table in relation to small business and the carbon price. The truth is that there is no small business which is directly liable for the carbon price. The truth also is that the electricity cost of a small retail business is estimated to make up less than two per cent of total costs. On the basis of Treasury modelling, therefore, the cost increase of the carbon price would be only 0.2 per cent of overall expenditure of a typical small business.

Obviously the government has also made provision in the previous budget for assistance to small business, and also in the clean energy package. We have increased the small business instant asset write-off from $1,000 to $6,500. This is a significant tax break for small business when they buy equipment for themselves. It is disappointing that the party of small business, those opposite, want to take back that tax break. If those on the opposition benches are not aware of that promise, that was a promise that Mr Robb, my counterpart, made. You are in the cart for making sure you take back the tax cut that this government is providing to small business. In addition, you would be aware that the government has included a new loss carry-back scheme in the previous budget. We estimate about 90 per cent of the beneficiaries of that to be small business.

I think it is important in this debate to recognise that there is a cost impact on small businesses as a result of electricity price impacts, but let us recall that the largest component of electricity price increases in this country has not been as a result of carbon. I know that is not something Senator Abetz wants to hear. (Time expired)

Arthur Sinodinos (NSW, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Given that the global economy is still suffering the effects of the global financial crisis and the current European debt crisis, does the minister concede that imposing heavy new burdens on small business like the carbon tax, for very small environmental gain, in a time of such global uncertainty is poor public policy?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

What is poor public policy is a command-and-control, taxpayer funded, bureaucratically run scheme such as the one that Senator Sinodinos has regrettably had to sign up for. Senator Sinodinos has a sound public policy background. I might not always agree with him, but at least he understands the issues and he, in his heart of hearts, would know how ridiculous it is that those opposite have moved away from a price on carbon throughout the economy and have gone for a taxpayer funded, command-and-control, bureaucratically run carbon scheme with a higher cost to the economy and a higher cost to small business. The biggest impost that could be put on the Australian economy from a carbon policy is the carbon policy of those opposite. That is the reality. In addition, they are seeking to roll back the tax breaks that this government wants to give and is giving Australia's small business.

Arthur Sinodinos (NSW, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Will the minister release the modelling that underpins the answer she just gave in relation to small business, including the pass-through factors that have been assumed about the capacity of small business to pass on price increases?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The modelling to which I was referring in terms of the estimated increase of the carbon price is the Treasury modelling, which has been publicly released—as the senator well knows. I do not think that there is anything further there that I can add to it.

I would also say to him in response to his previous question that I am pleased he does acknowledge there was a global financial crisis. That appears to be something that Mr Hockey and Mr Robb have forgotten about, but Senator Sinodinos has enough intellectual self-respect not to follow the talking points when it comes to airbrushing the global financial crisis out of any economic discussion. But back to the issue: in terms of the carbon price, we have put in place assistance measures and we have put in place some tax breaks for small business. The reality, and the senator would know this, is that the highest cost to a business of a carbon policy is for the one that his leader is advocating.