SMEs Will Lose Out to Big Business Under ETS

SMEs Will Lose Out to Big Business Under ETS

The ‘winners and losers’ lottery the ETS scheme will impose on business is among key reasons the scheme should be delayed, says Auckland Chamber of Commerce head, Michael Barnett.

The ETS discriminates against SMEs who don’t qualify for free allocation of emission units, while larger emitting manufacturing businesses will be able to claim benefits from the ETS and cover their costs of the scheme.

“However, small business will have to carry the increased costs of ETS but won’t benefit, while big business will be able to offset costs through benefits from demonstrating reduced emissions.”

“This is an unfair penalty against small business which ultimately all New Zealanders will pay for through increased costs such as electricity, fuel, food and water and the higher prices SMEs will be forced to charge for their goods and services,” said Mr Barnett.

Mr Barnett noted Australian reports indicating that a factor in that country’s decision to delay introduction of the ETS was to allow small businesses to better prepare for the impacts of emission trading.

Mr Barnett predicts that major ways in which the introduction of the ETS will affect SMEs will be through increased costs (such as electricity, fuel, food and water) and taxes, and less cash flow and profits.

Other significant ways in which the ETS will affect SMEs include:
• The need to increase prices, earn more money and pass the costs on to customers.
• The ETS will cause customers to spend less;
• They will become less competitive (especially compared to major trading partners and importers unaffected by an ETS regime).

Our Government is also ignoring good advice from the Reserve Bank, said Mr Barnett. Back in March Reserve Bank Governor Alan Bollard warned that the ETS will drive up prices of petrol and electricity, stoking inflation starting next year.

ENDS

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