Albanese government’s $150 power bill relief cold comfort for small businesses

Publican Simone Douglas says another $150 in power bill relief is cold comfort for small businesses like hers that are grappling with a perfect storm of skyrocketing energy costs and a cost of living crisis.

Duke of Brunswick co-owner Simone Douglas. Picture: Dean Martin

Adelaide publican Simone Douglas says another $150 in power bill relief is cold comfort for small businesses like hers that are grappling with a perfect storm of skyrocketing energy costs and a cost of living crisis that’s forcing more Australians to cut back on outings and non-essential spending.

Ms Douglas said electricity costs at her CBD hotel, the Duke of Brunswick, jumped by more than 45 per cent last year, with her quarterly bill rising to $16,000 in the December quarter.

And unless policies with a “meaningful impact on the cost of energy for business” are introduced she fears many more hospitality operators will be driven to the wall amid a record number of closures across the country.

“If I get the $475 in bill relief they’re banging on about … when you’re paying $16,000 a quarter for electricity, you might as well leave that $475 in the bank quite frankly,” she said.

“There’s a lot of small and family businesses out there who are really feeling the pinch, and their major costs of gas, electricity, water and insurance are probably the big ticket items outside of the cost of labour.

“I really do wonder whether the solution is actually getting back to a point where gas, power and water is in the hands of the state government or the Commonwealth. We can’t keep seeing it escalate.”

Duke of Brunswick co-owner Simone Douglas. Picture: Dean Martin

The Albanese government has announced that around a million Australian small businesses will receive a further $150 in power bill relief as part of a six-month extension of the $325 energy rebate that was initially due to expire in July of this year.

Ms Douglas welcomed a decision to extend the $20,000 instant asset write-off for small businesses in last year’s budget, and is hoping to see more certainty on the future of the concession in Tuesday’s announcements.

The Coalition wants to lift the write-off threshold to $30,000 and make it a permanent benefit rather than subject to legislative approval each year.

Last year’s extension for the 2024-25 financial year is yet to secure parliamentary approval, meaning small businesses face an anxious wait to learn if their purchases are tax deductible in the current financial year.

“Maintaining the instant asset write-off is pretty important, and also drives the economy,” Ms Douglas said.

“We make decisions about what we’re spending based on whether or not we can get the tax concessions back.”

Reform to fringe benefits tax is another area where Ms Douglas believes the government can stimulate demand in the hospitality industry, which she describes as a bellwether for the broader economy. The Coalition has proposed a capped $20,000 tax deduction for business-related meal and entertainment spending by small businesses with a turnover of up to $10m. The expenses would be exempt from fringe benefits tax, but would exclude alcohol.

“A big-ticket item that you’d love to see some movement on … is fringe benefits tax, because you’re actively penalising businesses for spending money in the local economy on their staff,” she said. “Let the electrician take his apprentices to the pub for a parmy when they’ve worked in 40 degree heat, and let them make it tax deductible – why should they foot the bill?

“We see what’s happening with hospitality and businesses announcing their closure … and the hospitality industry is a great litmus test for the wider economy, because if people aren’t spending money in hospitality then they generally don’t have money to spend. People are still going out for special occasions … but they tend to, instead of going out once a week, they might be going out twice a month.”

Originally published as Albanese government’s $150 power bill relief cold comfort for small businesses