Rising fuel costs and uncertainty around supply are adding to the pressures hitting small businesses across the country.
This is according to the Council of Small Business Organisations Australia (COSBOA), which added that impacts are flowing through supply chains and affecting some sectors more than others.
COSBOA CEO Skye Cappuccio said the impact is being particularly felt by businesses with limited capacity to absorb further cost increases.
“Many small businesses are feeling the impact of rising fuel costs and uncertainty around supply,” Cappuccio said. “It is hitting differently across industries and is often more pronounced in regional areas, but the effects are being felt right across supply chains.
“For businesses operating on tight margins, even small increases in fuel costs can have a direct impact on cashflow and day-to-day operations.”
For many small businesses, fuel remains a core and unavoidable operating cost. This is especially prominent in a country like Australia, where it takes days to get between capital cities on the road.
Heavy-duty commercial trucks, with tanks as big as 600 litres, are now paying up to $2,000 to fill their tanks, given diesel is now selling for over $3 per litre.
These costs will likely be passed onto retailers and brands that are paying to transport goods across the country.
“For tradies, delivery operators, farmers and regional retailers, fuel is not discretionary. It is a daily cost of doing business,” Cappuccio said.
“When fuel prices rise, those costs flow directly into transport, logistics and service delivery, and, where they can, through to customers.”
Amid rising concerns across the country, the Albanese Government has amended the Fair Work Act to allow truckies and road transport businesses to make an emergency application for a contract chain order to deal with the current spike in fuel prices caused by the war in the Middle East.
Under the Fair Work Act, the Fair Work Commission can require transport clients, including retailers, mining companies and manufacturers, to offer fair contract terms, ensuring that truckies and transport operators are paid enough to cover the cost of fuel.
Currently, a minimum of six months is required for a contract chain order, but the amendment will remove that wait time.
The Minister for Employment and Workplace Relations, Amanda Rishworth, said the government is stepping up to help create fairness through the supply chain and manage the impacts of global fuel challenges.
“Truckies and transport operators need to be protected from fuel price rises and it’s important that costs are shared fairly through the supply chain,” Rishworth said.
“We are making sure the independent Fair Work Commission can act quickly to deal with these issues.
“Truck drivers and businesses are a critical part of Australia’s daily economy, ensuring food and goods are delivered where needed, and we have their backs.”
COSBOA noted that the current environment reflects a broader pattern of cumulative cost pressures facing small business. This includes stubborn inflation, rising interest rates and record low consumer confidence.
“Fuel is one part of a bigger picture,” Cappuccio said. “Small businesses are already managing rising energy, insurance, wage and compliance costs.
“When these pressures combine, it reduces the ability of businesses to absorb shocks, delays investment and places further strain on viability.”
Cappuccio said practical flexibility across the system will be important while pressures remain elevated. She and her team are encouraging banks and the tax office to take a practical and proportionate approach to recovery to help ensure small businesses can maintain cashflow.
“There is also a role for those contracting with small businesses to take a considered approach, including allowing for renegotiation where input costs have shifted.”
Access to clear and timely information will also be critical, Cappuccio said. She pointed out that small businesses need as much insight as possible into fuel supply and market conditions so they can plan and make informed decisions.
Looking ahead, small businesses will need governments to be ready to respond if conditions worsen, alongside a continued focus on longer-term policy settings, according to COSBOA.
If this volatility persists, Cappuccio added, targeted and time-limited support may be needed to help businesses manage sudden cost increases.
“At the same time, it is critical we remain focused on the policy settings that support small business productivity, including reducing the cost of doing business, simplifying compliance and enabling investment,” she said.
“Measures that support investment in more efficient vehicles, equipment and technology will help small businesses reduce their exposure to future shocks over time.”
“Small businesses are resilient, but they cannot absorb sustained cost increases indefinitely,” Cappuccio continued.
“A stable and supportive operating environment is essential to ensure small businesses remain viable and continue to support their communities.”