More than half of all Australian small businesses (52 per cent) think the economy is in worse shape than six months ago and only one-in-five expects it to improve before 2012. Small business confidence has slipped 10 per cent since the start of this year and 31 per cent since the end of 2009

The findings, released today, come from the third Telstra Business and the Council of Small Business of Australia (COSBOA) "Back to Business" survey, which examined 1000 firms nationwide to get a mid-year pulse check of the small business community.

Peter Strong Executive Director of COSBOA said "these findings came from research conducted before the carbon tax announcement. The confidence level of most small business people will have dropped even further. We need to either stop the C-Tax now or immediately get information out to small business people about the impact on them, their families and their businesses. We also need to change competition policy and workplace laws to ensure that competitiveness is maintained."

He continued "we have asked for modelling to be completed across the various sectors of small business particularly those in areas of high power usage such as hairdressing, dry cleaning, trades and transport. This is essential if confidence is to be rebuilt. The impact of extra red tape from the administration of Paid Parental Leave and changes in superannuation administration are also hitting hard. Let's take the pressure off small business people instead of increasing it. Small business is in crisis, the government must use this announcement to focus on our needs. "

Mr Strong also added "big businesses have already said they will pass all costs onto small business people and then we will have to pass that onto the consumer. Small business is going to be the point where carbon tax strikes hardest and that is because of appalling competition policy, unfair contracts and leases imposed on small business by big business and a complete lack of understanding that a small business is a person not a robot or an automaton."

Mr Strong expects that the impact on Coles and Woolworths, Westfields and the like will be less than the impact on small business. He said "The gap in the two speed economy will widen, competition will decrease and jobs will be shed." Big business will see this as an opportunity to improve profits at our expense."

COSBOA believes the carbon tax has not been considered strategically and the impact on the economy will be worse for small business. The other issues that impact on small business including workplace relations and competition policy must be considered when considering the impact of the carbon tax. Australia needs a Small Business Strategic Plan that highlights strengths and weaknesses and the gains and losses for our important sector.

Mr Strong finished by saying "either don't implement the C-Tax or make sure that we are informed on the impact on each business and that we are not disadvantaged in any way, or the whole economy and the whole workforce will suffer. Small business people are optimistic by nature so this survey makes the findings even more alarming."

Drawing on comparable Telstra Business-COSBOA data, small business confidence has slipped 10 per cent since the start of this year and 31 per cent since the end of 2009

The research also shows:

· Only 40 per cent expect their sales to grow in the current financial year;

· More than a third (35 per cent) say the health of their own balance sheet has declined since the end of 2010;

· One-in-four (26 per cent) expects their business' finances to improve before year's end but 40 per cent say the world outlook will slump before Christmas. 

· Three-quarters (74 per cent) of small business expect their year-on-year expenditure to be the same or less in 2011-12

· While the potential of Interest Rates increasing remains the biggest concern for small business, the Carbon Tax has increased as an issue of concern , with an additional 5 per cent saying they are very concerned, compared to the start of the year 

COSBOA Executive Director, Peter Strong, said the research should be a major concern considering that the small business sector contributes greatly to the national and local economies. 

"Mr Strong said "The fact that less than half of these businesses are expecting sales growth this financial year is deeply concerning given the sector's role in driving broader economic activity." 

Mr Strong said introducing some tax relief and moving towards establishment of a small business ombudsman were positive steps by the Federal Government but more action was needed. 

Regarding options for a small business ombudsman, the research showed support was evenly divided between a range of options.

A low-cost mediation service (30 per cent), a telephone hotline and website pointing to existing dispute resolution services (32 per cent), an advocate with investigatory and government advisory powers (24 per cent) and a tribunal (21 percent) all have support. 

The Back to Business II study was conducted by StollzNow Research with an online panel of 1000 self-employed business people and owners of businesses with less than 200 full-time equivalent employees between June 17 and 21. 

Data released by Telstra Business and COSBOA last month showed of the one-in-three small companies normally making outlays immediately before June 30, some 55 per cent were cutting expenditure by an average of 15 per cent. 

The Back to Business II study was conducted by StollzNow Research with an online panel of 1000 self-employed business people and owners of businesses with less than 200 full-time equivalent employees between June 17 and 21.