Fuel, wages, insurance, energy. The costs keep stacking up. COSBOA is warning that more cost pressure risks pushing a fragile situation over the edge.
What’s happening: The Council of Small Business Organisations Australia has warned that a government recommendation for an above-inflation minimum wage increase risks compounding serious financial pressure already facing small businesses across the country.
Why this matters: With fuel, wages, insurance and energy costs all rising simultaneously, COSBOA says for a growing number of businesses, current conditions are approaching crisis point.
Running a small business in Australia right now means managing a cost base that keeps growing while revenue stays flat or falls. For many owners, the numbers are already difficult to reconcile.
The Council of Small Business Organisations Australia says its latest Small Business Perspectives Report paints a stark picture. Sixty-four per cent of small businesses reported lower profits over the past year. Sixty per cent were unable to pay themselves at least occasionally.
Against that backdrop, the Government has recommended an above-inflation increase to the minimum wage, a decision that now sits before the Fair Work Commission.
“Small businesses are operating in a pressure cooker environment right now,” said COSBOA CEO Skye Cappuccio.
“At the same time, 72 per cent say rising costs are the biggest barrier to growth, with fuel, wages, insurance and energy all continuing to increase.”
Cappuccio said recent fuel price volatility and supply uncertainty have added another layer of pressure, with impacts flowing through supply chains and across sectors.
When costs can’t be passed on
One of the defining challenges facing small businesses in the current environment is the limited ability to recover rising costs through pricing. Unlike larger companies with stronger margins and broader customer bases, many small operators are absorbing increases that have nowhere to go.
“Some businesses can pass on costs, but many cannot, and no small business can absorb sustained increases indefinitely,” Cappuccio said.
“There is also significant uncertainty about how current conditions will play out in the coming months, making it extremely difficult for small businesses to plan, invest and make decisions about their workforce.”
The compounding nature of the pressure is central to COSBOA’s concern. It is not any single cost increase in isolation. It is fuel rising at the same time as energy bills, insurance premiums, compliance costs and now a potential above-inflation wage increase, all landing on businesses that are already running thin.
COSBOA has stopped short of calling the current situation a crisis, but its language is pointed.
“For a growing number of small businesses, this is not theoretical, it is about day-to-day viability,” Cappuccio said. “In that context, adding further cost pressures through an above-inflation wage increase risks compounding an already fragile situation.”
Cappuccio was careful to acknowledge the position of workers. Cost-of-living pressures are real, she said, and small businesses want to pay their staff fairly. But the sustainability of the businesses doing the employing cannot be separated from the broader policy conversation.
“Small businesses want to pay their staff fairly and continue to employ and support their communities,” she said. “But measures designed to support households cannot come at the expense of the sustainability of small businesses. We need to ensure that measures designed to support households do not unintentionally put those jobs and businesses at risk.”
Small businesses employ around five million Australians. That number sits at the centre of COSBOA’s argument. The viability of small business is not just an economic question. It is a community one.
What COSBOA is calling for
COSBOA is not calling for wages to stay flat. Its position is more measured than that. The organisation is asking for caution on timing and a clear-eyed view of cumulative cost impacts before any decision is made.
“Right now, small businesses need stability and certainty,” Cappuccio said. “Delaying significant changes until there is greater clarity on current economic conditions would help ensure decisions do not unintentionally put businesses, jobs and investment at risk.”
The ask is essentially for the Fair Work Commission to factor in the full picture facing small business employers, not just the cost-of-living needs of workers, but the financial reality of the businesses employing them.
“Any changes to minimum wages should be approached with caution in the current environment, with careful consideration of timing and cumulative cost impacts,” Cappuccio said.
For small business owners watching this decision closely, the message from their peak body is clear. The system needs to work for both sides. Right now, many feel it is not.
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