The fact of the matter is that businesses are in trouble, why, this is why.

Having been in small business for 20+ years, I have seen the decline, mostly in the past four years and mainly due to lack of confidence.

I would once think little of borrowing $500K, even a million, because I have the cash flow to repay the loan. Not any more, those days ar all but gone.

The problem is margins.

I had a shop churning out 10 to 15 tons of meat every week. My margin was 28% and I made a fortune.

Today, a typical shops margin is around 50%, yet our net dollars are less than they were 15 years ago. Why, because of all the costs and fees now.

We are struggling to net 10% and that's not enough any more, not for the risks involved.

I know a guy with a great restaurant, turned over $260K last month, yet netted less than $10K.

He also employs about 16 people.

He, like me, will close cause it's no longer worth the risk.

You see big business can run on small margins,, but small ones can't.

This is why the carbon tax is bad.

Everyone in the supply chain will add their bit, but the consumer will refuse to pay, so they will flock to th majors as they have the power to say no to the suppliers, because many of these suppliers are now exclusive to either Coles or wollies and, if they say jump, the supplier must jump or loose thier contract, plus thei only income, plus often thier house, family, etc etc.

This is a bad tax and it will hurt many.

Don't say you were not warned!

butch. You constantly go on about the impending carbon tax, so what sort of rises are you expecting. Or is what you say all crap.

Rehub, hasbeen et al,
This link will tell you why businesses are having trouble with their
cash flow and why the customers do not have the resources they used
to have.

http://www.energybulletin.net/stories/2011-11-22/it-really-possible-decouple-gdp-growth-energy-growth

I have not read the following link but knowing the author, I did meet
him once and had a short chat, you might find him interesting and if
you read some of his writings or Utube it will explain a lot of what
is going on here & overseas.

http://www.energybulletin.net/media/2011-11-22/end-growth-richard-heinberg

Just remember growth depends on growing energy.

579, unlike governments,who can run on a cost recovery basis, a business mus make a profit to survive.

Any outlay one makes must also generate a return for the business, otherwise it's like buying a raffle ticket with no prize.

Now say the large polluters have to pay 100 million in carbon tax.

Well, first they have to fund this, either from cash reserves, or, from borrowed funds.

Now if it's from cash, then they need to factor in lost opportunity, in othe words, what could they have done wit that money if not for the tax. Let's call it 12%.

So if they need to make 12%, then they have to add 14% to thier prices t recover that 12%.

Now if they borrow the 100 million, thenthey have funding costs, plus lost opportunity, so say 20%.

In both cases they have admin costs to consider.

The whole point is that they will simply pass this tax on to the next guy, then they to will have to apply thier mark up so they get their out of pockets, the list goes on.

The end resut is that we, the real pollutes will pay big time from the tax, whereas, had the government charged big useres in the first place, there would be no tax.

Sure the cost would still go on, but not to the same extent.

It's like the GST. Why collect a tax to give it back.

This tax will hurt.

Now on the off chance I am wrong, and I hope I am, then I will gladly eat humble pie.

I am reminded of this, in just my life time my country and the way we make a living has changed so very much.
Post ww2 Migration shook us out of our she will be right mate world.
We saw new jobs new things and ways to eat.
We saw folk who came here penniless, by hard work become million airs , even billion airs.
Far more of us set out to own homes work for our selves and we grew to todays Australia.
Remember this thread, many others, is based on a bias, an untrue proposition, that a tax ,,not yet in force, has broke a business over the last 3 years?
Rechtub, mate, who do you blame? you pointedly say 4 years, is that true.
Would it have been any different under Howard.
Is it any use? can avoiding looking at the whole tribe of Elephants in the room, its impacts on world business the GFC be of any use?
We spent and earned like a stick in fast flowing river.
Thought wrongly we would never have to pay.
Human nature, young Brides nature.
The credit card became a monster.
New house, maybe two cars carpet, furniture we wanted to pass the folk next door.
We extended our loans and spent again Bali we wanted we forgot we must pay.
Now? we pay those loans, we spend far less we stay home we eat cheaper foods, we cook at home.
And our shrinking purchases? well its ok blame politicians, power bills, fuel, Henny penny stuff but its good to lash out at some one.

Well belly, I have to agree with you on most points.

As for Howard, well, history, and the position we were left in upon his exiting is the only benchmark we have to use.

Retail was doing quite well until around August 09, when, after rud convinced many to buy thier homes with the $21K he splashed around, interest rates went up.

I said back then that the government was beginning to effect people's confidence and, if you take away thier confidence , you would effect their spending and wolla! The rest is history.

Now, as for those coming here and making millions, even billions.

Although I give them credit, most did not make it from hard work alone, they made it from the buying and selling of assetts, without so much as a penny in tax, as there was no capital gains tax.

Another source of wealth was in the form of shopping centers.

Many migrants purchased centers and proceeded to increase rents, generally 5% each year. Many rents have almost doubled in ten years.

Much of their wealth today is in assetts, assetts which in time will be worthless as small retail is all but finished.
Continued