BUSINESS and consumer confidence is fraying at the edges, worn down by higher petrol prices, interest rate rises and uncertainty.
As the Gillard government's popularity plummets, consumers and businesses are bracing for a tough federal budget next month, concerned about the implications of a carbon tax and wary of the next moves from the minority government in Canberra.
"What is coming out of Canberra is scary," RCG chairman Ivan Hammerschlag said.
RCG owns the Athlete's Foot and Shoe Superstore chains. "Carbon tax, flood levy, green policies: all this has made consumers very worried and nervous," Mr Hammerschlag said.
And small business is also becoming increasingly frustrated with the Gillard government.
According to the April MYOB Business Monitor, released this week, fewer than a quarter of small business owners would vote for the Gillard government if an election was held soon.
Mr Reed said small business felt the government had "lost touch with the real demographics of Australian business".
Speaking at a lunch of the Financial Services Council in Sydney this week, Macquarie Group head of banking and financial service Peter Maher reminded his audience that it was just on a year since the Rudd government surprised the mining industry with its mineral resources tax, which had had a direct hit on broader business and consumer confidence.
"We saw the direct impact of public policy: creating some ... loss of confidence which had a massive impact on our industry," he said.
For business, the immediate political issue has been the carbon tax. Business criticism of the proposed tax has accelerated in recent weeks.
Business leaders are prepared to be far more critical of the tax and are demanding a more direct role in the decision-making process, with their stronger comments helping to fuel more concern at the consumer level.
Ms Hutchinson said she had returned last weekend from two weeks overseas and had seen a distinct increase in the preparedness of business to criticise the proposed carbon tax.
"Two weeks ago I would have been in the minority of people in business speaking up publicly against the carbon tax," she said.
"Today, we have a situation where everyone is talking about a carbon tax."
Ms Hutchinson said that, as Australia's was a small economy, the imposition of a carbon tax would have a minimal impact on global carbon emissions.
"I really worry where all this is going," she said.
She said the Australian manufacturing industry had already lost about 100,000 jobs over the past few years and could not afford the burden of a carbon tax. "I don't believe we can afford to take on a carbon tax at this stage," she said.
Mr Newman described the proposed carbon tax as "lunacy".
CEOs step up Canberra attacks, as they brace for tough budget | The Australian