TasWater has been accused of putting potentially thousands of small and medium-sized businesses at risk.
The water and sewerage body is shifting trade waste compliance costs onto businesses including hotels, cafes, restaurants, bakeries and butchers by trying to force them to upgrade their trade waste infrastructure, the Tasmanian Hospitality Association says.
THA chief executive Steve Old said he knew of a business which had closed because of the impost, and feared many more could follow.
“A lot of them are scared and don’t know what to do,” he said.
“This is massive around the state.”
He said hospitality alone had about 2000 businesses.
The THA hopes the state government, which plans to take over council-owned TasWater, will intervene.
The THA was urging members and other affected businesses to hold off on getting the work done while it pushed the issue with the government.
“That’s a disgrace, what’s going on,” Mr Old said.
“Small businesses can’t afford it.”
The work TasWater required would cost Smithton hotel Tall Timbers an estimated $40,000, its general manager, John Dabner, said.
He said he had been told by TasWater Tall Timbers had 18 months to comply.
He said he had been told if businesses did not comply, trade waste charges would be tripled or they would be disconnected from the system.
Mr Dabner said Tall Timbers already paid TasWater trade waste charges and he had been told the charges would not decrease if the infrastructure work was done.
A TasWater spokesperson said trade waste standards were a state government requirement.
“More than 2000 trade waste customers have already invested in meeting the regulations and improving environmental outcomes for our state,” he said.
“It is unfair to effectively ask them to subsidise those who do not comply.
“If trade waste customers do not meet the actual cost of treating their waste, they are effectively asking everyday Tasmanians to pick up the tab ...”
Treasurer Peter Gutwein said: “It's unacceptable that TasWater is punishing businesses because TasWater and its council owners haven't maintained basic infrastructure.”
“This is one of the reasons why TasWater needs to be taken over by the government.
“Once we own TasWater, we will ensure they become an enabler of business rather than an inhibitor to it, and we will work with businesses like Tall Timbers to resolve these issues.”