SMEs at risk of going broke without energy subsidies

The Australian, July 19, 2017

Kate Carnell : “If we don’t fix the policy settings there will be small business closures and job losses”. Small Business Ombudsman Kate Carnell says the government needs to consider subsidies to help small business struggling to cope with skyrocketing energy prices.

She says if the government is serious about keeping small businesses and manufacturers viable, it needs to support them.

Small businesses say they are losing competitive advantage and being brought down by skyrocketing and unpredictable energy bills, some of which are expected to rise by 180 per cent in a year.

With low-income households eligible for energy bill subsidies and large companies having the bargaining power to secure more affordable rates, the federal government is under pressure to extend energy assistance to small businesses.

“If we don’t fix the policy settings there will be small business closures and job losses, it’s that simple,” Ms Carnell said. “If we’re in a position where we can bring prices under control, then we need to make sure (businesses) don’t go under in the meantime.

“Maybe we’re going to have to think about subsidies, and if we’re going to maintain small businesses and manufacturers and high-energy users in Australia, then we’ve got to ensure they’re competitive.”

Her call for financial aid adds to those of industry groups, including the Council of Small Business Australia.

A slew of large-scale energy and gas providers announced price hikes for small businesses from July 1. For Dandenong-based manufacturer Price Plastics, the increase amounted to more than 75 per cent, excluding energy costs.

The business, which specialises in coloured plastics powder for water tanks and play equipment, has cut its 50 staff across three states to just 12 and is considering shifting operations to Malaysia.

Managing director Andrew Currie said he had no scope to pass on higher costs to clients.

“It’s a highly competitive market against imports and with the dollar strengthening, that doesn’t help either,” Mr Currie said. “And then we look at Malaysia and co-investing in a new venture up there, and on energy costs alone it’s roughly half the price per tonne.”