National employer association Ai Group has today released new research detailing the impact of rising energy prices on a group of Australian manufacturers.
"Many manufacturers are energy-intensive, and manufacturing businesses are on the front-line of soaring global energy prices”, Innes Willox, Chief Executive of the Ai Group said.
"To understand how energy price rises are impacting industry, Ai Group sought feedback from businesses in the manufacturing sector and the responses were sobering.
"More than half of the 78 manufacturers who were contacted reported that they have already suffered significant negative effects from rising energy prices, with expectations that greater difficulties are to come over the next year.
"Only one in six said they can substantively pass-on rising energy prices. For most, the cost must be borne elsewhere on the balance sheet. This is a significant drag that weakens the capacity of energy intensive industries to invest in R&D or job creation.
"Worryingly, approximately one in five say they expect to either cut production and/or employment in the next twelve months due to high energy prices," Mr Willox said.
The Ai Group research finds that:
"These insights highlight the significant impact that energy prices are having on Australia’s industrial base. They point to a pressing need for energy policy reforms that will restore affordability, stability and security to national energy markets.
"Accelerating our clean energy transition makes sense, but is complex and will take years to pay off even with urgent action starting now. In the mean time, decisions on the gas export trigger need careful weighing. Government cannot stand by if a shortfall threatens further extreme prices next year. But we also need to act responsibly amid a global energy crisis. And even with some use of export controls, energy prices are likely to be unusually high for several years to come.
"Helping energy users to deal with high prices will be vital. That will need to take at least two forms. One is support for the adoption and acceleration of energy efficiency, energy management, electrification and fuel switching. These improvements will take time to build up, and financial support for the most vulnerable energy users will be important in the meantime. As the responses from our members show, many businesses do not believe they will be able to pass through energy cost increases," Mr Willox said.
The full report – Snapshot of impacts of the energy price shock on Australian manufacturers – is available here
Tony Melville – 0419 190 347