Small businesses the first to feel energy price crunch

Andrew Munro 21 July 2017 NEWS

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Closing time draws nearer for Australian small businesses.

Rising energy prices are striking households and businesses alike all over Australia, but small businesses might be the first against the wall if costs continue to spiral upwards.

Kate Carnell, Australian Small Business and Family Enterprise Ombudsman, says small businesses are being forgotten in the midst of Australia's energy crisis. She described high-energy-use companies, like manufacturers and those in the hospitality industry, as casualties of a failed system.

With energy costs eating away at the bottom line, local businesses find themselves facing a disadvantage in Australia and are losing customers to overseas competition.

Peter Strong, of the Council of Small Business Australia has previously said, "Business plans are in tatters and cash flow in ruins" as a result of energy prices. The Enterprise report states, "Business as usual is no longer an option. Business as usual is lack of reliable power and unsustainable price increases."

What's the solution?

"If we don’t fix the policy settings, there will be small business closures and job losses. It’s that simple," says Ms. Carnell. "The states need to stop grandstanding and get on board with a national approach."

The ombudsman highlighted the following two key steps:

  • Confidence and stability to encourage investment. "Toxic political debates, mixed messages and policy backflips" have stunted development, deterred investment and seen Australia fall way behind schedule.
  • Investment to grow baseload power generation. "Investors need confidence there's not going to be another change of policy when there's a change of government," Ms. Carnell says. With crunch time coming, Australia's politicians need to rally behind an energy plan.

In her opinion, the Finkel Review provides one of the most promising ways forward for Australia, and a plan that all sides of the political aisle can get behind. Big strides, such as the SA battery, are already being taken, regardless of buy-in on the national level, but more is clearly needed.

There is no doubt that rising energy prices and other factors have already swallowed some small businesses, but without some changes, it's only going to get worse. It's also going to be much more difficult for Australia's economy to recover afterwards.

If there's any good news for Australian energy on the horizon, it's that blockchain technology and a wide range of startups are getting involved. But the bad news is that at this rate, they're set to come in as more of a cure than as a prevention.

Energy prices can't keep rising to compensate for inefficiencies elsewhere. If they do, small businesses will probably be the first to go. In the meantime, it falls on small businesses to understand their own energy needs and cut costs.

"It’s a terrible shame that one of the most energy-abundant nations in the world has reached this point," said Ms. Carnell.

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