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Electricity and gas prices 'growing faster in Australia'

Electricity and gas prices have risen sharply for businesses  expert says 16000646 800499164 0 0 7052144 300

Electricity and gas prices are rising faster and further in Australia than in other nations.

This is according to Innes Willox, chief executive of the Australian Industry Group, who described energy as a "major issue" for the country's businesses.

Mr Willox said electricity and gas suppliers are charging more for energy services than at any point in the last few decades – making these costs a serious threat to Australian enterprises.

"Energy price rises have eroded a longstanding source of competitive advantage," he stated.

"For particular sectors – notably in upstream manufacturing - the scale of energy price rises has called into question their future in Australia."

He argued that prices of gas and electricity are the second biggest problem for many industries, with only the high value of the Australian dollar more detrimental.

Mr Willox went on to compare electricity costs in households between the periods of 2001-06 and 2007-12, as well as isolating the "very large increase" in 2012.

His data showed the average annual rise was 3.1 per cent in the five years between 2001 and 2006, but this had increased to 12.1 per cent per year by 2007-12.

Last year alone, households experienced a jump in electricity prices of 17.3 per cent.

Examining business costs specifically, Mr Willox commented on the 57 per cent rise in gas prices over the last six years – more than two and a half times the rate of inflation.

Over the same period, electricity prices have shot up 96 per cent, four and a half times inflationary rates.

Sectors affected in particular include manufacturing, mining and agriculture, and transport.

However, Mr Willox said companies are reacting and are making more effort to become more energy efficient.

"Businesses are responding and the pace of response is gathering pace – moderated by flat conditions across much of the economy."

The expert pointed to the carbon tax as a particular hindrance on companies, stating that the Australian approach to tackling emissions is more costly on the country's enterprises than other similar initiatives internationally.

He compared the levy with the European emissions trading scheme, noting that the Australian carbon tax requires businesses to pay over four times the current and projected prices of counterparts overseas.

"A significant boost to industry could deliver a cut in electricity prices very quickly – by leaving behind the carbon tax and moving as soon as possible to an internationally linked emissions trading regime."

Posted by Charlie Moore