Energy Costs Drive Businesses and Jobs Offshore

Despite Australia’s wealth of natural resources, our energy costs are among the highest in world - and it’s seriously impacting on the competitiveness of Australian companies.

New research by the United States Studies Centre at the University of Sydney has drawn a stark contrast between the US and Australia in term of energy policy and the flow through effect for businesses and consumers.

In summary, the research found:

  • Australian households and businesses pay dramatically more for their energy than their American counterparts — two to three times as much in many cases.
  • American households and businesses are supplied energy with greater reliability and tariff transparency than in Australia.
  • Over the past decade, US carbon emissions from electricity generation have declined by more than twice the rate of Australia’s emissions decline.

Perhaps most telling was the reason outlined for conducting the research:

In discussing the prospects of investments both from and in the United States, Australian manufacturers repeatedly rated the United States as vastly more attractive for investment. They indicated that Australia was not a growth market for their businesses and that the United States figured prominently in their plans for growth and success. “Australian manufacturing is doing great”, one CEO said, “just not in Australia”.

And why? In a word: energy. The cost of electricity and gas for large, industrial consumers of energy is simply making Australia uncompetitive. Relatively high labour costs are more or less baked into the Australian social compact. But when another critical business input — energy — becomes as expensive as it has, many Australian businesses face existential threats.

It’s a staggering fact that a Queensland-based manufacturer is paying 197% more for industrial gas today than they were a decade ago – while a New York based manufacturer is paying 41% less.

In a global economy, it’s fair enough that an Australian business would look at setting up operations where it can be competitive and achieve success. But when operations are moved offshore – so are Australian jobs.

The Australian Reports:

Heavy industry including chemicals producer Dow, fertiliser and explosives maker Incitec Pivot and the nation’s largest petrochemicals producer, Qenos, have all raised concerns in recent months over their ability to remain competitive, with costs on the east coast remaining stubbornly high.

Dow, which has called for Australia to free up fresh gas supplies amid a tripling of prices in the last four years to about $12 a gigajoule, says the stark international comparison shows the need for the government to create a national energy plan.

“Without a bold and concerted effort to deploy an energy policy for Australia, consumers will continue to see the incredible rise in costs and the terrible effects of those higher costs on jobs, economic growth and energy security,” said Dow’s Australia president, Louis Vega. “This study shows just how important legislative and policy action is in building a stable and functioning energy market.”

Australia’s policy acquiescence to green/left demands has meant shutting down coal, locking up our natural resources and forcing higher energy prices on consumers and businesses. This is seriously holding back our national economic prosperity and, sadly, robbing us and future generations of job opportunities.

But it doesn’t have to be this way. As Professor Simon Jackman, CEO of the United States Studies Centre, says in the Financial Review:

Australia's flawed policy is also a system of a flawed debate. Achieving emissions reduction and lowering energy prices are often seen in a zero-sum lens. Indeed, the past decade of debate in Canberra reflects this. But as the US energy revolution reveals, emissions reduction, increased supply and reassurance for industry and households alike need not be mutually exclusive outcomes.

 

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