Companies could be forced to choose between cutting staff or production or raising prices, as a “perfect storm” causes rising energy costs, says the Australian Industry Group.
A decade of arguments over climate and energy policy combined with the aging of coal-fired power plants, the war in Ukraine and the onset of winter had immense consequences for industry and households, according to the director Ai Group executive Innes Willox.
He cited the 50-fold rise in gas prices in Victoria as an example.
“I was talking to a member company yesterday that was operating nationwide. Suppose its gas bill was $ 100,000 a year. They just signed a contract this week for $ 270,000 a year, an increase of 2.7. percent, now explained well in advance with the offer they received. [that] if you don’t sign up now, next week it will be $ 500,000, “Willox told ABC RN Breakfast.
“It simply came to our notice then. Gas is everywhere … it’s in fertilizers, it’s in paper production. It’s in food processing, it’s in steel, it’s very consistent for the industry.
“When faced with these kinds of rises and you see a failure of the market around them, they have to make decisions as to what they do, who they employ or cause prices to go up.
“And in the end consumers, businesses or households will have to pay more.”
Willox said Treasurer Jim Chalmers was right when he said there was no immediate solution to energy prices, “but there is an immediate problem that needs to be addressed.”
“It simply came to our notice then. States use a lot of levers here, they are responsible for preventing gas exploration and extraction in Australia for many years.
“If they had a light bulb moment in it, that would help, not immediately, but yes.”
Taking the trigger on Australia’s national gas security mechanism was a “big call” that people had been “whispering,” Willox said.
“But these whispers are getting louder and louder. But it’s a big call for consequences. Let’s look at things like power rationing? All that kind of thing. There’s no easy choice, but the government has to address it. [as a] first order priority “.