Small business calls on governments to fix soaring power prices

SBS World News Radio: Small businesses are calling for action on electricity prices as rising costs cut more and more deeply into their profits.

Small business calls on governments to fix soaring power pricesSmall business calls on governments to fix soaring power prices

Small business calls on governments to fix soaring power prices

Destiny Choutis owns Roastville Coffee, a cafe and coffee roaster in Sydney's inner west.

"So, for us, our biggest costs are our overheads. So, rent, electricity, our labour, our cost of goods are our biggest costs at Roastville."

Electricity is needed to power the company's refrigeration, lighting and its biggest expense, the coffee machine.

Destiny Choutis says she has been hit with a 15 per cent increase in her power bill in just the past year.

"So it's become a big cost for us, something that causes a little bit of anxiety when you know the quarter is up. So it's been a significant cost."

Federal small business minister Michael McCormack says he recognises the increasing cost of power is a barrier to doing business.

"I've spoken to a Bathurst laundry service. Their energy prices were going up more than double. And they're only a little firm, 35 people, but providing a little valuable linen service."

The government knows it is bad, and so do industry group representatives like Peter Strong, chief executive of the Council of Small Business Australia.

"It is a huge problem, and we're only seeing the *tip of the iceberg, and we're going to see a lot worse impact over the next 12 months. I've said to people this is the worst business crisis I've seen in my life, and nobody has challenged me. And, normally, when you make statements like that people always challenge you ..."

Mr Strong says there may be carryover effects on the economy.

"The costs are going up somuch that businesses have got to make a choice around whether they keep staff on, full-time staff or part-time. They've got to decide, 'Where am I going to cut my costs so that I can pay these bills?' Will they start paying the tax office late? Will they ring up the tax office and say, 'I can't pay you for two months.' They've got to make some big decisions."

A lack of supply is pushing prices up, exacerbated by the recent closure of a number of coal-fired power stations and a gas shortage on the east coast.

Michael McCormack says the Federal Government wants a balanced approach.

"Renewables are fantastic. I'm all for hydro-electricity -- I think that's great -- and we need to, obviously, use solar energy and make sure we have that as part of our mix. But we can't turn off coal in the short term. We can't turn off coal when we have plenty of it."

The Government is considering a response into the Finkel report, which recommends a clean-energy target.

Peter Strong, with the Council of Small Business Australia, says he wants action.

"Accept it, then move ahead, and then be dextrous, review it, change what you have to change as you move along. But start doing something because once you start doing something we can change it once we see how to do it better. So that's the first thing - make a decision and send that message out. The second thing is a moratorium on price rises in the power sector for 12 months. The states will have to manage that - they've been part of the problem so they've got to be part of the solution. And then we have industry groups get together, and we get behind closed doors, and we say, 'Right, how are we going to fix this?'"

Michael McCormack, the small business minister, says he is optimistic solutions will be found soon.

"I think, given the fact that Malcolm Turnbull has a long and earnest discussion with the energy regulators, I think we'll see some action very, very soon. I'm hoping weeks, not months."

In the meantime, it is up to businesses to find ways to reduce their electricity bills.

Roastville's Destiny Choutis has energy-saving bulbs and is moving on other changes.

"There's not much we can do but we have recently just invested in solar panels, which we're not going to see a return on probably in the next five years. However, that's a bit of a quest to reduce our fixed costs."

 






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