Struggles of Australian Manufacturers Amid High Inflation and Government Policies
Australian manufacturers are facing significant challenges as they try to stay afloat in the current economic climate. The impacts of high inflation and government policies have made it incredibly tough for these businesses to thrive. During a recent parliamentary inquiry hearing on the cost of living, manufacturers shared their experiences and shed light on the difficulties they are facing.
Matthew Fogarty, the director of Celsius Manufacturing Pty Ltd, a Victorian-based company specializing in ductwork, expressed his concerns about the rising costs of materials. Fogarty highlighted that the company has been operating for around 50 years, but the last couple of years have been particularly tough. He mentioned that the costs of steel and insulation, which are crucial for their operations, have significantly increased. These rising import input costs have made it extremely challenging for the company to maintain profitability. Additionally, everyday expenses such as utilities and technology rental have also skyrocketed, further adding to their financial burden.
Simon Whiteley, the managing director and CEO of Corex Plastics Australia, echoed similar sentiments. He emphasized that state taxes, such as land tax, payroll tax, and WorkCover insurance, have been steadily increasing over the years. Whiteley specifically mentioned that his land tax bill in Victoria has gone up by 200 percent in just four years. These escalating costs have put immense pressure on businesses like his, making it harder for them to sustain operations and remain competitive.
Furthermore, Whiteley pointed out the significant impact of state governments’ energy policies on manufacturers. He cited the example of the Victorian government, which has made it challenging for companies to invest in alternative energy technologies other than solar. While solar energy is promoted as a renewable option, Whiteley argued that it doesn’t make financial sense for manufacturers due to negative energy prices during the day. Negative energy prices occur when energy generators pay consumers to generate electricity, indicating an oversupply of energy. This issue has raised concerns in the energy industry, with projections indicating that negative revenues caused by negative energy prices will continue to rise in the coming years.
Jon Seeley, the group managing director of Seeley International, an air conditioner manufacturer, also expressed frustrations with the Victorian government’s energy policy. He highlighted that the policy has led to a suppression of gas supplies, resulting in significant price increases for both consumers and businesses. These rising energy costs have further strained manufacturers’ budgets and made it harder for them to operate efficiently.
In addition to the challenges posed by high inflation and energy policies, recent changes in industrial relation laws have added to the burden for businesses. Seeley explained that the complexity and ambiguity of these new laws regarding casual employment have forced his company to make difficult decisions. To navigate the changes, Seeley had to stop employing casual staff and consolidate the company’s operations into one factory. Unfortunately, this decision will result in job losses for 85 permanent employees in Albury, many of whom have been with the company for up to 20 years.
The struggles faced by Australian manufacturers are not isolated incidents. A member of the South East Melbourne Manufacturers Alliance highlighted that their company’s overhead costs had increased by $600,000 due to the additional labor costs incurred to manage the changes in industrial relation laws. These challenges are putting immense pressure on businesses, hindering their growth and ability to contribute to the country’s economy.
In conclusion, Australian manufacturers are grappling with the impacts of high inflation and government policies. Rising costs of materials, state taxes, energy policies, and changes in industrial relation laws have made it incredibly tough for these businesses to stay afloat. The testimonies of manufacturers during the parliamentary inquiry shed light on the difficulties they face and the need for policymakers to address these issues to support the manufacturing sector.