Power costs have blown out

Manufacturers unite to decry high prices

Energy prices are “out of control” and have emerged as the most critical headwind facing Australian manufacturers, the chief of paints maker DuluxGroup says.

ENERGY prices have been slammed as “out of control” and the biggest drag on Australian manufacturers in a scathing speech by the CEO of paint maker Dulux-Group.

Patrick Houlihan says manufacturing remains “well and truly alive” in Australia but soaring power prices mean it is “kicking against the breeze” when the sector needs to be globally competitive.

Speaking at a Business Council of Australia event yesterday in Melbourne, Mr Houlihan said it was “crazy” that an energy-rich nation had been saddled with such high prices.

“The cost of energy in this country is out of control,” Mr Houlihan said. “There is lots of politics, it’s very complicated and I don’t profess to understand it but we need to find the middle ground ... there has been a breakdown in market structure.

“When I think about manufacturing for this country, more than anything else our energy costs underpin our competitiveness.

“We are one of the most energy-rich countries in the world so common sense says it’s crazy what we are paying.”

Mr Houlihan made the comments at a high-profile panel discussion organised in Victoria’s traditional manufacturing heartland by the BCA, Sky News and News Corp, publisher of the Cairns Post.

About 170 people gathered to hear and question business leaders including Siemens Australia and New Zealand chief Jeff Connolly, Ford Australia president Graeme Whickman, BCA chief Jennifer Westacott and Mr Houlihan.

Mr Connolly, from Siemens, said the nation’s electricity market was too opaque around its cost structures.

He said that while electricity generation received a lot of public attention, much of the cost in bills was generated by the distribution side of the business.

“There is way too much discussion in Australia about what we are going to burn to generate the power,” he said.

Mr Connolly said Australia was unlikely to return to an era of cheaper power than rivals.

As such, it should spend a lot more time working out how to use energy more efficiently.

“We’ve reached a new norm in the price – the question is how do we use less.”