Energy rethink needed

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

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

Speaking at a Business Council of Australia event yesterday at Broadmeadows, in Melbourne’s north, Mr Houlihan said it was “crazy” that an energy-rich nation such as Australia 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 its crazy what we are paying for energy.” Mr Houlihan made the comments at a highprofile panel discussion organised in Victoria’s traditional manufacturing heartland by the BCA, Sky News and News Corp, publisher of the Gold Coast Bulletin.

About 170 people gathered to hear and question a group of the nation’s 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.

“The real issue is how opaque it is at the power station, through transmission, through distribution and what’s going on in the retail market ... we have not really got a competitive situation there that self regulates.”

The next Strong Australia forum will be in western Sydney next month.