Victorian businesses are bearing the brunt of a sharp increase in energy prices, with 41 per cent expecting to absorb the costs and 21 per cent likely to pass on costs to customers, a survey has found.
The Victorian Chamber of Commerce and Industry’s Survey of Business Trends and Prospects questioned almost 400 businesses about their sentiments over the first quarter of 2017.
A special question on energy policy revealed more than a third of respondents had already experienced significant increases in their energy costs, with the pressure felt hardest in the manufacturing, tourism and hospitality sectors.
Victorian Chamber of Commerce and Industry Chief Executive Mark Stone AM said the survey showed energy pricing and supply was a serious issue for all businesses, as many are facing steep price hikes when renewing their contracts.
“While 15 per cent of businesses said they would try to manage increased costs by switching energy providers, the majority said they have accepted the increases and will look to absorb the costs themselves. Of course, our concern in this circumstance is what impact this will have on staffing levels and job growth,” he said.
“We cannot shy away from the fact this will have an impact on all Victorians, as this extra burden faced by businesses limits growth and will affect our state’s economy if left unchecked. Other responses, such as 21 per cent of surveyed businesses reporting they will pass costs on to customers, and 18 per cent offsetting costs through savings elsewhere in the business are also a cause for concern.”
One in four surveyed businesses from the manufacturing, tourism and hospitality sectors reported difficulties in obtaining competitively priced energy supplies in the past 12 months.
Business sentiment for the national economy jumped by seven percentage points, possibly reflecting buoyed confidence from pro-business policies from the Federal Government such as a reduction in penalty rates and a reduction in the company tax rate for smaller businesses.
“While surveyed businesses had the strongest sentiment for the national economy in more than three years, we are seeing that Victoria’s energy crisis is still a major concern which is impacting the economic outlook for the state, with almost three quarters of Victorian businesses expecting the economy to stay the same or weaken over the next year,” Mr Stone said.
Survey respondents listed energy security and lower prices as their top energy policy priorities. Mr Stone said energy security and pricing is a national issue that must be addresses through a long-term plan to ensure no state is subjected to drastic price rises or energy blackouts.
“This survey shows the very real impact the energy crisis will have on Victorian business, with one per cent of our surveyed businesses already considering closing. This number will surely grow unless we address our energy problems at the highest levels of Government,” he said.
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