11 October 2016

Energy policy failures threaten manufacturing investment and jobs

Statement from Manufacturing Australia Chairman, Mark Chellew and Executive Director, Ben Eade

Last month's power outage in South Australia was extremely damaging for manufacturing in that state.

It follows previous incidents in South Australia this year that have led to both supply outages and extremely high energy prices.

The lack of stability and high power prices in South Australia are threatening both existing and future manufacturing investment in a state already reeling from automotive closures.

New manufacturing investment is particularly at risk. Energy costs are one of the key input costs in manufacturing. The more expensive and unstable our energy system, the more difficult it is to make the economic case for building new manufacturing plants, or making necessary re-investment in existing plants.

It is critical that the review of energy security being led by Dr Alan Finkel AO emphasises the need for both energy security and energy affordability, which are fundamental to competitive manufacturing.

The review must examine the gas market alongside the electricity market, because energy security and affordability can only be achieved with a mix of energy generation technologies including coal, gas and renewable energy. 

This is now a national issue, not just a state issue. One of Australia's biggest competitive advantages in global manufacturing is our abundant energy supplies, but we are squandering that advantage if we cannot ensure reliable and affordable energy is delivered to commercial and industrial customers. 

Manufacturing, once lost, is unlikely to return, so ensuring stable and affordable energy for manufacturing is a top priority for the nation and the 1 million people employed in manufacturing.

Media contact: Ben Eade, Executive Director, 03 9023 9117