Almost half of small business owners fear ability to pay their energy bills

August 28, 2018

 

New research confirms small business owners are frustrated by their inability to reduce their energy bills, and anxious about their business’s future viability as a result of Australia’s ongoing energy price crisis.

 

A national snapshot of nearly 200 small business owners reveals rising energy prices is threatening the viability of the sector, with one in two owners reporting they would struggle to absorb costs and stay in business if the past two years of price rises is repeated in the future.

 

The preliminary findings of the Energy Bill Shock: Future Proofing Small Business Energy Costs report found businesses with rented premises and sole traders are among the most vulnerable to energy bill shocks. About 12 per cent of small businesses surveyed fear their business will be forced to close if the recent rises in energy costs continued at the same level.

 

“It’s great to see to the Morrison government recognise the critical impact energy prices have on small businesses,” Council of Small Business Organisations of Australia chief executive Peter Strong said.

 

“We will be talking to the Government over the next few days over the possible practical action that can be taken right now to support Australian small businesses keep their doors open and reduce their energy price stress. 

 

“This is a fundamental issue that needs to be addressed as quickly as possible, Australian small business represents  97 per cent of all businesses operating in Australia.”

This survey is part of a project by the Council of Small Businesses of Australia, funded by Energy Consumers Australia and the Australian Small Business and Family Enterprise Ombudsman. The interim findings and small business case studies will be released at the Council’s National Summit in Sydney on Thursday and presented to Energy Minister Angus Taylor.

 

The interim findings include:

  • Half of small businesses sampled would struggle to cope with future energy price rises at the same pace as the past two years.Of these, about 12 per cent say they would need to close their business and 43 per cent would find it “extremely hard” to absorb future price rises.

  • Energy price rises are putting the brakes on small business, leading to reduced profits and dividends, less growth and investment and higher prices for consumers.

  • Nearly 60 per cent of small businesses report high energy prices have reduced their profitability, 37 per cent of small business owners have taken a pay cut themselves to absorb energy costs, 30 per cent have increased prices to offset energy bills and 24 per cent have put their capital expenditure plans on hold.

  • 57 per cent of business owners are stressed or anxious about energy bills and one in three business owners are worried about their ability to support their families because of high energy costs.

 

The Energy Bill Shock: Future Proofing Small Business Energy Costs report includes a series of case studies across various industries including farming, hospitality, retail, manufacturing and personal services that investigates the current impact on business decisions and ongoing viability.  The project’s final report will provide governments and key decision makers with evidence of the energy price impact on small businesses across the country and make a series of recommendation to help  small business owners reduce their bills.

 

Drawing on the evidence from the national snapshot of small business owners, potential areas of action include:

  • Empowering small business with better information: Developing a one-stop-shop of information highly targeted to small business with industry-specific information and advice.

  • Taking action: Greater tracking and information-gathering of average small business energy costs by industry and location, enabling small business to benchmark themselves against similar businesses’ energy usage and costs.

  • Potential regulation / legislative changes: Assistance to businesses with rented premises to help tenants and landlords introduce energy efficiency measures

  • Improving business practices: Supporting owners to implement better business processes and make the most of energy efficient capital investments.

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