Rising energy costs are a business confidence shocker

Sunday 20 August, 2017

According to the latest Suncorp–Resilium-Chamber of Commerce and Industry Queensland Pulse Survey, electricity and utility costs are now the number one challenge facing the state’s business community.

CCIQ’s Kate Whittle confirmed the results show what businesses have been anecdotally feeding back to CCIQ for the last 12 months, “Electricity is the key business issue facing small businesses across the state and there is an ever-increasing frustration on behalf of businesses about the year on year price hikes.

“When travelling throughout the state and meeting with businesses, there is a real anger about electricity prices and a feeling that nothing is being done to make a real difference to the issue. “Businesses are dismayed that Australia now ranks as the most expensive electricity market on the planet when we are awash with resources both traditional and renewable.

“To put that into context, electricity prices are now more of a concern to business than economic demand, generating sales and finding skilled staff.”



Results show the issue of energy costs has risen swiftly as a key concern for small businesses in the past year, ranking as the number one issue for businesses up from ninth place the previous year.

Almost 80 per cent of businesses reported increased costs during the past quarter. Throughout the survey, businesses cited rising costs for electricity and utilities as the biggest operating issue they faced. “The data shows the impacts of rising electricity prices were being felt in every region across the state in both the regulated and unregulated markets.

“With prices continuing to increase, small businesses have indicated there will be consequences for jobs and the economy moving forward” she said.

“State and federal governments need to commit to meaningful solutions to power prices and need to do so immediately. Businesses are fed up with talkfests and platitudes and want to see action that ensures that our manufacturers don’t get forced offshore, our farmers don’t see prices double every two years and jobs and economic growth is not stymied by an issue which they have the ability to control.

Ms Whittle highlighted the impact on business confidence “As a result of the electricity pricing issue, The Pulse Survey saw a set-back in confidence in the Queensland economy, falling 2.3 points to 47.1.”

Confidence Falls but Optimism in Tourism and Construction

Electricity pricing isn’t the only factor impacting on business confidence in Queensland, with the gains made following Federal and State Budgets being largely wiped out by uncertainty created by turmoil in global markets and the domestic political system are recurring themes which continue to weigh down on sentiment.

Ms Whittle said “The General Business Conditions indicator fell to 44.7 points signifying operating conditions worsened during the June quarter, with businesses reporting that rising labour costs and other operating costs resulted in falling profits in the past quarter.

“On a positive note, sales and revenues improved along with the number of businesses hiring new staff, however, it is concerning to see businesses cut back on capital expenditure.”

“What we are seeing is a classic case of business being squeezed from all angles and at some stage something will have to give, usually we see capital expenditure drop off followed by employment, as businesses enter a holding pattern as they try to ride out tough times.

“The bright spots for Queensland are the Tourism and Construction sectors as visitor numbers remain strong and we look forward to the Commonwealth Games.“

Ms Whittle did provide a note of caution regarding the upcoming quarter, “The forward-looking indicators point to a weaker quarter ahead in September, with the General Business Conditions Index forecast series pointing to another difficult quarter with profitability under pressure from rising operational costs. “If we throw into that mix the comical nature of politics in Canberra and the likelihood of a Queensland election in November, business confidence may be variable for the next 3-6 months.”

Key Indicators Key Pulse Survey findings include:

  • The 12-month outlooks for the Australian (52.0) and the Queensland (47.1) economies have both retreated during the past quarter.
  • The Pulse General Business Conditions Index dropped by 7.9 percentage points in the June Quarter to 44.7 points in seasonally adjusted terms.
  • The Pulse Sales and Revenue Index retreated 7.1 points during the June quarter to 51.8.
  • The Pulse Labour Costs Index rose a further 3.4 points to 60.9 in June.
  • The Pulse Profitability Index slumped by 9.5 points in the June quarter to 40.0.
  • The Pulse Capital Expenditure Index slipped back during the June quarter to 49.3 points, indicating a small fall in capital expenditure.
  • The Pulse Employment Levels Index fell 2.6 points to a below neutral reading of 49.2 points in the June quarter.

 Download the latest June 2017 Pulse Report here 

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