Matters of Interest

Electricity Costs

The Hon. D.G.E. HOOD (15:23): I rise to speak on the rising cost of power prices in our state, which are adversely affecting all South Australians. In recent days, members have seen that particular attention has been drawn to the negative impact these costs have had on our small businesses in particular. Indeed, it has been highlighted in The Advertiser in two very good examples, which I will allude to in a moment. Under our current state and federal Labor governments, the cost of doing business in our jurisdiction has reached an all-time high, with our smaller enterprises being forced to deal with some of the highest electricity prices in the nation, and indeed not just in the nation but in fact anywhere in the world.

The Advertiser has recently reported that one of our state's most iconic companies, which members would have seen in the publication I think it was yesterday, Nippy's, received a monthly electricity bill that has more than doubled over the past year from $51,600 last June to nearly $110,000 this month—more than doubled. This is despite the fact that Nippy's invested almost $1 million on solar panels, energy-efficient lighting and special pump equipment to actually decrease its power usage. So the bottom line there is that Nippy's is using less power but it is costing them more than double as much.

Nippy's experience is certainly not isolated, of course. Earlier this week, the owner of Ballaboosta cafe informed The Advertiser that his power bill had jumped dramatically from $5,800 a quarter last year to approximately $9,200 a quarter this year, which is an increase in the order of 58.6 per cent. These increases are unsustainable. If we want to drive businesses out of this state and out of our nation then that is exactly how to do it.

There are no doubt countless other business owners who would be in a similar position. As members would be well aware, small businesses comprise no less than 98 per cent of all businesses registered in our state, employing some 300,000 South Australians, which account for up to 40 per cent of our total workforce in South Australia. We therefore cannot afford to allow these enterprises, which have relatively low margins in many cases, to cease to exist when South Australia already suffers the highest level of unemployment in the nation.

I note that the wholesale cost of electricity has increased by some 145 per cent, which is a huge impost by any standards, and again I say utterly unsustainable. According to a recent Australian Energy Market Operator's quarter 2 2024 quarterly energy dynamics report, our state's average wholesale power prices have increased by $80 per megawatt hour; that is, they were $55 per megawatt hour and are now $135 per megawatt hour. That is just since the first quarter of this year, but the increase is $80 per megawatt hour from $55 to $135 per megawatt hour—again, utterly unsustainable.

I am also aware that South Australian and Australian household electricity prices were found to have risen considerably faster than those in France, Germany, Japan, Spain, the United Kingdom and the USA, and in fact more than three times the OECD average, according to a recent review.

Dr Geoff Bongers, an adjunct professor at the University of Queensland School of Chemical Engineering, tracked the growth in electricity prices across a selection of developed nations using the most recent data available and he discovered that among the aforementioned countries Australia experienced the greatest increase in the cost of residential electricity at some 32 per cent increase against average growth of just 8 per cent throughout the OECD—that is 32 per cent here in Australia and just 8 per cent across the rest of the OECD on average. Again, this is utterly unsustainable and making our businesses uncompetitive.

The study attributed the steep prices to the closure of power stations, which has led to a sharp decline in the country's reserve generation capacity, causing spikes in costs at times of peak demand. This highlights the fact that Australia has a less diverse mix of technologies in power generation and, most notably, a reduced reliance on coal and, certainly at the moment, no reliance at all on nuclear energy. I have much more to say on this but time will not permit me from doing it today. I will continue with this theme at my next matter of interest.