Food and grocery sector struggling against gas prices, taxes

Image: AFGC

The Australian Food and Grocery Council releases its State of the Industry annual report today, and despite a healthy growth in export figures, has pointed to a strain on the industry through energy costs.

The 2016 version of the report notes that employment in the sector has “hit a wall”, standing at 317,000 jobs. This total was 322,000 in the previous year.

Exports were up 14 per cent on the previous year, but operating costs were an issue, particularly with a shortage of gas supply contracts available, supermarket price wars, and in terms of taxation.

“Company tax cuts for all business are more important than ever as a means of sparking investment, and targeted investment allow­ances must also be considered,’’ Gary Dawson, the AFGC’s chief executive told The Australian, urging the opposition to pass a proposed tax cut for companies with revenues over $10 million.

Dawson said that gas price rises of up to 95 per cent were being seen in Victoria and NSW. The states had abundant gas reserves, yet bans on unconventional gas extraction.

“We have the crazy situation where cheap ­energy should be a source of comparative advantage for Australia but instead gas and electricity price increases are putting us at a disadvantage,” said Dawson.

The 2015-2016 report is in contrast with last year’s release, which found over 3,000 jobs created in the period, a “spectacular” surge in trade with exports up 28 per cent, and “double-digit growth across a whole range of categories.”