The Impact Of Increased Costs On Canterbury Business

Canterbury Employers’ Chamber of Commerce (The Chamber) Chief Executive Leeann Watson says the results of the BusinessNZ Network Energy and Transport Survey, released today, are "incredibly concerning".

The survey of 87 businesses spanning all sizes, conducted in June, shows big increases in electricity, gas and transport costs hitting them. As a founding member of the BusinessNZ Network, members of The Chamber contributed to the nationwide survey.

Energy costs

The survey found 40% of respondents had experienced increases in electricity prices in the last 12 months and over 62% expect them to increase in the next 12 months. The average electricity increase was 75.7% and the median increase was 35%. In addition, 25% had experienced an increase in gas prices over the last 12 months and 35% were expecting increases in the next 12 months, with the average price increase being over 50% and the median 12%. Nearly half of respondents (48%) said the increased energy costs had a middle to significant impact on their business.

Transport costs

The increase in costs for imports has on average increased by 124%, with a median of 45% and for exports the average increase in transport costs was 77% (30% median). When asked about strategies to cope with the price increases respondents said:

-74% would put prices up for their customers

-42% would absorb the increased costs, but reduce business activity

-22% would reduce staff numbers

-8% would offshore manufacturing to a more competitive country

-3% would close

"The increasing costs are incredibly concerning," says Ms Watson. "In Canterbury, these numbers support what we are hearing in the marketplace, and particularly in relation to our manufacturing and exporting base.

"What is most troubling is that many of the strategies that businesses have indicated that that they would use to cope, go against the grain of what we as a country are trying to achieve - which includes local procurement, increased productivity, more jobs, increased GDP, and a focus on New Zealand made products.

"Businesses, and particularly small businesses, aren’t able to continually absorb the increasing costs that they are experiencing across the board - as well as increasing electricity and transport costs, there is also the increase in minimum wage, additional sick leave entitlements, and the introduction of a new public holiday next year. There is concern that the culmination of all of these costs could be prohibitive for some businesses and see some choose to move their manufacturing offshore, reduce their staff numbers or close altogether.

"As a country we need to be working towards proving a business environment that enables and encourages enterprise. For Canterbury, and manufacturing and exporting in particular, we need stable, affordable, low emission energy and transport options that align with our unique local business environment and circumstances and consider our trade dependence and reliance on export competitiveness."

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