The Queensland Government’s plan to start an electrical contracting firm has been met with widespread criticism from sparkies up north. Paul Skelton reports.
It sounds like a great idea: the Queensland Government is embracing renewables while at the same time making a concerted effort to reign in the spiralling cost of power. For hippies and non-hippies alike this is great news; the announcement seemingly addresses environmental concerns as well as the hip pocket of consumers.
Sadly, an addendum to the plan carries a heavy cost for electrical contractors.
On 1 July 2016, the Queensland Government announced the formation of Energy Queensland, “a single entity which unites customers from the Torres Strait to Tweed Heads through the merger of Ergon Energy and Energex”.
“This is more than simply bringing organisations together – today we establish the means of ensuring that the electricity grid that underpins our economy will remain at the core of how customers choose to use electricity,” Energy Minister, the Honourable Mark Bailey, said at the opening of the new entities Townsville headquarters.
“Rather than sell these assets to the private sector and watch power prices soar, the Government’s commitment to keeping our electricity assets in public hands enabled us to take action to stabilise prices, and to create Energy Queensland.”
That all sounds great, but where things get a but problematic for contractors is in the creation of a complementary ‘energy services business’, which the Government says will “initially focus on providing access to renewables and storage through the grid for a broader range of customers; using renewable energy supply options to reduce expensive diesel costs in remote communities; and options to enable Queenslanders to take control of their electricity needs through the introduction of tools and systems including smart meters.”
In simple terms, the Queensland Government is planning to start its own electrical contracting firm to compete with mum-and-dad operators, many of whom are based in rural areas where work is already difficult to source.
The move has caught the ire of both industry associations, the National Electrical and Communications Association (NECA) and Master Electricians Australia (MEA).
MEA chief executive Malcolm Richards says the State Government is clearly planning to take work away from small contractor outfits.
“This is the start of what we believe will be a very tough period for mum-and-dad electrical businesses in Queensland,” Malcolm says.
“This is particularly true in regional areas, which the State Government has specifically nominated as a key target market for this taxpayer-funded giant.
“And sadly, we’re already seeing electrical businesses adjusting for the future, with a number of businesses that we are aware of laying off staff.
“This is like the State Government paying Coles and Woolworths to set up across the street from the local corner store.”
Malcolm says emerging technologies are the bread and butter work for all electricians, whether they are based in the regions or in the city.
“There’s already an army of innovative and enthusiastic small businesses across regional areas rolling out a range of new, green technology.
“They have outlined no plans to grow the size of the electrical contracting sector in the state, and will therefore only be taking work that is currently performed by private businesses.
“In most cases, these are small businesses whose owners have spent years of investment and hard work to carve out a position in a very competitive market.
“Now their hard work – and the jobs of their apprentices and employees – are being put at risk.
“However, it would be far better if the Government and bureaucrats would pause and genuinely consider the damage they are about to cause tor regional businesses and jobs, and choose a different course of action.”
The executive director of NECA’s Queensland branch, Mick Logan, has written to Premier Annastacia Palaszczuk asking her to reconsider the Government’s position with the creation of Energy Queensland.
“We believe it’s the Government’s role to create the proper regulatory and safety settings to ensure an efficient, market-based sector. The decision to create Energy Queensland to compete against mum-and-dad owned electrical contracting businesses, while adjacent Government departments regulate the sector, creates not only a negative perception of conflict but the potential to seriously distort the market and drive up service prices once smaller players are driven out of business.”
Mick has significant concerns about how far Energy Queensland will ‘creep’ into the market.
“Say there was a project to replace a remote community’s power supply from diesel engines and generators to solar. Normally, electrical contractors will be hired by the distribution entity to install all those solar panels; now, Energy Queensland is saying that it will do it.
“But what’s to stop them from creeping into the domestic market? If someone’s hot water system breaks down, will they fix it? What about installing solar panels on roofs?
“They have the ability to allow people to pay for these services through their power bill over a extended period of time. It might even be offered under an interest free arrangement – electrical contractors simply won’t be able to compete.”
Mick explains that NECA is ultimately not against the amalgamation of Energex and Ergon.
“This merger will create efficiencies that will hopefully reduce the cost of power which is very high in Queensland,” he says.
“Our issue is the Government’s plan to setup a contracting company to hang off the merged entity to do the work they traditionally gave to NECA members. We feel this is using their market power unfairly. Our members can’t compete against the Government.”
NECA and MEA have both indicated that they will continue to fight the Queensland Government over this issue, but the clock is ticking.