Fears hinder business

ENGINEERING firms in the Latrobe Valley are already experiencing significant income losses as power stations wind back maintenance works amid industry uncertainty and a “crisis of confidence” hits the region, Federal Parliament heard last week.

In a speech to Parliament on Tuesday, Federal Member for Gippsland Darren Chester said discretionary expenditure had been put on hold by the local power industry as it prepared for the impact of the carbon tax, and possible closures under the Federal Government’s ‘contract for closure’ scheme.

He said this had dealt a blow to smaller engineering firms to the tune of up to $18,000 in income per week, while another major engineering company had withdrawn from the proposed purchase of a smaller local engineering firm due to a lack of confidence “in the future of power stations in the Latrobe Valley”.

“Small engineering firms are now reporting back to me that the major power stations are doing only the absolute minimum they have to do in their maintenance programs,” Mr Chester told Parliament.

“A small engineering firm that may have been getting $10,000 to $20,000 per week in jobs through the power stations is now looking at $1,000 or $2,000 per week.

“They are saying ‘one job is lost over here and another one over there’. They are not the headline grabbing job losses we have seen with some of the other major losses around the state; they are happening on a smaller scale – and this is before the carbon tax has even been introduced,” he said.

Mr Chester said he also had a letter from a major engineering company which, mid last year, was well advanced in its plan to purchase a smaller engineering firm in the Latrobe Valley.

He told Parliament the company had intended to take all six staff from the smaller firm.

“The firm had progressed as far as receiving planning approval, expanding their workshop and negotiating the final terms and conditions,” he said.

Mr Chester said the firm later indicated that its board of directors was concerned about the local impact of the carbon tax and ensuing power station closures and this ultimately led them to pull out of the sale.

He said fears about the carbon price set by the Federal Government had been raised from within its own ranks, referring to comments by Federal Resources and Energy Minister Martin Ferguson in the past week that recognised industry concerns about being “locked into” a carbon price much higher than Europe’s.

“It’s not just members on this side who are raising concerns about the carbon tax and the impact it is having on confidence in the economy,” Mr Chester said.

He said the carbon tax was of particular significance in the Valley.

“For people in this community it is about their jobs; it is about the lives that they can lead today; it is about the future that their children may have and whether they can obtain a trade and get to stay and work in the Latrobe Valley; and it is about what role they can play in the future economic growth of our great nation.”