Energy policy must work with manufacturing: DuluxGroup

Australian manufacturers face a perfect storm of rising costs and regulatory delays that threaten to derail economic recovery, DuluxGroup’s Patrick Houlihan warns.

An 18-month delay is holding up DuluxGroup’s planned $120m factory expansion, chairman and CEO Patrick Houlihan says. Picture: Adam Yip/The Australian

CEO Survey 2026: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2026? Are cost pressures in your business: increasing/stable/easing? Are you likely to increase, hold steady, or trim your investment spend or employment over the next 12 months?

We anticipate GDP to be at the long-term average of around 2 per cent. We’re cautious about the recent uptick in consumer confidence given ongoing cost-of-living pressures and uncertainty on interest rate relief in the context of inflationary pressure.

While we anticipate markets to generally remain soft, 75 per cent of our business is in the renovation and repair of existing homes and gardens, and we expect this core market to remain relatively resilient. We expect cost pressures, particularly around inputs such as raw materials and costs related to freight, distribution and energy, to remain. We don’t anticipate any material change to our investment spend or employment levels.

Technology

Which best describes your organisation’s AI adoption? (Exploring/Piloting/Implementing selectively/Scaled across business) If implementing or scaled, are the productivity benefits starting to come through or do you expect more time for the full impact? Has the use of AI started to influence employment decisions across your organisation?

Our teams are actively using AI tools to explore and deliver productivity benefits in many different ways. While the productivity gains are starting to emerge, we see a long runway of activity both in productivity and growth as technology and our team grow in maturity. We are taking a ‘consumer & customer’, business-led approach this area, supported by a unified team of company-wide experts.

People

Has your organisation evolved its approach to flexible working during the past year? Does your organisation have a policy around office attendance. What feedback, if any, do you have for governments considering prescribing working from home for a set amount of days per week?

For us it’s about getting the optimal mix of face-to-face collaboration, mentoring and teamwork that is best achieved in-person at the workplace and the flexibility benefits of working from home.

We continue to take a ‘leader led’ approach, with leaders throughout our businesses working directly with their teams on the right balance of work on-site and offsite – as opposed to individuals making their own decisions. A culture of respect, trust and accountability is critical.

Government prescribed or regulatorily imposed measures would be counter-productive, you cannot have a ‘one-size-fits-all approach’ to this, each business operates differently. It is worth noting that 75 per cent of our employees work from site-based roles where this is not an option, such as manufacturing, distribution, stores, etc. Typically, for relevant roles, we seek 3-4 days in the office/customer interface ‘with flexibility’.

Geopolitics

How significantly are global trade tensions/tariffs impacting your business? Is Australia getting the balance in managing its big economic and political relationships with major trading partners?

In context, the most recent tensions come off the back of Covid-19, port congestion, and container and pallet shortages, among other disruptions. So, as a business, we’ve been managing through supply chain uncertainty for at least six years now.

We’ve been building as much flexibility where we can, in terms of alternate sources of supply for key inputs, lead times and inventory management. Given the overall geopolitical uncertainty, the Government’s measured, rather than reactionary approach to our major trading partners, is proving to be sound, with the recent easing of tariffs on some of the country’s key exports a case-in-point.

Energy

Do you have any concerns about Australia’s pathway to renewables? Should there be more flexibility in settings leading to 2035? Are energy costs becoming an increasing factor around your longer-term planning?

Our own operations are not particularly directly energy intensive nor emissions heavy – albeit this is more the case with our raw material and other suppliers.

The pathway to renewables requires genuine bipartisan support and state-federal co-operation. We don’t have a good track record of that generally in Australia. We’ll never get the level of investment needed in the required renewable technologies if we don’t get certainty on an agreed pathway moving forward.

The regulatory framework around environment and planning in particular must be conducive to investor confidence in this growing sector. It urgently requires a planned energy transition that factors in the needs of manufacturers in particular, including protecting our trade exposed, energy intensive industries to ensure a level playing field in global markets and a genuine ‘future made in Australia’.

Reform

What would nominate as your top policy priority that can be used to lift Australia’s competitiveness or productivity? Should The Albanese government be pushing for even bolder policies around reform?

Number one would be to eliminate the regulatory duplication, counter-productive tax and compliance burdens and policy uncertainty that put brakes on investment (including planning reform to free up much-needed investment in housing and construction). Relative to our global peers, it’s incredibly expensive to invest in capital projects in Australia in terms of construction costs and the time and cost related to planning and approvals.

For example, we’re investing more than $130m in a new factory for our Selleys sealants, adhesives and fillers business in Sydney that, despite being located on our existing site, largely within an existing building in an established industrial zone, has taken more than 18 months in approvals, required more than $2m in government fees and $700,000 in consultant and internal resource costs and has required our producing more than 40 reports spanning 3,500+ pages.

Fortunately, the NSW government has looked at the process and recently introduced changes that integrate economic, environmental and social considerations within a risk-based approach to decision-making, reducing unnecessary costs and delays caused by presumptive, standardised approaches.

This shows an intent to take a pragmatic, fit-for-purpose approach which should help provide confidence to invest. That’s one State addressing one key issue, however, we need a co-ordinated approach across government at all levels.

We also need a technology agnostic pathway, enabling investment confidence in new energy capacity and supply to deliver reliable, least cost energy as we transition to net zero.

And finally, we need education & skills training (plus skilled immigration) that supports our future growth industries, particularly addressing skills gaps related to AI and other digital enablement and technology skills.