SA seeking to capitalise, as Victorian business leaders warn high taxes, energy policy are sparking exodus

SA is targeting Victoria with an ad campaign to lure companies across the border to capitalise on its neighbour’s gas ban.

South Australian Treasurer Stephen Mullighan. Picture: NCA NewsWire / Brenton Edwards

South Australia has signalled it is seeking to capitalise on Victoria’s anti-gas energy policy and high taxes, targeting its neighbouring fellow Labor state with an advertising campaign to lure companies across the border.

South Australian Treasurer Stephen Mullighan has joined Premier Peter Malinauskas in declaring Victoria’s decision to ban gas connections to new homes “makes no sense”, days after Australia’s largest gas-heating manufacturer, Seeley International, announced it was moving 125 jobs from the NSW-Victoria border to its Adelaide headquarters.

Mr Mullighan’s comments come as the head of Victoria’s chamber of commerce, Paul Guerra, told The Australian businesses in his state were “on the edge”, doubling down on his warning at a business lunch on Friday that if the Allan government “cannot guarantee that the lights remain on in this state, then I can guarantee that many businesses will find places other than Victoria to set up.”

Welcoming Seeley’s decision to consolidate its business in his state, Mr Mullighan said he was aware of the company’s views on Victoria’s gas policy, which managing director Jon Seeley last week described as an “inexcusable anti-gas obsession”.

As well as producing gas heaters, the company is also Australia’s largest airconditioning manufacturer, and recently won a major contract to develop and export environmentally friendly airconditioning technology to California.

Seeley International managing director Jon Seeley his Lonsdale factory in Adelaide. NCA NewsWire / David Mariuz

“Seeley is a proud decades-old manufacturing business and we are very pleased that they are consolidating their operations here in SA rather than continuing them in Victoria,” Mr Mullighan said.

He said South Australia continued to believe that gas needed to be part of the energy mix.

“Banning gas makes no sense, especially when the alternative is to use electricity that is generated by dirty brown coal,” Mr Mullighan said, echoing Mr Malinauskas’s comments last week.

“Taking a key fuel off the table while we are building renewable energy capacity will make it ­harder to transition. In our view gas is an essential fuel and as such we are happy to support Seeley to that end.”

The Australian understands Mr Malinauskas met Seeley’s owners last year and immediately offered state government support to help the company shift its operations to South Australia. This included a $50,000 grant from the Department of Trade to support the expansion of the company’s Lonsdale plant in southern Adelaide, creating up to 160 jobs.

Mr Mullighan confirmed that South Australia had targeted Victoria with an advertising blitz promoting the state as a superior business and investment destination. “SA has a very good story to tell in terms of tax and the cost of doing business,” he said.

“These are not figures we have made up or contrived. It is clear that any national employer cannot find a place with lower costs, a better lifestyle, cheaper housing and happier staff in a city that’s easy to get around.”

Victorian Premier Jacinta Allan. Picture : NCA Newswire / Nicki Connolly

Late on Friday, in a bid to avoid scrutiny, the Victorian government quietly published a mid-year budget update, revealing state debt had blown out by an extra $11.7bn to $126bn. In a separate report, global ratings agency S&P forecast that figure could almost double, to $247.2bn by 2027.

Ahead of what is widely expected to be a horror May budget, Mr Guerra warned that businesses in Victoria are “on the edge”, as they grapple with $8.6bn of “temporary” levies announced in last year’s budget to help pay off Covid debt, as well as a mental health levy of 0.5 to 1 per cent of payroll unveiled in the 2022 budget.

“There can be no more taxes and levies, or increases on those taxes and levies, because business is at the limit,” the VCCI chief executive said.

Mr Guerra warned that the lack of certainty over energy security and affordability in Victoria, on top of the high taxes, was forcing businesses to reconsider remaining in the state.

“There are a number of businesses that are talking about downsizing their operations in Victoria, and increasing their staff levels in other states,” he said.

“We need a plan, and Victorians need to understand how we’re going to reach the targets that the state government’s put out, which is 95 per cent renewable energy by 2035. Every Victorian needs to understand that the path to net zero is going to be expensive, and it’s going to be complicated, and our view is Victoria should not be out of lock-step with the eastern seaboard, because then we will be more expensive than the other states.”

Victorian Chamber of Commerce CEO Paul Guerra at GMHBA Stadium. Picture: Mark Wilson

Mr Guerra urged other business leaders not to “sit quiet” nor presume that others would champion the issue. “Call out the bullshit and call out the ideology,” he said. “This isn’t a game. This is our future. Reliable energy at affordable prices must be our aim.”

Ai Group Victorian director Tim Piper said Seeley was far from the only business negatively impacted by the state government’s gas policy. “There are also many other businesses in Victoria that have been significantly disadvantaged, probably as many as 3000 jobs affected, and those companies had next to no time given to them to change their businesses to work in with the government mandate,” he said. “Those that are significantly affected are having to decide what to do with their businesses. Some will pivot, but some will not be able to.”

The architect of Victoria’s gas policy, Energy Minister Lily D’Ambrosio. Picture: NCA NewsWire / David Crosling

A spokeswoman for the Victorian government said Victorians had subsidised South Australia through the GST system to the tune of $670m last year.

“We are propping up SA’s ­ailing economy,” the spokes­woman said.

“We’ve always been clear gas has a role to play in Victoria’s energy transition. With dwindling supply and gas companies continuing to prioritise export markets over Victorians, getting households off gas not only helps to reduce their energy bills but helps ensure there is enough left for manufacturing and power generation.

“Because of our record investment in renewables wholesale power prices in Victoria are the lowest in the national energy market, so businesses in South Australia – particularly manufacturing businesses – will be paying more than they would here.”

Victorian opposition energy spokesman David Davis said Victoria under Labor was a “basket case”, with “the highest taxes in the country, the most restrictive regulations, and a damaging energy policy”

“The combined effect of the backward-looking energy policy, an ideological policy rather than a practical policy, will be to drive businesses from Victoria, and enable other jurisdictions, both within Australia and beyond, to poach key Victorian businesses,” Mr Davis said.

“This will weaken Victoria, making the massive debt burden harder to carry and substantial growth harder to achieve.”