PRINTERS FACING SOARING GOVT COSTS FAR IN EXCESS OF INFLATION

As the government trumpets headline inflation figures coming down, the reality for many print manufacturing businesses is that government charges themselves are skyrocketing, putting a significant burden on business.

Aleks Lajovic, managing director of National Print Awards’ gold-winning operation Impact International, based in Smithfield, NSW, John Galea, managing director of Wagner Labels in nearby Wetherill Park, and Ashley Goldsborough at Dimension1 are among those frustrated that fees charged by government and statutory agencies are soaring way past inflationary numbers, and are becoming unsustainable.

Lajovic said, “All levels of government tell us inflation is getting under control and that they are committed to supporting local manufacturing. As a proud Australian manufacturer, we appreciate the sentiment.

“So, with annualised inflation apparently now running at less than four per cent, we analysed some of our cost inputs that are directly controlled or heavily influenced by the NSW state and / or federal government.

“We compared what we paid in 2022 to what we are paying in 2024, and below is the percentage increase over the last two years – it is a sobering read.”

Lajovic’s figures show that:

* Local council rates: up 26.6 per cent in two years.
* Total ISR insurance premium: up 46.7 per cent in two years (our insured value was constant).
* NSW land tax: up 74.5 per cent in two years.
* NSW Fire Services Levy paid as part of insurance coverage in NSW: up 26.6 per cent in two years.
* Energy cost per kWh: up 140 per cent (disclosure: we did come off a long term contract this year).
* Network charges set as part of our energy bill: up 25 per cent in two years.
* Environmental charges set as part of our electricity bill: up 65.1 per cent in two years.

Lajovic said, “None of these cost inputs show any correlation to the inflation numbers. No manufacturing business can operate in Australia without paying for the above items.”

Soaring land tax, up by a whopping 74.5 per cent in the last two years, translates to higher rents, or for businesses like Impact, which own their own building, an additional extra burden after the costs of purchase.

Lajovic said, “These costs need to stabilise or reduce in 2025 otherwise local manufacturing will only get less competitive and weaker. We are already seeing this with our supplier base shrinking each year.”

Trying to meet these costs impacts the ability to invest in new technology too. John Galea, managing director of label converting business Wagner Labels said that with order numbers decreasing and volumes slowing, the company is holding back on purchasing new machinery.

Galea said, “When I look at those figures Aleks has shared, the scary part is the amount these costs have gone up by, they’re spiralling, and this impacts everyone in the value chain. If we’re not investing, our suppliers will suffer.”

Ashley Goldsborough, director at Dimension1, an NSW company that services printing and food packaging businesses by cutting materials to size, says the company is finding it difficult to run the business due to high insurance, among other costs. He said, “Our client base is shrinking as businesses close, and we're holding back on further investment for now. We have been in business a long time, much like Impact International, but even though we know things do get better when a recession lifts, there's a lot of pain now.”

Industry fears that the rapidly increasing fees cited by Lajovic, and replicated across many businesses, seem to show the federal and state governments are saying one thing – we support Australian manufacturing – but doing another, in driving up costs so high that work will be forced offshore.

Kellie Northwood, CEO of Visual Media Association, said, “We acknowledge and agree with the significant concerns raised by Aleks. What he is experiencing is common across the industry.

“While the government celebrates the easing of headline inflation, the reality for many businesses is quite different. A slow economy and the sharp rise in government controlled or influenced charges, some increasing by as much as 140 per cent in over just two years, is unsustainable. These increased cost burdens undermine the competitiveness of Australian manufacturers, which contradicts the government's stated support for local industry.

“The VMA is urging local, state, and federal governments to truly engage with the industry to find solutions that will help stabilise and reduce these costs. Without such intervention the long term viability of manufacturing in Australia will continue to be at risk, which will have detrimental effects across the Australian economy.”