Anthony Albanese’s power play to keep the Aussies $230 better

Power bill spikes will be dramatically reduced after federal parliament agreed to impose a year-long price cap on coal and gas to keep households $230 better off than they would have been otherwise.

It comes with a warning that Australians will still face higher electricity bills, but the government’s emergency package, which includes unprecedented market intervention, will save households and businesses from full-blown crisis.

The crucial point Australians should note, however, is that they won’t be getting a $230 discount on their electricity bills; rather, market intervention will mean that using coal and gas will cost consumers less on their future electricity bills, averaging about $230.

In a special session on Thursday, the government’s emergency energy package sailed through both houses, supported by Greens David Pocock and Jacqui Lambie in the senate.

The legislation imposes a 12-month maximum price of $12 a gigajoule for gas and $125 a tonne for coal.

The federal government will contribute $1.5 billion, which will be matched by states and territories, in a relief package. It is still to be distributed, but the discounts will be administered by state and territory governments from April in the form of reduced energy bills to reduce inflation.

Anthony Albanese said an outright cut would exacerbate inflation, which in turn would prolong the energy crisis.

“This plan is a combination of immediate action but also future reform,” the Prime Minister told Parliament.

“We must act now to tackle this crisis to keep Australians in work, to support families, but also to secure our energy future.”

It is estimated that the combination of the $12 per gigajoule cap on gas, the $125 per tonne cap on coal and the $3 billion in bill assistance could ease inflation by 0.7%, a 0, 5% of which will come directly from price caps.

The opposition has criticized Labor for its $230 figure when before the election it had promised to cut bills by $275.

Labor says the war in Ukraine had sparked a global energy that could not have been predicted.

In the October Budget, the Treasury had predicted electricity bills would rise by 20% this financial year and 36% next year, a combined increase of 63%.

The caps will slow growth to 23% next year, but bills will still be 47% higher over the two years.

Those who qualify for the rebates will be better off by about an additional 10 percent.

Gas bills, which were expected to rise 20% this financial year and 20% next year, are now forecast to rise 18% this year and just 4% next year.

Treasurer Jim Chalmers confirmed the price cap would be reassessed in mid-2023.

Energy Minister Chris Bowen played down concerns that the price cap would have disastrous consequences for the gas industry.

“In 2021, 96 percent of gas was sold for less than $12 a gigajoule. The average price was $9.20, it was a fair price and the gas companies weren’t complaining,” Bowen said in parliament

“They were making decent profits, and we’ve seen those prices skyrocket ever since.

“This is Australian gas under Australian soil and seas, and Australians are entitled to a fair price.

“We respect the job of the gas companies to maximize their profits. Our job is to protect the Australian people and act in the national interest … We will not stand by and watch (Australians) pay the price for the war of Putin in Ukraine”.

In exchange for their support for the legislation, the Greens have secured a package to help low-income Australians and renters switch from gas to renewable electricity.

Both the Greens and the government say this will further ease electricity bill pressure in the coming years, as renewables have been proven to be cheaper than gas or coal.

Originally published as Anthony Albanese’s power play to keep Aussies $230 better

Read related topics:Anthony Albanese

Leave a Reply

Your email address will not be published. Required fields are marked *