Australia

Battlelines are being drawn over a plan to cut power prices. So who will pay for it?

KEY POINTS
  • Labor is pushing for a price cap on coal.
  • NSW Premier Dominic Perrottet wants the Commonwealth to foot the bill.
  • Chris Bowen says Australia will hit its 2030 reduction target, despite projection.
Battlelines are being drawn over who will pay for a Commonwealth plan to cut energy bills, as two key premiers throw doubt on the idea.

Labor wants the states to impose their own temporary caps on the price of wholesale coal to bring down soaring prices, which it warns could rise by more than 56 per cent by the end of next year.

The move would also mean the Commonwealth avoids billions of dollars in compensation payouts to producers, which it would be due to pay if it implemented a national price cap.
Most of eastern Australia’s electricity is produced from coal-fired stations.
But two days after Queensland Premier Annastacia Palaszczuk bluntly rejected the idea, her NSW counterpart Dominic Perrottet insisted the Commonwealth should foot the bill for the impact on his state’s taxpayers.

It comes as Energy Minister Chris Bowen declared Labor will meet its 43 per cent emissions reduction target, despite new projections tipping Australia to fall short.

NSW Premier Dominic Perrottet wants the Commonwealth to foot the bill. Source: AAP / Lukas Coch

What is Labor planning to help with cost of living pressures?

Labor is exploring interventions into the domestic market, including a cap on gas prices, but fears its plan would be unworkable without backing from NSW and Queensland.

After a poll conducted by the ACTU found nearly a quarter of Australians had skipped meals during a deepening cost of living crisis, Mr Perrottet declared his support for any federal intervention which would ease the pressure.

But he insisted the Commonwealth should soften the blow if price caps hit NSW’s coffers.
“[They] have come out and said that they will provide solutions to reduce the cost of living across the country, and we support that,” he told reporters on Thursday.

“Ultimately [it’s] a matter for them to come out with those solutions in relation to a cap. If one is introduced in NSW, the taxpayers of NSW would need to be compensated.”

His intervention followed NSW’s Treasurer Matt Kean calling for a cap to be urgently implemented, warning Australia needs a “national solution” and has just a week to prevent prices from surging into the new year.
But the state’s resources sector is mobilising against the proposal, which the NSW Minerals Council warned would have “significant unintended consequences” and stifle investment.
It claimed the cap would distort the coal market, threatening jobs by forcing some producers to supply coal at a loss.

“[It] will have little impact on electricity prices … It is a bad policy proposal that should be rejected,” it said.

SA Premier Peter Malinauskas said consumers are now “paying the price” for inaction from eastern states and the former Coalition government at a federal level.
Mr Malinauskas insisted “all options are on the table”, but wants to see significantly more detail from his Commonwealth colleagues.
“We want the Commonwealth to pull as many levers as possible. They’re the main game in terms of having an impact,” he said.
“[But] SA will reserve its right to cost its own judgments, and development its own policy response.”

Ms Palaszczuk earlier warned the Commonwealth there was “no way” Queensland would sacrifice the economic benefits of its coal sector.

Close-up of a man wearing a shirt and tie

Chris Bowen insists Australia will hit its 43 per cent emissions reduction target. Source: AAP / Steven Saphore

Climate target

Mr Bowen said Australia had been left unprepared for the crisis by a “decade of wasted opportunity” under the Coalition, saying short-term market interventions would be followed by a longer-term plan to power cheap renewables.

Delivering his first annual statement on climate change, Mr Bowen announced it is currently projected to cut emissions by 40 per cent by the end of the decade but claimed a suite of measures imposed by the new government would see that rise quickly.

Mr Bowen was confident Labor will hit its 43 per cent target by 2030 at a minimum but warned that will take a huge effort.
“There are some who call for more. I understand the sentiment, and of course … we see 43 per cent as a floor, not a ceiling,” he said.
“For the last decade, climate has been used as a political football as the former government stumbled from one chaotic policy to the next.”

Mr Bowen’s speech was delivered to largely empty Opposition benches, with just four Coalition MPs present.

File source

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