Do we need a national debate about fuel stress as energy prices continue to rise? Australia’s longest-serving energy ombudsman thinks so.
Clare Petre, New South Wales Energy and Water Ombudsman since the late 1990s, says thousands of households are engaged in a juggling act to meet their bills.
Speaking at a conference I chaired in Melbourne, Petre eschewed the idea that we now have growing fuel poverty in Australia.
This is defined internationally, she pointed out, as a household where the energy bills take up 10 per cent of available income.
It is increasingly an issue in Britain, for example, where First Minister Alex Salmond has found that 770,000 Scottish households – or one in three of the population – will face bill problems this winter.
Residential fuel and power bills in Australia on average are about 2.6 per cent of household budgets, although Petre says some would be closer to 10 per cent.
The issue, however, she says is that for many Australians life is a series of crises. In households where government pensions or other forms of allowances are the main source of income, people are under "huge pressure.”
A particular problem, Petre says, is the "fierce pride” that older people have in paying their bills on time, even if this means going without meals or sometimes without medication.
Petre’s views reinforce a report produced earlier this year – which received the usual media 24-hour attention and vanished without further trace – by a coalition of social welfare groups calling for a national program that could help a forecast 250,000 to 500,000 households by the end of the decade.
This is the equivalent to the population of a couple of Canberras.
Speaking on a conference platform – where, as I revealed last week, Port Jackson Partners’ Edwin O’Young forecast that east coast electricity prices may double between 2011 and 2017 (A double take on power prices, October 3), after rising by 35 per cent in inflation-adjusted terms over the past four years – Clare Petre urged a national debate on the affordability issue.
"We need to find the most cost-effective way of delivering assistance,” she said.
One of the other speakers was AGL Energy head of economic policy Tim Nelson who, in a corporate economics paper with the AGL chief economist Paul Simshauser last year, suggested that, just in NSW and Queensland, some 300,000 households could be struggling to pay their power bills by 2015.
Another speaker was Cameron O’Reilly, chief executive of the Energy Retailers Association, who warned that state governments must be prepared to pass through the full extent of rising prices to end-users if the energy market is to stay viable.
South Australia and the ACT had ducked this responsibility this year, despite Australian Energy Market Commission recommendations to deregulate, he noted – and the big challenge is coming up when Barry O’Farrell’s government has to face the same issue in 2012 for the largest regional power market in the country, roughly a third of all users.
Only Victoria has deregulated retail power prices so far.
Looking at this situation, it can be seen that we are a faced with a three-pronged problem: power prices must rise under a range of pressures, including shortly a carbon price, a multi-billion dollar electricity market needs governments to sustain its viability by ensuring costs flow to customers, and large numbers of people are finding the rising prices too hard to bear.
The Gillard government has just devoted two days in Canberra to a tax forum that, to a large extent, was a political dog-and-pony circus act, but it can’t find the time to address a hardship issue that is literally growing by the day.
It has, however, in the run-up to the parliamentary debate on its 'clean energy future' policy issued a fresh set of modelling through the Treasury showing reduced growth levels for electricity demand that can only be achieved through significantly higher power prices.
Back in May a coalition of the ACTU, welfare groups and the Clean Energy Council published a paper, 'Energy efficiency and affordability for Australian households', that proposed programs to promote greater uptake of energy efficiency by low-income and financially-stressed households and by owners of rental properties plus ideas on specific support for households that are at risk of fuel poverty.
So far as I can see, it has been comprehensively ignored by Julia Gillard and Wayne Swan.