It’s a familiar story for many of us: the bills arrive, and the search for savings begins. Every dollar counts, and trimming household expenses has become a constant consideration.
From the weekly grocery shop to the quarterly energy statement, we’re all looking for more innovative ways to manage our budgets. Lately, the spotlight has been on the cost of keeping our homes running, with energy prices often taking a significant bite out of our hard-earned money.
So, when a new plan emerges promising to ease this burden, it’s natural to pay close attention. However, the latest development in this ongoing saga brings a note of caution, with a leading energy expert warning that the Coalition’s new energy strategy could lead to higher consumer prices than savings.
The Coalition, led by Peter Dutton, recently unveiled a Frontier Economics report outlining a bold policy plan. The plan boasts potential reductions in household gas bills by 7 per cent and a 3 per cent drop in electricity prices.
However, the details—or lack thereof—have raised eyebrows among industry experts and the gas sector. The crux of the Coalition’s strategy involves imposing a levy on gas that is not tied to long-term export contracts.
The idea is to make it less economically viable for producers to sell their gas overseas, thereby increasing the domestic supply. Producers who meet domestic sales targets would be eligible for a refund of this levy.
However, Bruce Mountain, director of the Victorian Energy Policy Centre, warned that this approach could backfire spectacularly.
‘There is a non-trivial possibility here that if [the Coalition] constrains exports in this way, local prices will rise because the gas producers will choose not to produce gas,’ he said.
The Coalition’s promise to bring gas prices below $10 a gigajoule is ambitious. They’re willing to invest $1.3 billion to encourage gas development, build more pipelines, and increase storage capacity.
However, Mountain described this as a ‘seismic policy shift,’ and the implications of such a tax on uncontracted gas exports could be far-reaching.
The policy’s unveiling followed the first leaders’ debate with Anthony Albanese, and it was met with scepticism regarding its potential effectiveness and timing.
The Coalition’s energy spokesperson, Ted O’Brien, admitted that the benefits might take time to reach consumers. In the best-case scenario, lower prices for wholesalers would be seen by the end of 2025 and for households at least a year later.
Following the election on 3 May, some predictions are that either Labor or the Coalition may end up governing with a minority in the lower house, and neither party will have a majority in the Senate.
If the Coalition passes its gas reforms through the House of Representatives, it will likely encounter resistance to new gas initiatives in the upper house.
The Greens have clarified that they will not endorse any new gas projects. Senators Jacqui Lambie and David Pocock have previously supported boosting gas supply in Australia by restricting exports and foreign contracts, yet they have also opposed new projects.
Frontier Economics’ analysis, which also conducted the Coalition’s nuclear plan modelling, has been criticised for its brevity and lack of detail, particularly concerning electricity prices.
Energy Minister Chris Bowen described the report as a ‘scamphlet’ full of flaws. However, Danny Price, the managing director of Frontier Economics, responded that Bowen’s comment was merely a ‘sledge’ that was ‘totally unwarranted’.
The gas industry itself has expressed concerns. Samantha McCulloch of the Australian Energy Producers pointed out that the policy could deter investment and exacerbate supply pressures in the long term.
‘Rather than increasing gas supply, the Coalition’s policy risks reducing domestic gas production and supply because there would be no incentive to produce sub-economic gas, and it would damage already suppressed investor confidence,’ she said.
She added: ‘The modelling also ignores the material infrastructure constraints that limit how much gas from Queensland can be sent to the southern states, with the pipes already running at full capacity during peak periods—a point the Coalition made less than six months ago.’
Tony Wood of the Grattan Institute’s energy program echoed the sentiment that the policy is ‘hugely interventionist’ and could have unintended consequences.
Despite the industry pushback, Dutton defended the policy, arguing that it would increase investment, exports, and domestic supply, ultimately reducing prices.
‘Are we here to line the pockets of big gas companies? No, I’m here to support consumers. Under our policy, you’ll see an increase in investment, you’ll see more exports, and you’ll see more domestic consumption and more domestic supply, which is about bringing down the price,’ he said.
However, questions remain about the constitutionality of applying the gas security charge only to East Coast producers and not those in other regions, to which he replied: ‘We don’t believe that we book any revenue out of [the] measure.’
Price stated that the gas industry’s concerns that the policy would deter investment were ‘not valid’ since the gas security charge would still enable producers to earn a profit and would instil confidence in long-term gas users.
‘They will still be profitable, just not to the extent they desire,’ he said.
Amidst these debates, environmental groups like the Climate Council and Greenpeace have criticised the Coalition’s plan for locking in climate pollution for decades and continuing to rely on gas, which they argue cannot compete with renewables on price.
Have you felt the pinch of rising energy costs? Do you think the Coalition’s plan will help or hinder your financial situation? Join the conversation below.
Also read: PM pledges extra energy bill support—here’s how much you can save
The Coalitions gas and nuclear plans lack any economic rational.
Their gas plan is unlikely to reduce prices and their nuclear plan is likely to greatly increase prices.
Just like they did with the NBN they will deliver an inferior product at an increased cost.
The Coalition already lost us enough money on their French diesel submarine fiasco.