A federal law to spend $1.5 billion on household power subsidies could be put to parliament on Thursday in a Labor bid to confront the Coalition over its complaints about a sweeping energy package that aims to ease pressure on prices.
Parliament is being recalled to vote on a contentious draft law to impose a price cap on gas but the government is likely to add the appropriations bill for the $1.5 billion and combine the two measures, daring the Coalition to reject the package and be accused of rejecting lower prices.
Anthony Albanese and Peter Dutton will clash over an energy price plan when parliament is recalled on Thursday.Credit:Alex Ellinghausen/Daniel Kalisz
But the central pledge in the government plan – that it can save households $230 by imposing price caps on coal and gas – is being questioned by experts who believe the dollar figure is too hard to forecast before regulators set electricity prices next year.
Prime Minister Anthony Albanese blasted the gas industry for “jumping at shadows” in its objections to the new price controls unveiled after a state cabinet meeting on Friday, but Opposition Leader Peter Dutton seized on the concerns to step up his attacks on the plan.
Dutton said the price controls on gas would discourage investment and cut supply when he believed more gas was the answer to rising prices.
“We’re not going to support a plan that is going to have devastating impacts in the medium and long term on our economy,” he said.
The comments put the Coalition on track to vote against the package when parliament is recalled this Thursday, a stance likely to be confirmed at a party room meeting because of widespread dislike of the concept of price controls among Liberals and Nationals.
The $1.5 billion in federal assistance is expected to be paid through the states so that millions of households will get a credit on their energy bills before the bills arrive.
Treasurer Jim Chalmers is likely to put the appropriations bill to parliament on Thursday to clear the way for his talks with state and territory counterparts over the next three months so the payments can flow from March.
Greens leader Adam Bandt backs parts of the plan, he has warned against any federal compensation for fossil fuel producers.
“The public should not be compensating big coal and gas corporations, it should be the other way around,” Bandt said on Monday.
Independent senator David Pocock will use a briefing on Tuesday to seek more detail and ask why the government is refusing to apply a “windfall tax” on energy exporters to pay for household assistance.
“This package provides short-term relief but is essentially a band-aid on a festering wound that has arisen from long-term failure of energy policy to plan for the transition to renewables,” he said.
Tasmanian senators Jacqui Lambie and her colleague Tammy Tyrrell signalled their support for the scheme.
“We’ll do our research and ask any questions that need to be asked. But we’re not here to block anything that’s going to help people,” Tyrrell said.
Lambie said she had questions about the package but was not going to stand in the way of people getting cost of living relief.
The government has not announced compensation for gas producers and instead imposed a cap of $12 per gigajoule on the domestic market. Coal miners, however, could be given payments if they lose out from a price cap of $125 per tonne for the domestic market.
Albanese dismissed a report by this masthead that the coal compensation could amount to $500 million but declined to say how much the help would be worth.
“If there is a cost of production that is higher than $125 per tonne, then it is reasonable that there be payments made for that to make sure that there isn’t a disincentive to continue to supply,” he said on ABC Radio National.
The compensation is a key feature of the scheme because the NSW government has warned Albanese that coal miners could reduce production, with consequences for energy generators, if they have long-term contracts above the new cap.
The gas industry has not ruled out a legal challenge or an advertising campaign to challenge the new scheme, but shares in Santos and Woodside rose on Monday despite fierce criticism of the government policy from investment analysts.
Australian Petroleum Production and Exploration Association chief Samantha McCulloch is seeking a meeting with Albanese or senior ministers but said it was up to member companies to say if they would cut investment in new projects as a result of the cap.
Industry Minister Ed Husic said the gas industry had opposed every attempt to bring down prices when they were making “exorbitant profits” from the impact of the invasion of Ukraine and the rise in oil and gas prices around the world.
“We as an Australian government cannot sit by when we’ve got gas companies more interested in wartime profiteering, and we as an Australian government have to act in the national interest, particularly for manufacturers that have been under huge pressure for months,” he said.
Husic dismissed claims from the industry that the price cap and a mandatory code of conduct, including a “reasonable price provision” to control prices over the long term, would hurt investment in new production.
“This is just another threat to scare us away from acting in the national economic interest,” he said.
Grattan Institute energy program director Tony Wood said the new plans were “eye-wateringly complicated” and he had questions about how the $1.5 billion would be filtered through the states, how the compensation package would work and how the Australian Energy Regulator would factor in the new measures when it sets electricity prices next year.
The $230 forecast is based on a Treasury calculation that household electricity prices were going to rise by 36 per cent in the year to June 2024 but will only rise by 23 per cent as a result of the new measures.
Wood said the benefits for households would be significant, but it was hard to be sure about the amount when the Australian Energy Regulator had to consider so many factors when deciding the default market offer for electricity, which is meant to apply from July 1 and will take the new measures into account.
“I haven’t seen any basis for that $230” he said.
The Treasurer’s office did not respond when asked for further detail of the modelling.
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