Following Labor passing its new energy bill during an extraordinary sitting of Parliament on Thursday, there have been many predictions about what it will mean for Australia.
Will the package help solve the energy crisis? Or will it turn Australia into a “Soviet-style” nightmare? Will it scare off fuel investors, or will it inspire confidence in them? Will power bills go up or down? Crikey takes a closer look at some of the forecasts made over the past 24 hours.
The federal government
Prime Minister Anthony Albanese told Parliament on Thursday the new energy plan is a combination of “immediate action and future reform”.
The new legislation will put a 12-month price cap on new contract sales of gas by producers, “designed to provide short-term relief from the current energy crisis”, Treasurer Jim Chalmers said.
There will also be a 12-month price cap on domestic coal.
The package also includes the appropriation of $1.5 billion to ease power bills, money that will be administered by the states and territories.
“This legislation will take some of the pressure off power bills,” Chalmers said.
Chalmers told Parliament the measures were estimated to reduce “the impact of forecast electricity prices next financial year by 13 percentage points”.
He also claimed they would reduce inflation in the next financial year by half a percentage point.
The opposition
Opposition Leader Peter Dutton opposed the package and said it wouldn’t help bring down power bills.
“The fact is that power prices will continue to go up and up and up under this Labor government because they have no idea what they’re doing,” he told reporters.
However, had the government agreed to split the bill, the opposition would have supported the bill relief portion because “there’s a package of support there”.
“But we don’t support a market intervention which is going to disrupt investment into our country,” Dutton continued.
“We don’t support market intervention which is going to result in higher power prices, less supply of gas into the system, and less Australian jobs.”
Dutton said he believed intervening in the energy market would chill businesses, “who will be looking at the sovereign risk that’s created out of this and questioning whether they will invest”.
The Greens
Greens Leader Adam Bandt told Parliament ahead of the bill’s passing: “Today is the beginning of the end for gas.”
He said it was “time to hold these greedy coal and gas corporations to account”.
Bandt also said the legislation would give the government the power to “freeze power bills”, something the Greens have been pushing for.
“Government can step in and stop those price rises,” he said. “If we are going to be giving compensation to ensure that people’s power bills don’t go up, which we support and were the first ones out there calling for it, let’s freeze power bills at pre-crisis levels and put a windfall tax on those greedy coal and gas corporations to pay for it.”
The Greens also claimed a win on reforms to household electricity, which will be part of next year’s budget after the party struck a deal with the government.
The Greens want households to get support transitioning from gas to electricity as part of that deal.
The fossil fuel industry
According to the industry, the plan will put Australia through a “Soviet-style” process of nationalisation that will necessitate gas rationing by next winter.
Businesses will flee the country because doing deals in the energy sphere will be as difficult as it is in “Argentina, Venezuela or Nigeria”, Santos chief executive Kevin Gallagher said, according to The Daily Telegraph.
“Every business owner in Australia should be alarmed,” he said.
In comments made a few days earlier, Woodside chief executive and Australian Petroleum Production and Exploration Association chair Meg O’Neill agreed the plan would prompt gas rationing and power shortages.
“We need to unlock gas supply now … no one wants to see energy shortages and gas rationing,” she said, according to the Australian Financial Review.
The unions
Daniel Walton, the national secretary of the Australian Workers’ Union, said the “doom-laden predictions of the gas industry” and opposition would not come true.
“Here’s my prediction for what will happen as a result of this apparently terrifying new legislation: the price of gas and coal will fall, consumers will feel relief, and the manufacturing industry will gain the confidence to keep operating and investing in Australia,” Walton said.
The threats of economic devastation if the big players don’t get to make super-profits for all eternity, are finally being called out for the bollocks they are.
Most of the people aren’t buying the neo-con version of things anymore. And thank you to all the pollies of different stripes who followed thru. It’s a start in a better direction.
It’s just a pity Rudd’s mining super profits tax went.
There is a super profits tax for gas called the PRRT. However, they don’t this either.
‘Most of the people aren’t buying the neo-con version of things anymore’. True, in part, but the sales team haven’t changed their pitch very much. Same bluff. Requires ex-WA Prem Barnett-like response.
Qld Min Council have said there isn’t a shortage of gas now but there will be in a time-scale too-short for the magic new supply to come online. Does not compute.
The threat of new gas investment being scared away is an empty one, as what we need is investors in the renewable sector, and they will only be encouraged by recent government direction.
Not Barnett.Ex Labor Premier Alan Carpenter.
Who was previously a journalist for the ABC. The ABC seems to be a place of learning for future politicians. They know the ropes.
Correction cheerfully acknowledged. Carpenter’s policy entirely, but I note Barnett was very happy to keep it and later share in the kudos of WA having a better policy than eastern states. Bi-partisan brotherhood that irks the partisan zealots and economic “drys”, wherever they reside. But even they have a supply issue with gas, will see coal plants close by 2030, and are pushing ahead on renewables.
Further correction: The Queensland Resources Council’s (Ian Macfarlane).
Ex lnp, same old line.
Thank you- Barnett was a typical Liberal and would never have done what Labor Premier Alan Carpenter did!!
Albo needs to look at this precedent and have the guts to tax the greedy and lying Gas & Coal companies early next year. As for ‘Soviet style’ policy what a ridiculous and outdated comment!!! Many Australians would be ignorant about what that actually means! A young newsreader on a Canberra radio station yesterday, referred to ‘ soviet style nationalism of the gas industry’ !!!
Actually, Barnett was pragmatic and not a religious right wing nut job. So, not a typical WA Liberal! And he was a pretty good local member.
The threat is clearly an empty one as gas companies are generally in the business of making money, so why would they withdraw investment which would make more money.
If the greed merchants and robber barons who run the fossil fuel industry think that Labor’s new energy legislation will turn Australia into a “Soviet-style” nightmare, then I hate to think what they would have to say about my preference for them. I would, without hesitation, nationalize them (and worry about the ‘compensation’ aspect later. And the fossil fuel industry would not be the only one on a ‘hit-list’. Banking, gas, water, electricity, telecommunications, health, and other essential services would also be dealt with in that way.
I heard Woodside chief executive and Australian Petroleum Production and Exploration Association chair Meg O’Neill being interviewed by Patricia Karvelas on ABC Radio National a couple of mornings ago. O’Neill’s comments gave me the distinct impression that if the government were to interfere with the “market mechanism” (with the legislation just passed in Parliament) then the fossil fuel companies would have the right to restrict supplies of gas. This sort of thing makes me furious as it should for any Australian. As Federal Minister for Industry and Science, Edham Husic has said on more than one occasion, these companies think they have a right to hold this country to ransom. This sort of attitude makes you wonder, “who really runs Australia, the government or large capitalist corporations?”
Here we have a natural resource that we are told is “owned by Australians”, being exploited (and I mean exploited!) by large multinational corporations. These companies do not operate in the interests of the Australian people; their raison d’etre is to make a profit and one that is as large as possible. We are dealing with greed here, pure and simple! The capitalist economic system provides not only a catalyst that ‘super-charges’ that greed but capitalism also enables, justifies, and rewards it.
Of course, what I am really saying here is that if we wish to effect any sort of basic and meaningful change in our economy (I would rather make that ‘society’), of which energy supply is an integral part, then some fundamental and dare I say it, revolutionary changes are required.
Simpler Idea would just be to make royalties 50%. As in we the owners of the fuel receive 50% of the profits.
No need for compensation.
Your suggestion would certainly cause less trouble Martin, however, I still favor my ‘long-term’ solution better.
Nuke ’em from orbit and sow the ground with iodized salt would be favourite.
“who really runs Australia, the government or large capitalist corporations?” I think the answer is pretty obvious. More accurately the government runs Australia for the welfare of large capitalist corporations. It won’t happen, but nationalising these fossil fuels in current circumstances is very feasible. The current super profits would enable compensation, based on past ten year yields for example, to pay off the cost quite quickly.
Agree with one small tweak – initially pay token ‘compensation’ for the intellectual property, plant & fixed assets nationalised then thoroughly examine the accounts.
Deduct from the nominal agreed (or NOT!) value all the previous taxes avoided, evaded via transfer pricing, internal loans, offshoring, license fees etc and imaginatively amortized investment.
Plus a modest penalty, say 150-200%, for having ripped us off for so long.
My agreement with nationalisation has been blocked TWICE so shan’t bother again – they’ll not see the light of day until Monday arvo, assuming the entire staff haven’t sloped off for the next couple of weeks of Xmas/NY revels.
Hear Hear Vive la revolution!
Damn straight, nationalise the lot of em. I’d say to Albo, if you’re going to be accused of it, you may as well do it.
The price cap will have a negligible effect on prices. I’m going to assume the Gas Producers will try to reduce production and hold us to ransom.
I’m stunned, not to mention extremely disappointed, legislation hasn’t been implemented to guarantee a minimum percentage of production is reserved for domestic use
Gas producer profits are at record levels from producers that often pay little tax and what do we get? Rhetoric about this being the Soviet Union from greedy companies that want Australians to pay exorbitant prices for OUR gas
complete cvnts!
The gas that these companies sell to us the consumer is OUR gas so why do cry foul?
Gas prices are capped well above pre covid prices. If there was no risk to gas exploration and investment then, why would there be any now?
Loved the Woodside broadside at the government and its legislation. Especially the soviet bit – I did not realise Woodside was in the business of making communism and the soviet system respectable again. And the bits about doing business in Australia being like Nigeria and other difficult places to do business!
So they want a government where to get a policy through you have to bribe at least the senior politicians, and probably quite a few more. Plus payoff anybody involved in implementation. And then they don’t stay bought but keep asking for more. On top of that people steal a significant proportion of your production and violently attack your production facilities.
Definitely sounds like Australia. I suspect Woodside is still suffering from grief at losing their lovely compliant national government who the voters so unkindly kicked out. Welcome to the real world where lots of governments intervene in energy markets in a variety of ways. Such undemocratic countries as Norway, or Britain.
Woodside also seems to love having a government (they’re donating too) using their national spook network to do their industrial espionage dirty work for them – like bugging an East Timorise delegation, to get the inside running when it comes to negotiating a contract – then giving the “minister responsible” (and his PS lackey) a job post politics : that’s how fair dinkum they are.
It wasn’t an East Timorese delegation they bugged. It was the cabinet offices of the poorest and newest nation in our neighbourhood, an ally.
The politicians and bureaucrats involved justify the bugging “because everybody does it”.
Ethically and morally bankrupt, yet they still have a voice on important issues.
It’s bewildering.
Their “delegation” to the deal brokering.
Hey, Australia has honest politicians. When they are bought they stay bought.