Key Points
- Households are set to receive energy rebates, as states place a cap on coal prices.
- Prime Minister Anthony Albanese says the relief will be distributed in a way to avoid inflationary impacts.
- Leaders also discussed funding arrangements for hospitals as the nation braces for another COVID-19 wave.
Australians struggling through a cost of living crisis are set to receive temporary discounts on their energy bills as part of a new deal struck between federal, state and territory governments.
Australian households will receive the relief via a $1.5 billion energy rebate package that will be funded by the federal government - and administered by the states and territories.
"It will be paid through state governments," Prime Minister Anthony Albanese said, adding that the relief will come into effect from the second quarter of 2023.
"This is important rather than cash handouts - so it has a deflationary impact on the economy."
He said modelling conducted by the government shows the average family would be $230 worse off next year without the benefits that would flow from implementing the new plan.
He said modelling shows the plan would see a reduction of 16 percentage points in the predicted gas price increase in 2023-24, and similar impact on electricity prices - where a projected rise of 36 per cent in 2023-24 would be wound back by 13 percentage points.
The temporary relief is one of four planks of a new plan outlined by Mr Albanese, following a virtual National Cabinet meeting on Friday afternoon.
What else does the plan include?
The other components include a temporary cap on coal at $125 per tonne, implemented by Queensland and NSW.
There will also be a 12-month cap on gas prices at $12 per gigajoule, overseen by the Australian Competition and Consumer Commission (ACCC). A mandatory code of conduct will also apply to gas retailers.
Parliament will be recalled next week to deal with the legislation required to implement the measures.
Mr Albanese, who chaired the meeting remotely due to a COVID-19 infection, said "urgent action" was needed to shield Australian consumers from the worst impacts of escalating prices.
"Extraordinary times call for extraordinary measures. We know with the Russian invasion of Ukraine, what we're seeing is a massive increase in global energy prices," he said.
"And because of Australia not investing in a number of our own energy assets, what we have is a vulnerability to those international price movements. That is placing pressure on businesses here, but also on households going forward."
Mr Albanese revealed the nature of the relief will vary from state to state, saying the impact of of price caps on coal-dependent states would be more severe.
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Employer association the Ai Group said there were aspects of the coal and gas price caps that need to be worked through, but overall it will be helpful in "dampening the immediate economic pain of this global energy crisis".
"They will be messy to implement and it would be better if we were not still so vulnerable to gyrations in these global fuel markets," the group's CEO Innes Willox said.
"Caps will need to phase out as soon as they can, depending on the evolving situation in global energy markets and Australia’s progress in speeding our supply and demand-side energy transitions."
How we got here
The federal government had been at loggerheads with NSW and Queensland, both large coal producers, over funding for the price cap intervention.
Its October budget forecast a 56 per cent increase in electricity prices over the next two years.
Premier Annastacia Palaszczuk last week warned there was "no way" Queensland would sacrifice the benefits of its coal sector, before her NSW counterpart Dominic Perrottet suggested the Commonwealth should soften the blow of any flow-on effects to the economy.
But the deal edged closer this week after NSW Treasurer Matt Kean confirmed he was not seeking compensation for lost revenue, saying the state was “prepared to take the hit” to protect consumers.
Mr Kean had warned the federal government that action was needed this week to prevent prices soaring into the new year.
'Coal mines are going to close'
Speaking before the meeting on Friday, Opposition frontbencher Simon Birmingham accused Labor of dragging its feet over its promise to bring down cost of living pressures.
Mr Birmingham said it would be up to the government to clearly explain what benefits Australians would receive, and when.
"The government should have done this months ago. It shouldn't have been forecasting energy price rises in the budget and doing nothing about it [then]," he told Sky News.
The announcement was made the day after Australia’s energy ministers relying solely on renewable energy, which federal Energy Minister Chris Bowen said would boost investment in the sector.
Mr Bowen insists Labor will pair short-term relief with a long-term shift towards cheaper, cleaner sources.
Australia’s energy ministers agreed to a capacity mechanism relying solely on renewable energy on Thursday, which Mr Bowen said would stoke investment in the sector.
"Let's be blunt: coal mines are going to close," Mr Bowen told ABC radio on Friday.
