Higher energy costs loom as a major political risk for the government,which has promised to cut power bills by $275 by 2025 and to grow manufacturing with a$15 billion National Reconstruction Fund.
But a global energy crunch has driven up sharply the cost of natural gas,which has a significant influence on electricity bills that have risen on average $300,or 25 per cent since April and are set to keep rising well into next year.
Grattan Institute energy director Tony Wood said the price rises were “politically untenable” for the federal government and it “will be forced to take action” against gas companies to push prices down.
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Industry Minister Ed Husic on TuesdaytoldThe Age andTheSydney Morning Herald that the government would intervene in the market to force gas companies to discount to local manufacturers. TreasurerJim Chalmers on Tuesday echoed Husic’s threat stating “more can be done” to lower prices through tougher regulation of gas companies.
Chalmers has ruled out new taxes on companies and electricity bill subsidies,which could be used to lower prices.
Grattan’s Tony Wood said the most effective measure to lower prices in the domestic market would be for the federal government to impose a short-term windfall tax on gas companies’ soaring profits,who are currently earning big bucks through lucrative export contracts.