Showing posts with label cost of living. Show all posts
Showing posts with label cost of living. Show all posts

Thursday, 12 July 2018

Don't expect your residential electricity costs to come down anytime soon

In three years time the amount of revenue electricity network companies can charge customers will be reduced, which according to the Australian Energy Regulator in its Draft Rate of Return Guideline "could [not would] result in household customers’ bills decreasing by around $30 to $40 per year".

Remembering all the other failed assurances that the cost of residentail electricity would come down, it is a brave individual who takes this latest prediction at face value.

The Australian Energy Regulator has moved to significantly cut the amount of revenue electricity network companies can charge customers in a bid to take the pressure off households and businesses enduring high power prices.
AER chair Paula Conboy said it would reduce average household electricity bills by about $30 to $40 a year….

But energy network companies claim the new guidelines will strip about $2 billion in revenue over the next five years and threaten future investment in the energy sector.
Morgan Stanley said the rule, if confirmed, would cut valuations of listed grid owners such as Spark Infrastructure and Ausnet Services, while adding it "could have been worse".

Energy users welcomed the move as a sign the regulator is prioritising the interests of consumers although Energy Consumers of Australia acting head Lynne Gallagher said the proposed reduction in the rate of return able to be earned on capital could have been bigger.

"There is no doubt that there could be some disappointment from some consumer groups with this decision, but it is a much better outcome than we've seen in previous years on this issue," Ms Gallagher said....

AusNet said that if the rule is confirmed, the reductions would apply to its power distribution network from the beginning of 2021, in transmission from April 1 2022 and in gas from January 1 2023. Spark said the rule would apply to its various assets in 2020, 2021 and 2023….

Mr Turnbull is also expected to use his speech in Brisbane to talk on the long-awaited Australian Competition and Consumer Commission into electricity prices which is expected to be released this week. The ACCC report is expected to be used as a reason not to call a royal commission into electricity prices as being pushed by the Greens. 

Australian Competition and Consumer Commission, Restoring electricity affordability & Australia's competitive advantage, 11 July 2018, excerpts:

Australia is facing its most challenging time in electricity markets. High prices and bills have placed enormous strain on household budgets and business viability. The current situation is unacceptable and unsustainable. The approach to policy, regulatory design and promotion of competition in this sector has not worked well for consumers. Indeed, the National Energy Market (NEM) needs to be reset, and this report sets out a plan for doing this…….

There are many causes of the current problems in the electricity market. At all stages of the supply chain decisions have been made over many years by many governments that set the NEM on the wrong course.

In networks, the framework that governs regulation of monopoly infrastructure was loosened, leaving the regulator with limited ability to constrain excess spending by network owners. The limited merits review (LMR) regime allowed network owners to appeal regulatory decisions and recover billions of additional dollars from consumers. It led to significant increases in prices, has drawn out the length of time taken for revenue determinations, and has created significant uncertainty around network pricing. In addition, increased expenditure on networks was driven by reliability standards for some networks that were set too high, without due regard for consumers’ willingness to pay for marginal increases in reliability.

In generation, against ACCC advice, the Queensland and New South Wales (NSW) governments made decisions regarding the operation and ownership of generation assets giving rise to concentrated markets. In Queensland, the government consolidated the generation assets of three businesses into two. In NSW, as one example, both generators owned by Macquarie Generation were sold to AGL, missing an opportunity to deliver a competitive market structure by selling them to separate buyers.

Most state governments put in place excessively generous solar feed-in tariff schemes with a view to encouraging consumers to install solar photovoltaic (PV) systems. Under these schemes, the subsidy paid to consumers for the energy produced by their systems outweighed, by many multiples, the value of that energy. Take up of the schemes exceeded all expectations, in part due to dramatic declines in solar PV installation costs. The substantial cost of the schemes continues to be spread across all electricity users.

The main enduring policy instrument for encouraging low-emissions electricity generation is the Renewable Energy Target. While it has been effective at encouraging wind and solar generation capacity installation, it has also distorted the investment that has occurred in the transition from higher carbon technologies to lower ones. The subsidies received for installing wind and solar made the business case for doing so compelling but did so in a way that was indifferent to the ability to provide energy to the market when demand requires it.

At a time when gas-powered generation has become more important with the exit of large coal-fired plants, the extent of LNG exports from the East Coast and government moratoria on on-shore gas exploration and development have stifled the availability of gas at a low price.

Electricity retailers have also played a major role in poor outcomes for consumers. Retailers have made pricing structures confusing and have developed a practice of discounting which is opaque and not comparable across the market. Standing offers are priced excessively to facilitate this practice, leaving inactive customers paying far more than they need to for electricity. Pay on time discounts, which have emerged as a response to attempts to constrain late payment fees, are excessive and punitive for those customers who fail to pay bills on time. [my yellow highlighting]

Tuesday, 13 March 2018

FAIR GO 101: It's Time To Change The Rules

Tuesday, 12 December 2017

"What alternate universe does the Australian Treasurer inhabit?

According to AMP chief economist Shane Oliver “consumer spending is being dragged down by low wages growth, slowing wealth accumulation, poor sentiment, high debt levels and rising energy costs."

In the 2017 September quarter households were spending less on clothing, footware, health, furnishings, household equipment, entertainment, dining out and alcohol - as the pressure on disposable income bites.

Yet this is the Australian Treasurer in December 2017……………
The Sydney Morning Herald, 6 December 2017

Tuesday, 11 July 2017

Can't live on the wage you bring home but can't get a raise from the boss? Here's the reasons why

In 2016 an est. 3.89 million people living in New South Wales had a personal weekly income of between $0 and $644 per week, according to the Australian Bureau of Statistics.

In Tasmania an est. 1.03 million people had way less than $573 per week.

Between March Quarter 2016 and March Quarter 2017 wages growth remained at record lows.

So this should come as no surprise……

Industrial relations lawyer Josh Bornstein writing in The Sydney Morning Herald, 5 July 2017:

When Reserve Bank governor Philip Lowe recently declared a "wages crisis" following a prolonged period of low wages growth, it appears to have caught the federal government on the hop. Quick to respond to crises about border protection, terrorism and rising energy prices, this is one crisis that renders the government mute. There is no plan, no working group, or commissioning of a white paper from the Productivity Commission. Instead, the government has announced a plan to pay up to 10,000 "interns" to work in the retail industry for as little as $4 an hour. This plan will only exacerbate the wages crisis.

Phillip Lowe is not the first prominent mandarin to observe that stagnant wages threaten economic growth. A new consensus has emerged since the Global Financial Crisis that anaemic wages growth and increased income inequality is retarding economies and stoking political volatility in developed economies. Nevertheless, Lowe is the first in Australia to join the chorus. His suggested remedy – that employees need to speak up more to request higher pay – is strikingly naive, inviting the obvious question. What if the boss says "no"?

Lowe's counterpart at the Bank of England, Andy Haldane, has offered a more sophisticated analysis of the wages crisis, focused on the transformation of the labour market. Haldane recently observed that profound changes in workplaces had produced a period of "divide and conquer" that left workers less able to bargain for higher wages. "There is power in numbers. A workforce that is more easily divided than in the past may find itself more easily conquered. In other words, a world of divisible work may reduce workers' wage-bargaining power," he said.

The collapse in bargaining power for workers that Haldane has observed is reflected in the plight of Australian trade unions, which are languishing at their weakest point in their history. Only 14.5 per cent of employees belong to a trade union. In the private sector, that number sits at a shocking 10 per cent and falling. The tipping point passed long ago. Australian trade unions are fighting for their survival. That wage growth and employee share of GDP has hit record lows is no coincidence…..

The explanation for the severity of the collapse of unionisation is far more prosaic. It's our laws. Unions have been seriously weakened by 30 years of constant political and legislative attacks. The last conservative prime minister not to establish a royal commission into trade unions was Billy McMahon (1971-1972). For decades, business lobby groups have permanently and successfully campaigned for legislative change that weakens unions.

In this era, workplace laws have been changed in two key ways. First, the laws have been deregulated to encourage employers to cut wages and de-unionise their workplaces. At the same time, unions have been subjected to complex regulation that restricts their ability to access workplaces, recruit members and to bargain for better wages and conditions. The laws have allowed employers unprecedented ability to cut labour costs, outmanoeuvre employees and their unions while at the same time inveigling unions into a kind of regulatory quicksand…..

Read the full article here.

Thursday, 15 June 2017

Blind ignorance and political opportunism continue to rule the federal corridors of power

“Some MPs are also concerned that a CET would be too similar to Labor's climate policy and would see the Government lose its edge over the Opposition.” [ABC News, 13 June 2016]

The National Electricity Market (NEM) is said to be the longest geographically connected power system in the world, supplying five of Australia’s eight states and territories with electricity for homes, businesses and industries. It generates around 200 terawatt hours of electricity annually, accounting for around 80 per cent of Australia’s electricity consumption, according to the Australian Chief Scientist Alan Finkel.

In December 2016 the Australian Chief Scientist presented the Expert Panel’s Preliminary Report of the Independent Review into the Future Security of the National Electricity Market to the Council Of Australian Governments (COAG).

Six months and one Final Report later, as electricity prices continued to climb and low income households across Australia worry about how they will meet the next power bill, the governing Liberal and National parties are still fighting crazy ideological battles and worrying about their own chances at the next federal election - instead of facing up to the fact that the NEM became highly dysfunctional once the system was essentially privatised as well as the fact that Coalition energy policies are spectacularly failing to meet Australia’s international obligations with regard to climate change mitigation.

I for one am unimpressed with and angered by this display of blind ignorance and political opportunism as I try to hoard my pennies against this winter’s power bill………

Malcolm Turnbull has been hit with a stronger-than-anticipated backlash over plans to introduce a Clean Energy Target in a battle which is fast becoming a test of his leadership, Liberal sources say.
Despite the CET having the support of senior conservatives and other ministers, it did not translate into backbench support late on Tuesday as Coalition MPs at a special meeting discussed the findings of Chief Scientist Alan Finkel and his main recommendation for a CET to be adopted post-2020.
By early evening, sources inside the meeting said only four MPs had so far spoken in favour of Dr Finkel's key recommendation while about 20, including Tony Abbott and junior minister Angus Taylor, were against, and four more unclear.
"It's a slaughter," said an MP inside the meeting "and a lot of the usual suspects haven't spoken yet".
As the meeting rolled on, it was apparent the government would, at the very least, have to design a scheme that enabled so-called clean coal to be designated, in part, as a low emissions energy source. Even so, this is unlikely to placate all the backbench rebels and also runs the risk of Labor withdrawing its offer of bipartisan support because it cannot accept a policy that designates coal as a clean emissions source.
The prospect of doing anything at all is now in serious doubt. Both Nationals and Liberals spoke against the plan, despite it promising to lower electricity prices and the government yet to do any design work.
With Mr Abbott leading a determined group of MPs who believe the government should either do nothing at all, or adopt a scheme giving so-called clean coal equal treatment to renewable energy, senior Liberals said Mr Turnbull cannot risk losing control of the policy process to his nemesis.
Mr Abbott, who had not read the Finkel report, slammed the CET on Monday as a "magic pudding" and "a tax on coal"…..
Labor resolved to oppose the government trying to allow the Clean Energy Finance Corporation to invest in carbon capture storage technology, saying it was "nothing but a hollow gesture to appease extreme right MPs".
Under a CET, existing generators would see out their natural lives and coal use would only fall slightly under a CET.
Climate-change policy has ignited tensions within the federal government, with a group of backbench MPs led by Tony Abbott confronting Malcolm Turnbull over the proposed Clean Energy Target in a special party room meeting.
As one MP in the room put it afterwards: "Malcolm could lose his leadership over this if he doesn't listen to us."….
The disquiet means that Environment and Energy Minister Josh Frydenberg is likely to have little choice but to significantly modify the CET, as proposed in the Finkel review, to keep the backbench on-side as he finalises the Coalition's policy response, which is expected as soon as the end of July.
The length of the meeting and depth of feeling is likely to cause a re-think by the Turnbull government as it looks to implement a CET, with coal and gas likely to be given more favourable treatment.
ABC News,13 June 2017:
Tensions between Liberal factional rivals Tony Abbott and Craig Laundy boiled over at the conclusion of Tuesday's party room meeting, in which dozens of Coalition backbenchers raised concerns about Alan Finkel's energy report.
The special meeting was called to give Liberal and National MPs more time to debate the chief scientist's recommendations, including the introduction of a Clean Energy Target [CET] to encourage the development of low emission generators.
While the three-hour meeting was described as "positive" and "constructive", the ABC has been told Mr Abbott and Mr Laundy had a "very heated exchange" that lasted around 15 minutes after MPs and Senators filed out of the meeting.
It is understood it followed a minor altercation during the meeting when Mr Laundy took issue with Mr Abbott for interjecting while he was on his feet.
The former Prime Minister was one of about 10 MPs who expressed "serious misgivings" about the introduction of a CET, while a handful spoke in favour of the policy.
The Sydney Morning Herald,  13 June 2017:
The evening's first questioner had nearly summed things up.
"I think many of us will remember four years ago we had an election and saw the Coalition more or less win on the promise that by slashing the carbon tax every family in this country would get $500 back. 
"I don't know about you, but in our family we didn't see this $500. I have seen prices of electricity rising every year since then. And, you know, actually experts around the world are telling us that putting a price on carbon, on pollution, is the most efficient way that we can deal with the challenge of climate change. 
"It actually works, it's very simple - people who want to pollute, that's fine, you want to pollute, but then you pay. Then you reward those who don't. Simple. My children understand that system."
The Australian, 14 June 2017:

The federal Coalition has put its dysfunction on display again.

Always up for a brawl on climate change, Liberals and Nationals MPs have thrown themselves into an internal row that tells Australians to look elsewhere for leadership.

In public, MPs assure voters they have a way to keep power bills down. In private they rip each other to shreds because they do not know what to do.

Tony Abbott interjected so often throughout the meeting that Craig Laundy, a frontbench ally of Malcolm Turnbull, called the former prime minister out and asked that he show respect to those who wanted to speak.

Wednesday, 31 May 2017

As utility bills get harder and harder to manage for those on low incomes, this comes as a slap in the face

In roughly five to six weeks time electricity prices are expected to rise for many people in Queensland, New South Wales, the Australian Capital Territory, South Australia and Tasmania.

Households are expected to pay up to $300-$400 more a year, with the rise in wholesale electricity prices making up est. 45 per cent of a domestic supply bill.

As low-income renters, pensioners and the unemployed struggle this winter with the choice of trying to stay warm without heating or face an impossibly large electricity bill, they might like to remember that all this was very avoidable.

First Prime Minister Abbott and then Prime Minister Turnbull (along with all their MPs and senators) had the chance to keep energy costs lower - but blinded by ideology they refused to do so.

This was The Sydney Morning Herald reporting the Turnbull Government's failure on 8 December 2016:

The Turnbull government has been sitting on advice that an emissions intensity scheme - the carbon policy it put on the table only to rule out just 36 hours later - would save households and businesses up to $15 billion in electricity bills over a decade.

While Malcolm Turnbull has rejected this sort of scheme by claiming it would push up prices, analysis in an Australian Electricity Market Commission report handed to the government months ago finds it would actually cost consumers far less than other approaches, including doing nothing.

It finds that would still be the case even if the government boosted its climate target to a 50 per cent cut in emissions by 2030.

Depending on the level of electricity use and the target adopted, modelling by Danny Price of Frontier Economics found costs would be between $3.4 billion and $15 billion lower over the decade to 2030.  Costs would be $11.2 billion lower over this time assuming average electricity use and the existing climate target.

Tuesday, 4 April 2017

Turnbull Government's $75 & $125 bribes appear to have earned it nothing but falling poll numbers

The announcement of a one-off payment of $75 to singles and $125 to couples who receive the aged, disabled and carers pensions to cope with a predicted rise of $78 in the average household electricity bill from June this year, along with a promised loan to the SA Government for construction of a solar thermal power plant and a feasibility study for a north-south gas pipeline, in exchange for company tax cuts for businesses with up to $50 million annual turnovers – has not produced a happy bounce in the polls for the Liberal-Nationals Coalition Government led by Malcolm Turnbull and Barnaby Joyce.

This Newspoll was conducted between Thursday 30 March and Sunday 2 April 2017.

The Australian, 3 April 2017:

Wednesday, 22 March 2017

GAS SHORTAGE! GAS SHORTAGE!: Why on earth do you think we would believe you now, Malcolm?

“Santos now argues that its aim in CLNG was always as much about raising the domestic gas price, and therefore re-rating large parts of the portfolio outside of GLNG, as it was about the project…….What is more, with a ~0.8% drag on Australian GDP from every $2/GJ rise in the domestic gas price, this view certainly wouldn’t have been terribly popular with politicians who approved the project. [Credit Suisse, Asia Pacific/Australia Equity Research: Santos, 11 March 2014]

The reality for Australian householders is that on on average gas cost the same or more than electricity by 2012.

After managing to artificial inflate the domestic price of gas still further and wanting to reserve as much LNG as possible for the larger export market, now the Australian gas industry is crying shortages in order to blackmail state governments into opening up more conventional and unconventional gas fields across rural and regional Australia.

The fact of the matter is that since at least 1975 domestic energy consumption has been lower than energy production and export, while current gas domestic consumption remains significantly lower that current gas production.

According to the Australian Dept. of Industry, Innovation and Science’s Australian Energy Update 2016:

Natural gas production rose by 5 per cent in 2014–15 to 2,607 petajoules (66 billion cubic metres). Western Australia remained Australia’s largest producer of natural gas, producing nearly two-thirds of total gas production in 2014–15. Queensland production grew 45 per cent to become Australia’s second largest producer, overtaking Victoria, where production fell by 11 per cent. Production of coal seam gas increased by 50 per cent in 2014–15, to reach 462 petajoules (12 billion cubic metres), as new wells were drilled in Queensland to support the start of LNG exports from Gladstone. Coal seam gas accounted for 18 per cent of Australian gas production on an energy content basis, and nearly half of east coast gas production.

This Australia Institute graph makes the relationship between 2016 gas production and domestic consumption levels clearer:

Graph retrieved from Twitter

So why the alleged gas shortage?

The gas industry in Australia ignored signs that domestic gas consumption would rise and, in an excess of greed made commitments to export markets which appear to have been predicated on the assumption that it would be able to easily and profitably make up the competitive squeeze between domestic need, client country needs and its own commercial aims - because it would still be allowed open slather to drill or frack every available square kilometre of land with gas reserves beneath it.

This can all be explained in one sentence. The gas industry has been deliberately manipulating and starving the domestic market for years.

Mainstream media is finally looking at this problem a little more closely and explaining how businesses and consumers are being played for fools.

The Sydney Morning Herald, 16 March 2017:

Let's be clear: there is no gas shortage. Not in Australia, and not around the world. In fact, there's the opposite: a global glut of the stuff. BHP has already admitted there's enough gas in Bass Strait to supply the east coast "indefinitely". And globally, by the end of 2015 the gas industry was capable of producing about 25 per cent more liquefied gas than the world wanted to import.

By 2020, production capacity looks set to increase another 30 per cent. Even if demand is increasing – and that's not absolutely clear – it's not keeping pace with that. The world's biggest importer, Japan, has been reducing its demand for several years, and according to its own government, will be buying 30 per cent less gas by 2030 as it turns its focus to renewables….

So it was all very encouraging to hear Turnbull boasting this week about the size of his constitutional stick. "We have a responsibility – which we do not shirk from"; the industry understands the gravity of its "social licence" to operate. Et cetera. But the government has steadfastly refused to use that stick previously. And when you have gas companies slugging Australians record prices while charging their Asian customers record low prices, it's a little hard to believe they stay awake at night worrying about the terms of their "social licence".

What's much easier to believe, though, is that the gas industry is desperate to get its hands on gas supplies that are off limits – especially controversial ones like, say, coal seam gas. And if they have to offer a little more domestic supply to do it – at a time when global demand is slowing anyway – then it's hardly a sacrifice. Oh, and as it happens, that's exactly what Turnbull would like to offer them, hence his condemnation of the states' bans on further gas extraction.

It's a neat trick, really. Take a country with enough gas to supply itself "indefinitely", send the vast majority of it overseas, refuse to sell locally at a fair price, create a domestic shortage, then demand access to some of our most environmentally sensitive resources as though it's an emergency measure.
The Australian, 18 March 2017:
According to a report compiled by Energy Edge, the $US18.5 billion ($24.1bn) Gladstone LNG project, run by Santos, has at times been buying the equivalent of up to half of the whole east coast’s energy demand to meet a shortfall of gas to put through its two LNG production trains.
It is little wonder then that high up in the gentlemen’s agreement struck on Wednesday were commitments to supply, rather than deplete, domestic gas markets.
It is also clear that only two of the three Gladstone projects could agree to being net domestic gas contributors “as part of their social licence”.
The GLNG project has had to “take the matter on notice”, the agreement said.
The other two LNG projects — Queensland Curtis LNG run by Shell and Australia Pacific LNG run by Origin Energy and ConocoPhillips — have been consistently providing gas to the market (and GLNG, sometimes) on top of their export commitments.
“QCLNG and APLNG are currently either net long or balanced to the market, whereas GLNG is significantly short on equity supplies and must rely on third-party contracts,” Energy Edge said.
That was known by most observers.
But, using a range of public sources, Energy Edge says GLNG has sometimes bought a staggering 500-600 terajoules a day of gas on top of its own production.
Illustrating how substantial that volume is, the combined domestic demand from the pipeline-connected eastern states of Queensland, NSW, Victoria and Tasmania is about 1250 terajoules a day.
GLNG appears to already be averaging the use of about 300-400 terajoules a day of third-party gas — that is, gas outside the coal-seam gasfields it has developed specifically to feed its LNG project — for its LNG export.
With APLNG and QCLNG ­already fulfilling the demand, any short-term change will need to come from Santos and its GLNG partners Total and Kogas, although it might pay the rest of the industry to somehow provide some assistance.
After the meeting, Santos chief executive Kevin Gallagher, who was brought in last year to fix the problems, would not comment on exactly what the GLNG response could be.
“As an Australian company that has supplied the domestic market since its inception, we look forward to working with and supporting the government on this issue,” Mr Gallagher said.
“We are committed to working across all of our joint ventures to free up gas as well as continue to identify and develop new resources for the domestic market.”
As recently as December, at the company’s investor day, Mr Gallagher said the aim was to ramp up GLNG volumes to fill 6 million tonnes of the plant’s 7.8 million tonnes of annual LNG export capacity.
This could be potentially expanded by offering tolling services to other Australian gas producers who might want to export their gas but didn’t have the facilities, he said.
Enthusiasm for toll-treating has probably eased off in the wake of the meeting with Mr Turnbull and the current alarm around contract prices that Australian Competition & Consumer Commission chairman Rod Sims said this week “are apparently being offered at $20 a gigajoule, if they receive supply offers at all”.
East coast gas contract prices were $3 to $4 per gigajoule before the export plants were committed to and are said to now average $8 to $10, except in extreme cases.
The $70bn worth of Gladstone gas freezers and associated coal-seam gas wells have rapidly tripled east coast gas demand and opened the market up to international buyers.
This has ended an era of cheap Australian domestic gas supply, although the industry says this would have happened anyway because the cost of developing required resources was rising.
But the expected price hike has been exacerbated and come with shortages thanks to external factors and industry and government missteps, many of them flagged by observers before they were committed to.
Despite calls for industry to collaborate, three separate, almost identical plants were approved by Queensland and federal governments and, from 2010, built by the gas industry on Curtis Island.
This resulted in increased capital costs because infrastructure was not shared, cost blowouts as the remote construction market heated up and the building of six LNG production trains when the associated coal-seam gasfields could only really supply enough fuel for five.
To achieve efficiencies of scale, GLNG built two trains when it only had enough gas to comfortably fill one, admitting it would need to buy an unspecified amount of third-party gas to fill the second train.
After this, much that could go wrong has gone wrong.
Oil prices crashed, robbing gas developers of cash flow and investor funds that would have been used for extra LNG-related and domestic gas development, while community opposition to onshore gas production grew, resulting in bans or restrictions on new development in NSW, Victoria and now the Northern Territory.
At the same time, coal-seam gas resources did not perform as well as hoped at some Santos GLNG grounds, Santos’s Narrabri project in NSW (which was also hit by community opposition) and at the Bowen Basin ground of the Arrow joint venture between Shell and PetroChina.
It is not clear what the options are for GLNG, but Credit Suisse analyst Mark Samter has made repeated calls for it to close down one of its two trains — something Mr Gallagher ruled out last year.
Now an incredibly rich Liberal Party politician heading a Liberal-Nationals federal government – who was a failure as Minister for the Environment and Water, an abject failure as Minister for Communications and is a profound disappointment as Prime Minister of Australia – expects voters to believe that there is a genuine gas supply emergency which will leave local families and businesses going without unless the states allow indiscriminate gas mining.

Wednesday, 22 January 2014

A Clarence valley voice in a wider forum

Clarence valley resident Charles Lincoln hold strong views on how the Abbott government regards pensioners. Mr Lincoln voiced his opinion in a contribution to the letters section of The Sun Herald (January 19).

Pension fears

 We have returned the Conservatives to power and as pensioners it appears that we may have done the wrong thing, as we now find that this government has openly stated that the pensioners are rorting the system with regards to concessional rebates on council rates (''Retirees furious over rate rort claim'', January 12).

This concession has not been raised with regards to the cost of living adjustments for seven decades.

So if this concessional rebate is a rort, in the eyes of the Federal Government, does it mean that all of the other pensioner concessions such as chemist prescriptions, doctor visits, transport and many more are also rorts?

Pensioners and all self-funded retirees must watch closely to make sure that the concessions that they have at present are not further eroded to improve the bottom line of the government, because increases in pensions are only 28 per cent of the average wage and each time that the CPI is increased we get further behind. 

Charles Lincoln, Gulmarrad

Thursday, 7 November 2013

The truth about Australian cost of living pressures in 2013

Remember Tony Abbott and all those Coalition candidates during the federal election campaign making promises about easing cost of living pressures caused by the big bad Labor Government?

Notice that the mainstream media is still talking about cost of living pressures building, despite the release of the latest Cost Price Index (CPI) data?
On the day these CPI figures were released News Ltd’s rather quaintly named Cost of Living Editor chose to focus solely on retailer energy price rorts and ignore the good news.

Well just for the record and according to the Australian Bureau of Statistics, Reserve Bank of Australia, Dept. of Veterans’ Affairs and Centrelink, here are a few facts that are not generally being mentioned by Murdoch’s minions.

Between January and September 2013 the Wage Price Index (hourly rates of pay without bonuses) had grown by an estimated 3 per cent.

In the months of July and August through to September 2013 annual inflation was running at 2.2 per cent.

During these same three months the CPI for households headed by an employed person rose by a mere 0.8 per cent, while living costs for independent retiree households rose 1.5 per cent, age pensioner households rose 1.3% and other government transfer recipient households rose by 1.1 per cent.

The cost of food and non-alcoholic beverages only formed a small part of these increases as on average these rose by only 0.1 to 0.2 per cent, while the cost of vegetables actually fell by 4.5 per cent. Insurance, financial services, and health care costs also fell for all four groups, as did interest rates when the cash rate was lowered to 2.5 per cent on 7 August.

Overall from January through to September the cost of living for households headed by an employed person rose 0.9 per cent and cost of living over that same period for independent retirees, pensioners and other welfare recipients rose by 2 per cent.

In response to these relatively modest CPI rises, fortnightly adult pension payments grew by $28 per couple and $18.70 per single person on 20 September.
The single rate parenting payment rose by $16.50 per fortnight and unemployment benefits rose by $4.10.

To put all these figures into some sort of perspective; the Reserve Bank inflation calculator tells me that if I spent $200 on a basket of goods and services in September Quarter 2012 by September Quarter 2013 that same basket of goods and services would cost me $204.32.

In other words cost of living was never a genuine issue during the federal election campaign and, will only become one once the Abbott Government begins taxing fixed and low income earners at a higher rate than they were prior to the election and finalises the withdrawal of a number of concessions/allowances.

Something that the Coalition has stated in writing that it intends to implement - beginning this year and continuing through to the 2016-17 financial year [Coalition Costings Table: Fiscal Budget Impact Of Federal Coalition Policy].

The alleged fall in gas and electricity prices voters are told they can expect if the national carbon pricing mechanism is repealed by the Abbott Government will not come anywhere near compensating for those additional taxes paid, superannuation foregone or concessions/benefits lost by individuals and families.

Friday, 1 November 2013

A reminder of cost of living figures BEFORE Abbott & Co have a chance to dismantle the national carbon pricing system

The Sydney Morning Herald 30 October 2013:

Australia's official inflation rate may be 2.2 per cent, but for most Australians the cost of living is scarcely rising.
New estimates released Wednesday show that for households headed by working Australians the cost of living climbed just 0.9 per cent in the year to September.
The Bureau of Statistics says among households headed by Australians on benefits, old age pensioners and retirees the cost of living climbed 2 per cent.
The estimates are lower than the official inflation figure because they include the cost of mortgage repayments, which has been sliding.
During the year in which the costs faced by working Australians climbed 0.9 per cent the wage price index climbed 3 per cent.
Electricity prices are climbing at their lowest annual pace in six years - just 6.1 per cent....

Sunday, 23 June 2013

Home and business electricity price increases begin to slow in 2013

From 1 July 2013 to 30 June 2016:

The average regulated price increases in 2013/14 are substantially lower than
those in recent years. This is due to:

Much lower changes to network costs in this year, following 4 years of large
network price increases. Network costs (excluding the climate change fund
levy) in 2013/14 will decrease in real terms in the Ausgrid3 and Endeavour
Energy area, and decrease in nominal terms in the Essential Energy area.4 We
expect that revised policy and governance arrangements will result in
moderate network cost changes over the medium term.

Relatively stable green scheme costs, following the one-off effect of the
introduction of the carbon pricing mechanism last year. Costs associated with
the carbon pricing mechanism and the Renewable Energy Target are broadly
stable in this year. We expect the costs associated with the small-scale scheme
under the Renewable Energy Target will fall over the coming years as the
impact of generous solar subsidies in the past declines. However, the costs
associated with the large-scale renewable generation under the Renewable
Energy Target are likely to continue to rise.

As Figure 1.1 shows, the main drivers of the average price changes for 2013/14
are higher retail costs (including the costs of customer service5 and the costs of
acquiring and retaining customers in the competitive market) and lower
generation costs. However, this partly reflects a reallocation of costs from the
generation to the retail cost categories.

The result of these changes in costs will add around 1.7% to average prices across NSW.

3 EnergyAustralia is the Standard Retailer in the Ausgrid network supply area.
4 Including the climate change fund levy, the Ausgrid and Endeavour Energy network charges will increase in nominal terms by 2.5% and 0.86% respectively, and the Essential Energy network charges will fall by 2.95%.
5 For example, this includes the costs of billing and handling customer inquiries........

Wednesday, 1 August 2012

Residential supply customers carrying the can for gold-plated electricity industry infrastructure upgrades

Granny Herald
points out the blindingly obvious on 27th July 2012:

"If any further evidence were needed to demonstrate how the power companies, both state-owned and private, have been foisting unnecessary price hikes on their customers, it can be found in the industry's own energy forecasts.
Forecasts of demand for electricity have a significant impact on the price of electricity. The higher the forecasts, the more money earmarked by industry for network upgrades in order to cater for this supposed increase in demand. In turn, the higher the financial returns for the industry players.
Ironically, as the transmission and distribution companies earn a regulated return on their assets, they have a perverse incentive to spend for the sake of spending.
Yet the great conundrum of the radical rise in Australian electricity prices
- up 70 per cent in six years and poised to ratchet another 30 per cent higher this year and the next - is that consumer demand has actually been falling, and falling for years.
Actual consumption in the National Electricity Network has been way out of whack with forecasts. For the past three years, the industry has had to downgrade its forecasts, and by a considerable margin. Still, they persist with forecasting large rises in energy consumption, even in the face of a clear downtrend in actual demand - and huge price rises at the retail level to boot.
Not only has the electricity industry failed to recognise a change of trend in total demand, but in peak summer demand and peak winter demand too."

Sunday, 31 July 2011

The Banana Mortgage Belt

As we leave July and enter August 2011, buying a banana is still a luxury for many on the NSW North Coast at around $14-$16 a kilo in some of the larger supermarkets.

The Australian Bureau of Statistics kindly places the pain in our wallets into perspective.

ABS CPI June quarter 2011 up 0.9%

The ABS Consumer Price Index rose 0.9% in the June quarter 2011, compared with a rise of 1.6% in the March quarter 2011.

The most significant price rises this quarter were for fruit (+26.9%), automotive fuel (+4.0%), hospital and medical services (+3.4%), furniture (+6.0%) and deposit and loan facilities (+2.1%). The most significant offsetting price falls were for vegetables (–10.3%), audio, visual and computing equipment (–6.3%), electricity (–1.5%), domestic holiday travel and accommodation (–1.5%) and milk (–4.6%).

Fruit prices increased by 26.9% in the June quarter 2011 mainly due to an increase of approximately 138% in the price of bananas due to shortages created by Cyclone Yasi. Banana prices increased 470% over the six months to the June quarter 2011.

The ABS Consumer Price Index rose 3.6% through the year to the June quarter 2011, compared with a rise of 3.3% through the year to March quarter 2011.

Wednesday, 29 June 2011

Saying it with pictures for the benefit of Tony Abbott

Tony Abbott told the 55th Federal Council of the Liberal Party of Australia on 26 June 2011; As I said in my maiden speech and have been repeating ever since, middle income families with children are Australia’s new poor.

Leaving aside both the fact that Tony Abbott entered Parliament seventeen years ago and the suspicion that he is using this tired old argument to advocate tax cuts for comfortably off families like his own - it is immediately obvious that this statement by Abbott is not true.

So for the benefit of this shabby economic illiterate politician I will say it with pictures.

The mean weekly equivalised disposable household income has been rising for the entire time Tony Abbott has been the Member for Warringah and, the number reporting financial hardship had fallen to below twenty per cent of total households by 2009:

Individuals and families with low household incomes remain the poor - period.
Individuals and families on middle incomes fare better and, have been doing so consistently for at least the last twelve years.

According to the Australian Bureau of Statistics in 2010; The headline indicator shows that the middle income group had a slightly greater gain in real income between 1997-98 and 2007-08 than the low income group (46% compared with 41%) and middle income households have maintained around a seven percentage point lead on low income households when it come to a percentage share of total income received by persons between 1994-95 and 2007-08.

Those most likely to experience financial difficulties are not middle income individuals and families:
By 2009-10 there were 2.9 million families with children living at home. In 2011 The Australian Institute of Family Studies stated; Of all four groups, families comprising couples with dependent children were in the second best financial position, with an average disposable income of $810 per week, and with 19% of people reporting the experience of at least one of the seven financial hardships.

The Report for National Families Week 2011 included the observation that in 2010 couples with children were more likely to have one of the parents in paid employment than lone women with children: