Overhaul of energy concessions needed as three million households struggle to pay their energy bills

Reforming electricity concessions to better meet need, a report released today by ACOSS, ACTCOSS and other partner social service organisations, found that while around three million households receive some form of ongoing financial assistance for their energy bills, the poor design and implementation of the assistance means too many people still can’t afford the energy they need.

Too many people are depriving themselves of energy – taking fewer showers, cooking less, not heating or cooling their homes, going without food, medicine, and other essentials to pay energy bills – and still finding themselves in energy debt, with no way to pay debt down.

The report found that providing energy concessions and annual rebates as a fixed amount means it does not respond to energy price changes, seasonal variations in energy use, or the energy performance of the home. It also means that some people are getting more assistance than they need, and others are getting significantly less.

For example, a fixed concession of $241.63 a year would only cover 7% of the energy bill of a 4-person family in a 3-bedroom home without solar, compared to a single person 2-bedroom home with solar where the same concession covers 63% of the energy bill.

Many of these concerns raised in this report were raised by the Australian Competition and Consumer Commission (ACCC) in 2018. Its recommendations have not been acted upon.

The report recommends shifting to a percentage-based concession or rebates (such as the regime currently operating in Victoria) which will help adapt support relative to need and circumstances, changes in the energy market and technology, and help manage the risks of the energy market transition for those most in need.

The report also considers transitional arrangements and notes that investment in energy efficiency, electrification and solar for low-income homes, combined with percentage-based concession, would ultimately reduce the cost to governments as well as households.

The report recommends Energy Ministers commit to undertake energy concessions and rebate reform as relevant to their jurisdiction to improve equity, accessibility, and better meet people’s energy needs and changing circumstances. The report recommends the ACCC to model how percentage-based concessions can be implemented, and separate reviews to look at eligibility and putting in place processes such as consumer focused automation to improve access to concessions and rebates.

It also outlines complementary measures Federal, State and Territory Governments should take to support the effectiveness of energy concessions:

• • immediately lift income supports above the poverty line to improve the capacity of people on low incomes to afford energy bills;

• • co-invest in efficient electric appliances, thermal efficiency, and solar upgrade programs for low-income households;

• • shift the costs of green schemes off bills or offset the costs for people on low incomes.

Dr Cassandra Goldie, Chief Executive Officer, ACOSS, said:

“At a time when people are already reducing their energy use in whatever way they can and still finding themselves in debt and unable to cover the basics like food, rent and medicine, it’s critical that Energy Ministers heed the call in this report for a new approach that better meets households’ needs.

“In addition to addressing the flaws and inequities that are preventing those most in need of financial assistance from receiving it, the Federal Government must immediately lift income supports above the poverty line so that people have enough to pay their energy bill and cover the cost of other basics like food, rent and medicine.”

Dr Emma Campbell, Chief Executive Officer, ACTCOSS, said:

“People who face disadvantage are disproportionately impacted by rising energy costs and spend a greater proportion of their incomes on energy bills. It is critical that the government review energy concessions to ensure they are sustainable, targeted and adequately respond to need.”

Joanna Quilty, Chief Executive Officer, NCOSS, said:

“The reality is, more and more people in NSW wake up each morning and wonder how they will afford to feed their families, pay the bills, and frankly, just get by.

“What we need right now is immediate energy price relief for those really struggling and more streamlined ways for people in need to access that relief.”

Toby oConnor, Chief Executive Officer, St Vincent de Paul National Council of Australia, said:

“As energy costs rise, it is essential those most in need of energy assistance are helped. Percentage-based energy concessions must replace fixed amounts to ensure fairness and equity.

“Fixed amount energy concessions fail to keep up with price increases, reflect seasonal variation or the energy performance of homes. The shift to percentage-based energy concessions must be prioritised.

“Energy assistance must be fair, equitable, easy to access and adequate to meet people’s needs. Work needs to start immediately on how percentage-based energy concessions could be implemented by jurisdictions across Australia.”

Jonathon Hunyor, Chief Executive Officer, Public Interest Advocacy Centre said:

“People should not have to worry whether they can afford to use the energy they need to stay safe and healthy. Governments have long recognised this, providing rebates and concessions to support people’s energy needs.

“This report makes clear that reform is needed to ensure those rebates reach the people who need them and more equitably provide the support required.

“The energy system transition will involve important investments and increasing volatility in the short term, we need concessions and rebates capable of adapting to those circumstances to ensure those most vulnerable aren’t left further behind.”