Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

No end to soaring electricity prices

By Brendan Pearson - posted Thursday, 20 February 2014

There is a tombstone in an English churchyard with the following six word epitaph. "I told you I was sick."

As the number of closures in the manufacturing and minerals-processing sector grows, it is worth reflecting on how and why the repeated warnings from these sectors about the debilitating impact of steadily higher energy costs were ignored.

Less than a decade ago, Australia enjoyed the lowest energy costs in the developed world. It was an intrinsic part of our comparative advantage as a trading nation. But today, that advantage has largely gone.


As a result of the carbon tax, the Renewable Energy Target (RET) and a range of other energy policy interventions at the federal and state government level, Australia now has some of the highest electricity costs in the developed world

Household electricity prices have increased by more than 110 per cent in the last five years, and are projected to increase another 7 per cent in 2014-15.

Australian businesses – which account for some 70 per cent of total electricity use in Australia – have experienced an almost 80 per cent increase in prices since 2009 and there are more rises on the way.

The causes are not hard to find.

The carbon tax accounted for 16 per cent of the electricity bill for a typical large industrial user in New South Wales in 2012-13. In 2013-14, the carbon tax added an estimated $6.4 billion to the nation's tax bill. That's equivalent to a 10 per cent increase in company tax revenue in a single year.

Defenders of the carbon tax often point to schemes like the Californian emissions trading scheme as examples of comparable effort by other nations. But we should not forget that Australia's carbon tax raised the same amount of tax in its first 6 weeks as the Californian scheme is projected to raise in its first 2 years.


Official estimates suggest that the Renewable Energy Target will generate a transfer of $20 billion from householders and industrial users by 2020.

We have turned an economic strength into a weakness, and are beginning to feel the consequences. Across the Pacific, by contrast, the United States has turned a weakness into a strength, and is seeing its manufacturing sector expand rather than contract.

Meanwhile, in the European Union - which Australia mistakenly adopted as a model for its energy policy - the de-industrialisation is accelerating.

It is not too late to change direction.

The case for the immediate repeal of the carbon tax could hardly be clearer. After all, both sides campaigned on its 'termination' at the last election. The best signal of resolve to deal with energy costs the Parliament could deliver would be the early passage of the repeal bill.

The review of the Renewable Energy Target must also frame its work around a single-minded determination to reduce energy costs.

The Government's broader deregulatory agenda is also critical here. This includes a renewed push on energy market reform, a root and branch effort to tackle red and green tape across all federal and state agencies as well as the streamlining of project approvals and structural obstacles to energy exploration. A reduction in the costs of new and existing energy projects will eventually lead to a dividend at the electric power switch.

We should also not be afraid to restart the conversation on nuclear power. Despite being home to more than 35 per cent of the world's uranium reserves, Australia stands out amongst its peers with its legal prohibition of nuclear power. A mature, sensible measured debate about nuclear energy should surely not be beyond us.

In the absence of such a conversation, can be no genuine and thorough exploration of the true economics of nuclear power generation in Australia, no genuine and thorough proposals from alternative reactor technology providers (such as small-scale, remote power plants) and no genuine and thorough engagement with potential site host communities.

Australia should resolve to regain our status as a low cost energy jurisdiction. There is no more regressive tax on low income earners than a high electricity bill. There is no more insidious burden on export and import competing firms than steadily rising energy costs.

Low energy costs must again become a defining objective of our energy policy, not – as they have been for the last five years – its first casualty.

  1. Pages:
  2. 1
  3. 2
  4. All

This article was first published in The Australian.

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

16 posts so far.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Brendan Pearson is chief executive of the Minerals Council of Australia.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 16 comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy