Energy Minister Pushes for States Collaboration to Reduce Energy Prices

Minister for Climate Change and Energy Chris Bowen speaks to media during a press conference in the Mural Hall at Parliament House in Canberra, Australia, on June 23, 2021. (Sam Mooy/Getty Images)

The federal minister for climate change and energy, Chris Bowen, has indicated the Australian government will be looking to the states to lower energy prices at the meeting with energy ministers in Canberra on Thursday.

This comes as the federal government seeks to address the current skyrocketing price of electricity and gas, which has been predicted to worsen in the coming months by the Treasury Department with forecasted price rises of up to 56 percent.

Speaking on ABC Radio on Wednesday, Bowen said that the federal government wanted to work in partnership with the state governments to find a way to lower the energy prices in the country.

“The prime minister and the premiers and all the governments, particularly those governments with black coal in their jurisdictions, are working hard in the best interests of the country and their respective states to strike the right balance and to make sure that there is a very sensible package developed,” Bowen said.

“We’re working through the options very carefully, including with states that have a different set of powers to the Commonwealth and different circumstances. There are some areas where Commonwealth clearly has effective powers, other areas where the states might have more effective responses available to them.”

States Concerned About Public Revenue Losses

The comments from Bowen come after the federal government was criticised on Tuesday for proposing state governments utilise price caps on black coal to address the price rises.

New South Wales Treasurer Matt Kean pushed back against the suggestion saying he was concerned the federal Labor government’s plan would cost the states significant funding.

“So if they are going to handball this problem to us, then we need an indemnity against the costs we may need to pay under free trade agreements or to keep energy companies afloat and compensation for lost royalties that we need to help fund our schools and hospitals,” Kean told ABC Radio.

Kean said that the federal government has known about this national issue for months, and it was up to them to come to the table to solve it.

“The Commonwealth raised that we would be seeing massive increases in electricity bills in their budget more than two months ago,” Kean said. “They said they would offer a solution, and so far, they’ve been consulting with themselves and unions, and I am worried that all they offering up is an excuse or a plan to pass the buck to everyone.”

He also queried why the federal government had not come out with an aid package for Australians considering state governments were already putting serious funding into aid packages, with the New South Wales state government providing $300 million (US$200 million) in energy rebates this year.

“The Commonwealth is yet to pit a single dollar on the table to help families with energy costs,” Kean said.

Queensland Set to Recieve Billions in Revenue From Coal

Meanwhile, the Queensland government has projected its revenues from black coal royalties will almost double to $10.69 billion in the 2022-2023 financial year after the Palaszczuk state government’s decision to implement a super profits tax hike scheme on black coal, reported The Australian.

The royalty hikes, which began on July 1, 2022, progressively increase the top tax rate on each tonne of coal sold for more than $175 from 15 percent to 40 percent. Additionally, the government would take 30 percent of revenue earned above $225 a tonne and 40 percent for prices above $300 per tonne.

“The distortion of global energy markets has resulted in coal prices remaining higher for longer than anticipated in the budget,” QLD Treasurer Cameron Dick said in a statement to The Australian.

“As coal prices return to more normal levels beyond the current financial year, the dividend from the new tiers is forecast to fall accordingly, delivering an average of $153 million each year across the remaining three years of the forward estimates.”

Mining Companies Angry About Tax

The tax scheme has faced severe criticism with the Queensland Resources Council (QRC) Chief Executive Ian Macfarlane described the new tax introduced as “the world’s highest coal royalty taxes,” which had “undermined everything” the new industry plan “had been set up to achieve.”

“A glossy document doesn’t change that one bit,” he said in a statement on Monday.

“We have to look at what the government does, not just what it says.”

Macfarlane further warned the “exorbitant new taxes—done behind closed doors and without consultation” risks jobs and threaten investments in all Queensland commodities, not just coal.

“We took the Treasurer at his word that the State Government was committed to removing barriers to growth for the resources sector, just as we took him at his word there would be no new or increased taxes in this term of government,” he said.

Analysts have also warned that the tax could go far beyond the Palaszczuk government’s $1.2 billion forecast and will be a detriment to Australia’s global coal industry.

Edgar Basto, president of BHP, one of Australia’s biggest coal producers, told The Australian in June that “the cost of doing business in Queensland is already high, and further cost pressures will discourage investment, operational growth, job creation and local business spending across the state.”

“A new tax damages Queensland’s reputation as a stable place to invest and will make it harder for the state to compete against other global jurisdictions in attracting major new investment that would deliver longer-term value to communities and the state economy,” he said.

Daniel Y. Teng contributed to this report.