Unsurprisingly, electricity affordability has proven to be a major election issue. With parties’ announcing some positive commitments, this has not necessarily translated into the holistic solution to the ‘energy crisis’ that farmers need.
For a long time, QFF has highlighted four core areas that must be addressed to ensure farmers can access power at the right price and use it more effectively:
- Optimise network assets and set network prices at efficient levels, at least 40% below existing levels.
- Remove the hidden taxes on the Government Owned Corporations (GOCs).
- Either retain the existing agricultural tariffs or develop new appropriate tariffs.
- Implement better demand management and energy efficiency practices.
The LNP is the only party to address first point committing to write down the regulated asset base (RAB) of Energy Queensland by $2 billion. QFF commends the LNP for this important shift in thinking as the number one driver of electricity prices is network prices – the ‘gold plating’ of the poles and wires. However, QFF estimates that the RAB for all the GOCs needs to be written down (i.e. ‘strand’ or ‘park’ the assets) by 50% – the LNP commitment is only about 6.5% of the total RAB.
The second point has been picked up by several parties. There are essentially four ‘hidden taxes’ that accounted for about $3 billion in government revenue last year – about $12 billion over the last 3 years. The KAP has committed to removing the competitive neutrality fee and unnecessary margins on regulated prices; the Greens will stop the dividend payments (about $2 billion last year alone); and One Nation has committed to reducing the price of electricity by 20%, most likely through addressing hidden taxes.
To date, the LNP and the KAP are the only parties directly dealing with the major issue many farmers on transitional tariffs will face from 1 July 2020. Encouragingly, the KAP has committed to indefinitely freezing the escalation of transitional tariffs used in irrigation. The LNP’s $75 million ‘Food and Fibre Transition Payment’ for farmers on tariffs 62, 65 and 66 is a constructive first step, but at least 60% of farmers on these tariffs will be worse or no better off when they are removed, so a longer-term tariff solution is also needed.
Labor has best addressed the final point with its commitment to a $10 million extension of the Energy Savers Program, which will conduct 200 extra energy audits and offer a 50% co-contribution (capped at $20,000) towards the cost of implementing changes recommended through the audits. The LNP’s ‘Food and Fibre Transition Payment’ also provides some assistance in this area with the $1,400 grants able to be used to fund smart meters, energy audits and energy-efficient technology.
It is encouraging to see some good positions presented during this election, but unfortunately, no party has offered the holistic approach our sector needs. To achieve this, the Queensland Government must modernize its thinking and challenge the way it has historically treated energy assets. This is hard, but quite clearly the status quo is no longer working.
QFF acknowledges that solving the ‘energy crisis’ will not happen overnight. The next Queensland Government must take some immediate steps and commit to a longer-term agenda to realise the appropriate changes.
There is still time before 25 November for parties to hone their offerings, and for the sake of our sector and the Queensland economy more broadly, let’s hope they do.