Low Income families face “Fuel Poverty”

GST revenue from soaring energy prices should form rebates – AGL

* By Annabel Hepworth
* From: The Australian
* October 15, 2010 8:51AM
* 8 comments

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Energy Developments

State governments are set to reap millions from rising energy prices / File Source: Bloomberg

* State goverments set for record windfall
* Prices to tip households into ‘fuel poverty’
* “Governments should give GST back as rebates”

AUSTRALIA’S biggest energy retailer is demanding governments siphon part of an estimated $550 million yearly GST windfall from skyrocketing electricity prices into rebates for low-income households.

In landmark modelling obtained exclusively by The Australian, AGL Energy finds that soaring power prices could lead to a GST windfall of between $400m and $550m a year from NSW and Queensland alone within five years.

The price increases threaten to tip 343,902 households in those states into “fuel poverty”, where they are spending about 10 per cent of their disposable income on electricity, according to the research.

AGL chief economist Paul Simshauser urged Australia’s governments to earmark a “significant” share of the extra GST raised from higher electricity prices into assistance measures such as rebates paid directly on to customer bills.

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Related Coverage

* Energy bosses raking in millions Daily Telegraph, 2 Oct 2010
* Cost of living to rocket by $600 Adelaide Now, 11 Sep 2010
* New $800 power slug Herald Sun, 13 Aug 2010
* AGL a safe energy play The Australian, 3 Jun 2010
* Power shift The Australian, 20 May 2010

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“If you accept that we have a large group of vulnerable households who will be exposed to fuel poverty, then you need to act on it and that is an important function and role of government in any society,” Professor Simshauser said.

“We have identified a significant windfall in GST revenue as energy prices rise in the next few years and it seems that’s a logical starting point when considering how best to provide a safety net for the most vulnerable.”

The company also wants federally commissioned modelling on the likely impact of electricity prices on low-income households, the creation of a national energy hardship committee to advise governments, and an “essential service credit” to help households upgrade to energy-efficient appliances.

The push was backed by welfare groups, who warned that cost-of-living pressures would continue to mount.

Queensland Council of Social Service president Karyn Walsh backed tapping the GST pool to help vulnerable consumers.

“It’s important to look at all options,” Ms Walsh said. “But we think it’s essential that governments at every level really understand the higher cost of living.”

She pointed to rising costs for housing, food and transport. “We are talking about what will be the tipping point for people. It’s not something that’s going to be solved by telling people to budget better.”

St Vincent de Paul policy and research manager Gavin Dufty described the GST on essential services as the “gorilla in the room that nobody is talking about”.

“The states have to make a statement about what they are going to do with that additional revenue,” Mr Dufty said.

Read more: http://www.news.com.au/money/money-matters/gst-revenue-from-soaring-energy-prices-should-form-rebates-agl/story-e6frfmd9-1225939015951#ixzz12NYP5SoO

news.com.au