❓ Hon. Helen Bullock questions the Minister for Energy about electricity price increases exceeding the CPI, despite apparent community hardship. The Minister defends the increases as necessary to reach cost-reflective levels and avoid greater long-term costs, while highlighting increased hardship allowances and a commitment to more modest future increases.
AnsweredQoN 256Legislative Council
QuestionView source ↗
ELECTRICITY
PRICES — INCREASES
256. Hon HELEN BULLOCK to the Minister for Energy:
I refer to the minister's
comment in this place yesterday, 15 May 2012, that in terms of electricity
price increases, by the third year it was clearly evident that the community
needed a break; that is what the minister said yesterday without notice.
(1) If it was
so clearly evident, why did the government continue to raise electricity prices
above the consumer price index?
(2) When it
became evident that the community was hurting, did the minister ever make a
case to the Treasurer or the Premier to keep electricity price rises to the
CPI; and, if not, why not?
PRICES — INCREASES
256. Hon HELEN BULLOCK to the Minister for Energy:
I refer to the minister's
comment in this place yesterday, 15 May 2012, that in terms of electricity
price increases, by the third year it was clearly evident that the community
needed a break; that is what the minister said yesterday without notice.
(1) If it was
so clearly evident, why did the government continue to raise electricity prices
above the consumer price index?
(2) When it
became evident that the community was hurting, did the minister ever make a
case to the Treasurer or the Premier to keep electricity price rises to the
CPI; and, if not, why not?
AnswerView source ↗
I thank the honourable member for
some notice—no; I thank the member for the question. I should know that
by now, I had a bit of rehearsal yesterday without notice!
(1)–(2)
As I said yesterday, when we first came to office we were faced with the
prospect of having a tariff increase of 116 per cent to get to cost-reflective
levels. That came at a social cost to all Western Australians, because we had
to recoup that cost one way or another—that is, by taking it out of
consolidated revenue to the tune of, over a period of years, let us face it,
billions and billions of dollars. We should not forget that if we had gone down
the path of Labor Party policy—which we were talking about and which
was a bit ambiguous at that time—of 10 per cent increments, we would
not have even been close to cost-reflective levels by 2019 and would have had
to pay over $6 billion. We had to take what was deemed both a socially and
economically responsible course of action. As I said yesterday, we had four
rather significant increases over a two-year period to get to a point at which
we were remotely close to cost-reflective levels and remotely close to the
user-pays system of electricity. That has its benefits on both parts. First of
all, as I said yesterday, we are getting to a point at which we are relying
less on consolidated revenue and moving to a user-pays system. That, of course,
makes a significant difference to money available to other areas of the community.
That is the simple fact of the matter; one way or another we have to pay for
electricity. It does not just drop out of the sky. We have to pay for
generation, we have to pay for fuel, we have to pay for retail and we have to
pay for the distribution to the networks; we have to pay for it and it comes at
an enormous cost. They are all the things that we, as government, had to take
into consideration when we made that determination.
As I said, those first two years
of increases were significant and they were steep. Number one, they still did
not get us to cost-reflective levels; they still kept Western Australia as one
of the cheapest jurisdictions in the nation. At the same time we significantly
increased the hardship allowances to those people who are least able to pay. We
significantly increased the rate of the hardship allowances. As I said,
certainly after two years it was becoming evident, as we moved through the
community and it became a topic within the community, that we had to slow the
process down. However, it would have been, and will continue to be, totally
irresponsible to go back to a situation like we had with the previous
government, in which we stopped it altogether so we did not have any increases
at all, because in three or four years' time we would be back to where
we started off. Therefore, last year we decided to have a much more modest
increase, which was five per cent. As I have said over and over again, in
tomorrow's budget there will also be a very modest increase and that is
also a reflection of the fact that some pain has been received through the
community. It is an acknowledgement of a significant increase in tariffs and as
a result of that, we have taken what I see as a much more compassionate
approach.
Having said that, we have ensured,
as a government, that we are assisting those who are least able to pay, we are
taking a much more responsible approach from an economic perspective and at the
same time, with the social aspect of it, we are also trying to assist the community
through community-awareness policies about energy use to ensure that people
within our community actually get to the point whereby they understand that
electricity is not free, it is not cheap and that it is much more sustainable,
not just individually or collectively as householders, but for the community at
large, the nation and for the globe, for us to reduce our electricity use. That
is exactly what has been happening across the board—a much more
sustainable, energy-efficient process to ensure that it is better for the
environment and better for the community and ultimately, of course, we will get
to a point whereby we will have cost-reflective tariffs. It will be some way
off, I have to say, because we are still looking at 23 per cent at least, but we
will not be recouping that 23 per cent in the short to medium term, I can
assure the honourable member. We slowed the process down last year and a modest
increase will be announced in tomorrow's budget.
some notice—no; I thank the member for the question. I should know that
by now, I had a bit of rehearsal yesterday without notice!
(1)–(2)
As I said yesterday, when we first came to office we were faced with the
prospect of having a tariff increase of 116 per cent to get to cost-reflective
levels. That came at a social cost to all Western Australians, because we had
to recoup that cost one way or another—that is, by taking it out of
consolidated revenue to the tune of, over a period of years, let us face it,
billions and billions of dollars. We should not forget that if we had gone down
the path of Labor Party policy—which we were talking about and which
was a bit ambiguous at that time—of 10 per cent increments, we would
not have even been close to cost-reflective levels by 2019 and would have had
to pay over $6 billion. We had to take what was deemed both a socially and
economically responsible course of action. As I said yesterday, we had four
rather significant increases over a two-year period to get to a point at which
we were remotely close to cost-reflective levels and remotely close to the
user-pays system of electricity. That has its benefits on both parts. First of
all, as I said yesterday, we are getting to a point at which we are relying
less on consolidated revenue and moving to a user-pays system. That, of course,
makes a significant difference to money available to other areas of the community.
That is the simple fact of the matter; one way or another we have to pay for
electricity. It does not just drop out of the sky. We have to pay for
generation, we have to pay for fuel, we have to pay for retail and we have to
pay for the distribution to the networks; we have to pay for it and it comes at
an enormous cost. They are all the things that we, as government, had to take
into consideration when we made that determination.
As I said, those first two years
of increases were significant and they were steep. Number one, they still did
not get us to cost-reflective levels; they still kept Western Australia as one
of the cheapest jurisdictions in the nation. At the same time we significantly
increased the hardship allowances to those people who are least able to pay. We
significantly increased the rate of the hardship allowances. As I said,
certainly after two years it was becoming evident, as we moved through the
community and it became a topic within the community, that we had to slow the
process down. However, it would have been, and will continue to be, totally
irresponsible to go back to a situation like we had with the previous
government, in which we stopped it altogether so we did not have any increases
at all, because in three or four years' time we would be back to where
we started off. Therefore, last year we decided to have a much more modest
increase, which was five per cent. As I have said over and over again, in
tomorrow's budget there will also be a very modest increase and that is
also a reflection of the fact that some pain has been received through the
community. It is an acknowledgement of a significant increase in tariffs and as
a result of that, we have taken what I see as a much more compassionate
approach.
Having said that, we have ensured,
as a government, that we are assisting those who are least able to pay, we are
taking a much more responsible approach from an economic perspective and at the
same time, with the social aspect of it, we are also trying to assist the community
through community-awareness policies about energy use to ensure that people
within our community actually get to the point whereby they understand that
electricity is not free, it is not cheap and that it is much more sustainable,
not just individually or collectively as householders, but for the community at
large, the nation and for the globe, for us to reduce our electricity use. That
is exactly what has been happening across the board—a much more
sustainable, energy-efficient process to ensure that it is better for the
environment and better for the community and ultimately, of course, we will get
to a point whereby we will have cost-reflective tariffs. It will be some way
off, I have to say, because we are still looking at 23 per cent at least, but we
will not be recouping that 23 per cent in the short to medium term, I can
assure the honourable member. We slowed the process down last year and a modest
increase will be announced in tomorrow's budget.
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