Why is the government’s energy bill discount of $300 going to every household?

Why is the government’s energy bill discount of $300 going to every household?
  • PublishedMay 15, 2024

The government has previously made much of its “targeted” cost of living relief, so Tuesday’s budget headline – a $300 energy discount for every household – came as a surprise.

The discount will be applied as a rebate directly to energy bills in the 2024-25 financial year. One million small businesses will also get a discount, of $325.

This will first require legislation, which the Coalition is not likely to oppose.

“In 2022, Russia’s invasion of Ukraine triggered the biggest shock to global energy prices since the 1970s,” Mr Chalmers said.

“We know Australian families and businesses have felt this pain – and that’s why we stepped in to help.

“Just as every Australian taxpayer will get a tax cut, every Australian household will get energy price relief.”

But Grattan Institute CEO Aruna Sathanapally questioned whether the plan was effective cost of living support given it was universal.

“It is not a well-targeted measure, everyone is getting the benefit from it,” she told the ABC.

Senator David Pocock went further, telling the ABC it was “ridiculous” to make the measure universal.

“I think maybe politicians are just out of touch. We’ve got three million Australians living in poverty in this country, and you’re going to give me and other politicians on six figure salaries $300,” he said.

“It doesn’t make sense to me.”

‘Simplest way to deliver relief’

Treasurer Jim Chalmers said giving the discount to everyone was “the simplest way to deliver this relief.”

“Once you go beyond providing it to people on pensions and payments, who were our priority in the last budget, then it makes sense to go broadly. Some of the cost of living package is broad,” he told the ABC.

“People are under cost of living pressure up and down the income scale.”

Mr Chalmers also denied the payment would add to inflation.

“”The very clear advice we got from Treasury was that by designing our cost of living package the way we have, we will take the edge off inflation and won’t add to inflationary pressures elsewhere in the economy.

“We took that advice very seriously and we proceeded on that basis.”

Shadow Treasurer Angus Taylor said the energy bill relief was “not going to the source of the problem.”

“They are putting a band-aid on a bullet wound… When you plan to spend money it is inflationary… When you have $4 of spending for every dollar of savings, you are not fighting the inflation dragon that homegrown inflation that so many Australians are suffering with.”

Greens leader Adam Bandt also called the measure a “bandaid” measure, arguing the government should have gone further.

“We would like to see electricity treated as an essential service. There’s a lot more that could be done to bring down the cost of electricity… [the] budget is a betrayal of people who are doing it tough.”


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