Treasurer says gas review likely to result in mandatory code of conduct as energy costs soar
The Albanese government will toughen gas market regulation and intends to make the industry code of conduct mandatory, with the treasurer, Jim Chalmers, also not ruling out export limits or cash handouts as soaring bills put pressure on household budgets.
On Sunday, Chalmers signalled a review, announced in the budget and being conducted by the competition regulator, would likely include mandatory price regulation and a requirement for “meaningful offers” to domestic consumers.
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The government has also not ruled out using the threat of export limits to guarantee more domestic supply and cash handouts to compensate households as called for by former Australian Competition and Consumer Commission chair, Rod Sims.
Chalmers said regulation, not handouts, was the priority. This view was echoed by the energy minister, Chris Bowen, who warned on Sunday the government must “factor in what the Reserve Bank is doing with the impacts of our of any policy interventions”.
Chalmers told ABC’s Insiders the government “acknowledges that very high gas prices are putting extreme pressure on Australians and on Australian industry”.
Chalmers noted the recent heads of agreement to increase gas supply and said Labor didn’t want to “narrow our options” by ruling out further export controls.
“Supply is part of the problem … But clearly we need to go beyond that.
“There’s a code of conduct that applies to this industry and we have said that we will work to make that code of conduct mandatory and we will make it more focused on meaningful offers and that means going beyond supply and considering issues like price.”
Chalmers said a price cap in the code was “obviously something that we are considering”.
Chalmers said the government didn’t “want to rule out” direct support to households but “our immediate focus is on the regulatory side”.
Chalmers confirmed electricity prices were projected to increase 20% this year and 30% next year, declining to set a date when the price would fall but arguing investment in “cleaner and cheaper forms of energy” and regulatory interventions “will have an impact”.
He said he accepts “a substantial part of the community would prefer” that the revenue intake from the petroleum resource rent tax (PRRT) were higher.
He revealed the Treasury has “restarted” a review commissioned by his predecessor on “around the taxing point in the PRRT”.
“I will obviously take their recommendations really seriously. We do want to make sure Australians get a good return for their resources.”
Chalmers said the government hadn’t been reconsidering its decision to rule out changes to negative gearing, capital gains and franking credits and he “wouldn’t have thought” Labor would revisit the suite of 2019 tax policies.
But the treasurer refused to say the changes were “off the table”, arguing the government would “need a fresh look at the budget in its entirety because what we have got is a structural problem”.
Earlier on Sunday, Bowen told Sky News his message to state energy ministers on Friday was “the same thing I’ve said publicly … that the federal government will not stand by and allow these pressures to flow through to households and to industry without taking any prudent, responsible and careful action”.
Asked specifically about a price cap, Bowen said: “We have very thorough cabinet processes, where we work issues through carefully and methodically.”
The workplace relations minister, Michaelia Cash, defended the Coalition’s decision to delay publication of the projected 20% increase in power prices before it lost the May election.
Cash told Sky News the “draft regulation”, which proposed delayed reporting, was released in February, but Labor had continued to suggest it could achieve a $275 reduction in the average electricity bill – a figure Labor has noted referred to 2025.
Cash accused the government of floating “thought bubbles in relation to what they may or may not do” on gas price caps while failing to address the supply of gas.