It’s a missed opportunity as Labor blows $2.5 billion

By Alistair Gray 

Yippee! The state Labor government is giving you $1000 off your power bills from July 1, 2024.  

“That's great. I will be able to buy some more wine,” Sid at the Rotary market said.  

“I will be able to upgrade my TV,” another market goer said. 

A pensioner struggling on a single pension to make ends meet, welcomed the news and thought that would be very helpful.  

Yes, we are all grappling with the cost of living. I know that prices have skyrocketed as I do the shopping in our household, yet using public funds collected from our taxes and mining royalties to provide subsidies carte blanch in this way is a big mistake. It is like drawing down on your housing loan to take a holiday, with the debt spread over the next 30 years and causing a staggering increase in interest cost. In other words, increasing the deficit.  

In effect the government is deferring the ‘sticker shock’ as these subsidies can't continue and sooner or later, the actual cost of your power bill will be evident and frighten the living daylights out of you. Not only will your future bills increase by $250 per quarter (the value of the subsidy), but any inflation and new power infrastructure costs will subsequently be passed on. In effect, the government is covering your energy costs at the expense of other critical projects. 

This type of policymaking is a disaster! It is a sign of a government that has completely lost its way, of a government that has been in power too long, with signs of on-the-fly policymaking, mixed signals, poor targeting and contradictions. One could even stoop so low as to say it is a blatant election bribe by a government about to be shown the door. It is a short-term decision without any cost-benefit analysis. One would have thought we would be better off investing the $2.5 billion cost into health, education or fixing the Bruce Highway. In other words, we need to invest in something that will give Queenslanders a payback year after year for many years to come. It's not a short-term ‘look at me’ media opportunity. 

The state government already provides subsidies to encourage solar investment, such as a subsidy of $2300 for homeowners to install a 6.6 Kw solar system in southeast Queensland. Last financial year, the government provided a cost-of-living energy rebate of $550 to non-vulnerable households and this year, a further $1000 to subsidise your power. All qualifying electricity account holders, including those with solar panels, will receive the subsidy, yet the solar panel owner's bills would likely be nominal if not zero. Why should those with solar panels get further government support?  

Perhaps, if we are not going to invest in infrastructure, a better use would have been to use those funds to increase the solar rebate to incentivise a further take-up of renewable energy while removing all energy rebates for others, except for vulnerable people. In that way, the government achieves a long-term policy objective and homeowners have the option to receive a long-term cost of living benefit and lower energy costs. Good policy should encourage responsible energy consumption, conservation and the use of renewable energy. 

The rebate smells of another ‘pink batts’ disaster, with funds about to be diverted from paying down power accounts to consumer spending and when added to the upcoming tax cuts and other federal government giveaways likely to create another inflationary consumer shopping bonanza in Queensland. Of course, our struggling retailers would love that, but maybe not the Reserve Bank. Sadly, this poorly targeted, so-called cost of living rebate continues to lock in an expectation for ongoing government handouts and support, creating dependency after several years of cost of living rebates. 

Yes, things are tough for many, but they are not bad. It is nothing like what we saw in the recession of the early 90s, where the unemployment rate was 10.8% and housing mortgage rates were 17.5%. Then, as a banker, I saw ‘blood’ everywhere and it wasn't pretty. We are not even in a recession and we have a strong demand for labour. Difficult times create focus, innovation and community as homeowners re-assess budgets and find workarounds. Some may need help, but not all. Instead, the Labor government is squandering the windfall mining royalties by spending $2.5 billion in giving rebates to everyone with a power account, whether they need it or not, including the likes of Clive Palmer, one of the state's wealthiest citizens.  

The comment by our smiling premier suggests that if we don't need it, we donate it to charity. I find this comment particularly galling when the state has such pressing and urgent needs.  

It’s time for a change.