Labor urged to provide $1,000 debt relief to low-income earners before power bills soar

Chris Bowen to meet state and territory energy ministers on Wednesday to determine response to ‘perfect storm’ of rising costs of living

The Albanese government has been urged to shield those on fixed incomes from the rising cost of living by providing a $1,000 emergency energy debt relief payment, while industry leaders backed calls to boost income support ahead of a looming winter price hike.

With the government acknowledging what it calls an “inherited” but “full-blown cost of living crisis”, the Australian Council of Social Service (Acoss) has written to the new federal energy minister warning it is “deeply concerned about the financial pressures on people on very low fixed incomes”.

The move comes as a broad coalition of groups spanning industry, housing, farming, green energy and the social service sectors also called on the government to protect those on the lowest incomes from what Chris Bowen last week called a “perfect storm”.

Bowen will meet state and territory energy ministers on Wednesday to hash out a response. Acoss has urged the minister to consider a range of short and medium-term measures.

The peak body called for emergency energy debt relief of up to $1,000 a household, arguing the number of households in arrears “skyrocketed” during Covid. The government has promised a “cost-of-living package” in the October economic statement, but has already ruled out an increase to jobseeker payments.

Acoss backs an increase of income support payments to at least $70 a day and a boost to Commonwealth Rent Assistance, but noted another short-term option was to extend the pension supplement to other welfare recipients, which would deliver a $36-a-week increase.

Despite record low unemployment, there are still about 816,000 people on unemployment benefits, well above pre-pandemic levels.

The Acoss climate and energy program director, Kellie Caught, said the current crisis was “sadly predictable” and those on low and modest incomes were suffering.

“People on low incomes pay four times more of their income on energy bills,” she said.

“We know there are more than 250,000 people already in energy debt coming out of Covid and rising prices will mean either people turn off their heaters and hot water to avoid energy debt, at risk to their health, or go without other essentials like food and medicine.”

Already, data from the regulator shows the average debt among customers in the retailers’ hardship programs increased 21% to $1,584 in 2020-21.

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Acoss noted another option was to bring forward the scheduled indexation of pension and unemployment payments, which is not due until September.

Charmaine Crowe, the program director of social security at Acoss, said that would “deliver some short-term gain, but ultimately not address the real problem, which is the need for a real increase to base rates of income support”.

Power bills are expected to soar on the east coast from July after the regulator last month lifted its standing electricity price, citing an increase in generation costs. The Australian Energy Regulator said residential customers in south-east Queensland would see increases of 11.3-12.6%, while costs would rise by 8.5-18.3% for households in NSW.

Acoss also called on the federal government to update its guidelines so the regulator can set the direct market offer at an efficient price by lowering retail margins, as has been done in Victoria.

Victoria released its own reset for 2022-23 last month, lifting the price by 5%.

Acoss also called for a suspension of energy debt collection and, to reduce demand, a boost to energy efficiency programs to upgrade low income housing and an expansion of access to rooftop solar for low income homeowners.

“These measures should be part of a plan for a faster and just transition to renewable energy to drive down wholesale prices,” Caught said.

Meanwhile, calls for an increase to the jobseeker payment – currently set at a $642.70 a fortnight base rate for a single person, well below the poverty line – were bolstered on Tuesday when nearly 30 groups signed on to a joint letter calling for measures to address the energy crisis.

Twenty-nine organisations including the Property Council, the National Farmers Federation and Ai Group called for any cost-of-living relief to target those on the lowest incomes.

“While all short term options should be evaluated, financial support to the most vulnerable energy users appears essential,” the groups said.

That would require a change of course for the government, which is so far prioritising its reforms in childcare, the price of medicines and broader energy policy.

Innes Willox, the chief executive of Ai Group, said high energy costs were a “particularly intense part of the inflationary pressures impacting households and businesses”.

He said boosting existing energy concessions arrangements could help but were less flexible for recipients than boosting income support, which would assist “with the wider range of cost of living pressures”.

The groups called for “increasing income support payments and more adequate and responsive energy concessions” as well as a focus on struggling businesses who could not pass on increased costs or that were in industries “sufficiently energy-intensive for these cost increases to threaten business continuity”.

“Broader reforms such as a lift in income support payments would reduce the need for emergency energy support payment,” they added.

Other groups, including the Greens, want benefits increased to the Henderson poverty line of $88 a day, while new crossbenchers Zoe Daniel and Kylea Tink have also backed an increase to jobseeker.


Luke Henriques-Gomes Social affairs and inequality editor

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