Federal Treasurer Jim Chalmers says a “perfect storm” has brought a spike in energy prices, and warns cost-of-living pressures for Australians won’t end soon.
Dr Chalmers also warned the national economy faced “really serious constraints” as data for the March quarter released on Wednesday revealed growth was slowing.
Dr Chalmers said the figures showed the quarter was weaker than forecast when the federal election was called.
Australia’s economy grew by 0.8 per cent in the quarter, although annual growth has fallen from 4.2 per cent to 3.3 per cent. Dr Chalmers said it was being driven by household consumption, but was still much weaker than had been expected.
“The national accounts are notoriously backward looking,” he said.
“If you think about what has happened in the economy since the end of March – inflation is higher, we’ve had an interest rate hike, petrol prices are up 12 per cent since the end of April, wholesale electricity prices are up 237 per cent since the end of March, gas more than 300 per cent higher than the average of the last few years.”
He said “there is no point tiptoeing” around the economic challenges.
“There is no point mincing words about the sorts of conditions that we have inherited,” he said.
Dr Chalmers again refused to put a figure on an increase to the minimum wage, which is being considered by the Fair Work Commission. The government will make a submission to the FWC soon, which he said would “reflect the objective that we have laid out for some time”.
“Minimum wage workers were, in many cases, the heroes of the pandemic. They should not be going backwards in this cost-of-living crisis,” he said.
“It is now more important than ever that we get an outcome out of the Fair Work Commission, which goes to the fact that people on the lowest wages in the country are facing skyrocketing costs of living and they should not be falling further and further behind.”
Dr Chalmers also lashed the previous Coalition government for its failure to land an energy policy and build a network for renewables, saying it had made the domestic market less resilient.
“This is the chickens coming home to roost when it comes to almost a decade now of climate change and energy policy failure from our predecessors,” he said in Canberra.
“Our first responsibility in times like this is to implement our Powering Australia plan, so we can boost renewables and storage but most of all boost certainty so we can get that investment flowing … to make our energy markets more predictable.”
Dr Chalmers said the spike in gas prices had multiple causes and no easy solutions as he planned discussions with regulators and other ministers to manage increasing costs.
“There is no simple mechanism that would immediately take this pressure off the gas price,” he said.
“These challenges will not be addressed overnight but it’s important we work hard together to address them.”
Deputy Prime Minister Richard Marles said the cost of living and rising energy prices remained key concerns for the Albanese government, with some families struggling to afford turning on the heaters.
“We are very well aware of that,” he told the Nine Network.
“It is not something we can solve overnight but we will be working very hard with the policies we’ve put forward to get the energy policy settled.
“Renewables are going to take a long time. No one is saying it’s not important but that’s going to take some time.”
As Labor looks to address the issue, more than 80,000 customers could face energy price hikes of more than double, the CEO of smaller power retailer ReAmped said.
Luke Blincoe said he was being honest by telling customers that the retailer could not offer the best deals, with wholesale electricity costs higher than retail prices.
“We thought we would be upfront and tell our customers [that] to get the best deal they would have to leave us. It is gutting for us but it’s the right thing to do,” he told Nine Network.
Mr Blincoe said Russia’s invasion of Ukraine and the exposure of Australia’s domestic gas market to global gas prices resulted in rocketing rises.
“The wholesale energy price is effectively set by the gas price and the Australian gas price has now effectively doubled with the global commodity price for gas,” he said.
“We’ve seen a really, really steep incline. As late as the last seven days, it has really rocketed away. That’s the driver of the energy prices.”
The Australian Energy Regulator has a dedicated price comparison website, Energy Made Easy, which shows offers allowing residential customers to save about $443, or 24 per cent, off their bills.
Small businesses can save about $1308, or 29 per cent, by switching.