The Australian government recently announced a plan to cap wholesale gas and coal prices in an attempt to ease household energy costs. Federal Energy Minister Chris Bowen has warned, however, that the plan is not a “magic bullet” that will trigger prices to drop.
Bowen made the comments on Saturday, following the announcement of the plan by Anthony Albanese. The plan, which was devised by the national cabinet, is designed to reduce prices for households by forcing companies to cap their wholesale prices. It also seeks to stop companies from hoarding resources, which has been identified as a major contributor to rising prices.
Bowen said the plan was a “good first step” but that “it would be wrong to pretend that this was a magic bullet”. He noted that while the plan could help reduce prices in the short-term, it was not a long-term solution to the problem.
The Minister also noted that while the government was taking action, it was up to the states and territories to implement the changes. He said that without the cooperation of the states, the plan would not be able to achieve its goals.
Mr Bowen stated that the energy bill crisis would not be solved by the price controls plan that intends to provide $1.5bn to the states and territories to spend on power bill rebates.
“What we are implying is not that this is a be-all and end-all solution that will lead to a decrease in energy prices. Rather, we are implying that this will effectively reduce the amount of significant price hikes,” he said.
“The treasurer will be discussing the rebates with his colleagues in the coming weeks, providing real relief to those who need it most.”
The federal parliament will be convened next week in order to pass the necessary legislation to implement the plan.
The Prime Minister, once more, dismissed the possibility of providing “cash handouts” to Australians, citing Treasury’s advice that this could potentially exacerbate inflation.
Each jurisdiction’s treasurer will determine how to put their portion of the $1.5 billion towards lowering energy costs for households and small businesses.