During an address at Canberra's National Press Club last week, Prime Minister Kevin Rudd put cutting high electricity prices at the top of a "new competitiveness agenda”
“Australian electricity prices are too high by global standards,” Rudd said.
“This affects the competitiveness of all firms large and small. Of course it also affects individual consumers.
“But before you all start reaching for your revolver on the carbon price, let’s be rational about this: the carbon price at present contributes less than 10 per cent to national electricity prices.
“The primary reason for the hike in electricity prices appears to be the current system of national electricity regulation which has allowed excessive rates of return for publicly-owned transmission and distribution utilities which have become cash cows for various state and territory governments.”
But ACA chief executive officer Nikki Williams said the easiest way for the federal government to put downward pressure on electricity bills would be to remove its own “costly and ineffective” climate change policies.
"Perhaps it is time the government looked at all the significant cost drivers of Australia's increasingly uncompetitive cost base, rather than omit discussion of the contentious elements for which it is directly responsible,” Williams said in a statement.
"Whilst most households are compensated for the carbon tax, few small businesses or industrial users get any compensation, despite being unable to pass on any increases in their electricity costs.
Williams highlighted a detailed analysis of electricity prices conducted by Origin Energy earlier this year, which showed that in 2012-13 households paid an extra $300 because of green schemes, including $160 for the carbon tax alone.
The CEO of Origin Energy, Grant King, pointed out in March, that the carbon tax and the Renewable Energy Target together make up 30% of the typical electricity bill for large industrial users in NSW.
“This is almost as much as network or wholesale costs, which both account for 33 per cent,” Williams said, adding that it was notable that the carbon tax had made little difference to reducing greenhouse emissions in the electricity sector despite its cost impost.
"Gas-fired electricity has substituted for some coal, and wind for some hydro-electricity, but the overall mix of electricity sources is no different to 10 years ago - fossil fuels still account for 90% of power generation and renewables 10%."
The other items on Rudd’s new agenda are “unintended rigidities arising in the labour market”; business productivity; reducing red tape on business; education, skills and training; infrastructure; and improving the operating environment for small businesses.
“The core of this new national competitiveness agenda must be a common agreement among us all that we must lift our annual productivity growth rate to 2% or better for the future,” Rudd said.
“As Prime Minister I want to bring the nation together in this new national competitiveness agenda.”