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SA welfare groups urge caution over ‘unfair’ energy guarantee

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The South Australian Council of Social Service and Uniting Communities have urged the State Government to consider what they describe as “critical” changes to the National Energy Guarantee to protect the interests of South Australians on low incomes.

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The call follows Premier Steven Marshall’s declaration yesterday that all state governments needed to “take the politics out of power and lock down a sensible national framework” ahead of tomorrow’s COAG meeting.

Marshall was vocal in his support for the National Energy Guarantee (NEG) before the March state election and has repeatedly stated that the modelling would, in his opinion, deliver cheaper household electricity bills and lower emissions.

Yesterday he appealed to all states to support the deal after Victorian Premier Daniel Andrews delivered a last minute list of demands earlier in the week calling for the inclusion of a no-backsliding provision to the emissions reduction targets and the establishment of a transparent registry “to ensure the NEG is working in the best interests of consumers”.

In response to Andrews’ demands, Federal Energy Minister Josh Frydenberg said the setting of Commonwealth emissions targets was not in the remit of the state governments.

During a press conference yesterday, Marshall said he was convinced that a national approach to energy was the right approach.

“We are absolutely assured that the (federal) Coalition party room is supportive of this, the ministry is supportive of this, the Prime Minister is supportive of this, and so is South Australia,” Marshall told reporters.

“We all know, exactly and precisely, what happens when people don’t take a national approach: South Australia is the living proof of what happens when states want to go it alone.”

But some environmental groups and energy researchers have raised concerns about the energy guarantee, saying the modelling lacks transparency and the pollution targets are not strong enough.

Now welfare groups have joined the campaign, arguing the guarantee is a social justice issue as people on lower incomes would be the first to be impacted by a poorly-designed energy model.

In a letter sent to Marshall and state energy minister Dan van Holst Pellekaan on Monday, SACOSS CEO Ross Womersley warned that costs associated with the transition to the national guarantee could fall on South Australia’s most vulnerable and disadvantaged low-income households.

“People who experience poverty and disadvantage will be most affected by climate change impacts because they are least able to cope, adapt and recover,” Womersley wrote.

“For this reason, we support the development of an emissions reduction mechanism in the electricity sector that is able to meet future emissions reduction targets and which has bipartisan support to provide durability.

“However, we are concerned that the proposed target of 26 per cent emissions reduction from 2005 levels by 2030 is too low and will not drive the necessary emissions reduction to contribute to Australia’s short and long-term commitments to the Paris Agreement.”

SACOSS and Uniting Communities are part of an alliance of community sector groups across Australia that have raised concerns with federal and state governments about the potential impacts of the NEG on low income-earners.

Under the NEG, the 26 per cent reduction target will be set by legislation rather than regulation, meaning it would be more difficult for future governments to adjust the target because that would require the support of both the upper and lower houses.

A Commonwealth paper has also confirmed that emissions-intensive, trade-exposed (EITE) businesses will be exempt from the emissions requirement of the guarantee.

Womersley said the inclusion of a “no-backsliding provision” to the emissions target and the ability to modify the target outside set review periods was “critical” to ensure disadvantaged South Australians were protected from the effects of climate change.

He said the exclusion of EITEs from the guarantee was particularly “unfair” on low-income earners.

“These industries utilise approximately 20 per cent of the NEM’s (National Electricity Market) electricity and exempting them will result in cost-shifting to other consumers. The wholesale electricity price will not reduce as much if the EITEs are excluded,” he said.

“The effect is that households cross-subsidise industry and of course the biggest impacts will be borne by those households with the lowest incomes.”

Uniting Communities SA advocacy manager Mark Henley said the group strongly supported the NEG but it wanted the guarantee to apply to “everyone across Australia”.

“The energy-intensive exploiting businesses and other businesses need to be part of the NEG, so that it’s not something that applies just to consumers,” he said.

“Fairness across the board to us is really important, so that everybody is treated equally.”

Womersley said SACOSS “strongly supported” the goals of the Paris Agreement to limit global warming to below two degrees Celsius given, in his view, people on low-incomes would find it especially difficult to protect and recover from the increasing number of extreme weather events brought on by global warming.

He recommended that the NEG be amended to include the capacity to increase the emission reductions targets without needing new legislation.

“The proposed target setting process is not flexible enough to take into account changes to our international commitments, climate change science, technology changes and community expectations,” he said.

“The target setting process should be consistent with the Paris Agreement and include a no-backsliding provision and flexibility to modify emissions reduction targets outside of the set reviews.”

Henley said while the emissions target should be higher it was not a deal breaker for his organisation.

“We think if we can actually get a bit more security and certainty in Australia’s energy markets then the target will become increasingly meaningless as this new sector of wind, solar and storage takes over,” he said.

Womersley said the State Government had acknowledged his letter but he was yet to receive a formal response.

In response to questions from InDaily on how the State Government will respond to the welfare groups’ concerns, a spokesperson said in a statement that the Government “believes the National Energy Guarantee will deliver both cheaper electricity and lower emissions and urged the other states and territories to get on board.”

State and territory ministers, including van Holst Pellekaan, will meet with Federal Energy Minister Josh Frydenberg at tomorrow’s COAG meeting, where Frydenberg will attempt to convince all ministers to sign up to the NEG.

If the guarantee receives support from the states, the NEG will then be discussed at next Tuesday’s Coalition party room.

Opposition leader Peter Malinauskas fronted the media today to claim information released by SA Power Networks and energy retailers showed there was “no way” that a Liberal Party election promise to deliver a $300 saving to households on their power bills was going to be kept.

“This amounts to an absolutely fundamental broken promise on a key election commitment from Steven Marshall and the Liberal Party and they need to be held to account for it,” he said.

– Additional reporting by Bension Siebert 

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