$150 Power Bill Relief: Labor’s $1.8 Billion Pitch to Voters

Every household and one million businesses will get $150 in energy rebates from July, if Labor secures re-election.

Australian Labor Treasurer Jim Chalmers, Finance Minister Katy Gallagher (C), and Prime Minister Anthony Albanese speak to the media during a press conference at Parliament House in Canberra, Australia on Nov. 29, 2024. AAP Image/Lukas Coch

Every household and nearly 1 million small businesses will receive a further $150 in electricity bill relief from July 1, contingent on Labor staying in power.

The Albanese government confirmed the $1.8 billion extension just before its budget release, positioning it as a key cost-of-living initiative.

“This is hip-pocket help for households, and it recognises that people are still under pressure,” Treasurer Jim Chalmers stated on March 23.

Despite suggestions that the rebates are a pre-election tactic, Chalmers dismissed claims of an “election cash splash,” asserting that this marks the third instance of the government providing energy bill relief.

Meanwhile, the ACCC’s Inquiry into the National Electricity Market will be extended for another 12 months to ensure households and small businesses receive fair pricing from their energy providers.

Government’s Economic Rationale

Treasury estimates suggest that the taxpayer-backed rebate extension will lower headline inflation by about half a percentage point in 2025.

It will also reduce household electricity costs by an average of 7.5 percent nationwide.

It quotes the data from the Australian Bureau of Statistics that shows previous energy rebates, introduced with state governments, had a major impact on electricity prices.

In 2024, power bills fell by 25.2 percent. Without rebates, the decline would have been just 1.6 percent.

While the government highlights the drop in headline inflation, experts warn that underlying inflation remains the bigger issue.

John Humphreys, chief economist at the Australian Taxpayers’ Alliance, contended that Australia requires a comprehensive productivity strategy, starting with reductions in income tax.

“Regarding volatile electricity prices, they are not included in the underlying inflation data, so while they make for good political headlines, they aren’t the focus of economists,” Humphreys told The Epoch Times.

He outlined a medium-term policy approach that includes indexing tax brackets to counteract bracket creep, introducing tax-free savings accounts, and allowing small businesses to opt for cash-flow-based taxation.

Dutton Rejects Rebate, Calls It a ‘Ponzi Scheme’

Opposition Leader Peter Dutton has forcefully criticised the extension of subsidies, arguing that the government has failed to meet its commitment to lowering energy costs.

Speaking in Parramatta, Dutton labelled the $150 rebate a “Ponzi scheme” and dismissed government claims that Australians have experienced a 25 percent reduction in electricity prices.

“I don’t know what planet the Treasurer is living on,” he said. “I don’t know a single Australian who has had a 25 percent reduction in their energy costs.”

Dutton contended that the real solution to rising energy costs lies in increasing gas supply and extending the operational life of coal power stations, a move already under consideration by some state Labor governments.

He further promoted his plan for nuclear power as a long-term, cost-effective alternative to Labor’s renewable energy-only policies.

Shadow Treasurer Angus Taylor also criticised the rebate, calling it a “band-aid on a bullet wound.”

While confirming that the opposition would not obstruct the measure, he argued that the government had failed to implement structural reforms that would deliver sustained reductions in electricity prices.

Election-Year Fiscal Policy Under Scrutiny

Despite government denials, critics argue that the rebate extension serves as a political sweetener ahead of the federal election.

The Mid-Year Economic and Fiscal Outlook (MYEFO), released in December, reported a $1.3 billion improvement in the current year’s budget deficit. However, cumulative deficits over the next four years are projected to reach $143.9 billion—an increase of $22 billion from the $122.1 billion forecast in the May budget.

In October, the International Monetary Fund (IMF) cautioned the Australian government against maintaining expansionary fiscal policies, warning that such measures could hinder efforts to control inflation.

While the IMF acknowledged that cost-of-living support could provide short-term price relief, it also noted the potential for these policies to stimulate economic activity and exacerbate inflationary pressures.

In its annual report on Australia’s economy, the IMF recommended that the government consider curtailing spending, particularly on infrastructure projects, to moderate demand and facilitate a quicker return to inflation targets.

“Prioritising infrastructure projects that boost productivity and support the green transition would also help alleviate capacity constraints in the construction sector,” the report noted.

Additionally, the IMF advised that financial aid should be more targeted to those most in need, rather than being broadly distributed, to avoid generating unnecessary inflation.