The truth about energy poverty in Australia

Sensational headlines and misinformation about energy poverty in Australia is distracting policymakers from helping out the genuinely needy.

Energy poverty is an emotive expression increasingly bandied about in Australian debate and especially in the media.

The Sydney Morning Herald and The Age, for example, ran a story over the Christmas weekend headlined: “Australians now live in energy poverty.”

The real story is complex and doesn’t lend itself to simplistic headlines or sound bites.

The Australian Energy Regulator takes until page 135 of its new 141-page State of the Energy Market 2014 report to get around to dealing with the issue. Then you have to read carefully to understand what the watchdog is saying.

The nub of the point is buried even in this segment of the report, which deals with the east coast, the AER’s area of responsibility --and home to 9.4 million electricity and 3.8 million gas household accountholders.

At June 30 2014, the number of customers on energy hardship programs ranged from 0.4 per in Tasmania and the ACT to 1.2 per cent in South Australia, according to the AER.

To put it another way, about 98 in 100 Australians are not “living in energy poverty”, however bills that have nearly doubled over six years may annoy when they arrive.

As the Australian Council of Social Service acknowledges, “most people in Australia are enjoying better living standards than ever before”.
 

Residential disconnections for failure to pay energy bills in New South Wales, Victoria and Queensland (the location of 7.3 million power customers and 3.3 million gas users) are between 1-1.3 per cent.

More than 40 per cent of disconnected power customers and 24 per cent of gas users were reconnected within a week, according to the AER.

A point here is that quite a large number of disconnectees don’t fall in to the poverty bracket.

There is a real problem for some Australians, and stress for a lot more, but the data is subjected to endless beat-ups, playing to the cost-of-living meme that now dominates the political debate. It seems increasingly like a form of mass blackmail of governments by the middle class.

The AER includes in its report estimates of annual energy costs as a percentage of disposable money for low-income households.

The essential background knowledge is that ‘energy poverty’ is defined internationally as households spending more than 10 per cent of net income on their needs.

In Britain, for example, there are now 2.33 million people caught in this bind.

In the trio of most populous Australian states (housing 77 per cent of the power mass market on the east coast), electricity is between 4-5 per cent of disposable income.

The national average is about 2.6 per cent and has shifted little in recent years, notwithstanding energy price spikes, because income has also risen. But AER research shows that it is higher, except in Victoria and Tasmania, for low-income earners than two years ago. ACOSS claims that about a quarter of those on lowest incomes in NSW now spend over 10 per cent on energy.

The bottom line for energy for the many not in ‘poverty’ but stressed is relatively simple. When you are juggling rent (or mortgage), food bills, education-related costs (which includes clothes and shoes), childcare bills and credit card repayments, the quarterly arrival of an energy invoice is never welcome, not least for the winter quarter when they are at their highest.

For single-parent homes, it is tougher still.

The distance between this and “Australians now live in energy poverty”, however, is about the same as the length of the road through the Nullabor and yet one more manifestation of the poor ability of mass market media to interpret energy information and set it in context.

The genuine concern for social workers and NGOs is that the system, spanning governments and energy suppliers, doesn’t deal as well as it should with the plight of those in serious need.

For these folk, as the Salvation Army has said, it is not just about being unable to pay a power charge on time. It is also a situation where, for example, families can’t afford to heat or cool more than one room or skimp on meals to pay bills.

Even as the body politic focuses increasingly on ‘customer choice’ -- the opportunities for users to shop round and to access good information about their consumption and the means to reduce it -- governments are still not moving efficiently to handle real energy hardship.

We live in a society where politicians eager to play green cards are spreading billions of dollars of subsidies for solar power across the community as a whole but can’t get the equations for helping the genuinely needy sorted out.