Dutton reveals details of campaign pledge to cut power prices

Opposition Leader Peter Dutton will promise Australians a 3 per cent cut in household energy bills and a 15 per cent reduction in gas prices for big industrial users if he wins government, pledging to flood the Australian market with gas to make energy cheaper and grow the economy.

The Coalition has released long-awaited modelling on its national gas plan that forces companies to keep Australian gas onshore, revealed in Dutton’s budget-in-reply speech last month.

Liberal candidate for Werriwa Sam Kayal and Peter Dutton preparing to fill up the campaign truck on Tuesday morning.Credit: James Brickwood

After Dutton spent much of this term attacking Prime Minister Anthony Albanese for failing to bring down power bills by $275 as promised, the opposition has launched its most significant cost-of-living pitch of the campaign by committing to lower electricity prices.

The pledge could come back to bite Dutton if prices continue to rise, but he will rely on analysis from Frontier Economics to argue his plan will lead to a 23 per cent cut in wholesale gas prices.

That would lead to a 3 per cent cut in residential electricity prices, according to the modelling, an 8 per cent reduction in wholesale electricity prices, a 7 per cent deduction for household gas prices, and a 15 per cent cut for big industrial gas users such as smelters.

A 3 per cent cut to electricity bills would equate to roughly $60 off the average east coast electricity bill of $2100, which applies to a homeowner without solar panels or batteries.

The Coalition has not committed to a timeframe for the pledge because it said it would take time for the reservation scheme to kick in, but the modelling has a timeframe of about two years for the price reduction of 3 per cent to have an effect.

Labor and some experts have criticised Dutton’s gas reservation policy and claimed it lacked detail, but Dutton says that the move to keep gas for local use, which is backed by some left-wing think tanks and unions, was overdue.

“Our policy will be a game changer because we can then see the cost and therefore price of electricity, construction, food prices and many other goods start to come down,” Dutton said in a statement.

“Gas is critical to our nation’s energy future. By making the gas companies put more of our Aussie gas into our market instead of exporting it, we will get the price of gas down by 15 per cent.”

Electricity prices are core to the debate over which leader is more trusted to bring down living costs. Dutton is sliding in the polls and has been under pressure to release compelling policies and shift the debate back onto the issue of economic management.

This masthead reported on March 21 that backbench Coalition MPs were crying out for a pledge from Dutton to bring down prices in the near-term because the nuclear power plan would not materialise until next decade.

Key details on the gas scheme are yet to be fleshed out, such as how much gas companies would be forced to contribute to the reserve.

Companies are set to argue that the $10 price is below the cost of production and would eat into their profits. Dutton has argued that lower prices for Australians matter more than profits, continuing his interventionist approach that has included a threat to break up supermarkets and a plan to roll out a government-backed $321 billion nuclear power grid.

Gas companies and industry groups cried foul of the plan when Dutton revealed the policy to force them to sell inside Australia. Australia is one of the world’s biggest gas exporters, with major projects shipping liquefied natural gas (LNG) from Queensland, the Northern Territory and Western Australia, largely to the Asian market. The key decision to let them export was made by the Gillard government.

However, energy officials are sounding the alarm south-eastern Australia is headed for a gas shortage in as little as three years, a major problem given gas is an essential fuel for cooking, heating, power generation and manufacturing.

Supplies from offshore fields in Bass Strait, the mainstay of the Victorian and NSW gas product, are rapidly drying up and there are no new projects to replace them.

Dutton wants to create what is known as a domestic gas reserve: a mechanism to impose extra charges on a certain portion of exports to force gas exporters to divert supply into the local market.

Dutton claims his plan would deliver enough gas locally to swiftly cut the wholesale price of $14 a gigajoule to $10. He will do that by forcing an extra 50 to 100 petajoules a year, roughly 10 to 20 per cent of the existing domestic supply, to remain onshore for local buyers.

While gas companies send most of their product offshore, they also contribute to domestic supply. They warned the curb on profitable exports would deter investments in new projects.

Frontier Economics’ modeller Danny Price, who also produced the Coalition’s nuclear energy modelling, said this plan would decouple Australian gas prices from the more expensive international price.

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