Loans on the table to keep lid on costs

More than 100,000 low-income households will have access to $1.3bn in concessional loans to improve energy efficiency.

The government said upgrading a home’s energy efficiency from one star to three out of 10 could cut bills by around 30 per cent.

More than 100,000 low-income households will have access to $1.3bn in concessional loans to improve energy efficiency in their homes and help cut power bills as part of a sweeping electrification package in the budget.

The government’s $1.3bn Household Energy Upgrades Fund will unlock 110,000 low-­interest loans for energy-saving home upgrades – such as solar panels and double glazing to cool homes in summer and keep them warm in winter – in a bid to enhance energy performance and reduce reliance on gas.

The government said upgrading a home’s energy efficiency from one star to three out of 10 could cut bills by around 30 per cent, while an increase from three to five stars could reduce expenses by a further 20 per cent.

Labor has also announced $300m to be distributed to the states and territories to support tenants in social housing upgrade their homes in a bid to drive down bills. The investment is expected to cut the energy usage of about 60,000 homes by one-third.

The electrification package to subsidise low-income households to move away from gas was delivered after Labor struck a deal with the Greens to legislate price caps on gas and coal in December.

Jim Chalmers said the measures were a commonsense ­approach that would help families cut power bills and reduce overall emissions.

“A big part of making sure that energy bills are more affordable into the future is improving the energy efficiency of Australian homes – and not just new builds,” the Treasurer said. “Through this budget, we are investing $1bn to help provide low-cost loans for double-glazing, solar panels and other improvements that will make homes easier – and cheaper – to keep cool in summer and warm in winter. A commonsense program that will help family budgets – and reduce emissions.”

The federal budget also contained $310m in tax relief for 3.8 million small and medium-sized businesses to incentivise them to electrify their heating and cooling systems, installing batteries and upgrading to high-efficiency electrical goods.

About 3.8 million businesses with an annual turnover of less than $50m will have access to a 20 per cent tax deduction on electric assets from July 1.

The budget papers said electrification was “critical” to achieving emissions reductions and lowering energy costs for households and businesses but the investment is likely to fall short of what electrification advocates believe is needed. Rewiring Australia co-founder Saul Griffith has estimated the federal government would need to invest $200bn in order to help Australians electrify their homes and transport.

The government has announced a number of smaller measures to help drive down bills, including $36.7m to provide households with better access to information on where they can save energy.

It will also expand its nationwide house energy rating scheme to existing homes, enabling consumers to access a star rating of their home’s energy performance, as well as modernise and expand greenhouse and energy minimum standards to make it easier to choose efficient appliances.