Jim Chalmers downplays odds of super-profits energy tax

Jim Chalmers has played down the prospects of a special tax on energy producers, saying his ‘preference’ was for a temporary and targeted regulatory intervention.

Treasurer Jim Chalmers in question time on Monday. Picture: NCA NewsWire / Martin Ollman

Jim Chalmers has played down the prospects of a special tax on energy producers, saying his “preference” was for a temporary and targeted regulatory intervention to “take the sting” out of surging power prices.

In unscripted, private remarks, the Treasurer told about 75 leaders in the manufacturing sector and broader business community he recognised energy was “the big pressure you’re all facing”, and intervening in the energy market was justified by the extraordinary ­circumstances associated with Russia’s invasion of Ukraine.

The October budget predicted electricity prices would jump by 56 per cent in the coming two years, and the Albanese government has committed to delivering a package of proposed measures to lower prices by Christmas.

While the exact measures were yet to be determined, Dr Chalmers said “the ‘why’ is simple – we don’t want to see our industries hollowed out”.

“The ‘how’ is ideally a regulatory change rather than a tax change,” he said. “Ideally, something which focuses on the domestic market without causing problems for our international obligations,” he said, referring to conjecture the government could force LNG ­exporters to redirect contracted gas from overseas customers to domestic consumers.

“Any intervention we make in energy markets will be temporary, it will be meaningful and worth the effort, and it will be sensible and responsible.”

The Australian revealed on Friday that large manufacturers were being offered gas contracts for 2023 at rates up to five times as high as a year earlier.

Dr Chalmers in Parliament House on Monday told assembled business leaders that addressing the local impact of a global energy shock unleashed by Russia’s invasion of Ukraine was a priority for the government.

“Probably the thing that I spend most time on – working with my colleagues ministers (Madeleine) King, (Chris) Bowen, (Ed) Husic, the Prime Minister and others, (Don) Farrell, too – is to try and make sure we can do something here to take the sting out of these very high prices, particularly for gas that so many of you are confronting,” he said at the Ai Group event.

“I think it would be fair to say that none of us is an enthusiastic intervener in markets like this one. In normal times, we don’t sit around contemplating some of the interventions that we are currently contemplating. But we think these are extraordinary times, and they require some different thinking about the best kind of intervention that we might be able to make.”

The Treasurer’s comments came as Peter Dutton attacked Anthony Albanese in question time for signing Australia up to a $2 trillion global fund to compensate poor countries for the impacts of climate change.

“Prime Minister, doesn’t charity begin at home? When will you start helping Australian families instead of giving away their money?” the Opposition Leader asked.

The Australian has confirmed that a super-profits tax would be among measures considered by cabinet, but the government has since played down the prospect as industry groups launched a high profile pre-emptive campaign against such an outcome.

Treasury secretary Steven Kennedy in a recent statement to Senate estimates said “direct interventions” to deal with higher coal and gas prices would be “optimal”, appearing to lay the groundwork for a super-profits levy to subsidise costs for consumers.

Dr Kennedy in his statement flagged “unusually high prices and profits for some companies”, which represented a “redistribution of income and wealth” away from poorer households and exposed businesses.