Victoria’s appliance subsidy plan a ‘poor tax’ says charity boss

Vinnies’ Gavin Dufty says ‘green schemes’ — such Victoria’s plans to subsidise the replacement of gas appliances with electrical ones — are regressive, transferring money from the poor to the better off.

Victorian Energy Minister Lily D’Ambrosio. Picture : NCA NewsWire / Valeriu Campan

The general manager of policy and research at one of Australia’s largest charities says the Allan government’s plan to subsidise a transition from gas to electrical appliances will essentially act as a tax on poor Victorians.

The St Vincent de Paul Society’s Gavin Dufty, an expert on the energy sector and impact of power bills on Australia’s most disadvantaged, says plans set to be announced as part of a Victorian Gas Substitution Roadmap announcement will ultimately increase the power bills of all Victorians – including those living below the poverty line – in order to subsidise wealthier homeowners replacing gas appliances.

The move is expected to see the Victorian Energy Upgrade program – which provides subsidies for energy saving appliances – expanded to include electric cooktops. Under the VEU program, installers of new electrical appliances receive carbon credits, which are funded by electricity retailers who are required to purchase them, and recoup the expense through the fees they charge customers for power.

“What you’ve got is a wealth transfer issue,” Mr Dufty told The Australian. “Most of the (appliance) upgrades occur where people are purchasing or own their own home, because they’ve got the agency to do that.

“If you’re a renter, you can’t get the benefits of the program, and you don’t have solar, so you end up disproportionately paying. It’s regressive. It’s an intergenerational equity issue.

“Older people built their wealth on carbon. They’re the homeowners, and the younger people who are trying to build their wealth on renewables are paying.

“What we’re calling for is the government to fund these things on consolidated revenue, rather than loading up costs to particular groups in the community to underwrite the transition.”

St Vincent de Paul's manager of policy and research Gavin Dufty.

Mr Dufty’s 2022 annual analysis of the National Electricity Market predicted Victorian consumers would pay an average of 2.15 cents per kilowatt hour of electricity used for “green schemes” in 2022-23.

Based on the Australian Energy Regulator’s estimate of average annual Victorian household electricity usage of 4615 kilowatt hours, “green schemes” cost an average of $99.22 in 2022-23 – which will only increase if electric cooktops are added to the VEU scheme.

Mr Dufty also condemned the Allan government for axing three key concession schemes from January 1, as part of a plan in the May budget to save at least $17m a year, based on last financial year’s spending on the concessions.

“In a cost-of-living crisis, with energy costs going up, it’s incredibly disappointing seeing the Victorian government cut energy supports for low-income and disadvantaged households,” he said of the decision to cut the property charge, controlled load electricity and electricity transfer fee waiver concessions.

Australian Pipelines and Gas Association chief executive Steve Davies said an expanded VEU scheme would “increase the cost of energy for all Victorians while only benefiting the few that can afford to install new appliances”.

“The most effective pathway to rapidly decarbonise is to pursue decarbonisation of all energy. Victoria’s all-electric approach is high-risk, high-cost and leaves most consumers behind,” Mr Davies said.

A spokeswoman for Energy Minister Lily D’Ambrosio said: “Homes with efficient appliances require less power; reducing demand for power across the grid brings down the average wholesale price – with households that haven’t used the VEU still projected to save $150 and business saving $870.”