January 30, 2019

Stop subsidising well-off to bring down prices

Perhaps the greatest gift a country can give a visitor is perspective.

Late last year I spent time in France. Languages aren't my strength, but I was drawn to the famous French motto "Liberte, egalite, fraternite".

Freedom, equality and mateship; that's how I translated the phrase.

Australians value mateship and I think that's one reason French and Australian people get on so well. And mateship in France has just faced a test we should learn from.

You may have seen the "Gilets Jaunes" (the yellow jackets) in the media. It's a protest movement. It is easy to dismiss it as just another French strike by a bunch of troublemakers but I don't think it is. At its heart, I think it is an expression of, yes, frustration but ultimately of mateship, too.

The Gilets Jaunes began in November to protest a planned increase in diesel taxes; most vehicles in Europe run on diesel. President Macron decided to raise diesel taxes to encourage cleaner forms of transport.

But the people who would bear the brunt of such a policy were those whose only transport was their diesel family car - they tended to be France's rough equivalent of the typical battling Australian family. The well-intentioned tax was a tax on France's battlers, thousands of whom turned out to support their mates.

Around the world household costs are rising faster than incomes. Any extra cost on struggling families will see an electoral reaction. So, what can we learn from the French experience?

Australia has some similar policies.

Let's start with solar subsidies.

Renewable energy is here to stay as part of a mix of technologies - including pumped hydro and flexible faststart gas plants - in a modern energy system. And household solar is the smartphone of energy, the energy "must have".

It's rapidly becoming affordable too - the average household system can pay for itself in five to seven years without upfront subsidies, and small systems cost not much more than an iPhone.

Solar cannot only save people money, it can help put them back in control of their energy consumption.

That's why it's no surprise solar installations are booming - and booming installations are great both for family budgets and our Earth.

So, there is no doubt that solar power is playing an important role in Australia's transition to cleaner energy. But guess who pays for it? No surprises it's mostly those without solar, mostly renters and battling families.

One of the ways in which solar is subsidised is by a federal government program called the small-scale renewable energy scheme. Often shortened to SRES, the program covers all of Australia by providing subsidies for rooftop solar systems.

The scheme has been hugely successful and homes and businesses across the country are putting systems on their roofs in record numbers. Today around two million households have a solar system on their roof. But there are eight million households which don't.

In other words, the majority of Australian homeowners and renters - the ones who don't have solar - are paying for the minority of households which do. All told, customers across Australia are paying around $1 billion to comply with the SRES program.

And unlike other subsidy programs, SRES is not capped, which means there is no limit on the amount of subsidy that might be paid by the time it finishes in 2030.

With electricity prices at record highs, it's time to look at whether one group of Australians should be paying more for their electricity than they need to for the privilege of funding other households' solar systems.

Let's learn from France. Unfair taxes do not work. Let's end the SRES and bring down electricity prices.