War in Ukraine, the COVID pandemic, and extreme weather events are among the factors contributing to “terrifying” soaring costs of petrol, electricity and gas, says Dr Andrew Papadimos, lecturer in economics and international business at Australian Catholic University.
Virtually all Australians will suffer from the Federal Government’s predicted rise of 50 per cent in family’s power bills plus rising costs of virtually everything else over the next two years, Dr Papadimos told The Catholic Weekly last week.
“Even for people with higher incomes, power costs will take a big chunk of their budget. It’s tough for everybody no matter what their income,” he said.
“Although under a relatively new change to Federal law (the Australian Domestic Gas Security Mechanism), exporters would be made to limit their exports or find new gas sources to address any short-fall in the domestic market as a last resort.”
Dr Papadimos said that supply chain issues due to the pandemic, and the war (Russia is a major supplier of the world’s gas and resources for generating electricity), combined with the ravaging of local crops due to bushfires and floods added to the snowball effect this year of raising the prices of everyday items.
Another issue is that exporters of Australia’s natural gas are largely foreign-owned companies, with our country needing to pay increasing costs to import gas back, he explained. Although under a relatively new change to Federal law (the Australian Domestic Gas Security Mechanism), exporters would be made to limit their exports or find new gas sources to address any short-fall in the domestic market as a last resort.
Dr Papadimos believes that changing government regulation of the electricity and gas markets and investing in green technologies will ultimately make our power costs cheaper, but in the meantime there will be no short-term relief for stretched family budgets.
“Re-regulating gas and electricity takes time and the government is trying to balance its budget, so there will be a lag of at least a few years before they can do anything,” he said.
“The only real relief people can get is maybe government subsidies or tax relief for those who are most affected, but then that will only be really short-term relief. Certainly in the long term we’ll see better days but in the short to medium term it’s going to be a very bumpy ride.”
The country also needs to repair and stabilise its relationship with China, which has been a strong economic partner for the last 50 years, Dr Papadimos added.
“I won’t be so flippant as to say they’ve got to get rid of their smashed avo’ on toast because it’s not as simple as that.”
In the meantime, families should save as much as they can, try and reduce electricity consumption and seek financial advice from a professional if they need help with balancing their budget.
“People will have to try to lower their expectations too, I won’t be so flippant as to say they’ve got to get rid of their smashed avo’ on toast because it’s not as simple as that,” Dr Papadimos said.
“People deserve the right to enjoy themselves sometimes, but it has to be within their means.”