Maintain the momentum on social policy
investment
VCOSS State Budget Submission 2007-08
Utilities
Over the last term a number of Government
initiatives have significantly improved
consumer outcomes with regard to the
energy industry.
 The retention of the consumer safety net
has ensured that vulnerable consumers
continue to have a sufficient suite of
safeguards and entitlements;
 The Wrongful Disconnection Fee has
forced retailers to give more attention to
their obligations under the retail code
when dealing with customers in severe
hardship;
The whole community needs to respond to
the major environmental challenges of the
future if Victoria is to become a more
sustainable community. However, low income
and vulnerable Victorians face more serious
risks to their livelihoods and access to
services as a result of major economic and
social change, so they need special attention
and support in Government strategies to shift
to a more sustainable economy.
The pressures on rural and regional
Victorians caused by environmental stress
include direct threat to income and livelihood,
mental and other health issues, emotional and
financial pressures causing family violence and
family breakdown, and ongoing community
out-migration.
In the outer metropolitan area, many
Victorians are experiencing the impacts of
high petrol prices, minimal access to public
transport, and increasing risk of home
repossession – seriously limiting their capacity
to pay environmentally weighted power and
water costs.
It is the role of Government to ensure
affordability and access to power and water
for low income households at a time when
energy and water efficiency and pricing
strategies are, by necessity, ‘in the mix’ to
help respond to long term climate change
concerns.
 The renegotiated price path ensured that
network savings were passed on to
consumers;
 The comprehensive response to the
Hardship Inquiry — including expanding
the Utility Relief Grants Scheme,
requiring retailers to have best practice
hardship policies, training community
sector workers in energy hardship issues,
enhancing the Essential Services
Commission’s monitoring and reporting,
and enshrining the principle that no-one
should be disconnected from energy
supply solely due to incapacity to pay —
was a significant step forward in all those
areas; and
 Some of the climate change initiatives —
in particular the pilot program to provide
efficiency ratings of dwellings when sold
or leased, the $100 rebates for efficient
appliances, and the requirements for
energy retailers to supply or subsidise
energy efficient products to their
customers — will address affordability
problems at the same time as reducing
emissions.
These have been solid achievements and have
ensured that disadvantaged and vulnerable
households in 2007 have more secure access
to essential energy than they did in 2003.
The commitment given in July 2006 that
current Victorian consumer protections will
be retained beyond the transition to national
regulation was also very welcome and
cements Victoria’s position as the state with
the strongest protections for energy
consumers.
While these initiatives have satisfied many of
our concerns regarding access to essential
energy for disadvantaged and vulnerable
households, there are a number of issues that
are still of concern.
Access of low-income households to
rebates and subsidies
Many programs designed to improve energy
efficiency are inaccessible to disadvantaged
households due to their limited income or
their status as private tenants. For example,
the newly announced $100 rebates for
households upgrading inefficient appliances
will be out of the reach of many households
because the rebate is not sufficient to make
efficient appliances (which tend to be more
expensive than inefficient ones) affordable. A
higher rebate for concession households (as
applies with the high efficiency gas heater
rebate scheme) will make a difference here.
However, rebates still fail many low-income
households because, with few savings and no
access to affordable credit, they cannot afford
the up-front cost even if they could afford the
difference between the rebate and the full
cost. Using vouchers instead of rebates will
improve outcomes.
Additionally, many rebates and subsidies are
only realisable for home purchasers or
homeowners. It is imperative that creative
solutions are developed to address this
inequity. Cheap private rental accommodation
is notoriously substandard and energy costs
for many tenants are huge due to high
consumption over which they have little
control. The Home Energy Advisory Service
that was discontinued in the 1990s was able
to retrofit private rental dwellings because
one of its aims was to improve the quality of
housing in Victoria. A cross-government
approach in this instance could be a strong
foundation for a new program that builds
upon the existing Energy Taskforce Program
but open to all low-income households and
based on need as well as location.
Expansion of the Capital Grants
Scheme
The Capital Grants Scheme is currently the
only way for very low-income households to
upgrade faulty or excessively inefficient
appliances. Many households have no up-front
resources to take advantage of rebate
schemes, and no ability to even meet the
repayments of a No-Interest Loan.
Consequently, many households who can
least afford to are struggling to pay high bills
for wasted energy. It is thus imperative that
the Capital Grants Scheme meets the needs
of this extremely disadvantaged group.
While the limitation of the Capital Grants
Scheme to concession card holders will be
eased if No-Interest Loans are available to
low-income households without concession
cards, the once-off nature of the scheme
constrains its effectiveness. A progressive
expansion of the scheme (perhaps to allow
for two appliances in one application, and
periodic re-eligibility as has been introduced
for the Utility Relief Grant Scheme) will
better address affordability issues for these
households, as well as facilitate a reduction in
greenhouse emissions.
Recommendation
1. VCOSS proposes that the Government
support low income Victorians to
secure their essential access to
affordable power and water, while
encouraging energy and water
conservation through targeted
programs that includes:
a.
Implementation of a Victorian Energy
Efficiency Target to require energy
retailers to help families cut power
bills, but ensure that low income and
vulnerable households are assisted
with targeted measures that take
their financial and household
circumstances fully into account
b.
An enhanced appliance upgrade
program especially for low income
households, including tenants, using a
cross-government approach that
builds upon the existing Energy
Taskforce Program
c.
An expanded and reformed Capital
Grants Scheme for appliance
upgrades, and
d. A stronger concession framework to
assist low income households meet
costs that they cannot control. This
includes expansion of the winter
energy concession to all-year round.