Queensland’s electricity price rises are tax by stealth

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Qld’s latest electricity price hike shows how legislated return on investment acts as incentive for govts to use utilities to find revenue by stealth.

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Truth in taxing – a term you probably haven’t heard before, but it’s probably time we all had a dose of it.

The Queensland Competition Authority is due to announce today a 13.6 per cent increase in electricity prices for year 2014-15. This is, apparently, on top of an increase in network connection costs already announced of 25 cents per day in from July. If true, this means a total increase of around $350.00 per year to the average electricity bill. This is at a time when overall volume and demand has dropped by around 10 per cent over the last couple of years.

Governments grew the utilities in line with demand as our state developed and did so at cost, this is because it was representative of the public and charged with the task. The public seems to have completely been disregarded by current governments with regard to their basic charter, to provide essential services to the communities. Bloated bureaucracies have been become apparent, from the smallest of local councils all the way up to the feds.

A close read of the constitution plainly states the role of government. How is it that governments now have corporations under them operating as “for profit” businesses? It’s tax by stealth.

It’s high time all government’s got back to basics and provided services to the public at cost and identify these costs for each service. Then if we are to subsidize some of these services, such as public transport, show them as a particular tax.

The NSW government introduced a 3 cents a litre tax in 1989 in response to carnage on the Pacific Highway. This tax was legislated to last three years only and was to meet the cost of duplicating the Pacific Highway to the Queensland border over the 3 years.

Now, some 25 years later, the tax remains, though it is now federally collected and the Pacific Highway is still in parts, single lane. What is more curious is that because the tax is now federally charged, Queenslanders now pay it and no longer see it reimbursed at the pump, so where is this money?

This latest increase in electricity charges will be almost completely attributed to network charges, costs allegedly incurred in maintaining a network that is transporting 10% less volume and requires 10% less capacity. All of these recent charges are about revenue, plain and simple.

Why can’t the governments, who are our servants, provide some truth in taxing and let us know where we are getting taxed and where the money is going? Any corporation who behaved in this manner would be investigated by ASIC!

I continue to maintain that the recovery of the solar feed-in tariff via electricity bills is an excise which is being collected illegally. It should be coming out of state revenue and be identified for what it is, a subsidy.

It’s true that state and federal finances are in a shambles, but I think I would be happier to know exactly where the costs are and what I need to contribute based on full and organised disclosure. Legislated return on investment is an absolutely ridiculous and blatant incentive for governments to abuse utilities to find revenue by stealth.

Read the constitution and you will be surprised at the boundaries that have been exceeded in order to maintain popular government, we have a lot to learn from the Chinese model in this day and age, when we had our manufacturing and a growing economy we could scorn these governments, it is now clear that  popularly elected governments are going to send us into the abyss.

The government insists that it is the carbon tax that is driving up power prices. The carbon tax has always been 2.3 cents per kilowatt hour, this has never increased. It was imposed when it came in, so it is nigh impossible to claim that it is a driver behind these new increases.

The carbon tax, by recent reports, has had a negligible effect on carbon emissions and needs to go. It should be replaced by a tax that is more transparent and effective, and perhaps the new federal government can deliver this.

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10 Comments
  1. Coaltopia 5 years ago

    “The carbon tax, by recent reports”… which reports?

    See this: Flat emissions result masks impact of carbon tax
    http://www.smh.com.au/federal-politics/political-news/flat-emissions-result-masks-impact-of-carbon-tax-20131209-2z0mr.html

    The impact is there. Greg’s being devious.

  2. Rob Campbell 5 years ago

    Maybe so, but it is still a grab for cash, Fairfax and News are polls apart on the subject. I am just sick and tired of being taxed from behind, II’d sooner pay GST of 20% if I new it was the only tax I was paying!

  3. Warwick 5 years ago

    This article is more of a philosophical rant rather than a study on “taxation by stealth”.

    As an example “How is it that governments now have corporations under them operating as “for profit” businesses? It’s tax by stealth.”…ever heard of Telstra, TAA, Qantas, Australian airlines, Australia Post, OTC, Energy Australia or the Reserve Bank?

    Showing each item as a “particular tax”…interesting thought but where are you going to place your education tax, defence tax, road tax, etc…Governments raise consolidated revenue primarily through company, income tax and GST,….what’s the point in naming it after a particular expenditure?

    On the question of “Why can’t the governments, who are our servants, provide some truth in taxing and let us know where we are getting taxed and where the money is going?”, have you ever considered reading the consolidated government accounts? This information is available on the internet…try Google.

    The Solar FiT is a subsidy but what is illegal about that?

    On the point of “The carbon tax has always been 2.3 cents per kilowatt hour, this has never increased” is also incorrect as the price went up to $24.15/tonne on July 1 and is only about 2.3c/kWh where the emissions are around 1 t/CO2e/MWh such as NSW. The cost impact varies significantly from state to state.

    So what exactly is “It should be replaced by a tax that is more transparent and effective”? Taxing emissions at the source is a pretty transparent way of penalising pollution…

    • Rob Campbell 5 years ago

      I don’t agree, why should the man in the street have to go through reams of information to find out where the money is coming from and where it is spent. Remember when councils used to take away our garbage, mow our parks etc. now they have media units costing millions, the average citizen wants the services he needs, not what the government thinks he wants. It’s all too muddy and, believe me when I assert there are a hell of a lot of people making a hell of a lot of money by doing nothing remotely related to essential services. If I had the power I would wipe their out and start from scratch. The only people that would disagree with that are the ones on the gravy train.

      • Warwick 5 years ago

        What don’t you agree with exactly? It’s a complex world and you’re asking for details of councils mowing, doing the garbage so there will be “reams of information”. …What exactly are the problems? Please provide specific examples. Who would you wipe out? and why? References to the assertions in your piece would also be beneficial.

  4. Joshua Marriage 5 years ago

    Great to see a unique angle on a hot topic, I think it’s quite refreshing to see a “philosophical” approach to such a taboo like this. I have to disagree however, that the network is carrying “10% less capacity” when peak demand has in fact risen. Overall consumption is definitely down due to initiatives like solar – but when it comes to capacity, suppliers need to allow for the peak times where demand is high and solar generation is non existent. Not only are we seeing price hikes to recover lost revenue due to decreased total consumption, but we are footing the bill for infrastructure upgrades to accommodate rising peak demand. In my opinion, the best way for the average consumer to react to rising prices is to first measure, understand their load profile and tailor a plan to their own needs. I am a big believer in making Validated Purchases of energy efficient products in order to see the return on investment you deserve – don’t just buy based on the speculative spin given to you by the next salesman you meet who is simply riding the energy efficiency bandwagon.

    • David Osmond 5 years ago

      According to AEMO data, this is the max 30 minute demand periods for QLD for the last 5 years, and the time they were reached:

      2008-09 8877GW 5:30pm Feb 9

      2009-10 8890GW 3pm Jan 18

      2010-11 8836GW 2:30pm Feb 21

      2011-12 8707GW 4pm Jan 9

      2012-13 8453GW 5pm Dec 12

      So it appears that peak demand is indeed falling. Moreover, the periods of peak demand are generally during the afternoon in summer when solar PV is still producing substantial amounts electricity (the times listed above are the end of the 30 minute trading period).

      http://www.aemo.com.au/Electricity/Data/Price-and-Demand/Aggregated-Price-and-Demand-Data-Files

      • David Osmond 5 years ago

        Oops, those values should be MW rather than GW, And that’s for the average demand over the 30 minute period (alternatively, multiply by 0.5 for the number of MWh)

    • Rob Campbell 5 years ago

      Joshua,

      The focus is on Queensland, we have summer peaks that are offset by solar, abit different to down south, hence the confusion. Likewise when considering carbon tax we use black coal and gas, so 23.00 is safe to quote in my opinion.

      Check this story about solar in Qld and the network. https://reneweconomy.com.au/2013/confessions-of-a-network-operator-solar-changes-the-game-35541

      • Joshua Marriage 5 years ago

        I’d be interested in seeing data that includes factors other than just the 30min sliding window demand (as we know this is an average value over 30 minute period) because sizing network infrastructure and transformers needs to take into account the actual peaks (for a given time obviously). There are of course spikes in consumption. I was actually expressing my opinion on the Queensland level of consumption, even though the data shows a fall in demand and consumption due to solar generation during such times, the difference doesn’t seem proportional to the vast quantities of solar. I would actually expect that the demand levels for homes without solar would still have risen collectively. Plus, the huge amounts of solar generation have a number of derating factors that can’t be measured by demand. Solar inverters are outputting fairly nice power but it’s not exactly perfect sinusoidal AC and it results in a lot of harmonics. The reactive power is wasted as heat losses, transformers are being affected by harmonics and suppliers continue needing to upgrade infrastructure. Solar is great for those who can afford to invest but for the many families who can’t (and actually need such solutions) solar is detrimental as they are now footing the bill of lost revenues and will now struggle even more to implement solutions such as solar.

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