The week that was to December 9

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Today in History

1990: Lech Wałęsa wins Poland's 1st direct presidential election in Poland

In today’s meeting of the National Cabinet, Prime Minister Anthony Albanese and the nation’s leaders agree to a temporary cap on the price of gas and other measures, as well as financial support for power bills.

Temporary cap on the price of gas and other measures

Tackling high gas prices by the Commonwealth introducing a 12-month emergency gas price cap, to be set at $12 per gigajoule on new wholesale gas sales by east coast producers subject to consultation; introducing a mandatory code of conduct for the wholesale gas market that includes a reasonable pricing provision, accelerating the introduction of the AGDSM; and boosting resources for the ACCC for implementation, monitoring and enforcement.

Temporary cap on the price of coal

The New South Wales and Queensland Governments are taking action by effectively setting ceilings for the price of coal used for electricity generation to $125 a tonne, with the Commonwealth to contribute to costs.

Impact of these actions

The reality is that due to global circumstances and a decade of energy policy mismanagement, Australians will continue to still see high energy prices for some time.

The average family would be $230 worse off next year if we do not take action with the Energy Price Relief Plan.

Combined, these gas and coal measures are estimated to:

• Dampen predicted gas price increases by two percentage points in 2022-23 and 16 percentage points in 2023-24.

• Reduce the impact of forecast electricity price increases of 36 per cent in 2023-24 by 13 percentage points, preventing a $230 increase that the average Australian household would have seen if these actions were not taken.

• Reduce expected inflation in 2023-24 by around an estimated half percentage point.

Targeted Energy Bill Assistance

The Commonwealth Government will partner with States and Territories to deliver targeted and temporary relief on power bills to eligible Australian households and small businesses that are customers of electricity retailers.

The Commonwealth will establish an Energy Bill Relief Fund with up to $1.5 billion to deliver relief directly to electricity bills.

Commonwealth support will be contingent on the relevant State or Territory matching funding on a dollar-for-dollar basis.

This targeted and temporary support will provide hundreds of dollars of additional bill relief to eligible Australian families and small businesses and help shield them from the worst impacts of rising global energy prices.

National Cabinet agreed to finalise the design and delivery of the energy bill relief based on the following principles:

• Bill relief will be jointly funded between the Commonwealth and the relevant State or Territory on a dollar-for-dollar basis.

• Contributions will constitute additional support above and beyond any existing or announced schemes.

• Bill relief will be targeted to households receiving income support, pensioners and Commonwealth Seniors Health Card holders, Family Tax Benefit A and B recipients and small business customers of electricity retailers.

• Relief is provided as a credit directly on recipients’ power bills.

It is expected that the final details and funding arrangements will be settled by National Cabinet by March 2023.

Investing for a renewable future

Beyond these immediate measures, the Prime Minister and First Ministers reinforced the commitment made by Energy Ministers at the meeting of 8 December, to implement the long overdue Capacity Investment Scheme.

This Scheme will unlock around $10 billion of private and public sector investment in clean, dispatchable storage and generation to ensure a reliable and affordable electricity supply and reduce our exposure to high coal and gas prices over the medium and long term.

Over nine years of denial and delay under the previous government, Australia’s National Energy Market saw a decline of 3GW of dispatchable power or enough to power over two million homes.

Firmed renewables are the cheapest form of energy. The current coal and gas price crisis make that reality even more stark. Rewiring the Nation and the Capacity Investment Scheme will drive investment in Australia’s future as a renewable energy superpower.

Governments around the country are working together to provide relief to families, businesses, and manufacturers, along with longer-term measures that increase the capacity and reliability of renewable energy.

The Australian Petroleum Production & Exploration Association (APPEA) has criticised the lack of consultation with industry before the Australian Government announced it was introducing an unprecedented market intervention of a gas price cap and mandatory code of conduct.

APPEA Chief Executive Samantha McCulloch said: “A gas price cap will force prices higher for households and businesses because it will kill investment confidence and reduce future supply.

“Less gas will ultimately mean higher prices while threatening Australia’s energy security, our emissions reduction goals and the enormous economic benefits that the industry delivers for Australians.” She said.

“Today’s decision is the opposite of what should have happened – the Government should be providing confidence to the market with positive policies that promote investment in new supply that can put downward pressure on prices and secure all the other benefits of having more gas production.

“Recent gas supply agreements with manufacturers for competitively priced gas showed the market was working.” She added

Ms McCulloch said analysis by EnergyQuest showed price caps would have the opposite impact of what was intended, ultimately leading to higher prices down the track by reducing investor confidence and future supply as investors went elsewhere.

While Opposition leader Peter Dutton said Today’s announcement will come as a rude shock to the millions of Australians who took the Prime Minister at his word that they would see a solution to this energy crisis before Christmas.

Dutton said Labor must also explain how its proposed price caps were determined and what impact they will have on investment confidence and energy supply, given the increased risk of intervention like this creating a greater energy price crisis down the track.

“It’s clear that nowhere in the world has there been any experience, nowhere in the world has there been any experience of success in capping prices and what the government needs to do is to drive more supply – more gas into the marketplace – instead of reducing supply at a time when you’ve got increased demand,” Dutton said.

On a landmark change to Australia’s environmental laws, the federal government has announced a plan to create an independent watchdog to oversee compliance and enforcement as well as a national standard to protect endangered plant and animal species.

In a press conference, Environmental Minister Tanya Plibersek unveiled the government’s formal response to the scathing 2021 review of the Environmental Protection and Biodiversity Conservation Act by Professor Graeme Samuel.

“This is large complex consequential work. What we’re seeking is a win-win a win for the environment, a win for business” Plibersek said.

Ms Plibersek said the existing EPBC Act was “not working for anyone” as it had failed to adequately protect Australia’s wildlife and provided significant hurdles for businesses to jump over to receive project approval.

“One reason that we’re establishing it in this way is to make sure that it is transparent that it is answerable to our democracy that people can see the decisions that are being made and why they’re being made and how they’re being made and can have confidence that there is integrity in the systems a tough cop on the beat that is operating at arm’s length from government.,” She disclosed.

Meanwhile, Farmers for Climate Action Deputy Chair Anika Molesworth said the new EPBC Act amendment will for the first time note greenhouse gas emissions as part of the Federal Government’s environmental assessments.

“Farmers also note the clarity the new National Environmental Standards set around the environmental value of different landscapes. We hope the new environmental protection authority will use its powers to limit emissions from Australian projects. We need urgent cuts to emissions globally to protect our farms.” Molesworth added.

On the other hand, Vets for Climate Action said they really happy the new EPBC guidelines have been released and that the new federal environmental protection agency can consider local greenhouse gas emissions in project assessments.

But are disappointed that there has been no climate trigger included in the EPBC Act amendment.

“We are hopeful that through the new EPA’s powers, the agency can make decisions that protect our unique animals from ongoing habitat destruction and the damaging impacts of our changing climate. Vets for Climate Action look forward to working with the new environmental protection agency and we are waiting to see how the EPA will be funded.” The group said.

The Greens welcome this long-awaited response to the biggest review of Australia's environment laws in a decade. The Albanese Government is moving in the right direction.

However, the government lacks any sense of urgency to halt and reverse the unsustainable environmental trajectory Professor Samuel described in his report.

Australian Greens Spokesperson for the Environment Senator Sarah Hanson-Young said: “ We need immediate action, action must include climate action and stopping the destruction of native forests and habitat. Sadly, this package does not deliver on these points, but the Greens are willing to work with the government to fix it”.

"The Greens will not be rubber stamping this legislative reform and will be pushing the Albanese Government to go harder and faster to protect our environment”, she said.

Hanson-Young said there is nothing in this package to save an iconic koala or to protect the native forests and there is very little to address the impact of the climate crisis on the environment at all.

"The Greens consider the package of reforms announced by the Environment Minister to be a floor when it comes to strengthening environmental laws, not a ceiling. We will continue to push for an urgent moratorium on the clearing of critical habitat, an end to native forest logging and a climate trigger. We will also work to improve the proposed EPA so that it is a true cop-on-the-beat, not just an excuse for the government when it makes unpopular decisions." She added.

The Australian Conservation Foundation has welcomed Environment Minister Tanya Plibersek’s intention to overhaul the country’s broken environmental laws by introducing national environmental standards and an Environmental Protection Agency with enforcement powers.

CEO Kelly O’Shanassy said Strong national nature protection laws that halt the destruction of wildlife habitat and ecosystems are critical if Australia is to meet its worthy goal of no new extinctions.

“We are encouraged that Minister Plibersek intends for the new national EPA to have decision-making powers to stop political influence affecting nature protection,” she said.

However, She deeply disappointing the Minister has made no reference to adding a climate trigger to the law, allowing the climate impacts of coal and gas projects to continue to be ignored.

Austrac accused SkyCity Adelaide of allegedly failing to comply with federal anti-money laundering and counter-terrorism financing laws.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) on Wednesday commence civil penalty proceeding action against SkyCity Adelaide in the Federal Court after an investigation found "serious and systemic non-compliance".

The civil penalty proceedings come after an enforcement investigation into SkyCity, about which SkyCity was notified in June 2021. The investigation was a result of an AUSTRAC proactive, industry-wide compliance campaign that began in September 2019.

AUSTRAC Deputy CEO Peter Soros said AUSTRAC’s investigations into SkyCity had found systemic failures in its approach to AML/CTF obligations.

“AUSTRAC’s investigation identified a range of circumstances where SkyCity failed to carry out appropriate ongoing customer due diligence. SkyCity also failed to develop and maintain a compliant AML/CTF program, leaving it at risk of criminal exploitation.” He said.

AUSTRAC’s allegations are extensive and include that SkyCity:

• Failed to appropriately assess the money laundering and terrorism financing risks it faced, including the likelihood and impact of those risks, and to identify and respond to changes in risk over time.

• Did not include in its AML/CTF programs appropriate risk-based systems and controls to mitigate and manage the risks to which SkyCity was reasonably exposed.

• Failed to establish an appropriate framework for Board and senior management oversight of the AML/CTF programs.

• Did not have a transaction monitoring program to monitor transactions and identify suspicious activity that was appropriately risk-based or appropriate to the nature, size and complexity of SkyCity.

• Did not have an appropriate enhanced customer due diligence program to carry out additional checks on higher-risk customers.

• Did not conduct appropriate ongoing customer due diligence on a range of customers who presented higher money laundering risks.

Mr Soros said SkyCity’s ineffective approach to its AML/CTF program had left it vulnerable to criminal exploitation.

He said the requirement for regulated entities to have appropriate AML/CTF controls and systems in place is not optional and should be taken seriously by all businesses regulated by AUSTRAC.

He said AUSTRAC continues to work with SkyCity to ensure it complies with its obligations under the AML/CTF Act and to ensure it continues to meet its obligations in the future.”

“ It should serve as a warning to casinos and all other businesses regulated by AUSTRAC to take their AML/CTF obligations seriously and comply with the AML/CTF Act and AML/CTF Rules.” He added.

In a statement from Skycity Entertainment Group Limited, “Given that the matter will be before the Court it would be inappropriate for the company to comment further on the allegations at this stage.”

Skycity added that they will continue to cooperate with AUSTRAC more generally, particularly in the ongoing implementation of enhancement to its Adelaide AML/CTF control frameworks as outlined in SkyCity’s FY22 Annual Report.

The case is the third civil penalty proceeding AUSTRAC has brought against casino operators.

On Tuesday, The RBA Board decided to increase the cash rate target by 25 basis points to 3.10 per cent. It also increased the interest rate on Exchange Settlement balances by 25 basis points to 3.00 per cent.

Inflation in Australia is too high, at 6.9 per cent over the year to October. Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role. Returning inflation to target requires a more sustainable balance between demand and supply.

A further increase in inflation is expected over the months ahead, with inflation forecast to peak at around 8 per cent over the year to the December quarter. Inflation is then expected to decline next year due to the ongoing resolution of global supply-side problems, recent declines in some commodity prices and slower growth in demand. Medium-term inflation expectations remain well anchored, and it is important that this remains the case. The Bank’s central forecast is for CPI inflation to decline over the next couple of years to be a little above 3 per cent over 2024.

The Australian economy is continuing to grow solidly. Economic growth is expected to moderate over the year ahead as the global economy slows, the bounce-back in spending on services runs its course, and growth in household consumption slows due to tighter financial conditions. The Bank’s central forecast is for growth of around 1½ per cent in 2023 and 2024.

Check this Redwires AU recommendation to reads and listens for the weekend.

From down under

Have great weekends.

Miko