PASSWORD RESET

Magazine of the Socialist Party, Australian section of the CWI

Surging energy costs and mega profits no coincidence

Ordinary people across Australia are struggling to cope with surging energy prices. Some households are even turning to charities for help as they can’t afford to pay their bills.

According to the Grattan Institute, households were hit with energy bill increases of up to 20% in 2017 alone! This hike has put a huge burden on households, especially given that wages are barely rising.

But who is to blame for this situation? Nobody seems to want to take responsibility.

While consumers have been squeezed, the major energy companies have posted record profits. AGL made $1.6 billion (a 300% yearly increase) and Origin made $838 million (a 200% yearly increase).

While the energy companies tell us that the energy price surge is because of more expensive raw materials, the truth is that they have used this excuse to further gouge people. Their profits have come directly from our pockets.

The big private energy companies are profit making enterprises that put the needs of their big shareholders before everything else. But this wasn’t always the case.

Most of Australia’s energy infrastructure was publicly owned and controlled by state governments until the 1990s. While it wasn’t perfect, the publicly owned energy sector was run to service consumers rather than make money.

We were told that the privatisation of these utilities would lead to lower prices and better services. This was a bald-faced lie. More than two decades on, we have the total opposite.

Privatisation split up the components of the energy sector (generation, transmission, distribution and retail) into different parts that are now run by private companies. Each one taking a cut and passing the costs on to the rest of us.

Their drive for short-term profits is also behind the failure of these companies to invest in renewable energy.

As long as money can be made digging up and burning dirty coal, these companies will be reluctant to invest in new markets that may not produce a return on their investment for some years to come.

They are delaying taking the action we need to address climate change.

Both the major parties supported the privatisation of the energy sector and, despite the market being the source of all our problems, they want to leave the sector in the clutches of the profiteers.

It is the Liberals and Labor, along with their big business backers, that are responsible for the mess we are in.

Recent debates about energy policy have skirted around the real issues. Neither of the major parties plan to do anything that will drive energy prices down, let alone deal with climate change.

The most significant thing proposed is restricting exports in order to redirect the energy supply back into the domestic market. The energy companies don’t really care if their product is sold here or overseas, as long as they can keep charging high prices.

Restricting exports does nothing to address the high price of energy, or stop the different private companies gouging us at every turn.

And if failing to deal with the real issues wasn’t bad enough, some politicians are trying to use the energy crisis to further advance big business interests. A layer of MPs falsely claim that expanding dirty coal-fired power stations will drive down prices. This is absurd.

Burning coal exacerbates climate change. We need to urgently transition to renewable energy sources that are more efficient and cheaper. If done in a planned way, this would create jobs while also protecting the environment in which we live.

This is the direction we need to head in, but we are being held back by greedy profiteers and dinosaur politicians in the pay of the fossil fuel industry.

It is clear that the market has failed. Affordable clean energy will only be delivered by removing the profit motive and taking the sector out of the capitalist market.

We need to return to a publicly owned energy sector. But unlike the setup we had before the 1990s, planning and operation should be done with democratic input from workers in the sector and the community.

This would lead to higher levels of efficiency and allow for prices to be controlled.

By Triet Tran