The Federal Government’s Treasury Secretary on Tuesday urged the Albanese administration to intervene in the labour market to cap the coal ang gas prices.
Chief economic advisor Stephen Kennedy said unusually high profits in the coal and gas industry are coming at the expense of financially challenged Australians.
Kennedy told parliament that the Russian-Ukraine war has led to a “redistribution of income and wealth” that is not in Australia’s interest.
He said that current thermal and gas prices are leading to unusually high profits and prices for some companies, which are beyond the usual bounds of investments and profit cycles.
Kennedy said these price increases are causing a reduction in the incomes of many people, with the most severely affected being lower income working households.
The Albanese government has flagged some form of market intervention to prevent staggering increases in gas and electricity prices in 2023.
However, details remain unclear with the federal government consulting with industry, states, and territories.
Treasurer Jim Chalmers warned that the federal government must act to ensure industry does not close due to high prices.
Experts forecast that electricity prices will rise by 56 per cent across an 18-month period, with gas prices increasing by 44 per cent.
According to ABC News, one NSW steel-making company is experiencing a $25 million increase to its annual gas bill.
The company has been quoted between $33 and $44 gigajoule, which is beyond the current rate of $10.
This company uses more than a million gigajoules of gas per year and receives gas supply offers from Origin, Shell, and Macquarie Group.
Kennedy told parliament that the Treasury would wait for the market to adjust to high prices. However, he said that the price increases caused by the Russian-Ukraine war were so great that government intervention is justified.
Kennedy said that in the current circumstances of generalised price pressures, they need to be mindful not to contribute further to inflation.
"This would suggest to us, that interventions that directly address the higher domestic thermal coal and gas prices are more likely to be optimal,” he added.