Union demands Labor consider price caps for coal

A key union is pressuring the federal government to intervene in the market for Australia’s two largest fossil fuel exports, calling for a cap on the price miners can charge the operators of coal-fired power stations and warning controls on gas prices alone won’t lower power bills.

Gas and coal prices have jumped this year amid a global energy crunch sparked by bans on Russian energy exports following its invasion of Ukraine in February.

Dan Walton in Parliament House on Tuesday, flanked by ACTU secretary Sally McManus and union members, calling for the government to cap coal prices. Credit:Alex Ellinghausen.

The government has said it is considering market intervention to lower gas prices but Australian Workers’ Union national secretary Daniel Walton on Tuesday also demanded a price cap for coal that is burned for electricity.

“We need a mechanism in place to keep prices down,” he said.

Walton said he was pleased the government was moving “very quickly” on gas prices, but it had to act on coal as well.

“The difficult situation … in front of the government is you can’t get a solution of gas without tackling coal at the same time,” Walton said.

Electricity bills are forecast to rise a further 30 per cent next year and gas bills 20 per cent, heaping pressure on the federal government, which made an election promise to cut household power bills by $275 a year by 2025.

Treasurer Jim Chalmers said last week the government hoped to have a solution to rein in gas prices before the new year and “our preference is to do something with regulation”, while Climate Change and Energy Minister Chris Bowen has said all options would be considered.

Imposing controls on the prices gas companies can charge local buyers would be an unprecedented market intervention by the federal government, but unions and manufacturers have warned power prices are becoming unaffordable and many households are struggling with cost of living pressures.

Some experts have warned a cap on gas prices, while it could help manufacturers that use it as a feedstock in processing, would have a negligible effect on power bills as less than 10 per cent of the east coast market is gas-fired electricity while about 60 per cent comes from coal.

NSW energy customers are facing a bigger impact from the high price of coal than those in both Queensland, where state-owned electricity corporations reduce the price pressures on consumers, and Victoria, where the bulk of electricity is generated in the Latrobe Valley by coal plants that burn cheaper brown coal.

NSW Treasurer and Energy Minister Matt Kean last week called for the federal government to force exporters to reserve supply of both gas and coal for the local market.

East coast gas contract prices traded as low as $4 a gigajoule prior to 2015, when exports began and linked the east coast to the international market, but manufacturers have said they are being offered new deals at up to $45 a gigajoule.

Federal Industry Minister Ed Husic escalated his attack on gas companies on Thursday, accusing them of creating a “glut of greed problem” and claiming they were failing to hear Australians’ concerns.

Walton said the government should not intervene in a way that disrupted coal supply to Australia’s trading partners, which are also grappling with the global energy crunch, but said other countries were stepping in to lower prices and “Australia should not be ashamed to do the same thing”.

“Every other nation around the world is making moves to shore up their energy security, to protect the interests of their residents and their businesses,” he said.

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