households – Michmutters

Canberra homes and businesses will be unable to install a gas connection from next year under the ACT government’s plan to ditch fossil fuels by 2045.

Households are already leading the way, as natural gas prices convince them to switch to electricity to save money.

And Canberra’s new suburbs have already been designed without gas connections.

However, the government tabled legislation today to end all connections to new builds — including in older suburbs — as of January 1.

Chief Minister Andrew Barr said the transition — far ahead of the rest of the country’s schedule — would be “gradual and gentle.”

He said cutting off new gas connections was the only way to meet the ACT’s target of eliminating greenhouse-gas emissions.

“The days of cheap gas in Australia appear to be over,” Mr Barr said.

“Renewable electricity is now the cheapest and cleanest way to power our homes and businesses.”

An aerial view of houses with solar panels on their rooftops. — About two-thirds of Canberra homes have a gas connection, though the number has been shrinking.(Supplied: ACT government)

About two-thirds of Canberra homes use natural gas — for heating, water systems or cooking — and the fuel accounts for about 20 per cent of the ACT’s emissions.

The ACT already buys more electricity from renewable sources than it uses: it reached its 100 per cent target three years ago.

Most remaining emissions come from transport, and the government revealed plans last month to phase out petrol and diesel engines.

Mr Barr said the government would help Canberrans to turn off their gas entirely by 2045.

“We know we need to make this transition in a responsible and considered manner — a way that provides certainty to households and businesses but also supports them during the transition,” he said.

Market forces already encouraging Canberrans to switch

A tradesman in bright yellow working on a power meter. — Each year, about one in 50 ACT households year switches from gas to electricity.(Supplied: ACT government)

Even before the Ukraine war worsened the global energy crisis, prices had been driving Canberrans to disconnect from mains gas.

In the two decades to 2020, gas costs for ACT households doubled after accounting for inflation.

They are expected to rise a further 19 per cent over the coming decade — about $220 a year more for a typical home.

Meanwhile, electricity prices are predicted to fall 3 per cent.

As a result of these pressures and environmental concerns, about 2 per cent of Canberra households each year have been cutting off their gas supply.

The government now expects that to increase to 2.5 per cent a year.

Its modeling also suggests that, without any policy interventions, market forces alone would reduce Canberra’s gas use by almost 60 per cent by 2045.

Change-over costs the biggest barrier: survey

Photo from above a person's head as they pour seeds into a pan sitting on a flat, black induction cook top. — Shane Rattenbury says induction electric cooktops are preferred even by chefs.(Unsplash: Conscious Design)

The government says a range of incentives will help people and businesses change over.

These include the existing interest-free household loans of up to $15,000 to improve energy efficiency or switch to electricity.

Lower-value homes are also eligible for direct subsidies of up to $5,000.

Climate Change Minister Shane Rattenbury said disconnecting from mains gas was a longer-term goal, and there was no need to hurry, though it made sense to avoid the annual connection fees.

“As your current gas devices come to the end of their life, our advice to you is: make your next one electric,” he said.

“As you go to replace your hot water or heating system, don’t put another gas one in: choose an electric one today.

“It’s better for the environment and it’ll be better for your bank account — and we’ll help you make that transition over the coming years.”

A recent government survey found cost was the biggest barrier preventing Canberrans from switching to electricity.

At present, removing a gas meter and supply pipes costs about $800 per household.

The government said it would work with the Australian Energy Regulator to reduce or abolish that charge.

Mr Rattenbury said the ACT gas network would be switched off in 2045, but the government would not stop people from buying gas in LPG tanks if they wanted to.

“But I would say to those people: those new induction cooktops perform like gas, and the chefs we’ve talked to who’ve tried it love it.”

The ACT government has today released its 2022-23 budget, setting out its spending for the coming year.

There are few surprises enclosed in the documents, with major announcements for health and housing already made in the past week.

But what the papers do reveal is an ACT economy that is thriving, despite outside forces continuing to threaten Canberrans’ hip pockets.

1. Things are better than we thought

First, the good news: the territory is faring better than expected.

In October last year, ACT Chief Minister Andrew Barr delivered an economic update. An outbreak of the Delta variant of COVID-19 had forced a lengthy lockdown, leading to a $951.5 million deficit.

But, according to the budget papers released today, that position has improved, with the deficit now sitting at $580.4 million.

“The ACT economy has outperformed expectations, demonstrating resilience and flexibility in the face of the COVID-19 pandemic and other adverse global and national events,” the budget papers state.

Today, Mr Barr, who is also the ACT’s Treasurer, credited that improved economic position largely to a surging population.

“Revenue has driven that improved situation, which is largely a reflection of the territory’s increased population,” he said.

A main street lined with trees and greenery. — The ACT economy’s recovery from the effects of lockdowns has been stronger than expected.(ABC News: Ian Cutmore)

But it’s not all good news — that boom in people also has a downside.

“The fact that our population has grown by nearly 90,000 people demonstrates that people want to live in Canberra,” Mr Barr said.

“And that explains why we have seen such strong demand for housing, such strong enrollments in our schools and pressure on our health system.”

And it’s that growth and demand that has guided much of the budget spending announced today.

2. Costs are going up, but the government says we can afford it

Close-up of Australian currency on leather handbag with keys and face mask to the right — Some costs are expected to increase, including parking fees and gas bills.(ABC Everyday: Fiona Purcell)

Over the past two years, many costs have been mitigated or put on pause by the government to ease financial pressures brought about by the COVID-19 pandemic.

But those measures are gradually ending.

A pause on an increase to government paid parking is set to end, which means Canberrans will notice a jump in prices.

Home owners will also notice an increase in household rates of 3.75 per cent on average.

For homes, that means $111 more per year and, for units, an extra $67.

Other levies will also go up — the fire and emergency services levy by 3.25 per cent and the safer families levy by $5.

A trip to Access Canberra will also incur a greater cost, with car registration fees set to increase by $27.

One cost that won’t go up, however, is public transport fares.

Of course, the cost of living overall is being impacted by pressures further afield — the ongoing pandemic and the conflict in Ukraine having the greatest effect.

Weighing on many Canberrans’ minds is the announcement of yet another interest rate rise, but the ACT projects government Canberrans can weather the storm better than most other Australian jurisdictions.

“These effects are expected to be temporary, with the economy expected to continue to grow at 3 per cent over the coming years, supported by population, employment and wage growth,” the budget papers state.

While there are some relief measures outlined in the budget, such as a utilities concession increase of $50 for more than 31,000 low-income households, overwhelmingly, these are costs the government says most Canberrans are expected to manage well thanks to higher than average incomes.

3. The long shadow of COVID-19 remains

The ACT budget shows the risk COVID-19 still poses to the economy.(ABC News: Mark Leonardi)

Canberra is experiencing strong economic growth. And, as industry booms, there are a lot of jobs up for grabs.

But budget papers reveal China’s ongoing lockdowns to mitigate the spread of COVID-19 are having far-reaching effects, including on the ACT’s economy by limiting the arrival of workers.

And with Omicron sub-variants running rampant, this lack of workers is being felt especially harshly across the healthcare system.

The ACT government’s “upside scenario” in the latest budget papers assumes that these pressures will ease in the near future and the flow of migrants will increase steadily.

The government is also cautiously optimistic that the number of international students and tourists coming into the ACT will increase — two important revenue streams for the territory.

But the government’s optimistic budget forecasts have been wrong before and the potential risks posed to the ACT’s economy, from a myriad of external forces beyond the control of local government — including COVID-19, are also laid bare in the budget papers.

4. Another budget devoted to health

Health is a major part of the ACT budget, as the government aims to create more jobs and continue expanding the hospital campus.(ABC News: Penny McLintock)

Healthcare is, predictably, a major focus of this budget.

Record levels of COVID-19 patients, illness within the healthcare workforce, long emergency department wait times and a shortage of specialist doctors are not new problems for the government.

But how to solve them remains less of a sure thing.

The budget papers list a number of funding announcements—some already unveiled—aimed at addressing these issues.

$59 million has been set aside in the 2022-23 budget solely for the ACT’s COVID-19 response.

Further investments are also aimed at boosting the workforce, with plans to employ an additional 400 healthcare workers “ahead of schedule”, the budget papers reveal.

And with eight per cent of Canberrans surveyed reporting experiencing high levels of psychological distress in late 2021, the budget named mental health as an area of community concern.

As a result, $70 million will go towards mental health over four years.

There are few surprises in the budget spending, as the same projects that have been underway for some months continue to be funded.

This includes the Canberra Hospital master plan, which was launched late last year, and will see the existing facility expanded over 20 years.

5. A necessary debt, but cautious optimism

Chief Minister Andrew Barr said the ACT was accruing necessary debt in order to grow.

Throughout the pandemic, the government drove economic growth through infrastructure, and the zest for building shows no signs of slowing down.

Mr Barr said the government was prioritizing a few key areas as part of a $7 billion five-year infrastructure program — $1.4 billion in 2022-23 — including health, education, and emergency services.

“These are assets that will be enjoyed by generations of Canberrans,” Mr Barr said.

But they’re assets that come with a large price tag, with the ACT debt expected to grow from an estimated $4.9 billion to $9.8 billion over the next four years.

“They’re assets that we need to build now, and so it is appropriate to borrow in order to build those assets, and that the users of those assets over the decades and sometimes centuries ahead will make a contribution to that cost over time, Mr Barr said.

He said that debt was “sustainable” and would be financed largely through land releases.

The budget details plans for 30,000 extra dwellings in Canberra over the next five years.

But there’s no quick fix — at least, not in this budget — for the ongoing crisis in housing affordability and rental availability.

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