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Australia

Energy ministers from across the country meet to establish a new framework for transition away from coal

Energy ministers from across the country meet to establish a new framework for transition away from coal

State, territory and federal energy ministers have started the process for significant reforms to Australia’s energy future.

The ministers met on Friday in Canberra where they received a briefing from energy market operators and the consumer watchdog on expected gas and electricity shortfalls in 2023 and 2024.

On top of the agenda was the establishment of a new National Energy Transformation Partnership (NETP) to better collaborate on Australia’s transition to greater reliance on renewables in the electricity grid.

Federal Climate and Energy Minister Chris Bowen announced that as part of the new NETP, emissions reduction would be included in the national energy objectives for market operators.

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Mr Bowen said the decision would send a “very clear” message of certainty to investors and would ensure emissions reduction is at the forefront of every aspect of energy market operators’ functions.

“This might not sound much, this is the first change to the national energy objectives in 15 years this is important,” he said in Canberra on Friday.

“It sends a very clear direction to our energy market operators that they must include emissions reduction in the work that they do.

“And the message of certainty to investors in renewable energy and transition and storage around the world that Australia is open for business, Australia is determined to reduce emissions.

“And we welcome investment to achieve it and we will provide a stable and certain policy framework.”

The ministers also agreed to extend the powers of the Australian Energy Market Operator (AEMO) to better manage east coast supply shortfall risks.

It will also provide AEMO with the option of direct market participation ahead of winter 2023.

In its interim gas report, the Australian consumer watchdog warned of a serious shortfall in natural gas in 2023.

The Australian Competition and Consumer Commissions (ACCC) said LNG exporters needed to redirect excess supplies to the domestic market or Australia would risk its energy security heading into next year.

It comes after AEMO intervened in the Victorian gas market to redirect excess supply from Queensland producers to avoid mass shortages in the southern state – using its emergency mechanism for the second time in history.

The ministers joined the ACCC in calling for producers to redirect excess gas to the domestic consumers rather than the lucrative export market.

NSW Energy Minister Matt Kean said it was a “non-negotiable” for his state when it came to protecting households and businesses.

“What we don’t want to see is domestic gas producers prioritizing profits and exports ahead of local users, that is a non-negotiable for us in New South Wales,” he said.

“There is going to be a shortfall in gas in 2023 and 2024. That shortfall needs to be met.

“And what we need to do is prioritize Australian gas for Australian gas users ahead of companies making super profits and exporting that gas offshore.”

His Victorian counterpart Lily D’Ambrosio shared the concerns and said the country produced “more than sufficient gas” to meet domestic needs but “too much of it was sent overseas”.

“And that’s got to change and that’s really the task of all of us and we’re all up for it. And we’ve all agreed about how we can go about doing that,” she said.

On top of the gas market reforms, the ministers also discussed a future capacity mechanism to ensure firming power in the grid during the transition away from coal.

Senior federal and jurisdictional officials have now been charged to provide options for a framework which delivers “adequate capacity, ensures orderly transition, and incentivises new investment in firm renewable energy.”

“Ministers intend to take a more active role in delivering the firming capacity needed as the system transforms and consider the best means to manage the risks of a disorderly exit of coal generation,” the joint communique said.

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Business

Tasmanian property investor drop ‘a worry’ for the rental market, REIT says

Tasmanian property investor drop 'a worry' for the rental market, REIT says

There are growing concerns a drop in investors buying into Tasmanian real estate could further shrink the availability of rental properties in the state.

The number of investors purchasing a Tasmanian property in the June quarter fell by 20 per cent compared to the previous quarter.

Out of 1,781 properties sold, just 16 per cent were purchased by investors, with even fewer Hobart properties (12 per cent) purchased as investments.

“That’s a worry,” the president of the Real Institute of Tasmania, Michael Walsh, said.

He fears properties being sold could be removed from an already tight rental market that has a current statewide vacancy rate of about 1 per cent.

“That’s probably a big discussion to be had on the implications for the rental market,” he said.

Mr Walsh said 30 per cent of buyers needed to be investors to properly support the private rental market.

“We just don’t have the private investment right now that tries to keep pace with that demand. Where people live is anyone’s guess,” he said.

Supply of affordable rentals ‘falling for over a decade’

Mary Bennett from Anglicare’s Social Action and Research Center said the drop in investment was concerning if it meant properties were leaving the long-term rental market and not being replaced by new supply.

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Business

City chief: Market Square ‘a feasting sore’

City chief: Market Square 'a feasting sore'

Market Square UK 2022Geelong’s Market Square shopping center and Busport transport interchange have been described as “festering sores” in an extraordinary speech by the City of Greater Geelong’s highest ranking officer.

The outburst took many city councillors by surprise, with a source telling Geelong Broadcasters the CEO’s frank comments were certain to be discussed at tonight’s scheduled meeting.

Martin Cutter’s address to a business luncheon last week included criticisms of what he views as the city’s dependence on cars at the expense of “active transport” options such as bicycles.

According to the Geelong Advertiser Mr Cutter, who will finish up next month after cutting his contract short, laid bare his intense dislike for the bus exchange.

“I hate it. I think we all hate it,” he reportedly said.

“It needs to go, it needs to be shifted – it needs to be improved.”

Martin Cutter credit CoGGCouncilor Eddy Kontelj told Geelong Broadcasters he agreed that the bus terminal was problematic.

“We should be doing something about it and the state government should be doing something about it,” Cr Kontelj said.

“I just wish that Martin had used his voice earlier on to express the concerns that we have around that issue.”

Cr Kontelj was more guarded about his thoughts on the privately-owned Market Square, saying the city needed to be “in the tent” with the facility’s owners and trying to forge a way forward.

“What we can’t do is be just throwing blows through the media. What we need to be doing is working with the owners of the property to try and find a solution.”

Mr Cutter pointed to Melbourne’s Emporium as an example of what shopping center improvements can achieve.

“It’s easy for me to say, I don’t have the investment funds, council doesn’t have the investment funds, but it’s not working, something needs to be done in the area to lift that,” he told the event, which was hosted by the Urban Development Institute of Australia.

He also took aim at overwhelming criticism of the city’s controversial bike lanes.

“We all have an opinion about bike lanes. We can all be critical about the way they look and what they do, but if we’re going to make Geelong different we need to invest in active transport.

“We can’t keep making more roads, it will not fix what our problems are – it’s about being visionary, about looking to the future and deciding what we want Geelong to look like and not just asking for more cars to come into the center of the city.”

Mr Cutter announced his resignation in early July, saying he wanted to focus on ‘personal pursuits’ and spend time with his family.

Image: (top) Market Square [Geelong Broadcasters]; (middle) outgoing CoGG CEO Martin Cutter (City of Greater Geelong)

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Categories
Business

Fresh food prices may be soaring, but how much of your cash is making it back to the farm?

A person shopping at Australian grocery store, with a basket full of sparkling water, fruits and vegetables.

Lettuces have crossed the $10 mark, milk prices are being bumped up by the major supermarkets and strawberries are $6 a punnet.

Nearly everywhere you look, the price of food and other farmed goods is on the rise.

You would be forgiven for thinking this must be a great time for Australian farmers, preferably while gazing out the window at gentle rain.

Not remove.

Prices on the rise

Understanding what’s driving the price of any commodity can be a mind-bending exercise at the best of times.

The current situation is broadly due to a number of issues, the first of which has to do with the nature of the Australian growing season.

Australian vegetables come from different parts of the country depending on season. At the moment the primary supplier is Queensland.

Earlier this year some of its growing regions were smashed by two floods in 11 weeks.

Flooding of field at Mulgowie School Road in Lockyer Valley showing brown flood water through a field
Queensland’s Lockyer Valley flooded earlier this year and destroyed large vegetable crops.(Supplied: Lockyer Valley Regional Council)

Belinda Frentz is a herb grower on the state’s Gold Coast and deputy chair of Australia’s peak body representing vegetable growers, AUSVEG.

She said the damage to crops caused already high prices to climb even further.

“When you get a loss of that magnitude, it’s not the price that’s significant, it’s the production loss that’s associated with that,” Ms Frentz said.

“Anything that increases in price is usually associated with a loss somewhere in the supply chain.

“When we’re processing less than half of the volumes that we usually would, obviously the demand for that product increases exponentially and there’s just not the availability of the products.”

Farmers with hidden costs

Like every industry, farming has costs. There are start-up costs, such as the price of crop seed for the year, the cost of land, or the price of buying livestock.

Then there are input costs, things like fertilizer, fuel, chemicals, water and labour.

In short, they are the products necessary to do business — similar to fixed costs for personal budgets, such as rent and electricity.

These costs fluctuate naturally, but recent world events have thrown a spanner into the works.

small white urea pellets spill form an augur into a large trailer as a woman watches from the side
Common fertilizer, urea, jumped from $750 a tonne in 2021 to $1,300 in 2022.(Rural ABC: Clint Jasper)

Fertilizer costs began to spike in mid-2021 when China announced restrictions on exports, but the war in Ukraine has driven that price even higher.

The price of fuel has also been abnormally high, particularly for diesel, which is not just used in tractors, but also fuels the trucks that haul produce from the farm to processors, wholesalers and supermarkets.

The ongoing global hangover from the pandemic has also slowed Australian imports of these commodities to a crawl.

Creating a perfect storm

While each of these costs may have been manageable on their own, together they have created a perfect storm.

Ms Frentz said the costs were eating into what little profits many producers were making.

“We all know what our costs of production are and we know that they’ve increased,” she said.

Woman kneels down amongst rows of green and red lettuce. She smiles at the camera holding loose lettuce leaves in her hands.
Belinda Frentz says flood damage to crops caused already high prices to climb further.(Supplied: Belinda Frentz)

“I think the new pricing of fresh [food] will be around the input pressure costs that we’ve got, and that we can’t do anything about.

“Like everybody at the moment under household pressures about the cost of living, growers are experiencing that across the board.

“For us to be sustainable, we have to be profitable.”

A tale of two growers

But with prices so high, how much of that money is actually making it back into the pockets of growers?

Melbourne-based wholesaler Michael Piccolo believed the situation had divided growers into two distinct groups.

“You’ll get a certain grower that doesn’t have the yield, so basically whatever they’re producing is only covering the cost of production,” Mr Piccolo said.

“Then you’ll have a grower who has a full crop and they just base their sales on what’s going on around the Australian market.

A man is standing in front of a sign that says Piccolo Fresh
Melbourne vegetable wholesaler Michael Piccolo believes the market is over inflated.(Supplied: Michael Piccolo)

“Certain markets like Melbourne, Brisbane and Sydney will compete against each other, so when one sets a price, everyone else has to follow suit.”

Mr Piccolo also believes that, while input costs are a large part of current costs, it is competitive bidding from buyers that is driving up prices.

“I think it’s a contributing factor. My opinion, though, is that it’s a bit too inflated and we’re about 20-30 per cent above where we really need to be.”

When will prices come down?

The good news is that relief is on the horizon.

Mr Piccolo believes prices will fall as the season shifts away from Queensland growers and back towards those in southern Australia.

“The changeover of seasons happens around September to October, so a lot of these products that we have to purchase from Queensland start to come down during the Victorian season,” he said.

“My prediction is that we’ll start to see prices reduce more towards the mid-to-end of September, and then the Victorian growing season will kick in.

“However, I can’t see it making it’s way back down to the prices we’ve gotten used to,

“I think it will probably settle around at 10 to 20 per cent above what we are traditionally used to pay.”

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Categories
Business

RBA increases to interest rates mean home buyers who bought at the peak are facing rapidly rising mortgage repayments

A bearded man stands with crossed arms in an lounge room

While some Australians may rejoice at the idea of ​​a drop in house prices, interest rate rises mean home owners face the prospect of their asset dropping in value at the same time their mortgage repayments steadily increase.

And those who bought recently, at the peak of the market, are more likely to have the most left to pay off on their loans, meaning interest rate rises will cause them the most pain.

Bobby Graham bought a house in January in Hobart’s outer suburbs for slightly more than he had hoped to pay, after saving for the past five years.

Just months before his purchase completed, as late as October, the Reserve Bank of Australia was still saying it expected interest rates would not rise until 2024.

There have now been three months of straight rate rises, and another due today.

While he is not struggling to meet payments, Mr Graham says the changing circumstances have meant he needed to adjust something else — his expectations.

He has had to make tweaks to his lifestyle and reassess his living expenses.

“It’s the perfect storm — you pay the higher price because you bought at the peak of the market then there is an increase in interest rates,” he said.

“And it becomes obvious that everything else is becoming more expensive due to inflation.”

He described the increases in his mortgage repayments as “a bit of a kick”.

A bearded man in a hoodie smiles
Mr Graham has had to re-examine his budget and adjust his expectations.(ABC News: Luke Bowden)

As part of his changes he has had to cancel several interstate trips planned for this year in a bid to save money and meet home and mortgage commitments.

“You pay so much of your income, just to maintain your house,” he said.

His advice to others in his situation is to take a thorough look at the household budget and adjust expectations.

Home prices dropping but interest costs going up

According to figures released on Monday by property analysis firm CoreLogic, median house prices in most capital cities are falling at a steady rate — and are expected to continue the trend.

In Hobart, there was a 1.5 per cent drop in house and unit prices in the past month, in line with similar falls in Sydney and Melbourne.

CoreLogic compares the downswing to the same drop experienced during the Global Financial Crisis in 2008 and the 1980s recession.

Gray roofs in a Tasmanian suburb
The RBA has increased interest rates for three straight months, with another increase expected this afternoon.(abcnews)

The Reserve Bank (RBA) is acting to stem inflation by increasing the cash rate, which in turn is being passed onto consumers via higher mortgage rates.

The RBA is expected to lift the rate again when it meets today.

The head of research at CoreLogic, Eliza Owen, warns potential home buyers while they may feel like they are buying a house at a discounted price, the reality of interest rate increases will see more spent on repayments.

“The interest you pay on the debt you take out will be more,” she said.

Financial counselors expect demand spike

A woman with glasses stands in front of a sign reading Anglicare
Anglicare financial counselor Fiona Moore said people should call the National Debt Hotline if they were struggling.(Supplied: Anglicare)

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