Australian power consumers have just started opening their winter power bills, which are fully 20% higher than this time last year. By comparison, Australia’s underlying rate of inflation is around 1.5%.
The consequences for the economy, as a whole, are just starting to bite.
Restaurants, bars and retailers are copping it from both ends.
Business customers – often on retail power contracts with fixed prices for two or three years – are watching their power costs almost double, as they enter new contracts with prices fixed at the current rates.
And the customers who consume what these businesses hope to offer, have been forced to cut back on expenditure, simply to be in a position to pay their own rocketing power bills. Some might call it a vicious circle.
STT calls it a self-inflicted economic suicide.
Shoppers stay away as power costs bite
Adam Creighton
The Australian
6 October 2017
In a sign sluggish wages and higher power prices are starting to bite, the new financial year has seen the biggest fall in retail sales since 2009, fuelling concern the economy isn’t as strong as the government’s forecasts imply and casting further doubt on the prospect for Reserve Bank interest rate increases.
The Australian dollar fell back towards US78c yesterday after the Australian Bureau of Statistics revealed retail sales had fallen 0.6 per cent between July and August, defying economists’ expectations they would rise modestly.
“It was a shocker,” said Commonwealth Bank economist Gareth Aird, pointing to the broad declines in spending across all states, especially in Victoria and Queensland, and business sectors. Spending at cafes and restaurants, one of the strongest growing retail sectors in recent years, fell 1.3 per cent between July and August.
“We are always reticent to put too much emphasis on any one figure, but it now looks increasingly likely that strong sales growth in April and May were the anomaly in 2017,” he said. That strong growth had helped the economy grow 1.8 per cent over the year to June, in line with the government’s May budget forecasts, which had been criticised for being too optimistic.
The budget has assumed household consumption will rise 4.75 per cent this year. Retail sales (which make up about half of household consumption) are rising at only 2.1 per cent, though, down from 3.8 per cent in May when the budget was released.
“Households are facing several headwinds, including record low wage growth, record levels of debt, slowing house price growth, and, importantly, sharply higher energy bills,” said ANZ economist Jo Masters.
The drop in retail sales by a cumulative 0.8 percentage points over the two months to August, the biggest two-month decline since 2009, comes as consumers receive their first round of power bills after prices went up more than 20 per cent since July.
“The outlook isn’t encouraging either, with the full effect of higher energy bills yet to be felt,” said Capital Economics chief economist Paul Dales.
Department stores were the only category to see a rise in spending between July and August, after a terrible few months. Economists expected retail sales to rise 0.3 per cent in August.
“The weakness in retail sales supports our long-held view that a slowdown in consumption growth is one reason why the RBA won’t raise interest rates at all next year,” Mr Dales said. The Reserve Bank left the cash rate on hold at 1.5 per cent this week for the 14th month in a row, resisting any temptation to signal future rate increases. The RBA isn’t expected to lift rates until May next year at the earliest. “While monetary policy remains highly accommodative, household interest payments as a share of income have been edging up since the last rate cut because the stock of debt is growing faster than income,” Mr Aird said.
The IMF this week said rapid increase in debt, the kind Australia has been an example of since 2012, would weigh on consumption in future years.
While bricks-and-mortar retail spending fell in August, online retail spending, which is about 7.5 per cent of traditional spending, rose 1.7 per cent. “The retail sector is undoubtedly facing challenging times given the impact of competitive pressures on pricing,” she added.
It wasn’t all gloom yesterday, however — August produced a $1 billion trade surplus on the back of rising iron ore sales, stronger than expected and up from $800 million in July.
“What the weak retail sales data have taken away from third-quarter GDP with one hand, the stronger trade data have given back with the other,” Mr Dales said.
The Australian
Here’s one business that the LRET killed earlier.
The glib and un-panicked manner in which much of Australia’s business community seems to deal with our power pricing and supply calamity, reminds STT of the apocryphal frog left to swim in a pot of cool water, being slowly brought to the boil.
Drop a frog into boiling water, and, instinctively, it jumps to safety. But, when the temperature rises steadily around it, the unwitting amphibian fails to notice the brewing peril and perishes.
True it is, that the mainstream media have failed the public abysmally, which offers some explanation for entrenched ignorance.
Australia’s media continually put forward all manner of theories as to why Australians are now paying the highest power prices in the world, but steadfastly refuse to attack the renewables rort.
Barely a handful of journalists have even a basic understanding of how Australia’s Large-Scale RET operates, and fewer still can provide a decent explanation as to its direct cost to power consumers (REC subsidies worth more than $3 billion a year and which will top more than $60 billion over the life of the scheme).
And you can count on one hand the number that understand how subsidies to wind and solar (worth $85-93 per MWh) have made it impossible for conventional generators to dispatch power to the grid; according to their well-established business model (once based on known daily customer demands, rather than whether the sun is up or the wind is blowing).
Add to a gormless and gullible press pack, politicians of every persuasion, most of whom also struggle to understand the basics of the policies for which they are directly responsible; or which they blindly support, thereby acquiescing in the greatest government mandated wealth transfer in Commonwealth history.
If an external force were looking to destroy Australia’s wealth and prosperity in double quick time, massive and endless subsidies to intermittent and chaotic wind and solar power would be the weapon of choice.
With the temperature rising fast around them, the only question is: can Australian power consumers jump in time?
I know I’m in trouble, but there’s nowhere to go…
About stopthesethings
STOP THESE THINGS 
Many good points. Climate change catastrophists have been so successful with the PR and spin that editors, journos have bought into the narrative in a big way. When the perception of global warming skeptics has been well established as fringe-dwelling, anti-science crackpots, those same scribblers and their editors can’t bring themselves to consider that perhaps they have been conned by the Green industry and the skeptics have been right all along. While putting over a facade of journalistic professionalism, they’ve lived vicariously through their comment contributors in name calling and pedantic derision of anyone who has disagreed with the catastrophic climate change forecast. They can’t bring themselves to look in the mirror yet.
In an environment in which editors and journos go to extreme measures to verify sources and doublecheck research, I don’t think they can even consider yet that they’ve been victims of a huge con and have been willing participants in that con.
As much as I’d love to revert to name calling and ridicule as reality hits home on these communication professionals, I have to tell myself to resist. It takes a lot of humble pie for these people to seriously consider the possibility that they’ve been conned. I like to think I’ll save my angst for the instigators of this con, but they’ll likely get off Scott free with their retirement finances intact.
How the Australian public moves quickly to limit the economic fallout is a puzzle. Policy has to do a complete reversal. Someone has to lead the public back out of the tunnel and it has to be someone other than than the idiots who led the public in. Where you find someone like that in an environment of hostile Green rhetoric is anyone’s guess.
When reality hits with many consumers that they’ve personally wasted thousands of dollars on ineffective rooftop solar panels that Do nothing more than highlight their owners’ susceptibility to slick scammers, the fallout towards journos and politicians won’t be pretty.
How with this reality hit? genuine question. As prices escalate they will just feel further vindicated in their choices. What is the scenario you see that creates this general awakening?
Good question. PV solar generates electricity between 10am and 4pm. Peak electricity demand is around 7-8am and again around 6-7pm when there’s no or little solar. But utilities are forced to purchase electricity from solar at RETAIL or above rates when they have no use for it, then provide electricity back to those homes at no charge or more correctly: at the expense of those people being charged already for their own electricity.
The environmental cost of bad energy policy and poor state planning laws is also massive. Could your readers please check out my Change.org petition asking for AGL to be held to their planning permit conditions for their Macarthur energy generation site.
http://www.change.org/p/richard-wynne-parliament-vic-gov-au-make-agl-adhere-to-permit-conditions
AGL’s reports show that they are likely to be killing nearly 2,000 birds and bats a year at their Macarthur generation facility alone (many of which are raptors), which is many times more than their planning application documents estimated. Please demand that the Moyne Shire and DELWP enforce planning permit conditions before it is too late.
PS I’ve approached the Greens, Greenpeace and Friends of the Earth, but so far the silence has been deafening…
Hamish, I would like to believe that everyone who reads this site signs your petition and passes it on to others to sign, but even here there are probably people who do not wish to put their name to anything in case they upset a friend or family member who is so deluded they support the madness that has been unleashed around the world.
That even our own Federal Environment Minister is unwilling to stop the slaughter speaks volumes. He may list a species but that’s as far as it goes, the EPBC appears to be hamstrung by having to accept ‘mitigation’ of damage. ‘Mitigation’ is another word that has taken on another meaning it now means approval to slaughter.
The continued additions to projects in South Western Victoria and the process of Contiguous development of more and more projects is allowed without having to take into consideration that for every turbine installed close to another is reducing the amount of land available for species to move to, then those places may not be suitable, too small or already occupied by other species which could be unable to accept others in their areas.
Flight paths of migrating birds and feeding flight paths of bats are just a minor concern to the industry – they just get a permit to kill what fly’s through their project sites, with small areas adjacent for these creatures to use instead – as if they know or read the project plans and realise they need to change their flight paths.
Until more people speak out and go against the warbling of organisations they may contribute to and start thinking and reading for themselves nothing will change.
Hamish you have and are doing a fantastic job and I hope you receive the support you and the creatures you support so richly deserve.
Problem is, at least in QLD, there is NO requirement for governments to take any notice of petitions no matter how many signatures. Case in point: In QLD a few years ago, the Labor state government needed more money to balance the budget due to their mismanagement, so they decided to increase car registration by 12%, which was unpopular enough, but then realised they would still fall short, so proposed to increase it by massive 24% instead. Needless to say, there was a equally massive outcry against this, and a petition started. When I signed, there were 138,000 signatures on this petition which was later presented to the government, with no doubt by then, many more signatures. The Minister involved simply said in parliament that they needed the money for roads, ignored the petition, and increased rego by 24% anyway.
Silly me! With the South Australian energy crisis destroying the state’s economic base and a summer of discontent looming, it was a little optimistic of me with the upcoming state election in 2018 to think our opposition leader Steven Marshall would attempt to address the real issues.
I had previously met Marshall with others about 4 years ago, concerned over Senvion’s Ceres 600Mw Ceres project on Yorke Peninsula. Having little understanding of energy generation and not wanting to upset the greenies in his Norwood electorate he accepted our concerns but stated that in opposition there was little he could do about it.
After 4 years of hibernation Marshall rolled the stone from the front of his cave and yesterday delivered the Liberals energy policy. His signature piece was that he was going to save power consumers $302 a year by offering grants to households with solar of up to $2500 so that they can install batteries and take the peaks out of demand. The plan is expected to cost the state $100m. ,
In further good news, next week he is expected to deliver the Liberals health policy with the key initiative being to grant up to $100 worth of “Band Aids” to all those in palliative care.
This guy is like the Rip Van Winkle of state politics it will take him twenty years before he realises what the hell went on.
The naive politicians are still trying to tell themselves they can be friends with the Green eco-loons when the reality is that there is no compromising with them and any proposed policies to win Green votes will never go far enough. Perhaps the next round of political leaders will grasp the concept.
Don’t hold your breath, those who are preselected are selected by the current mob of insipid tail followers.
Marshall and his Liberal party after the announcement of their energy plan besieged the airwaves and social media spruiking potential savings to consumers of $300 a year.
One problem! Its come to light today that the savings per year will be in the vicinity of $60/year.
Get back in that cave, buddy.
Reblogged this on Climatism and commented:
““The outlook isn’t encouraging either, with the full effect of higher energy bills yet to be felt,” said Capital Economics chief economist Paul Dales.”
FEAR NOT! The (inept) Turnbull Governments’ latest solution to Australia’s electricity crisis – to pay consumers for turning their AC off during summer for a $25 voucher – should save the day…and their government.
More fake fixes to a fake catastrophe.
Stupidity on steroids.