A QUT economist has warned the Queensland Government's plan to spend $3.4 billion from state asset leases on reducing the price of electricity will have little impact on power bills.
QUT financial economist, Dr David Willis said the subsidy offered would quickly be wiped out by power companies increasing prices.
"A family of four with a pool is forecast to save $1,190 over five years, or around $5 a week, on their electricity bills if the asset is leased for 100 years," Dr Willis said.
"The issue with offering a subsidy is that it tends to be quickly eclipsed, as we have seen with the First Home Owner Grant, for example. Its introduction just inflated house prices and made it impossible to see any advantage.
"This very modest family discount does not stop the new power company from increasing prices as it searches for profit for its new shareholders. Therefore, the $5 a week will be wiped out in the first years price increase."
The State Government has pledged to reduce the price of electricity by at least $100 a year if it is re-elected.
The proceeds of a $37 billion leasing asset plan would be spent on paying down debt ($25 billion), job-creating infrastructure ($8.6 billion) and reducing power bills ($3.4 billion).
"Why is the State Government offering a $3.4 billion fund from the lease of tax payers' assets to discount electricity bills if they are so sure that offloading the electricity assets will not create a monopoly and hence prices will rise further?" Dr Willis said.
"And what is the government going to do with the $1.3 billion windfall it will receive from paying interest on $55 billion of debt instead of $80 billion?"
Dr Willis questioned whether the $3.4 billion earmarked for electricity savings would be better spent on improving public transport.
"While $5 a week is a discount, is there a more pressing need to upgrade public transport? Could that $3.4 billion be better spent on improving the daily commute many Queenslanders undertake each day?"
Media contact:
Rob Kidd, QUT Media, 07 3138 1841, rj.kidd@qut.edu.au
After hours, Rose Trapnell, 0407 585 901
