Government pulls the plug on energy bill rebates

The government’s scrapped energy rebates, leaving Aussies bracing for higher bills as the first summer heat wave kicks in.

The Albanese government has pulled the plug on energy bill rebates, confirming the current round of support will finish at the end of this year, and there’ll be no fourth instalment. Treasurer Jim Chalmers fronted cameras in Canberra to spell it out. The universal rebates that softened the blow of soaring electricity prices will not be extended into 2026. Cabinet made the call on Monday.

“This marks a shift in the way that we are delivering cost of living relief,” Chalmers said. “This is a shift from temporary measures, first decided when inflation was almost 8 per cent, a shift towards ongoing cost of living help.”

Chalmers said taxpayers had already tipped in close to $7 billion across three rounds of subsidies, with states and territories adding another $1.5 billion. While he acknowledged families and small businesses are still doing it tough, he argued the days of one-off bill boosts are over.

“This wasn’t an easy decision, but it’s the right decision,” he said. “These were never going to be a permanent feature of the budget.”

Aussies warned to brace for power bill pain

The Treasurer’s comments set the tone for next week’s economic update, with Chalmers warning that it will be a stripped-back affair with “no major new policy announcements”.

“It’s not a mini budget, but there will be savings, and there will be difficult decisions, and one of them is around these energy rebates,” Chalmers said.

He blamed “intensifying” pressure on the nation’s finances, pointing to blowouts in areas like veteran affairs, and higher-than-expected disaster spending.

“Yes, there are pressures on the budget. Yes, there will be difficult decisions and savings to be made, but overwhelmingly, that’s about making room for our priorities.”

With the Reserve Bank flagging it may have to consider interest rate hikes early next year thanks to stubborn inflation, the Treasurer made it clear Canberra isn’t willing to pump more fuel into the economy.

Economists split: correction or cop-out?

Economists broadly backed the decision, though not without a few jabs about how long the government took to yank the band-aid off.

Ecomomic commentator Chris Richardson described the rebates as “pure political pork, as crispy as it comes.” First reported in The Guardian, Richardson said the policy had outlived its purpose once it was expanded to everyone, not just those most in need.

“There was remarkably little to recommend [power bill rebates] as a policy,” he said.

Ben Phillips from ANU agreed, telling The Guardian the Commonwealth rebates “should have gone earlier, but better late than never”.

“I’m not sure we have entirely slayed the inflation dragon, but the days of 7 per cent or 8 per cent inflation have disappeared,” he said. “We don’t need fiscal stimulus.”

Coming at the news from a different angle, Betashares chief economist David Bassanese wasn’t surprised to see the rebates axed, but said Australians were paying the price for years of political failure.

Speaking to Yahoo Finance, he said: “We have a failure of energy policy in this country and households will pay the consequences of that.

“The government has been putting a band aid on that failure through this expensive subsidy for a year, but it can’t last. It is an inefficient way of protecting households.”

He argued both sides of politics were responsible for what he called “a lack of government investment” in energy supply.

Opposition: “Budget disaster for all to see”

The Coalition, predictably, pounced. Shadow treasurer Ted O’Brien and finance spokesperson James Paterson issued a joint spray accusing Labor of leaving families stranded.

“Labor’s decision to end household energy bill relief exposes the Albanese Government’s cost-of-living, energy policy and budget disasters for all to see,” they said in a statement reported by SBS and Yahoo.

“When you fail to manage the nation’s finances, you lose the capacity to assist those in need. That’s why Labor is leaving struggling households to fend for themselves today.”

Liberal senator Anne Ruston also took aim at high power prices in comments to Sky News, saying the government needed to fix the system so Australians could “afford to pay their energy bills instead of finding themselves in a situation where every Australian family… is struggling with the cost of living and every Australian business is struggling with the cost of doing business.”

Still, the Coalition stopped short of opposing the decision outright, a sign the political appetite for more temporary cash splashes is wearing thin.

Aussies urged to shop around for energy

The end of rebates comes at a rough time for households, with electricity prices jumping 37 per cent in the past year after many state-based rebates were used up.

Energy Consumers Australia reported in July that one in five households is struggling to pay their bills, with renters hit hardest.

So, if the government isn’t footing the bill, what can households and small businesses do? Cue some very practical advice: starting with shopping around.

Sally Tindall, data insights director at comparison site Canstar, told SBS earlier that millions were overpaying simply because they hadn’t reviewed their plan.

“Our research shows switching from an average-priced plan to one of the lowest in the market could save a typical household up to $406 a year in some areas, even more for larger households,” she said.

She also reminded customers that energy retailers are legally required to tell you if a better deal is available, but only if you ask.

And with a hot summer settling in, the CSIRO suggests keeping the aircon at 24–25°C, as every degree lower can add up to 10 per cent more running costs.

Tax cuts to come

Chalmers was quick to suggest that the government isn’t leaving people completely high and dry. The next phase of the plan, he said, is permanent relief via the tax system and Medicare.

“People can use that to help pay their electricity bills or to meet their other cost of living pressures,” he said.

The already-delivered 2024 tax cuts will be followed by further reductions in 2026 and 2027, which the government estimates will save the average Australian about $43 a week in 2026–27.

“So, the tax cuts will help people pay those bills,” Chalmers said. “Our commitment to providing meaningful and responsible assistance is constant.”

But with prices still rising, rate hikes on the horizon, and the heatwave season arriving early, many families and small businesses will feel the loss of those quarterly rebates long before tax time.

This post first appeared on Business Builders. You can read it here.

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