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2015-16 State Budget Snapshot: Cut the cost of living Analysis

2015-16 State Budget Snapshot: Cut the cost of living

Cut the cost of living

With the federal government having axed the longstanding National Partnership Agreement on Concessions, VCOSS welcomes the state government’s decision to maintain concessions funding, as revealed in the 2015-16 state budget. The ability to access concessions means low-income households’ can receive vital assistance to pay their utilities bills, use public transport, pay municipal rates and car registration, and meet other essential needs. The additional funding provided by the state government to maintain this program in the face of the withdrawal of federal government support is of great benefit for low-income Victorians struggling with living costs.

The 2015-16 state budget shows that the state government’s energy concessions expenditure, particularly for electricity, dropped considerably in 2014–15; and while real growth is budgeted for in 2015–16, it will still be lower in real terms than 2013–14.[1] The scale of this difference suggests the cap on the energy concession is a factor. VCOSS is concerned that many Victorian low income households are missing out on the full value of energy concessions and looks forward to working with the government so those facing poverty and disadvantage can fully access concessions.

Improving concession households’ energy efficiency is one way to manage concession expenditure, and the budget commitment to retaining and improving the Victorian Energy Efficiency Target (VEET), along with the new Energy Efficiency Scorecard tool, are important parts of this picture. VCOSS looks forward to working with the government on developing comprehensive energy efficiency programs aimed at low-income households in the near future.

VCOSS also welcomes the targeted investment in microfinance and other private transport discounts for certain groups. We look forward to working with the government to encourage more investment in microfinance more broadly across Victoria in the future.

Initiatives at a glance

  • $1.9m in 2015-16 for the VEET review and Energy Efficiency Scorecard tool – which have the potential to improve households’ knowledge of and access to energy efficiency strategies.
  • $7.2m over four years for the continuation of Good Money community finance hubs – in Collingwood, Dandenong and Geelong, to provide safe microfinance services for low-income Victorians who would otherwise be excluded from mainstream financial services.
  • $7m over four years for free three-year licences for young drivers – who have completed four years on P plates with no road offences. This initiative is aimed at encouraging responsible driving, but will also help with living costs for the target group.
  • $8.8m over four years for discounted car registration for trade apprentices – covering the registration fee and compulsory third party insurance charge. This will help with living costs for this target group.

Future policy directions

  • While it is positive that the state government has maintained Victoria’s concessions program, energy concessions now provide less assistance to eligible households than in the past, while energy hardship indicators are higher than ever before. VCOSS looks forward to working with the government in future to remove the energy concession cap and reverse the carbon price compensation adjustment. These reforms will ensure all concession households receive the full value of the available concession on energy bills.
  • Asylum seekers living in the community are one of the most disadvantaged and vulnerable groups in Victoria. The state government can assist this group by making them eligible for energy and water concessions; a measure that would cost comparatively little and benefit these groups who face significant disadvantage. VCOSS looks forward to working with the government on developing this measure to assist asylum seekers in our state.
  • Households that struggle to pay energy bills often end up with significant debts that they cannot afford to pay. Increasing the cap on the Utility Relief Grant to $1,000 would reflect the rising costs of energy and water and properly meet the grant program’s objective of helping indebted energy and water customers improve their financial situation and avoid disconnection.
  • Poor energy efficiency in dwellings and of major appliances is a significant cause of people having difficulty paying energy bills. A funded appliance replacement and dwelling retrofit program for concession households would complement the Energy Efficiency Scorecard tool by helping low-income households lower their energy use and bills.
  • We welcome the continued funding for the Good Money community finance hubs and future investment in No Interest Loans Schemes and Financial Counselling would assist more low-income households struggling with high energy bills and debt, and those who need to replace major appliances.

[1] Electricity 10.3% lower and, gas 1.2% lower in real terms, accounting for CPI increases (BP2) and output projections for number of households receiving concessions (Budget Paper 3, p. 258).

VCOSS Victorian State Budget 2015-16: Snapshot analysis