Google AI


Modern Australian

power should be subsidised for struggling households

  • Written by: Jodi Gardner, Professor, Law School, University of Auckland, Waipapa Taumata Rau
power should be subsidised for struggling households

Last week’s headlines warning of electricity shortfalls brought the issue of access to energy into (increasingly chilly) homes around the country.

The threat of power cuts due to an unseasonable cold snap and low wind generation was averted by a nationwide effort to reduce consumption. But winter has not even begun in earnest.

Ensuring households can access fuel to warm living areas of the home has been ranked a basic human right by scholars, advocates and some at the United Nations. In a recent survey in the United Kingdom, 97% of survey respondents classified it as a “necessity” to live an adequate life.

And yet an estimated 40,000 New Zealand households had their power cut due to unpaid bills in 2023. And one in five had trouble paying their monthly power bill.

How have we ended up with so many people unable to access such a basic necessity – particularly when energy companies are making near-record margins? Meridian, Contact, Genesis and Mercury made a combined NZ$2.7 billion profit in the 2023 financial year.

The answer goes back to New Zealand’s market structures and the fact so many basic necessities – food, housing and electricity – are provided by private companies.

Cold senior man warming his hands over electric heater at home
Thousands of New Zealand households are struggling to pay their monthly energy costs. coldsnowstorm/Getty Images

The rise in fuel poverty

Fuel poverty (also known as fuel hardship) is an ongoing challenge in Aotearoa New Zealand – particularly when it comes to heating.

According to the UK government, a household experiences fuel poverty if it has to spend more than 10% of the total household income on electricity, gas and other fuels to achieve a satisfactory indoor environment. This is defined as meaning at least 21°C in the living areas and 18°C in other parts of the house.

The situation has been exacerbated by COVID-19, increasing inequality, and the cost-of-living crisis.

According to the government, 110,000 households could not afford to keep their house adequately warm in 2022. Māori and Pacific households, renters and low-income households were more likely to experience hardship.

Inadequately heating homes, or having to disconnect electricity, does not just mean people are cold. There are many related, serious social, health and economic consequences.

Damp and mould become a problem, children do not get adequate nutrition due to money going on heating, people’s physical and mental health conditions worsen, food in fridges and freezers can spoil.

According to Consumer NZ, 19% of households had trouble paying their monthly power bill in 2023 but still didn’t meet the threshold of “energy hardship”. Those in dire straits can apply for a Work and Income grant. But these are essentially a loan and can cause financial strain while being repaid.

Private responsibility for a public problem

The political system has almost completely wiped its hands of any overriding duty to ensure people have access to electricity. Instead, it is provided through a contract between the consumer and the energy company.

If someone cannot afford to pay their electricity bill, they run the risk of being judged for not being financially responsible and forced to pay additional disconnection (and reconnection) fees. This approach ignores the fact that the minimum wage rose by only 2% in April but inflation sat at 4% in the first quarter of 2024.

The problem is exacerbated by significant fluctuations in the cost of electricity. This is based on both wholesale cost and the amount of electricity used by households. As the country heads into winter, hundreds of thousands may not be able to heat their homes adequately.

The government has previously offered piecemeal solutions, such as the (now disbanded) Warmer Kiwi Homes programme. A small number of the most vulnerable households also receive up to $31.82 per week to help pay for electricity.

But the statistics on struggling households and financial hardship around the country show these responses are really only a drop in the bucket.

The ‘social tarrif’ solution

One solution would be to return to state ownership of electricity, but that is far from realistic in this political environment.

A simpler – and more appropriately targeted – approach is to implement “social tariffs” for electricity. These are targeted discount energy deals funded by the government for qualifying low-income consumers.

There are examples of social tariffs being used overseas to reduce the harm being caused by profit-driven companies operating in essential sectors.

In the UK, for example, a number of private telecommunications providers have voluntarily chosen to implement subsidised social tariffs for broadband and telephone for people on certain welfare benefits. This is because access to the internet, like electricity, is seen as a basic human right in developed countries.

In light of the profits being made by New Zealand’s biggest energy providers, a serious reconsideration of the system is surely justified. Cost-of-living pressures are ongoing, while temperatures are falling.

If we believe energy is a human right, and all New Zealand houses deserve to be comfortable this winter, now would be the time to act.

Authors: Jodi Gardner, Professor, Law School, University of Auckland, Waipapa Taumata Rau

Read more https://theconversation.com/nzs-big-chill-was-an-early-winter-warning-power-should-be-subsidised-for-struggling-households-229795

Pool and Deck Design: How to Plan the Perfect Outdoor Living Space for Your Sydney Home

For many Australians, the backyard is where life happens. Summer barbecues, weekend swims and long evenings outdoors are all part of the lifestyle, ...

Is Solar Pool Heating Worth It? What Sydney Homeowners Should Know

There's nothing quite like a backyard pool on a hot Sydney day. But once autumn rolls in, many pools sit unused for months because the water is simp...

Planning a Luxury House Move: A Week-by-Week Timeline for Prestige Sydney Homes

Selling or buying a prestige home is a major milestone. Whether it's a waterfront residence in Birchgrove, a grand Federation home in Haberfield or ...

Downsizing or Upgrading Your Caravan? Here's How to Sell It Without the Hassle

Selling a caravan can feel like a major task, especially when you are unsure about its value, paperwork, or how to find a buyer. Whether you are dow...

The Best Overseas Adventure Holidays for Australians Who Love the Outdoors

Australia offers no shortage of incredible outdoor experiences, but sometimes the best way to satisfy your sense of adventure is to head overseas. A...

Cape Town Wine Shuttle: Winelands Tasting & Tours

Embark on an unforgettable journey through the picturesque Cape Winelands, where world-class wines and breathtaking scenery await. Our Cape Town Win...

Why Giant Rats Tail Grass Keeps Coming Back After Spraying

Giant Rats Tail Grass (GRT) is one of the most frustrating pasture weeds for farmers and lifestyle property owners. You spray an infested area, see th...

When Custom Cardboard Boxes Make Sense for Your Business

Custom cardboard boxes can be useful when a standard carton does not fit a product, packing method or presentation requirement particularly well. A ...

Virtual Livestock Fencing and GPS Tracking: Improving Visibility Across Cattle Properties

What Virtual Livestock Fencing Means for Modern Cattle Management Managing cattle across extensive properties requires more than knowing where anim...

Sydney Pawnbrokers Explained: How Hocking Your Car Actually Works

Sometimes you need cash, and you need it soon. If you own a car, you may already have a way to get it. That's what people mean when they say they've...

Moving Interstate from the Gold Coast to Brisbane (or Back)? What Removalists Wish You Knew First

Have you talked to anyone who’s done the move? They say the same thing: the drive up the M1 is the easy part. It's everything around it that catches...

Why the Spring School Holidays Are a Great Time to Visit Coffs Harbour

The spring school holidays are a good time to spend a few days on the Coffs Coast. The weather is starting to warm up, there is plenty to do outdoor...

What to Do When an Older Car Is No Longer Worth Keeping in Melbourne

Ever looked at another repair quote and wondered whether your old car is still worth the trouble? It is a common turning point for Melbourne motoris...

Your Baby's First Year: A Local Guide to Feeding, Sleep, and When to Get Extra Support

Ask ten parents in a Brisbane mothers' group how their baby is feeding or sleeping, and expect ten different answers.  Someone's baby sleeps throug...

Kitchen and Laundry Makeover Ideas That Don't Require a Full Renovation

Full kitchen renos are expensive — and most people don't actually need one.  They need the kitchen to stop looking like it's stuck in 2009, or they...

How Technology Is Reshaping the Modern Australian Commercial Kitchen

The commercial kitchen has always been shaped by technology. Refrigeration changed how ingredients could be stored, modern ventilation transformed k...

The Number on a Roller Blind Fabric That Nobody Explains

Somewhere in the fabric book, next to the colour name, there is a percentage. Three per cent. Five per cent. Ten per cent. Nobody explains it, most c...

What’s Trending in Men’s Jewellery This Father’s Day!

Finding a Father’s Day gift that feels personal, stylish and genuinely wearable is not always easy. While socks and novelty mugs have traditionally ...