Introduction

• Published date: 01 December 2022
• Author: Barbara Broadway
• Date: 01 December 2022
• DOI: http://doi.org/10.1111/1467-8462.12490

The Australian Economic Review, vol. 55, no. 4, pp. 489–490 DOI: 10.1111/1467-8462.12490

Policy Forum: Energy Poverty—What Is it, How Bad Will it Get

and What Can Be Done to Help?

Introduction

Barbara Broadway*

Over the course of 2022, the world has seen

an enormous increase in energy prices, and

Australia is no exception. Retail prices for

electricity and gas have already increased

steeply, but price increases in the future are

expected to be even higher: when retailer's

current contracts mature, the large price

changes in the wholesale market will

be increasingly passed on to consumers.

The government's budget, delivered on 25

October 2022, forecasts a 44 per cent increase

in gas prices and a 56 per cent one in

electricity prices over the next 18 months.

High energy prices are expected to be a major

driver of overall inf‌lation over the coming

years, not only driving up energy bills, but

also the cost of other items.

As poorer households usually spend a

larger share of their income on necessities,

including heating and cooling their homes,

they will be hit the hardest by this develop-

ment, and Australia is likely to see a rise in

energy poverty. However, energy poverty is

not a simple function of income. It results

from a complex interaction between energy

prices, household incomes and the household's

energy needs—which depends on its geo-

graphic location, the quality of the dwelling

and eff‌iciency of appliances, as well as on

individual needs that can vary with a person's

health and many other factors. The analysis

of energy poverty, its extent, its causes

and consequences is thus as complex as the

problem itself.

The Australian Economic Review dedicates

the current issue's Policy Forum to the most

pressing questions: What, exactly, is energy

poverty and how do we measure it? How

much energy poverty will we see over the

coming years, and who will be most affected?

What can policy‐makers do about it?

Sangeetha Chandrashekeran, Viktoria Noka

and Stefan Bouzarovski ask how energy

poverty is measured and inquire into what

data are available to do so. They argue that

Australia's understanding of the scale and

nature of energy hardship is limited because

there is no clear def‌inition of the phenomenon,

and therefore no clear metrics are being

collected. Moreover, institutions to monitor

the problem are lacking. The authors look to

Europe to show how sophisticated quantita-

tive measurement and monitoring tools can be

designed, and how they can contribute to good

governance and promote transparency. They

discuss the advantages and disadvantages of

different measures and indicators of energy

poverty, and argue that Australia needs a

systematic review of indicators that will

provide a complex picture of energy poverty

across regions and population groups in a

simple way.

Paul Simshauser forecasts levels of energy

hardship and examines different policy options

to alleviate the problem through household

subsidies. Using microdata from the 2015

Survey of Income and Housing and rolling

it forward to 2024, he projects how levels

of energy poverty will change in Queensland

by 2024, f‌inding that 10.5 per cent of

households will be energy poor. However, this

can be mitigated if governments directly sub-

sidise household energy bills. The study com-

pares three policy options that differ in their

horizontal and vertical eff‌iciency: f‌lat‐rate sub-

sidies granted to pensioners, f‌lat‐rate subsidies

* Melbourne Institute: Applied Economic and Social

Research, The University of Melbourne, Victoria 3010,

Australia; email: b.broadway@unimelb.edu.au.

© 2022 The Authors. The Australian Economic Review published by John Wiley & Sons Australia, Ltd on behalf of The University of

Melbourne, Melbourne Institute: Applied Economic & Social Research, Faculty of Business and Economics

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