From the CEO
I’ve been thinking a lot about fairness lately, probably because I’ve heard the word used in a few surprising contexts. Now, I suspect that for many people it may not be easy to define as it’s one of those words that sits as much in the heart and stomach as the head. It really is genuinely visceral – which is why you feel it in the gut when it’s used jarringly. And that’s what happened to me recently.
I was in a meeting room and heard someone talking earnestly about the “cost of fairness”. Aside from the immediate questions – how much?, to whom? – it felt a weird phrase to me and so it got stuck in my head.
I now realise that it reminded me of an economic orthodoxy from my student days: the winningly titled ‘equality/efficiency trade-off’. The prevailing view at the time was that the pursuit of equitable/fair outcomes within societies created inevitable system inefficiencies. Why? Because it led to diminished incentive and a ‘leaky bucket’.
Take, for example, a welfare system: the idea is that both the person paying and the person receiving the welfare lose their incentive to work, and that the system itself costs significant sums to administer. In other words, you can have all the fairness you want, but there’s always an economic cost to pay. I think this “mercy arithmetic” is not far below the surface in a lot of the discussion over the energy transition.
I think one result of this way of thinking is that a lot of decision-makers have felt they couldn’t make an economic business case of fairness but nonetheless knew it was too important to ignore. This led to fairness being placed squarely in the category of values and social policy. While I guess that makes some sense, it does rather limit fairness to a strictly moral, rather than also an economic, virtue. It also opens the gate for competing ‘fairnesses’ – i.e. my fairness can differ from yours.
What’s interesting in this context is that the ‘equality/efficiency trade-off’, which 50 years ago was canonical, has now been solidly disproven. Time and again, it’s been shown that while promoting fairness might result in an initial cost to production, this reverses in time.
Importantly, it’s also quite clear now that while inequitable outcomes might create occasional growth spurts, they eventually stunt efficiency. Fairness and efficiency, it turns out, are relational and additive. (In this context, I am reminded that on President Biden’s first day he directed the Office of Management and Budget to ensure that in addition to a standard cost benefit analysis, all regulation must have regard for negative impact on vulnerable people and communities.)
So: I now realise why I had a visceral response to hearing about the ‘cost of fairness’. It wasn’t because I had some moral aversion; it was because the thinking is simply disproven. Fairness isn’t a cost; it’s an investment. And every time my team and I hear someone talking about how much the needs of exposed consumers are costing the transition, it is our job to show that today’s investment is tomorrow’s reward.
Brendan French
Chief Executive Officer
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Energy Consumer Sentiment Survey
The latest results of our Energy Consumer Sentiment Survey – where Australians tell us how they’re thinking and feeling about the energy system – are out now. The research shows that consumers think they receive less value for money from gas and electricity compared to supermarkets, even when these are under a pricing inquiry by the ACCC. Consumers also trust energy and gas companies less than supermarkets. Unsurprisingly, affordability continues to be the top priority for the energy system for households and small businesses.
We know many of our stakeholders use this survey data in their work. That’s why we’ve made the raw data available in a handy data pack for your use. We’d love to hear how the data supports your work. Contact us at info@energyconsumersaustralia.com.au to share how you use the data.
Tracking Energy Prices for SMEs
Twice a year, we collect data on electricity and gas price offers for small and medium enterprises (SMEs), to help consumer advocates and governments compare prices over time. The latest results show that in the past year, average annual electricity prices for small businesses have increased by 8%, and gas prices by 7% (excluding small business energy rebates).
In addition to a national report, we have state by state factsheets to see how prices have changed in your area. There are also downloadable workbooks so you can further analyse the electricity and gas market offers available to small business customers.
Submissions
Smart Meter Rollout
Accelerating the roll out of smart meters is crucial for helping consumers achieve the affordable, reliable, and clean energy system they desire. However, many consumers aren’t getting the information and tools they need to better understand their energy use and lower their bills. In our recent submission to the AEMC, we outlined two key ways – customer safeguards and improving the customer experience – to improve the smart meter rollout.
The Future of Embedded Networks
Where you live shouldn’t determine the quality of energy protections or services you receive. That’s why we’re committed to ensuring that consumers in embedded networks aren’t disadvantaged by their living or working arrangements. In our submission to DCCEEW, we focus on two main concerns for embedded network customers: ensuring adequate consumer protections and improving communication and information requirements.
Come Work With Us!
We’re on the hunt for a Senior Policy Associate to join our team. You’ll be making a difference by amplifying the voice of consumers to influence decision-makers and ensure the best outcomes for all Australians in the transition to net zero. You’ll lead advocacy across a range of energy policy issues, including those related to energy efficiency, electrification, consumer energy resources and electricity networks. Please spread the word within with your networks.
In the Media
Recently, there’s been considerable media focus on the complexity of retail tariffs that consumers have to navigate. Our Policy Director, Jacqueline Crawshaw, discussed the importance of safeguarding consumers and advocating for improvements to ensure they receive fairer deals with CHOICE magazine.
Additionally, off the back of our Insights Report: Understanding the diversity of consumers and their experiences of the energy system, we’ve been in the media discussing the unique challenges that CALD communities face navigating the energy transition.