Weekly Wrap Up - GRACosway

17 June 2022

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Highlights

National Cabinet will meet today for the first time since the Albanese Labor Government’s election.
The Australian Energy Market Operator (AEMO) suspended the spot market for wholesale electricity in a move to ensure reliability and avoid blackouts across the country.
The Federal Government submitted its updated emissions reduction target to the United Nations Framework Convention on Climate Change, with a commitment to reduce emissions by 43 per cent below 2005 levels, by 2030 – an increase on the former Coalition Government’s target of 26 to 28 per cent.
The Fair Work Commission released its Annual Wage Review and announced that the minimum wage will increase by 5.2 per cent from July.
Deputy Prime Minister and Minister for Defence Richard Marles met with his Chinese counterpart, Wei Fenghe, on the sidelines of the Shangri-La security summit in Singapore to discuss the Sino-Australian relationship – the first meeting between Australian and Chinese Defence Ministers since November 2019.
The Federal Government confirmed a payout of $830 million to Naval Group, following the former government’s termination of its contract for the Attack class submarine program.
The WA Government announced it will phase out state-owned coal power stations by 2030.
The Australian Electoral Commission (AEC) rejected a request from former NSW Transport Minister Andrew Constance for a recount in the federal seat of Gilmore, where he ran as the Liberal Party’s candidate.
The AEC finalised Senate counts for the ACT, NT, SA, and Tas.
The NSW and Victorian governments announced a joint commitment to overhaul preschool education and childcare.
The Queensland Government announced it will launch an independent inquiry into Star Entertainment’s suitability to hold a casino licence in the state.
The national unemployment rate remained at 3.9 per cent.
The Greens unveiled the party’s allocation of portfolios.

Energy crisis continues

As concerns about energy supply and pricing escalated this week, for the first time, the AEMO suspended the spot market in all regions of the National Electricity Market. As a result, the AEMO can set fixed prices for wholesale electricity instead of prices being set competitively, as well as taking a greater role in directing power stations to generate energy.

A number of state energy ministers welcomed this decision, with Queensland Minister for Energy, Renewables and Hydrogen Mick de Brenni stating the decision would provide AEMO with “greater flexibility and agility to ensure adequate supply across the Eastern Seaboard”, as well as reducing the risk of shortages in supply and unplanned outages. In NSW, Minister for Energy Matt Kean suggested the action “will help prevent energy companies from putting energy reliability at risk by unnecessarily withdrawing supply”. The Federal Government also provided support for AEMO’s decision, with Minister for Climate Change and Energy Chris Bowen stating it was “the best way to make sure the lights stay on”. Minister Bowen also took the opportunity to reaffirm the Albanese Government’s commitment to investing in renewable energy to ensure affordable and reliable energy supply moving forward.

The Australian Energy Market Commission (AEMC) also indicated that a compensation regime would apply for eligible generators who supply energy during suspension price periods.

Minimum wage to increase by 5.2 per cent

Releasing its Annual Wage Review, the Fair Work Commission announced that the minimum wage will increase by 5.2 per cent from July, bringing it from $20.33 per hour to $21.38 per hour. This followed Mr Albanese expressing support throughout the 2022 Federal Election campaign for an increase to the minimum wage in line with inflation of 5.1 per cent. The Federal Government welcomed the decision, stating that “Australia’s low-paid workers will be better off because the Albanese Labor Government fought to get them a pay rise”. By contrast, business association the Chamber of Commerce and Industry expressed concern over the decision, with Chief Executive Officer Andrew McKellar suggesting the wage increase “will be a very considerable burden that [certain] businesses will either have to take to the bottom line or pass onto their customers”.

Joint commitment to early childhood education in NSW and Victoria

Significant reforms to early childhood education were unveiled in both NSW and Victoria this week, with both states to introduce an extra year of “play-based learning” before children begin school. To be known as “pre-prep” in Victoria and “pre-kindergarten” in NSW, this program will consist of 30 hours a week of play-based learning for four-year-olds.

The Victorian Government has committed $9 billion to early childhood reforms over the next ten years, with its ‘Best Start, Best Life’ program to include free kindergarten across the state from 2023 as well as the establishment of 50 government-operated childcare centres. In NSW, the upcoming State Budget will allocate $5.8 billion over the next ten years to establish universal pre-kindergarten for all children by 2030, as well as $1.4 billion over four years to subsidise preschool costs from 2023 and a $376.5 million package over four years for child development and family support.

Looking ahead

The NSW and QLD governments will hand down their respective 2022-23 state budgets on Tuesday 21 June. The GRACosway team will be attending our annual staff conference on Tuesday 21 June, and we’re looking forward to spending time with our colleagues in person for the first time since 2019. As such, we will send out our usual budget analysis for the NSW and QLD budgets on Wednesday 22 June. If you have any questions or concerns, please don’t hesitate to get in contact with us.

FINANCE

Federal developments

The Australian Bureau of Statistics (ABS) published dwelling value statistics for the March quarter, revealing that the total value of dwellings in Australia has exceeded $10 trillion.

The Australian Prudential Regulation Authority (APRA) released quarterly authorised deposit-taking institution statistics for March 2022, indicating a 30 per cent increase in profits since March 2021.

APRA has amended its prudential policy framework, which requires authorised deposit-taking institutions (ADIs) to be prepared to use macroprudential policy measures if required.

Australian Securities and Investments Commission (ASIC) Deputy Chair Karen Chester delivered a speech to a Financial Services Council member webinar discussing ASIC’s key policy and enforcement priorities for 2022.

RESOURCES AND ENERGY

Federal Developments

The Clean Energy Regulator’s (CER’s) Quarterly Carbon Market Report (QMCR) revealed 1.2 million carbon certificates were cancelled in the first quarter of 2022, more than three times the volume of cancellations recorded in Q1 2021. Meanwhile, 7.6 million Australian Carbon Credit Units (ACCUs) were contracted for optional delivery at the 14^th Emissions Reduction Fund (ERF) auction in April 2022.

State Developments

In NSW, the Registration of Interest (ROI) process opened for energy project developers and businesses with large electrical loads under the State Government’s Illawarra Renewable Energy Zone (REZ), closing on 22 July 2022.

ACT Minister for Emissions Reduction Shane Rattenbury indicated that the Territory Government is reviewing ways to reduce scope 3 emissions in major infrastructure projects, including in Light Rail stage 2 and the CIT Woden campus, in response to recommendations in a report delivered by the Commissioner for Sustainability and the Environment.

The WA Government pledged an additional $547.4 million to support Collie’s transition away from a coal-based economy. The funding has been allocated to ensure that preparations are in place for the local community upon retirement of the Collie’s State-owned coal-fired power station.

WA Minister for Mines and Petroleum Bill Johnston endorsed the Department of Mines, Industry Regulation and Safety’s Approvals Response Plan to accelerate exploration and mining approval.

INFRASTRUCTURE, TRANSPORT AND WATER

Federal Developments

The Federal and Victorian governments announced a joint $219 million investment to upgrade Mickleham Road in Greenvale. The upgrade will include extra lanes, new traffic lights, new walking and cycling paths, and an upgraded roundabout and intersections.

The Federal and NT governments awarded a $67 million design and construct tender to Exact Contracting Pty Ltd for stage one of the Carpentaria Highway upgrade.

State Developments

The NSW Government appointed John Holland Pty Ltd as the main works contractor for the Sydney Children’s Hospital Stage 1 redevelopment. Main works are due to begin over the coming months.

The QLD Government committed over $300 million in funding to the Toowoomba to Warwick pipeline, with construction set to begin shortly.

HEALTH

Federal Developments

The Federal Government awarded $4 million to FightMND for research into potential treatments for motor neurone disease (MND).

State Developments

The NSW Government announced $883 million in funding over the next four years towards an incentive scheme aimed to attract and retain healthcare staff in regional and remote NSW.

As part of the upcoming State Budget, the Queensland Government has invested $750 million towards a new stand-alone cancer hospital to built in Brisbane.

Following revised advice from the Australian Health Protection Principal Committee (AHPPC), the QLD, WA, Tas and NT Governments announced the lifting of mandatory mask restrictions in airport terminals from this weekend. Passengers will still be required to wear masks onboard aircrafts.