Is the war in Ukraine responsible for high power prices in Australia? — Here are the facts Take Note of Answers


I’d like to support the words of Senator Urquhart, that actions have consequences and people need to consider those.

The Higgins Allegations

One of the actions that I’m aware that my colleague Senator Reynolds and her chief of staff undertook was to make the offer of support and advice to report the allegation to police. The action of going to the media before the police though has had a significant consequence, in that the principle of ‘innocent until proven guilty’ has been denied to an Australian citizen.

Valid concerns have been raised here about the impacts of this whole debate on people’s mental health. But it’s important to realise that that individual has also been driven close to the point of suicide and self-harm because of the pressure that has been placed on him because that principle, that part of the rule of law in Australia, has been taken away.

Likewise, the mental health of a number of other people has also been damaged. So actions do have consequences, and I think all senators in this place should reflect on that, not just in terms of the action in here but also in terms of the actions that governments take. No amount of rhetoric will change the reality.

Cost of Living, Power Prices & the war in Ukraine

One other answer from Senator Gallagher that I wish to go to is her comment on cost-of-living pressures. She made the claim that things like power prices are linked to overseas events.

The reality on the ground though is that, throughout 2020, the average price for energy in Europe—in Germany, in particular, which has been seen as a bit of a canary in the coal mine—was in the order of 43 euros per megawatt hour.

By December 2021, it was already increasing to an average of 213 euros per megawatt hour. In December 2021, before the invasion of Ukraine, it was peaking at 435 euros per megawatt hour. There were another couple of large spikes in the intervening period, but in Germany that price has now gone back to 102 euros per megawatt hour, which is still, by the way, one of the most expensive in the OECD.

The point is that the price pressures in Germany were rising ahead of the invasion—they have been held out as the canary in the coalmine—so the rhetoric from the minister doesn’t reflect the reality of the things that are driving up prices. In fact, if you look, in Australia’s case, back to the market interruptions in May of last year, there were times when the domestic price for gas was higher than the international price, which actually lays bare the claim that our market is driven purely by international factors.

So the interventions by the Albanese government, with things like the price cap, actually decrease confidence in investment, which decreases supply. Basic market economics say that that then starts driving price factors and has an impact on the cost of living.

The other part that is important to understand around the rhetoric versus reality, going particularly to the cost of living and energy, is that the rhetoric here is that the clean energy transition to variable renewable power sources will drive down prices. But the reason that Germany has the highest price for electricity in both industry and residential households in the OECD is that they actually have the highest penetration of variable renewables in the OECD.

The country with the lowest price of power in the OECD is Canada, which operates 19 nuclear reactors and also has a substantial amount of hydro. But the province of Ontario, which gets the majority of its power from those 19 nuclear reactors, is in the bottom quartile of the provinces in Canada for power.

So clearly there is no correlation between the claim that large amounts of variable renewables will drive down power and that nuclear will drive up power.

In fact, reality shows the opposite. It’s also borne out by the reality shown in modelling by both the OECD and the IEA, which highlights that the only way to have reliable and affordable power is to invest in base load power such as nuclear power.