Power pain: an investigation of energy stress in Australia

Understanding which households experience energy stress is important for policy development in the context of rising energy prices and the move to decarbonise the economy.

At a glance

Many people in Australia struggle to afford the energy they need for their wellbeing. This report investigates the scale of the problem of energy stress and identifies policy implications. We find that over the period 2006 to 2020 around one in five Australian households were in energy stress. Moreover, energy stress is much higher in specific groups such as people with a chronic health issue or disability, renters, low-income workers and people on JobSeeker Payment. This has important implications for policy development.

Dive deeper

In Australia and internationally, energy stress has been measured in different ways, but there is no single agreed measure. Informed by earlier studies, we consider a household to be in energy stress if it meets any of the following criteria:

• energy expenditure greater than 6% of before-housing disposable income
• energy expenditure greater than 7% of after-housing income
• inability to pay bills on time
• inability to heat the home
  

This study uses the most recent time series data for these measures, drawn from the Household, Income and Labour Dynamics in Australia (HILDA) survey for the period 2006 to 2020.

Selected findings

• Over the period 2006 to 2020, 18–23% of households in Australia experienced at least one form of energy stress
• Households in energy stress in 2020 included
  • 41% those in the lowest 20% of incomes
  • 35% renting public or community housing
  • 24% in private rental
  • 27% where at least one member has a long-term health condition or disability
  • 43% relying on JobSeeker payments

Policy responses and implications

The report presents a typology of the numerous state or national energy-related policies that directly or indirectly address energy stress, aimed at consumers (demand) and the energy system (supply).

Addressing energy stress and achieving equitable energy policy will require:

• developing agreed measures of energy stress and monitoring results
• systematic review of the effectiveness of existing policies
• strengthening institutional arrangements to address energy stress
• policy initiatives that target the drivers of energy stress, including
  • measures to make energy consumption more efficient
  • measures to reduce energy prices
  • measures to increase incomes.