Rising debt remains ‘key concern’ for community help sector

Eighteen months into the coronavirus pandemic, the community help sector has told the state’s economic regulator that rising debt is the number one issue for clients who are seeking help.

Representatives from 20 Victorian consumer and community help services told the Essential Services Commission that ‘buy now, pay later’ deals and a lack of intervention before high bills accumulate are adding to the situation.

The group said access to and adequacy of utility relief grants continues to be an issue for struggling Victorians along with an inconsistent response to family violence by some energy retailers.

The group also discussed the commission’s review of the payment difficulty safety net which is designed to help anyone struggling to pay their energy bills.

It was the commission’s tenth community roundtable since April last year.

Chairperson’s notes

Please note, this is a summary and not a verbatim transcript

Good afternoon everyone and welcome to our tenth community sector roundtable.

Today is our tenth community sector roundtable, a milestone I am proud of, and one that signals the importance of having this ongoing dialogue with you all and the value we certainly find from hearing from you directly. 

We started these roundtables in response to the outbreak of coronavirus in Victoria last year – and I doubt any of us could have predicted we would be in lockdown six in September 2021?

But throughout the last year and a half, these roundtables have proved invaluable for us to understand the experiences of customers and has played a huge role in our work.

Today we again want to continue to give you an opportunity to keep us about informed. We want to know:

• What is the lay of the land right now for your organisations and the people you support?
• What, if any, adjustments are you making to adapt to the latest lockdown?
• And what does 2022 look like? – if you can see that far ahead.

As indicated in our invitation we want to start a conversation with you today about the review of the payment difficulty framework. As you would expect, we have done some thinking about what that review should look like but -before we get too far down the path - we want your input.

Now to introduce my fellow commissioners, senior leaders and commission staff who, like me, are keen to hear from you. 

My fellow commissioners Simon Corden, Sitesh Bhojani and Rebecca Billings. We also have John Hamill, our CEO, our divisional heads and other senior staff.

I would also like to welcome our attendees from community and consumer service organisations.

Consumer Policy Research Centre, Brotherhood of St Laurence, Victorian Council of Social Service, Thriving Communities Partnership, Consumer Action Law Centre, Financial Counselling Victoria, the Energy and Water Ombudsman of Victoria, Community Information and Support Victoria, IPC Health, Uniting, the Federation of Community Legal Services, Hume Riverina Community Legal Services, Justice Connect, WestJustice, Council of Small Business Organisations Australia, Small Businesses Organisations Australia, Victorian Aboriginal Legal Service, St Vincent de Paul.

Observers: Australian Energy Regulator, Department of Environment, Land, Water and Planning, Consumer Affairs Victoria.

Today’s agenda

On today’s agenda – I'd like to give you a brief update from the commission and we will go around the table to hear from you. As well as the usual updates and sharing, today we want to begin a conversation about something we know you are all keen to hear more about – the review of the payment difficulty framework.

Aaron Yuen, our senior regulatory manager energy analysis, and reform, who will be taking you through our proposed approach for that project. We are keen to hear your thoughts about how you want to be involved and engaged in that review, our proposed scope and any key issues to start off that conversation.

You have all been sent a brief outline of our proposed approach so that is the starting point for today’s conversation.

Update on the last few months

But first, it’s been a few months since our last meeting in July so a quick refresher on what we were hearing from you. At that time, we heard concerns about:

• inconsistent application of utility relief grants
• increasing average debt
• ongoing concerns around debt collection practices and
• inconsistent application of the protections in the payment difficulty framework.

I can confidently say these are all front and centre for the framework review – but today we are keen to hear if there are other key issues that should be part of that conversation.

For now, I’d like to give you a quick update on what’s been happening at the commission over the last few months.

As many of you would be aware, last month we released our Getting to fair strategy, our plan for breaking down the barriers some people face in accessing essential services.

I am incredibly proud of this piece of work and can I express my thanks, and the thanks of the entire commission team, for your input to this work. The many roundtables, workshops and your submissions on the draft strategy were instrumental in its development. And I just want to say a heartfelt thanks to all of you for your interest, support and feedback.

Work is now underway across the commission to deliver on the promises made in that strategy and I will keep you updated as that work continues.

Update on our priorities

I’d like to take just a few moments now to take you through some of our priority projects that we will need your input on over the next few months.

First, many of you would be aware of a proposed bill that was introduced in parliament this week.

Sitting alongside the Energy Fairness Plan legislation passed last month, this bill enhances our enforcement powers and paves the way to remake our energy codes as codes of practice.

We will be commencing consultation in the next couple of weeks with an initial focus on the energy retail code followed by the distribution code next year.

I want to flag this is not about making policy changes - we see this as a technical process to turn our codes into subordinate instruments.

We expect the reforms will give us the toolkit available to most modern regulators

As part of the project, we plan to develop new guidance and education material for industry, and we are also updating our compliance and performance reporting guideline.

Our draft decision on the Victorian default offer for 2022 was released on Tuesday. It is now out for comment and a public forum is being held later this month – please see our website for details.

We have five industry performance reports coming out over the next quarter as well as our annual report. That includes two energy market reports, our annual water outcomes report and Victorian energy upgrades report, and our local government rate capping report.

As an economic regulator, monitoring and reporting is an important part of what we do.

We’re always looking for ways to do better so please make sure you subscribe to our essential newsletters to make sure you don’t miss any – and feel free to provide feedback via our strategic communication team. They are always happy to receive feedback on whether our reporting is hitting the mark.

Update from the community sector

Community sector representatives provided their updates.

Payment difficulty framework review

Presentation by senior regulatory manager energy analysis and reform, Aaron Yuen on the proposed approach to the payment difficulty framework review.

• The payment difficulty framework came into effect in January 2019 with a review to be conducted after two years.
• The framework is a set of rules designed to better protect and support residential customers who are facing payment difficulty developed as a response to high disconnection numbers.
• The framework was developed following extensive engagement with a broad range of stakeholders.
• Its implementation coincided with a significant fall in disconnections (pre-pandemic).
• The review will focus on the operation and implementation of the framework, not starting again.
• The review will therefore focus on evaluating how effective the framework has been in meeting its objectives namely:
  • supporting customers to pay their ongoing energy use, repay their arrears and lower their energy costs
  • helping customers avoid getting into arrears
  • and, that customers are only disconnected as a last resort
• The group provided feedback on the proposed approach including the engagement plan, scope and focus of the review. This feedback, along with feedback from other stakeholders will inform further planning for the review.

In closing

In closing, I would like to quickly sum up some of the main themes we’ve heard here today:

Consumer debt and accumulated bills is a leading issue for many of the organisations here today. This is being exacerbated by ‘buy now, pay later’ deals and a lack of intervention before high bills are accrued.

Access to and adequacy of utility relief grants continue to be an issue along with inconsistent responses to family violence by energy retailers.

We heard a strong recommendation that the payment difficulty framework review needs to consider the impact of the coronavirus pandemic as full recovery will take years, not months.

Thank you again and I hope to see you at our next roundtable at the end of November.

Stay well and take care.