Cabinet ministers rejected Turnbull's $1.6 billion plan to cut power bills before leadership implosion
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Cabinet ministers rejected Turnbull's $1.6 billion plan to cut power bills before leadership implosion

Cabinet ministers rejected a $1.6 billion plan to cut power bills for thousands of Australians in the days before a Liberal Party brawl on energy policy that helped bring down Malcolm Turnbull.

Fairfax Media can reveal the Coalition government had drafted plans for a one-off bonus to help pensioners and others in financial stress pay their electricity bills, in a bid to demonstrate stronger action on power prices alongside tougher consumer laws.

Mr Turnbull put the plan to federal cabinet in early August at the same time he was trying to shore up support for the National Energy Guarantee against threats from Tony Abbott and others to cross the floor.

In a crucial decision, cabinet members rejected the plan to lower power bills and left the government without new measures to address household energy costs in the face of the backbench revolt over the NEG.

The outcome is now the subject of dispute within the government over the handling of such a key issue before the bitter leadership spill, as Prime Minister Scott Morrison tries to remove policy “barnacles” in areas ranging from the retirement age to company tax cuts.

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But the revelations over the two energy measures considered in early August show the continued bitterness over the way some events and decisions made it more difficult for Mr Turnbull to fend off a leadership challenge.

Fairfax Media has spoken to multiple sources who have confirmed the government prepared two proposals to ease the impact of electricity prices around August 13, when Parliament met for what became Mr Turnbull’s final fortnight as leader.

Energy policy and power affordability played a role in Malcolm Turnbull's demise as prime minister.

Energy policy and power affordability played a role in Malcolm Turnbull's demise as prime minister. Credit:AAP

The decisions to reject one measure and delay another are now the subject of intense debate over whether ministers could have moved more swiftly to ease tensions over energy and prevent the conflagration of the leadership spill.

Two sources said Mr Turnbull tried to get cabinet agreement to help with household energy bills, while a third source confirmed the events but said the measures would not have prevented the damaging row over cuts to carbon emissions.

The first policy considered on August 13 was set out in a short-form cabinet submission and involved one-off payments to pensioners and other Australians in need, costing $260 million.

The scheme offered $75 for single pensioners and $125 for couples in a one-off payment that would have been rolled out alongside new powers for the competition watchdog to cap default prices for household electricity.

Mr Turnbull put the scheme forward with a proposal to persuade big energy companies to match the Commonwealth assistance for their customers, but the policy was rejected by cabinet over concerns about cost and complexity.

Fairfax Media has been told Mr Morrison opposed the policy as Treasurer, and Finance Minister Mathias Cormann also expressed concern that the outlay would weaken the budget.

The $260 million energy payment would have repeated a similar one-off policy from last year, agreed between the government and the Nick Xenophon Team during negotiations in the Senate on company tax cuts.

A spokesman for Mr Morrison said the Prime Minister's Office would not discuss what happened in cabinet or respond to unsourced claims. Senator Cormann declined to comment.

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A second proposal was to abandon a controversial $1.4 billion cut to an energy supplement paid to pensioners and those on low incomes, using the debate on the NEG to admit the unpopular budget saving would not go ahead.

In a conversation outside cabinet, Mr Turnbull discussed an agreement with key ministers to restore the energy supplement to its original form as soon as possible to demonstrate help on the cost of living.

Mr Turnbull was also knocked back on this proposal, according to those familiar with the talks.

A key factor was Senator Cormann’s need to use the energy supplement as a “bargaining chip” in negotiations in the Senate on company tax cuts – an argument that swayed Mr Turnbull to postpone a decision despite the political cost.

The delay meant the government could not unveil the concession on the supplement at a vital point in the argument over energy prices and the NEG.

Mr Turnbull, Mr Morrison and Senator Cormann did not abandon the cut to the energy supplement until Wednesday, August 22, in a press conference two days before the final ballot that removed Mr Turnbull from power.

The move had already been included in the federal budget’s contingency reserve, showing the government intended to abandon the cut and the announcement was only a matter of timing.

Those who sided with Mr Turnbull during the leadership spill now point to the decisions on the two energy measures to argue the former prime minister was hamstrung at key moments, leaving him more exposed to a challenge from Home Affairs Minister Peter Dutton.

Those who sided with Mr Dutton or Mr Morrison insist the leadership spill would have gone ahead anyway, given Mr Turnbull was under pressure and chose to call a ballot on his position on Tuesday, August 21.

Mr Morrison has vowed to make lowering power bills a priority of the new leadership team.

David Crowe is the chief political correspondent for the Sydney Morning Herald and The Age.