As 2026 kicks off, millions of Australian households are in for a shock: a significant rise in their energy bills. The key cost-of-living relief, designed to ease the sting of skyrocketing power prices, is being scrapped. If you’re already worried about the pinch on your wallet, brace yourself—things are about to get worse.
The End of the Energy Rebate
For the last few years, the Australian government has been offering a subsidy to ease the burden of rising energy prices. The $75-per-quarter discount, part of a broader Energy Bill Relief Fund, has been a lifeline for many families struggling with soaring power bills. But, as of December 31, that relief will come to an end. Treasurer Jim Chalmers called the decision “hard” but made it clear that these subsidies were never meant to be permanent. While the government has warned Australians about the phase-out, the timing couldn’t be worse.
A Decision That Hurts
The timing of this move couldn’t be more unfortunate. The $75 quarterly discount had been a small but much-needed cushion for Australians, softening the blow of climbing energy prices. Now, the entire country faces a rise in energy bills as the rebate is axed. It’s an unfortunate reality that many Australians are already stressed about their household bills. According to Finder’s figures, over one in four Australians reported that their energy bill was one of their most stressful expenses in late 2025.
Even more concerning, 28% of households said they had received unexpectedly high energy bills in the past year, reports Yahoo Finance. So, while the government might have hoped for a smooth transition, the end of the subsidy is likely to create a new wave of financial strain.
The Ripple Effects
It’s not just your energy bill that will feel the impact. Experts are warning that removing the rebate will have a ripple effect across the Australian economy. AMP’s October research predicts that axing the subsidy could add up to 25% to household energy bills and increase the Consumer Price Index (CPI) by 0.4 to 0.5%. For households already grappling with inflation, this could push the CPI closer to 4.2%. That’s not just a number on a page—higher CPI means higher costs for things like groceries, housing, and even wages.
The CPI is a key index used to adjust things like pensions and the minimum wage, meaning the subsidy’s removal could also lead to higher living costs across the board.
The Larger Picture
It’s easy to see why this decision is a tough pill to swallow for Australians already struggling with everyday expenses. Energy bills, once just another monthly cost, have become one of the major stress points in many households. For some, the $75 discount was the difference between making ends meet or cutting back on other essentials. The government has positioned the ending of the rebate as a necessary step in tightening the national budget.
But the truth is, the economic pain caused by this move will likely be felt across the entire country. The ripple effects on the CPI and broader economy might make this a short-term solution with long-term consequences. Economists like AMP’s Shane Oliver have warned that the removal of the subsidy could lead to a more complex situation than anticipated. It’s not just about energy prices rising—it’s about how that rise will affect the cost of everything else, from household goods to wages.
What This Means for Australians
As we head into 2026, the decision to scrap the energy rebate is a reminder of the ongoing struggle that many Australians face in managing their household expenses. While the government is aiming to reduce spending, the reality is that the economic burden will likely shift to consumers. For everyday Aussies, this could mean even tighter budgets, with more people finding themselves choosing between paying for power or other essential services.
The end of the energy rebate might be the final straw for some, while others may find creative ways to manage the increase. But one thing is clear: the government’s decision, however necessary it may seem on paper, will not be without its consequences. For many, the new year will bring more than just fresh resolutions—it will bring higher bills and a harsh reminder of the cost of living crisis.
