The former Labor government’s climate change adviser and leading Australian economist Professor Ross Garnaut, has said abolishing carbon pricing could cost the federal budget at least $4 billion a year within five years.
Professor Garnaut said this would be the effect if the current conservative Liberal-National government wanted to reduce emissions in line with Australia’s international commitments.
The Liberal-National government has limited the cost of Direct Action by “capping” funding at $1.55 billion over three years, but costs would blow out in the future if the coalition wanted to keep up with international standards.
”A fund large enough to provide similar incentives for emissions reduction to those under existing policies would see a deterioration of the budget of around $4-5 billion per annum,” wrote Professor Garnaut, in a stinging submission to a Senate inquiry today on the government’s Direct Action scheme.
Fairfax Media reports Professor Garnaut, who is a strong supporter of having a price on carbon, believes the ultimate cost to the budget of the government’s climate policy could be much greater than $4 billion a year, given many countries are committing to more ambitious emissions reduction targets.
Fairfax Media reports unlike a price on carbon, which provides a disincentive to pollute, the coalition’s Direct Action scheme pays companies ”incentives” to lower their greenhouse gas emissions.
”The lower limit of budget deterioration is based on a target of reducing emissions by five per cent by 2020,” Professor Garnaut wrote.
”Higher targets, as required by the Australian government’s domestic political and international commitments, would expand the budget deterioration.”
The independent Climate Change Authority (CCA) last month called for Australia to lift its emissions reductions goal from five per cent to 19 per cent to take into account international moves, Australia’s fair share and the urgency of the climate change threat.
The Liberal-National government this week failed in the Senate for a second time to scrap the CCA.
Fairfax Media reports at the Senate hearing Professor Garnaut said that it was misleading to compare the government’s ”Direct Action” program to the Obama administration’s ”muscular direct action”, which was ”highly interventionist”.
The US government was taking much stronger actions than the Liberal-National government to reduce greenhouse gas emissions, Professor Garnaut suggested.
In his submission Professor Garnaut said direct action was vague and failed public interest analysis tests.
He said the government’s Green Paper on the Emissions Reduction Fund aimed at replacing the Labor climate policies ”is a shooting of the breeze”, merely raising a few questions that it failed to answer.
”It is an unusual document, lacking any semblance of the framework of public interest analysis that is characteristic of Australian policy-related papers of modern times,” Professor Garnaut said in his submission.