Apr 30, 2014 - 10:44am
Scrapping revenues from polluter payment of carbon prices and adding expenditure of taxpayer funds on the Emissions Reduction Fund (ERF) has a $24 billion to $40 billion fiscal impact on the Federal Budget out to 2020, according to new research from The Climate Institute.
“To 2020, the Government’s carbon pollution policy hits the budget with a $24 billion impact, while all publicly available independent assessments estimate increasing carbon pollution over that time,” said John Connor, CEO of The Climate Institute.
“Achieving pollution not just expenditure targets will cost around $40 billion.”
“This budgetary impact not only affects broader choices but the loss of carbon revenue also threatens funds now supporting clean energy, low emission programs, technology research and development, as well as support for households and business.”
The sum of $24 billion could cover federal funding for the Gonski school reforms to 2020 or all costs for the National Disability Insurance Scheme for that period, while the larger $40 billion is the equivalent of total annual spending on pensions.
The Climate Institute has calculated the net fiscal hit under a number of scenarios, to illustrate the impact on the budget from the ERF and removing the carbon price. They are outlined in a Policy Brief released today.
“Over the four years of the forward estimates, the Government has indicated it would spend $2.55 billion of taxpayer funds to subsidise emission reduction activities via the ERF, while at the same time losing $12.55 billion from companies paying the carbon price for next financial year and purchasing permits under the European linked carbon trading scheme from 1 July 2015. That adds up to an over $15 billion slug.”
Reports in the media suggest the proposed debt levy would raise $8.8 billion over four years.
“Last week’s White Paper leaves unanswered key questions on safeguards to control carbon pollution beyond whatever reductions the ERF can purchase. It stands in stark contrast to current laws which are supporting decreased emissions but also have inbuilt default reductions of at least 12 million tonnes a year which could achieve at least 15 per cent reductions on 2000 levels by 2020.”
“The even bigger problem is that in the absence of credible policy, national emissions are projected to grow by 30 per cent by 2030. Even using the most generous assumptions to drive credible levels low pollution investments, the Government would need to be spending $3-$5 billion every year by 2030.”
“Repealing the carbon laws and their revenue is not only a high risk gamble with pollution policy – it is a high stakes fiscal gamble,” concluded Connor.
For more information
Kristina Stefanova, Communications Director, The Climate Institute, 02 8239 6299