Greater job and fiscal risks of Coalition CPRS plans Media Release

Nov 19, 2009 - 7:30am

While the Australian economy and jobs would continue to grow under Coalition and Government CPRS plans, Coalition amendments risk greater short term job impacts and carry tens of billions of dollars of extra fiscal and political risk, according to new research from the independent Climate Institute.

“Giving even more handouts or exemptions to the big polluters risks future budgets, may undermine global action to tackle climate change and may have perverse short term impacts on jobs growth,” said John Connor, The Climate Institute’s CEO, today.

The research uses the Monash University “whole of economy” model used by both the Government and Coalition. It assumes a more likely Australian emissions reduction target of 15 percent below 2000 levels by 2020 and examines the economic and fiscal impacts of both the Government’s CPRS and Coalition’s proposed amendments under this emission reduction scenario.

“This research also estimates that exempting agriculture without additional policies to reduce its emissions would force business or taxpayers to carry an additional $7 billion emission reduction liability,” Mr Connor said.
Key findings include:

  • Under both scenarios, Australia’s 2009 trillion dollar economy grows to $1.2 trillion by 2020 and around 800,000 new jobs will be created across the economy over the same period.
  • The Opposition’s amendments would result in slightly larger short-term impacts. Between 10,000 and 30,000 fewer jobs are created each year between now and 2015.
  • The Opposition’s proposal to provide much larger handouts to major emitting industries and exclude agriculture from the scheme result in a deficit of over $36 billion to 2020. The Government scenario generates a small surplus by 2020—although this assumes emission reduction policies for agriculture.
  • The Opposition’s amendments would result in a far smaller change in domestic emissions, requiring 44 percent of the national target to be met with international permits, worth an additional $7.1 billion to 2020, compared with 12 percent under the Government’s scheme.

Extending the data out to 2030 reveals that roughly 85 percent of the difference between fiscal impacts of the Government and Coalition proposals is due to the extra assistance to big polluting exporters (EITEIs) and the exclusion of coal mines.

“We acknowledge that models can vary according to assumptions but these different estimates underscore the budget risks faced by governments if they lock in high levels of assistance in an uncertain world. Unless the Government maintains the ability to modify assistance and drive emission reductions in uncovered sectors such as agriculture it is locking in fiscal risk not managing it,” he said.

“Locking in excessive financial support also potentially further undermines Australia’s ability to help achieve an effective, binding and fair global agreement by constraining investments in national and global climate change solutions.

“This research shows we should be strengthening not weakening the CPRS, and that both major parties need to come clean on how agriculture will be doing its fair share of the national effort to reduce carbon pollution.”

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