Australia's top economists back carbon price, say benefits of net-zero outweigh cost
- Written by Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University
Eight in ten of Australia’s leading economists back action to cut Australia’s carbon emissions to net-zero.
Almost nine in ten want it done by a carbon tax or a carbon price – mechanisms that were explicitly rejected at the 2013 election.
The panel of 58 top Australian economists selected by the Economic Society of Australia wants the carbon price restored to the public agenda even though it was rejected seven years ago, some saying Australia’s goods and services tax was rebuffed in 1993 and then restored to the public agenda seven years later.
Among those surveyed are former heads of government departments and agencies, former International Monetary Fund and OECD officials and a former and current member of the Reserve Bank board.
Asked ahead of November’s Glasgow climate talks whether Australia would likely benefit overall from the national economy transitioning to net-zero emissions by 2050, 46 of the 58 said yes.
Of the 58 surveyed, 49 backed a carbon price, seven backed government support to develop and roll out emissions-reducing technologies, and one backed support for technologies that drew down carbon from the atmosphere.
None backed so-called “direct action” – the program of competitive grants for firms that cut emissions the government took to the last two elections.
“The less federal governments choose to involve themselves with the technical aspects of the alternatives at a micro scale the better,” said Lin Crase, a specialist in environmental management at the University of South Australia.
Crase said governments had shown themselves to be very bad at picking winners, but very good at putting in place broad settings that allowed the people and businesses closest to the action to pick winners.
Several of the economists surveyed said the government’s slogan of “technology, not taxes” set up a false distinction. Taxes could drive the switch to better technologies – ones chosen by the market rather than by government edict.
Australia’s carbon price was introduced in 2012 and abolished in 2014. Had it still been in place Australia would have at hand the tools it needed to get to net-zero.
Some of those surveyed said it was “too late” for a carbon price, partly because of politics and partly because of lost time.
Time for everything plus the kitchen sink?
Saul Eslake said Australia was no more likely to adopt an economy-wide carbon price than he was “to step in thylacine droppings on my front lawn of a morning”, the views of the OECD and the International Monetary Fund notwithstanding.
What was needed was everything possible, including the second-best option of direct action. John Quiggin said Australia needed direct action in the literal sense of government investment in renewable electricity and infrastructure.
Rana Roy said nothing should be ruled out, including the resurrection of a carbon tax or a carbon price, perhaps by a different name. An option rejected once was not rejected “for the rest of time”.
Read more: We can't stabilise the climate without carbon offsets – so how do we make them work?
Others pointed to Australia’s natural advantages in solar, wind, geothermal energy and carbon removal via means such as reforestation and storing carbon in soil.
With the right settings in place, Australia could become a major producer of zero-emissions hydrogen, and an industrial powerhouse that used its own iron ore and green energy to export green steel to the world.
With one of the most important settings missing, Australia would find it harder.
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Authors: Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University
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