News & Views item - July 2010



Two ANU Academics Voice Disgust Regarding Climate Change Policy. (July 23, 2010)

Professor Warwick McKibbin is Director of the Research School of Economics  at the Australian National University and a Board Member of the Reserve Bank of Australia.


Dr Frank Jotzo is Fellow at the ANU Crawford School of Economics and Government and Deputy Director of the ANU Climate Change Institute.


Professor Warwick McKibbin Dr Frank Jotzo

The Labor party's climate approach is extremely disappointing. The science and expert input has made a strong case for action for more than a decade. A majority of Australians already want to take action on climate change. What would be required to come out of a Citizens Assembly to convince the government to take action? An absolute majority - a majority in key electorates? This appears to be another 2020 summit style delay to make it appear that action is being taken when the purpose is purely delay for political advantage. Australian's deserves better than this. If the Hawke and Keating governments had taken the approach of a Citizens Assembly to consider the major economic reforms of the 1980's, Australia would have be a third world economy floundering in the wake of the global financial crisis. The floating of the dollar, tariff reductions and labour market reform would not have been understood nor supported by a Citizens Assembly. What is proposed is not leadership - it is abdicating responsible action.

The Labor approach also appears to be based on the "fact" that the CPRS is the best policy that would be implemented once enough genuine Australians are convinced. There is far more debate about the policy approach which I believe is seriously flawed, than about the science of climate change. It is the policy approach that should be debated not the science.

It is hard to decide which of the Coalition or Labor policies on climate change are worse. It is appalling to see the politics of asylum seekers,  applied to climate change policy.

More channels for scientific advice and citizen involvement are useful, but this proposal could simply mean more procrastination. We know the science of climate change, we know that carbon pricing is the economically best way of cutting emissions, we know that other countries are acting. Further delay will make climate action more expensive for Australia, and the 2020 target will get out of reach. Business has been on board with carbon pricing for some time. Australia is falling behind internationally, for example China has strong carbon policies and might soon introduce emissions trading.

Some measures on renewable energy and energy efficiency are justified, but without a carbon price we will end up with a hodgepodge of expensive subsidies and cumbersome regulations.

There is a viable solution to start carbon pricing quickly: emissions trading with fixed price permits. This gives some certainty for business, and allows to gear up the policy later, transitioning to emissions trading with market prices at any time. Government needs to make a start, and it is likely that just like with the GST and the accompanying income tax cuts, it will prove uncontroversial once it is in place.