The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

10 July 2011

NO.079

Joint Media Release with
Prime Minister
Minister for Climate Change and Energy Efficiency

Strong Growth, Low Pollution Under a Carbon Price

The Gillard Government today released extensive modelling that shows Australia's economy will continue to grow strongly at the same time as we cut carbon pollution.

The Strong Growth, Low Pollution report models the impact on the economy of putting a price on carbon pollution.

The modelling shows incomes and jobs will increase substantially while our country takes action to reduce the risks of dangerous climate change.

Average income per person under a carbon price is forecast to rise by about 16 per cent by 2020 to be around $9,000 higher in today's dollars.

National employment is projected to increase by 1.6 million jobs by the end of the decade.

The modelling also shows that the cost of living impacts of a $23 carbon price are modest, with an overall price increase of 0.7 per cent in 2012-13. That compares to a price increase of 2.5 per cent as a result of the GST.

The price of most goods will increase by less than one half of one per cent as the result of a carbon price. That is less than half a cent in every dollar.

Delaying action on climate change will only lead to dramatically higher costs, will undermine our competitiveness and will ultimately hit jobs and living standards.

Putting a price on carbon will drive innovation and investment in clean energy technology, moving production towards less pollution-intensive processes.

The report shows that without action Australia's pollution is forecast to nearly double by 2050. A carbon price will deliver an absolute reduction in emissions and drive the expansion of the renewable energy sector so that it is 18 times larger than its current size.

This extensive modelling has been prepared by the Treasury in consultation with other departments over recent months, and will be updated to reflect the specific finalised policy agreed by the Multi-Party Climate Change Committee ahead of legislation being introduced into the Parliament. Any updated modelling is expected to closely match the results of the core policy scenario modelled in the Strong Growth, Low Pollution report.

Differences between the MPCCC agreement and the scenarios modelled include the starting price, availability of international permits, the binding 100 per cent facility allocation cap and the treatment of fuel.

The Government extends its thanks to the Treasury and other government departments for the hard work and world-class expertise that has underpinned this important report.

CANBERRA
10 July 2011