30/10/2008 - 12:08

ETS will not stymie growth: Swan, Wong

30/10/2008 - 12:08

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Early action to tackle climate change will reduce gross national product by just a tenth of a per cent a year, with the economy continuing to grow strongly, the federal government says.

Early action to tackle climate change will reduce gross national product by just a tenth of a per cent a year, with the economy continuing to grow strongly, the federal government says.

Treasurer Wayne Swan and Climate Change Minister Penny Wong said Treasury modelling of the economic impact of an emissions trading scheme showed early action to tackle climate change would sustain growth, create new jobs and protect the economy into the future.

They said the economy would continue to grow strongly as carbon emissions were reduced.

The modelling indicated that economies which acted early would face 15 per cent lower long-term costs.

"The earlier Australia acts, the cheaper the cost of action. The longer we delay, the more damage we risk to the Australian economy," they said in a joint statement.

"Many of Australia's key industries will become more, not less, competitive.

"The report also finds that average annual GNP growth will only be one tenth of one per cent less than it would be in a world without action to tackle climate change."

Mr Swan and Ms Wong said the study showed that taking early action would allow an orderly and gradual adjustment to a low-carbon economy.

But delaying action, and then playing catch-up, would deliver a sharper shock to the economy in the years ahead.

"Putting in place the necessary economic reforms through the Carbon Pollution Reduction Scheme will also allow Australia to capitalise on emerging opportunities and gain a competitive advantage," they said.

"The report contains the most complex, comprehensive and rigorous analysis of its kind ever undertaken in Australia."

Meanwhile, under the ETS, households will pay $4-5 a week more on electricity and $2 a week more on gas.

As a result, Mr Swan said there will be a one-off inflation rise of around 1 to 1.5 per cent.

The modelling also showed that the costs of the ETS would not be high enough to make heavily exposed industries to leave Australia.

 

 

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