Carbon price:Treasury’s modelling

The Federal Treasury expects both the Australian and global economies to grow strongly over the years ahead.

In the key points of its economic modelling of the government’s new climate change policies, the Treasury said this can happen as we “cut pollution to reduce the risks of dangerous climate change.”

“Early global action is cheaper than delayed action,” the Treasury added.

“For economies like Australia, deferring action on climate change will only lead to higher long-term costs as emission-intensive technology, processes and outputs are locked in,” it said.

In other points, the Treasury declared:-

* Pricing carbon will drive structural change in the economy, moving production towards less emission-intensive industries. Many of Australia’s industries will maintain or improve their competitiveness in a carbon constrained world.

* The structural change in the economy driven by a market-based carbon pricing mechanism will be modest compared to other changes facing the economy, such as those driven by the terms of trade or demographic change.

* Incomes grow strongly under carbon pricing. By 2020, income per person is around $9,000 higher in today’s dollars.

* Jobs will continue to grow under carbon pricing. By 2020, national employment is projected to increase by 1.6 million jobs, with or without carbon pricing.

* Household consumption continues to grow strongly over time. The impact on the overall price level is modest.

* The modelling provides information on only one element necessary for evaluating climate change policy: the costs of taking action. It does not measure the benefits of tackling climate change.