Bloomberg News

Australia’s Economy to Expand With Carbon Plan, Swan Says

June 06, 2011

(Adds employment estimate in second paragraph.)

June 7 (Bloomberg) -- Australia’s economy will grow while the government’s planned emissions trading system makes “deep cuts” to pollution, Treasurer Wayne Swan said today.

Treasury Department estimates show the economy will create 1.6 million jobs over the next decade if the emissions program is implemented, Swan told the National Press Club in Canberra. Real national income per capita will expand at an annual average rate of around 1.1 percent until 2050, he said.

“Our economy will continue to grow solidly while making deep cuts in carbon pollution,” Swan said. Emissions trading would cut about one tenth of one percentage point from gross national product, he said.

The government, whose popularity has fallen in opinion polls ahead of an election due in late 2013, is trying to address voter concern over its intention to cut pollution and protect icons including the Great Barrier Reef and Kakadu National Park. The opposition Liberal-National coalition says the plan will hurt the economy and increase living costs.

“It won’t be easy to put a price on something that is currently free,” Swan said. “We will be asking 1,000 of the biggest polluters in our economy to pay for the damage they do to the environment and they’ll have a view on that.”

Trading Start

The government wants to start emissions trading from July 1, 2012, with a fixed price for the first three to five years before full trading begins. The Labor Party wants to cut 2020 carbon pollution in the world’s biggest per capita emitter by 5 percent by 2020.

A multi-party committee is due this month to recommend a start price for emissions trading and indicate by how much it should change year by year. The committee will also suggest how the government should compensate businesses and households for rising costs.

Companies such as BlueScope Steel Ltd. and TRUenergy Holdings Pty, a unit of Hong Kong’s CLP Holdings Ltd., have warned the carbon policy may sap investment in a nation that burns coal to generate more than 80 percent of its electricity. BlueScope is Australia’s eighth-biggest emitter according to government emission records for the year ended June 30 2010. TRUenergy is the nation’s sixth biggest.

Treasury modeling using a A$20 ($21.45) start price for the trading system predicts real national income will rise 16 percent by 2020, or by A$8,000 in today’s dollar terms, and by 56 percent by 2050, with the carbon plan in place, according to Swan’s speech.

--With assistance from Jason Scott in Perth. Editors: Patrick Harrington, Peter Hirschberg

To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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