Economist warns Labor’s emissions reduction target will cost economy $264 billion

There a bitter fallout over an economist’s dire warning that a key Labor plan could cost $264 billion.

New economic modelling suggests Labor’s emissions reduction target could wipe $264 billion from the economy and kill-off 167,000 jobs.

Bill Shorten has faced questions for weeks over the cost of his climate change policy, but the Opposition leader has been unwilling to put a figure on it.

Brian Fisher, an economist, has released a report that forecasts a 0.8 per cent fall in growth by 2030 if Labor’s emissions reduction target of 45 per cent is adopted.

That would equate to $264 billion, but could be as high as $542 billion depending on the specifics of rules that would allow companies to buy international carbon credits to offset their obligations.

“It’s not disastrous, but it is a drop off,” Dr Fisher told ABC Radio on Thursday.

Labor’s climate change spokesman Mark Butler rubbished the “dodgy” modelling.

“This is no more credible than the last piece of rubbish he produced a week or two ago with the same utterly dodgy assumptions,” he told ABC Radio.

“This is utterly rubbish and it is utterly at odds with every other piece of analysis of this policy.” However, while Labor disputed the figures, it has steadfastly refused to put a price on its climate policies.

Opposition leader Bill Shorten at the Southern Sustainable Electric solar farm in Whyalla in South Australia yesterday. Picture: AAP

Dr Fisher’s modelling also predicts 167,000 fewer jobs over the next 20 years. Allowing international permits would reduce the impact of the plan, he said.

“Negative consequences for real wages and employment are projected under all scenarios, with a minimum 3 per cent reduction in real wages and 167,000 less jobs in 2030 compared to what otherwise would have occurred,” he told the Sydney Morning Herald.

Speaking to ABC’s 7.30 program last night, Mr Shorten denied Labor’s plan would put downward pressure on the economy.

“It won’t have a negative effect on economic growth,” he told Leigh Sales. “In fact, most of the mainstream modelling shows that our economy will continue to grow.”

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Bill Shorten on 7:30 last night. Picture: ABC

He said not taking action on climate change would have a significant higher cost in the long-term than Labor’s initial investments.

“If you’re asking me to specify what a particular company and a particular factory will have to do, I can’t do that. Nor could you, nor could the government.”

He also slammed the Coalition’s attacks on his policy, describing the debate as “dishonest”.

“The reason why the government’s trying to focus on how much it might cost to put in a new renewable energy system is that they’re trying to distract from the fact they have no climate change policy,” Mr Shorten told Sales.

Bill Shorten has faced questions for two weeks over the economic cost of his climate policy. Picture: AAP

Minister for Energy Angus Taylor says Labor’s plan will ‘wreck the economy’. Picture: AAP

Labor has refuted the modelling presented by Dr Fisher and points to analysis by Citibank that concludes “the consequences in terms of cost of policies like ours are immaterial”.

“Both in the short term and the long term, the cost of not acting on climate change is far worse than acting on climate change,” Mr Shorten said.

“The Australian people and business are so far ahead of the political debate, you must be bored by the government’s rhetoric, which wants to simply say we can’t do this, can’t do that. The rest of the world is so far ahead of us it’s embarrassing.”

.@billshortenmp on climate modelling: Brian Fisher and his report remind me of the doctors that big tobacco companies used to roll out in the 70s and 80s to say that smoking was healthy. We will file this report under P for propaganda.

MORE: https://t.co/cnxAXrua6v #kennyreport pic.twitter.com/e59Ye2Kynp

— Sky News Australia (@SkyNewsAust) May 2, 2019

Energy Minister Angus Taylor has been prosecuting the Coalition’s case against Labor’s emissions reduction plan.

Mr Taylor said the Labor Party would “wreck the economy” with their proposed approach.

“Mark Butler and Bill Shorten have refused to come clean on the details and the impacts of their policies, they have refused to do it time and time again,” Mr Taylor told 2GB this morning.

Labor has disputed the economic modelling released today. Picture: AAP

The SMH report today also includes several academics questioning Dr Fisher’s conclusions.

Dr Fisher’s modelling relies on a quarter of the emissions reductions being achieved by allowing big companies to buy international carbon credits to offset their pollution.

If big polluters could instead meet their targets through 50 per cent access to international permits, Dr Fisher predicted economic growth would slow by just 0.2 per cent, or $276 billion.

“The more ambitious you are with your target, the higher the cost is going to be, unless you can defray that cost in some way - for example, by buying international points,” he said.

Labor has said it will consult with business over what level of international permits would be allowed.

Greens leader Richard Di Natale described the modelling as “garbage” but will not say whether he will support Labor’s plans — particularly companies being allowed to buy international permits to offset their emissions — should the Opposition win government.

“I’m not going to negotiate in public through the media,” Senator Di Natale told Sky News today.

“I’m not ruling anything in or out.”