Sunday, June 03, 2007

A Garrett recession? Not likely.

The Prime Minister says that a cut in Australia’s carbon emissions to 20 per cent below 1990 levels by 2020, as once proposed by the Labor frontbencher Peter Garrett would be “the recipe for a Garrett recession”.

Peter Garrett is no longer proposing such a cut. He put the idea forward in back in his days on the backbench, within months of entering parliament.

As the Shadow Minister for the environment Garrett supports the only target Labor has proposed – a cut in emissions to 60 per cent below 2000 levels by 2050.

John Howard said yesterday: “Peter Garrett and Kevin Rudd have absolutely no idea what the consequences of these numbers are”...

Insofar as the official Labor party policy goes they have a very good idea.

Australia’s preeminent economic modeling unit, the Centre for Policy Studies at Monash University has just been hired by the Commonwealth Treasury to do the numbers for the Howard government.

A few months back it did them for the Business Roundtable on Climate Change. It found that cutting emissions to 60 per cent below 2000 levels by 2050 (Labor’s policy) would dent economic growth hardly at all.

If action was taken early, it found that real GDP would climb by 2.1 per cent a year rather than 2.2 per cent. If action was delayed, real GDP would climb by 1.9 per cent rather than 2.2. Neither would amount to a recession.

The 20 per cent cut in emissions by 2020 once proposed and no longer endorsed by Peter Garrett does sound a bit steep, but mainly because we are now very near 2020.

When Peter Garrett put that cut forward back in 2005 there was a decade and half in which to achieve it. By the time John Howard introduces the emissions trading scheme he promised yesterday for 2012 there will only be eight years left.

In any event Peter Garrett is in good company. Republican Governor Arnold Schwarzenegger committed California to a 2020 target in April. Queensland’s Premier Peter Beattie committed his state to a 2020 target yesterday. Schwarzenegger wants emissions back to 1990 levels; Beattie wants them back to 34 per cent below 2000 levels.

Should John Howard be reelected he is planning to issue his own implicit 2020 target next year as part of the “long-term aspirational goal”.

Labor should embrace the process John Howard endorsed yesterday and speed it up. It has already come up with an aspirational goal – its promised cut in emissions to 60 per cent below 2000 levels by 2050 is about what is needed.

It should promise to get the system up and running by 2009, or 2010 at the latest – two years ahead of the Coalition.

I get the impression that such a timetable is achievable and wouldn’t much trouble the government’s advisors.