Landmark report puts climate at centre of economy

Paul Osborne and Andrew Brown |

Treasurer Jim Chalmers says complacency over climate change could seriously damage the economy and put Australia’s security at risk.

Dr Chalmers on Thursday delivered the sixth Intergenerational Report – a 300-page analysis of where the Australian economy and society is heading over the next 40 years.

He named the shift to a net-zero economy as key to the country’s future.

“The major lesson … is that we can’t be complacent about the future and where that complacency could be the most damaging is when it comes to climate change,” he said.

The treasurer said climate change could not only “ravage” jobs and economic growth but leave Australia “more vulnerable to a world that is getting riskier”.

Rising temperatures and changing conditions will cost the economy more than $400 billion in the next 40 years, the report said.

The transition to net-zero emissions will also see demand for some Australian exports decline, with the market for thermal coal to halve.

However, demand for Australia’s critical minerals resources, which are key to technology and clean energy production, will be eight times higher.

The shift to electric vehicles could also see the government get less money from fuel excise.

Dr Chalmers said some taxes would start “trailing away” in the future but some changes were under way.

“There are, for example, tax cuts coming in and legislated for the middle of next year. Part of that is giving back some of this bracket creep, and governments into the future will make those sorts of decisions as well,” he told ABC Radio on Friday.

“The big focus is on making sure the revenue base is more robust and reliable. For us, that means multinational tax reform, the (petroleum resource rent tax), high-end superannuation balances and all of these other meaningful tax reforms we’re engaged in.”

Opposition Leader Peter Dutton said with the report showing Australians living longer, more consideration should be given to how older workers could stay in employment,

“Of course we want, if people choose to do so, for them to be able to work more hours. There’s demand in the economy for them,” he told Nine’s Today program.

“More flexibility in the welfare system is a good thing. More encouragement for people to work, helps them, helps the country.”

CEDA chief economist Cassandra Winzar said previous editions of the Intergenerational Report had “not addressed climate change seriously” and it was good to see the 2023 version start modelling its impacts.

“We should prioritise developing industries where we have a comparative advantage, like lithium mining and processing, rather than cutting ourselves off from global trade by onshoring manufacturing such as battery production,” Ms Winzar said.

Changes should also include harmonising occupational licensing in key jobs needed for the transition, increasing access to training for people at risk of losing jobs and reforming of temporary skilled migration for highly skilled clean energy workers.

Greens leader Adam Bandt said Australia stood to lose more than many other countries if the climate crisis was not brought under control.

“The loss that we could suffer could be much higher than set out in this report,” he told reporters in Melbourne.

“But Labor, in the face of this advice, is still opening new coal and gas mines.”