Economist warns Gillard on carbon price delay
Economist warns Gillard on carbon price delay
Updated
A member of the Reserve Bank board says Prime Minister Julia Gillard’s decision to rule out a price on carbon for some years is ill advised.
Professor Warwick McKibbin, also an economist at Australian National University (ANU), says industry wants a price on carbon and the alternative will prove more costly.
In a report for the Lowy Institute, he argues for a new strategy for wealthy countries to reduce pollution.
Rather than waiting for a United Nations agreement, Professor McKibbin suggests rich countries use the Major Economies Forum to come up with their own solution.
The forum’s member countries, including Australia, would simply agree to adopt similar carbon prices domestically, and to increase them over time.
“We know from the Copenhagen outcome that countries are willing to take action, the problem is that they’re not willing to incur excessive costs,” Professor McKibbin said.
“This is a mechanism by which they can implement policy, they can do it in a way where they compare to each other and coordinate so that the competitiveness problems which have derailed the domestic as well as the international negotiations are taken out of the equation.
“If everyone’s moving together with a similar pricing structure, then the negative spill-over affects across countries are diminished.”
But Ms Gillard’s timeline leaves no room for such ideas, ruling out any price on carbon for years to come.



