Evaluation of the revised Carbon Pollution Reduction Scheme

On 18 October, the Coalition (Australia) put forward a set of amendments to the Australian Commonwealth Government’s proposed Carbon Pollution Reduction Scheme (CPRS). In response, on 24 November, the Government put forward a Revised Offer to the Coalition. Frontier (Australia) analysed the Revised Offer, using the same model as the Commonwealth Government. This analysis focused on the effects of the CPRS on non-carbon related Government tax revenues and expenditures.

Frontier’s analysis shows that the Revised Offer, when compared with the Coalition’s original proposals, would result in an emission trading scheme that:

  • increases the fiscal impact (from introducing the CPRS) to a deficit of AUS$3.7bn compared with a surplus of AUS$2.1bn;
  • reduces net tax revenue by AUS$11.8bn due to a less vibrant economy. This is principally due to the lower income and company tax revenues that would be observed with GDP of around AUS$50bn lower (over 20 years); and
  • reduces average annual wages by around AUS$800 per person.

Frontier undertook this work on its own behalf. Earlier this year Frontier advised the Coalition, and the independent Senator Nick Xenophon, on how to implement the CPRS.

For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.

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