And it may be even worse than that. Treasury's estimates assume international agreement on emissions reduction is reached relatively soon. Were agreement not reached, the cost could be two to three times greater.
That is because unilateral action would undermine our international competitiveness. But it is also because Treasury expects massive purchases of abatement from overseas. By 2018, it says, those purchases will account for 60 per cent of Australia's total abatement, and they remain above 50 per cent right through to 2045.
So if we are creating a "clean, green future", as the Prime Minister asserts, it is not in Australia. Where then do all those low-cost emissions reductions come from? According to Treasury, well over half will come from the former Soviet Union and from "Other Asia". But many of these countries lack any ability to monitor carbon abatement, with corruption so pervasive they are at the top of Transparency International's list of offenders. To assume they will provide a credible source of abatement is wildly optimistic; to think they will do so absent a comprehensive international framework is fanciful.
Abatement costs could therefore prove far higher than Treasury's numbers suggest. But a precise estimate would require access to Treasury's models. And here Treasury's performance has been disappointing. Appearing before the Senate Select Committee on Scrutiny of New Taxes, Treasury said its models were "publicly available" and that anyone willing to pay for those models could obtain them.
That evidence was misleading. For Treasury relied on a model developed by the Australian Bureau of Agricultural and Resource Economics. And ABARE has now confirmed it will not make available the model Treasury used.
Moreover, Treasury blended the ABARE model with other models and data sets. Given that, only Treasury can provide users with the capacity to test its modelling: and the government clearly does not intend it to do so.
The Regulation Impact Statement released with the draft legislation does nothing to fill the gap that leaves. Indeed, it does not even meet the government's own guidelines for such RISs: it is strikingly superficial, given what is at stake; it is vague and qualitative; and it completely ignores the risks created by locking in future governments. That it was approved by the Department of Finance merely highlights how flawed the RIS process now is. Decisions about this legislation will therefore be based on assertions, not evidence tested in the light of day. And that is a disgrace. Not only because it makes a mockery of the government's claims about transparency. But also because the consequences of those decisions could be so great. And the poison pills built into the legislation would ensure those consequences were felt for decades to come.
Dreyfus is to be commended for stating that frankly. But whatever one may think of the carbon tax, those poison pills are public policy at its worst. If parliament had any decency, it would throw them out. That it won't says it all.
