Australia’s ageing population and exposure to climate change were stand out concerns of the fifth intergenerational report (IGR), released Monday by Treasury.
Published every five years, the IGR seeks to identify the long-term suitability of economic policy for the coming four decades, based on changing demographic, technological and other structural trends.
While this year the impact of COVID-19 on population and economic growth was front and centre, the broad ranging impacts of climate change were also again identified as a major concern for Australia’s economic future.
“The effects will depend on domestic and global actions, as well as the pace, extent and impacts of climate change,” he said.
“Rising global temperatures and other changes to the climate will impact locations, sectors and communities in diverse ways,” the report stated.
It said to help combat climate change Australia was working with international partners to “make low and zero emissions technologies globally scalable and commercially viable.”
The government will contribute $20 billion towards new and emerging low emissions technologies over the next decade.
This spending will be guided by the annually updated Technology Investment Roadmap which last year identified five initial priority areas to be clean hydrogen, carbon capture and storage, long duration energy storage, low carbon materials including low emissions steel and aluminium, and soil carbon measurement.
“The government has committed to reducing emissions by 26-28 per cent below 2005 levels by 2030 and to reaching net zero as soon as possible, preferably by 2050,” the report said.
Measures to mitigate the environmental impacts of climate change over the next four decades included tightening environmental laws, the National Landcare Program, the Oceans Leadership Package, the National Soil Strategy, and the Agriculture Biodiversity Stewardship Package.
The important role of finance
The report noted the financial sector also played an important role in helping the economy adjust to climate change through appropriately pricing climate related-risk and “encouraging the reallocation of capital to more sustainable areas.”
However, the report noted that the effects of climate change were already having a major impact on Australia’s economy and would continue to do so despite global efforts to mitigate damage.
“Notwithstanding global efforts to reduce emissions, responding to the impacts of climate change will be required and is a shared responsibility across all levels of government, community, and businesses,” the report stated.
One example was the increasing occurrence and severity of natural disasters which had contributed to making insurance more expensive for homeowners, and in many cases unaffordable.
An updated National Climate Resilience and Adaptation Strategy was also under development in 2021 with the aim of better guiding adaptation practice and resilience building.
The lost decade
More than 10 years ago, the 2010 IGR delivered by then Treasurer Wayne Swan under Prime Minister Kevin Rudd, more directly highlighted the threat climate change posed to Australia’s economic sustainability.
“Climate change is the largest and most significant challenge to Australia’s environment. If climate change is not addressed, the consequences for the economy, water availability and Australia’s unique environment will be severe,” the 2010 IGR stated.
Since then, what Committee for the Economic Development of Australia boss, Melinda Cilento called a “lost decade of policy reform”, has seen Australia make slow progress towards facing this threat and taking better advantage of the opportunities it presents.
“More than nearly any other country, Australia is ideally placed to be a renewables superpower. This is our new energy advantage,” she said.
“We have the sun, the wind and the minerals needed to build and power new renewable technologies. If we don’t take advantage of this, we will miss out on enormous job opportunities along the way.”
Greens groups were among those to criticise Treasurer Joe Hockey’s 2015 IGR for drastically understating the economic effects of climate change. It declared a goal of reducing Australia’s domestic emissions by 5 per cent on 2000 levels by 2020 and noted the “beneficial” effects of climate change in improving agricultural productivity in some areas that would become warmer or wetter.
So much more was possible
Independent federal MP, Zali Steggall called the government’s latest IGR a “wasted opportunity” in driving greater action on climate change.
“The long-term focus of the report and emphasis of previous reports on climate change presented the Morrison government with an opportunity to articulate climate risk in economic terms,” Steggall said.
“I welcome the focus on the opportunities that transition to clean technologies offers to Australia but, without clear policy guidance, these opportunities will be missed by our economy with investors looking elsewhere for greater certainty,” she said.
“Rather than patting itself on the back for the minimal change that has been achieved in the last 15 years, the Morrison Government needs to focus on the improvements it can make over the next 30.”