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ABC News
ABC News
Business
political reporter Jake Evans

Climate modelling abandoned by Abbott nine years ago reinstated by Labor government

Jim Chalmers says opportunities have been squandered by not having Treasury model the impact of climate change on the economy. (ABC News: Matt Roberts)

Treasury has not modelled the economic impacts of climate change for almost a decade, after the practice was abandoned by former prime minister Tony Abbott. 

But new Treasurer Jim Chalmers has ordered the Treasury to restart its climate modelling and says work is underway to restore the department's role in climate action.

"Treasury is working closely with other departments to rebuild this capacity after years of neglect under the Coalition, and we'll have more to say about this important work," Mr Chalmers told the ABC.

"Treasury's modelling will help us chart a path that maximises jobs and opportunities for our country as we take advantage of this transformation.

"Australia's economic prospects will be in large part determined by our ability to take ambitious action on climate change and deliver cheaper and cleaner energy."

The head of Treasury admitted last year that it had not been asked for climate modelling since 2013.

Last year's modelling of the Coalition's plan to reach net zero carbon emissions by 2050 was conducted by private consultants McKinsey and had limited involvement from Treasury.

Treasury secretary Steven Kennedy told an estimates committee that just two of its staff had been seconded to give advice on the policy.

Treasury's role in climate change was significantly reduced in a wave of departmental changes made by Tony Abbott. (AAP: Lukas Coch)

Mr Chalmers said a generation of economic opportunities had been "squandered" by the Coalition.

Shadow Treasurer Angus Taylor said the Coalition government operated "robust" climate modelling through a separate department.

"Under the former government, climate policy was led out of the Department of Industry, Science, Energy and Resources and supported by robust economic capability, including the Office of the Chief Economist. Key policy development continued to be supported by Treasury, ABARES and the Productivity Commission.

"It's up to the Labor Party to explain why its new environment super department does not have comparable economic capability.”

Mr Taylor said the Treasurer could direct the Treasury "as he chooses — but it should not take away resources from the core economic task of easing pressure on families and small businesses by reining in inflation and putting downward pressure on interest rates".

The last major review of the impact of climate change on the economy, the Garnaut Review, was commissioned in 2007 by former prime minister Kevin Rudd.

Professor Ross Garnaut recommended then that a carbon emissions trading scheme be established and found that in worst-case climate scenarios, the Murray-Darling Basin could dry up, the Great Barrier Reef could be destroyed and climate change would cause hurt to wages and increase the costs of goods.

In April, Professor Garnaut said whoever won the election would need to commit to reducing emissions by 75 per cent by 2035 and phase out coal generation to avoid those worst-case scenarios.

Labor has committed to a 43 per cent reduction by 2030, an increase from the Coalition's 26 to 28 per cent target.

"Australians face interrelated policy challenges of historic dimension," Professor Garnaut wrote in the Australian Financial Review. 

"Fail to deal with them well, and we irretrievably disrupt climate and environmental conditions that underpin Australian lives, lose the chance to regain effective influence in our neighbourhood, continue the last decade’s stagnation and decline in living standards for ordinary Australians."

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