Australia’s climate failures are costing its economy dearly – and Scott Morrison’s government is blamed | Greg Jericho

The latest OECD economic survey of Australia details an economy that has weathered the Covid storm well, and yet while the Morrison government will appreciate such rhetoric, it will not like the advice that comes with it – recommendations to improve our low productivity growth, inequalities and massively reduce our emissions.

The OECD only surveys a country every few years. The latest, released overnight, is the first for Australia since December 2018.

In 2018, global pandemics were just the stuff of the movies; The report therefore focused on keeping growth at around 3%. At the time, the OECD noted of Australia, “life is good, with high levels of well-being”.

This time, the opening is rather less bubbling.

Still, the OECD praises our response to Covid, noting that “well-coordinated policies between different levels of government have sought to suppress the transmission of Covid-19” and that the “economic downturn in 2020 has been less important than in the majority of other OECD countries ”:

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The report’s authors note that Australia had one of the largest and most targeted stimulus packages for fiscal year 2019-2020:

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But he also notes that the latest epidemics and closures “have a significant negative impact on economic activity.”

The OECD believes that the Delta strain also means that the next economic rebound “could be more gradual than in previous episodes, given that it will occur in an environment of higher community transmission of Covid-19”.

And while the OECD still prefers a budget surplus to deficit, it notes that current low interest rates mean that “the government could run primary budget deficits in the years to come and continue to drive down the debt ratio. gross public ”.

But the OECD survey not only summarizes the current situation, it also provides recommendations – some of which will not be desired by the government.

The OECD has long supported increasing taxes through the GST over personal and corporate income taxes. He notes that our TPS has a lower rate and many more exemptions than most OECD countries and suggests that both should be changed:

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That won’t happen anytime soon, of course – unless Scott Morrison decides he really wants to lose the next election.

The OECD also suggests that the time has come to review our monetary policy framework. He suggests a broad review that potentially includes “a review of the central bank’s mandate, policy tools, public communication methods, recruitment processes and internal structures.”

While this can be politically burdensome, it is more acceptable to the government than the other OECD recommendation that fiscal policy should be much more transparent by giving the Parliamentary Budget Office the power to “assess and monitor regularly the budgetary strategy ”.

Such a role would be more akin to that of the Congressional Budget Office, and indeed is something that I have long advocated, but would see the government’s own policy come under scrutiny – something it will not accept. .

The report also argues for a further increase in unemployment benefits, noting that “the income shock resulting from falling unemployment in Australia is much larger than in other countries and minimum income supports remain well in place. below the relative poverty line ”:

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And as in 2018, the report addresses the persistent problem of low productivity growth that has been in place since 2013:

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Among the policies that OCED recommends to improve productivity are the introduction of an inheritance tax, the reduction of the capital gains tax abatement and the replacement of the stamp duty by a property tax.

While Josh Frydenberg has praised states like New South Wales for passing a property tax, there is no way the government will raise taxes on retirees and property investors.

Nor will it likely push to implement other productivity-boosting recommendations such as road user charges (another long-favored OECD policy) or a resource rent tax (yes, a “mining tax”).

But where the report is most uncomfortable for the Morrison government is when it comes to climate change.

Rather than swallowing the government’s line on meeting and exceeding its emissions target, the report notes that “faster progress in reducing carbon emissions is needed”:

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The report also notes that Australia is “uniquely positioned to benefit economically from global decarbonization due to a large (and windy) landmass, high solar radiation, [and] abundant access to the ocean ”.

Unfortunately, the report found that “there has been a downward trend in environmental innovation over the past decade and stronger incentives for innovation and the adoption of new low-emission technologies are emerging. required “. So much for our policy of reducing emissions through technology and not taxes.

This failure is blamed on the Morrison government.

The report argues that “a coherent and coordinated national strategy that defines clear objectives and corresponding policy parameters” to achieve net zero emission by at least 2050 “is necessary”.

Failure to do so since the end of the carbon price has meant Australia has missed out on “significant economic benefits” that “may come from a faster pace of emissions reductions.”

This again remains toxic to the Morrison government – as the Prime Minister does not have the political will or power to challenge climate change deniers in his government.

And so the Morrison government will find a lot to like about this survey of what the OECD reports for 2020, but a lot to ignore about what it recommends going forward.

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