The Federal Government’s decision to delay the start of its emissions trading scheme has not deterred the critics of the policy, with a new RIRDC report showing that irrespective of the start date, it could cost rural Australia billions.
The Rural Industries Research and Development Corporation report quantifies the economic impact of the proposed Carbon Pollution Reduction Scheme on average farm businesses.
On Farm Impacts of an Australian ETS was prepared by the Centre for International Economics (CIE) and uses a variety of economy-wide and agricultural commodity models to assess the impact of an ETS, and then applies ABARE’s farm financial survey data to assess the impacts on the "average" farm.
The report found:
- The CPRS will affect agriculture both directly (through costs associated with the need to either buy permits or reduce emissions) and indirectly through cost increases elsewhere in the economy. Farm costs will rise even if agriculture is not included in the CPRS.
- The CPRS will have a significant impact on the livestock sector – farm cash income for the average beef farm would fall by over 60pc under a full participation scenario with a carbon price of $25/tCO2, or 125pc at a carbon price of $50/tCO2 (turning a positive income into a negative one).
- This is followed by an average beef-sheep farm (down by 90pc if permit price is $50/tCO2), an average sheep farm (down by 78pc), an average dairy farm (down by 69pc) and an average mixed livestock/crops farm (56pc).
- Profits for all farms would fall, ranging from a fall of $6524/year for sugar farms under a full participation scenario at $25t/CO2 to $72,111 for beef at $50t/CO2.
National s Leader Warren Truss says it is not good enough to simply delay the start of the ETS, but for the Government to scrap the policy and start again.
"Even with this tinkering and extra time, Labor’s ETS will still be virtually friendless," Mr Truss said.
"The extra time does give the Government the opportunity to call for a Productivity Commission inquiry into the untold damage it will wreak on the economy as it begins to recover.
"Treasury can do modelling on the hundreds of thousands of jobs that will be lost, and we will know the outcome of the upcoming Copenhagen summit and the attitude of the world to dealing with climate change."
The National Farmers’ Federation welcomed the delay, but warned a new-look CPRS could still devastate the farm sector.
"New [RIRDC] research released today starkly exposes how climate change policy can be far more damaging for our farmers than climate change itself," NFF acting president Charles Burke said.
"While we welcome the deferral, we still urge the Government not to dogmatically pursue covering agriculture within a CPRS, especially in light of the new research showing that the farm sector – as the backbone of the national economy and the most reliable of all sectors when the economic chips are down – could be devastated. The new data is clear cause for pause."
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