By Rich Bowden:

A report released today by an Australian public policy think tank has criticised the Federal Government’s proposed ETS scheme, describing it as a waste of taxpayers’ money.

The Melbourne-based Grattan Institute’s report, “Restructuring the Australian Economy to Emit less Carbon”, a study designed to examine the effect a carbon tax would have on Australian industry and households, found the Government’s free permits scheme to polluters to be flawed.

“The proposed free permits scheme should be recast,” said CEO of Grattan Institute Professor John Daley in an accompanying statement.

“Rather than being “free” the industry assistance will be very expensive. Its ‘one size fits all’ approach is counter-productive. Fears about large-scale job losses or cost increases are not supported by the evidence and have led to irrational and costly policy,” he added.

The report concluded that the free permits were unnecessary and would get in way of urgently needed industry structural reform.

Prof Daley said that “…many of the proposed free permits would delay structural reform that will ultimately improve Australian living standards. Where businesses are unsustainable, government support should be directed to assisting individuals and communities to adjust, not propping up profits.”

“In the few industries where some assistance is justified – particularly steel and cement – assistance could be delivered better, at lower cost to taxpayers, through border tax adjustments,” he added.

Speaking on ABC Radio Prof Daley said that only the steel and cement industries were deserving of free carbon permits and he considered that other major polluters would be unlikely to move offshore as a result of a carbon tax imposed as part of the scheme.

“…when you look at the LNG (liquid natural gas) industry, the alumina industry and the coal industry, we found that by and large those industries are not likely to relocate offshore as a result of a carbon price,” he said.

The Grattan Institute concentrates on five key policy areas: Cities, Schools Education, Water, Energy and Productivity and publishes evidence-based reports designed to contribute to the public debate.

Tags: carbon emissions australia, carbon tax, Environment & Sustainability, ets, grattan institute, polluters australia co2, Restructuring the Australian Economy to Emit less Carbon