Impact of Emissions Trading Scheme on state budgets report released
The state and territory governments are set to lose up to $1.4 billion per year to the Federal Government as a result of the introduction of the Carbon Emission Reduction Scheme, according to research undertaken by The Australia Institute.
A paper entitled ‘The Impact of an Emissions Trading Scheme on State Government Budgets’, by David Richardson and Richard Denniss, shows how the cost of energy, transport and wages paid by state and territory governments will increase as a result of the Commonwealth Government’s plan to tackle climate change.
The paper finds that the cost of emissions permits will impose a large burden on state and territory governments likely to be close to $1.5 billion in 2010-11 when the CPRS is planned to come into effect. That represents a charge of $1.5 billion on the state governments by the Federal Government. That is the equivalent of more than 15,000 teachers, nurses and police officers. The states have a strong claim for compensation from the Federal Government.
The paper highlights the need for an additional class of compensation payments that do not appear to have been considered in the debate so far, namely, payments to compensate the state and territory governments for the likely increase in the costs they will face in delivering services to their residents.
“Everybody knows that the cost of electricity, fuel and food will rise for consumers, but what this paper shows is the impact of those same increases on the states and territories when they are trying to provide schools, roads and hospitals,” said Dr Richard Denniss, Executive Director of The Australia Institute.
“The problem is not that some costs will rise, but that at the moment there is no discussion of the need to compensate the state and territory governments. Nearly one and a half billion dollars per year could employ more than 15,000 teachers or nurses. The Commonwealth has said that it will compensate households and polluters, but it looks to us as though the state governments have got a much stronger case for compensation than the big emitters,” he said.
“Australia needs an emissions trading scheme, but what we also need is for the Government to provide compensation to those who require it the most. Unless the Commonwealth puts compensating the states ahead of compensating the polluters then those who rely most heavily on government services will miss out the most.”
The report is available at www.tai.org.au
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