Managing Macroeconomic Policies for Sustainable Growth
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Managing Macroeconomic Policies for Sustainable Growth

John Asafu-Adjaye and Renuka Mahadevan

The authors expertly reveal a model-based analysis of economic development and environmental issues with policy prescriptions for enhancing sustainable development. Within the last four decades, there has been a rapid deterioration in the quality of our environmental and natural resources, raising grave concerns about the sustainability of unbridled economic growth. In light of these concerns, the authors analyse a range of economic and environmental issues, and propose policy recommendations that would enhance sustainable economic growth. The book covers a variety of issues related to economic development, trade, energy and climate change, and focuses on countries in the Asia-Pacific region including Australia, Thailand, Papua New Guinea and Fiji.
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Chapter 7: An Analysis of Australian Greenhouse Gas Policy

John Asafu-Adjaye and Renuka Mahadevan


136 Managing macroeconomic policies for sustainable growth hung parliament. However, it managed to retain government with support from three independent MPs in the lower house, and from the Greens in the senate. Although climate change was not a central theme of her election platform, Julia Gillard announced in February 2011 that Australia will have a carbon tax for three to five years before a full emissions trading scheme is introduced, under a blueprint for dealing with climate change to be agreed to by a Multi-Party Parliamentary Climate Change Committee (MPPCCC). To date, the MPPCCC is yet to announce what the price on carbon would be. However, it is widely believed that the price would have to be about $20–$30 per tonne of CO2 equivalent emissions (CO2-e) if Australia is to meet her carbon pollution targets. Recent government projections suggest that Australia would need to reduce greenhouse gas emissions (GHGs) by an additional 160 metric tons (Mt) CO2-e in 2020 to achieve the 5% target (against 2000 levels), and by an additional 273 Mt to achieve the 25% target (DCCEE, 2010). Given these policy developments, the aim of this chapter is to analyse the implications of the proposed greenhouse gas policy. Specifically, it seeks to estimate the macro– and microeconomic impacts of the proposed carbon price and to address the policy implications. The remainder of the chapter is organised as follows. Section 7.2 provides a background for the discussion by presenting a brief overview of the Australian economy and the...

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