Commission says carbon price would benefit consumers and help deliver best possible market reforms

This article is more than 2 years old

This article is more than 2 years old

The Productivity Commission has called on the Turnbull government to adopt a “proper vehicle” for reducing carbon emissions that puts a single price on carbon, saying it would benefit consumers.

It says a price on carbon must eventually form part of Australia’s energy markets and would help to deliver the greatest possible market regulation reform benefits over the next five years.

The recommendation can be found in the Productivity Commission’s new report, called Shifting the Dial, released on Tuesday.

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It is the first of a series of new five-yearly reports on Australia’s economic performance, styled on the commonwealth government’s intergenerational report, commissioned by the treasurer, Scott Morrison.

The Productivity Commission’s report has taken aim at successive governments, at the state and federal level, which have contributed to Australia’s “energy wars”, saying politicians have made insufficient use of experts in recent years.

It has criticised governments for ruling in or out specific energy technologies to satisfy their political prejudices, including governments that have put moratoria on gas development.

It has warned productivity growth is much lower than it was during the “golden era” of the mid-1990s and, without serious market reforms, income growth could fall to half of historical levels by 2022.

It says the greatest market regulation reform benefits – which would boost productivity – would come from solving Australia’s energy market problems, and it has called for an energy policy ceasefire.

“Australian governments ... must stop the piecemeal and stop-start approach to emission reduction and adopt a proper vehicle for reducing carbon emissions that puts a single effective price on carbon,” the report says.

“It is a principle of every properly designed pricing system that the charge should reflects its harms. Thus carbon emissions intensity is necessarily a matter to be reflect in the regulated pricing system.

“Governments need an emissions target to provide certainty for the sector about the trade-offs allowed between emissions reduction and cost.”

The Productivity Commission has also recommended sweeping changes to the healthcare sector, pharmacies, schools and roads.

On healthcare, it says government should cooperate to remove the current messy, partial and duplicated presentation of information and data, and provide easy access to healthcare data for providers, researchers and consumers. It has suggested linking hospital funding to early adoption of integrated electronic medical records.

It says governments should reconfigure the healthcare system around the principles of patient-centred care, by measuring and recording people’s experience of the healthcare system. It says the results should be published so clinicians, hospitals and patients can see how the system is working at the grassroots level.

On pharmacies, the report says the federal government should move away from community pharmacies as vehicles for dispensing medicines to a model that anticipate automatic dispensing in a majority of locations, supervised by a suitability qualified person.

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On schools, it says educational outcomes for students could be improved if teachers who are asked to teach subjects outside their areas of expertise are given professional development. It says that to improve teacher effectiveness generally, a more rigorous micro-evidence base about what works in schools and how it should be implemented is required.

On roads, it says state governments should experiment with road toll trials on new additions to the road network to see how drivers respond and to increase the public’s awareness about the cost of roads.

It has also recommended state and territory governments abolish stamp duties on residential and commercial properties and replace them with a broad-based land tax on the unimproved value of land.

Morrison welcomed the report on Tuesday, highlighting the chapter on Australia’s energy problems called “Fixing the energy mess”.

He said the energy mess “was created by the Labor party” and it was the government’s job to fix that mess.

“We are fixing that appalling mess, that appalling mess as described by the Productivity Commission, which is standing in the way of productivity improvements,” he said.

He did not mention the Productivity Commission’s argument that a carbon price was necessary, nor that the energy mess had been created by successive Labor and Liberal governments.