Former Reserve Bank governor Bernie Fraser says Labor is sensible to propose the use of international carbon credits to meet its emissions reduction goals and described as “crazy” government claims that the measure would cost Australian businesses $25 billion.

Mr Fraser, a former Treasury chief and advisor to both Labor and Coalition governments on climate policy, expressed frustration with the Morrison government’s “absurd assertions” about climate action, including a “stupid argument” that sought to downplay Australia’s responsibility to act because it produces only a fraction of global emissions.

Labor leader Bill Shorten has come under sustained attack this week over the potential cost of his party’s 45 per cent emissions reduction target.

Former Reserve Bank Governor Bernie Fraser says the Coalition's claims about the costs of Labor's climate policies are "crazy". Credit:Alex Ellinghausen

Labor has argued its policy will have the same economic impact as the Coalition’s 26 per cent emissions reduction goal, because it would allow businesses to buy international carbon credits to meet their obligations. Overseas credits represent emissions cuts made overseas and can be cheaper or less onerous for businesses than taking domestic action.