When a government is embarrassed about something, it puts it out late on Friday afternoon without even a media release.

Such was the case last Friday, when the release of the government’s modelling of emissions cuts was put online without any fanfare, and with a fair degree of embarrassment. It showed the cost of emissions reductions is much less than suggested by the prime minister in parliament.

The modelling, undertaken by economist Warwick McKibbin, compares the cost of various cuts to our carbon emissions by 2030 – from a scenario where our emissions rise after 2020, to one where there is a 45% cut below 2005 levels:

The government has announced it will seek to cut emissions by 26% by 2030.

When announcing this policy on 11 August, Tony Abbott told parliament that “the modelling that was done by the Department of Foreign Affairs and Trade shows that a 26% reduction in our emissions on 2005 levels by 2030 will cost the economy in the year 2030 between 0.2% and 0.3% of GDP”.

The modelling supports this, although we need to be clear what he is talking about.

The cost he refers to is the difference between the new 2030 target and a scenario in which Australia met the existing target to reduce emissions by 13% by 2020, and then cut no further.

The lower figure of 0.2% is based on the assumption that technological advances make renewable energy cheaper; the 0.3% GDP cost is based on the assumption that “technology costs are at the high end” of the scale:

So far so good. But Abbott went on to tell parliament that “the modelling also shows that a cut in the order of 40% will cost more like 2% of GDP — a massive hit on our economy, a massive hit on jobs and a massive hit on families, which this government will never impose”.

The modelling released last Friday, however, shows that a cut of 45% would reduce GDP in 2030 by between 0.5% and 0.7% – much less than the prime minister would have you believe.

Abbott also suggested that the cost under the ALP’s policy of emissions reduction would be a “$600bn hit on our economy”.

That figure is breathtakingly stupid.

As Lenore Taylor has reported, the figure doesn’t account for inflation, assumes an absurdly high carbon price, is a cumulative figure over 15 years and assumes a 44% cut in emissions relative to a situation where neither Australia nor the rest of the world made any more cuts.

Any politicians repeating the figure should be mocked; any journalist reporting it should be scorned.

Tony Abbott wrong on costs of tougher climate targets, government modelling shows Read more

So what does the government’s actual modelling say?

It notes that regardless of whether the target is a cut of emissions below 2005 levels of 13%, 26%, 35% or 45%, “average annual GDP growth continues to be above 2%”.

Specifically, the modelling shows that under a 13% cut target GDP would grow by 2.18% each year; the government’s target of a 26% cut would have GDP grow by 2.14%; and were the cuts to be of the order of 45% below 2005 levels (the target the Climate Council recommends), GDP growth would average 2.09%.

The difference, therefore, between the government’s proposed target and the one Abbott suggests would be a “massive hit” on our economy is just 0.05% each year.

Pretty much a rounding error.

But what does this mean in an actual money sense? Surely that lower growth adds up?

Well it does, but not by enough to really get excited about.

The prime minister told parliament the government’s target of a 26% cut and the subsequent 0.2% to 0.3% drop in GDP in 2030 would mean “the overall cost to the economy of this will be in the order of $3bn to $4bn”.

The figure is a bit cute. Currently, Australia’s real annual GDP is about $1.58 trillion, so 0.3% of that is roughly $4.7bn. But by 2030 – the relevant year – GDP is predicted to have grown 40.9% from where it is now.

The government’s modelling predicts that were we to keep only to our 2020 target cuts, real GDP in 2030 would be US$2.323tn, whereas if we pursue a 26% cut, it would be $US$2.316tn – a US$7bn difference.

It’s a small matter, but it does highlight how the government has been very careful to use the lower figures when it suits and the highest when it would not suit the ALP.

By contrast, were the government to pursue a 45% cut, Australia’s real GDP is predicted to grow by 40.27% over the next 15 years. That means GDP in 2030 is expected to be US$2.306tn – just US$1 bn less than it is predicted to be under the government’s policy.

Or about the equivalent of one and a half days of economic output in Australia.

Rather than $600bn, the cumulative GDP cost in real terms of a 45% cut compared with the government’s 26% target is about $56bn.

So absurdly small is the difference between the cuts that it led to the production in the modelling of one of the least informative graphs you will ever see. It charts the different levels of Australia GDP out to 2030 under each of the scenarios.

So similar were the lines, the authors felt the need to explain below the graph that the “closeness of trajectories [in the graph] reflects that difference in GDP in 2030 from highest to lowest scenario is 1% of GDP”.

With such a small difference – and the complete decimation of figures previously used by the prime minister and the environment minister, Greg Hunt – the modelling not only removes the fear from the issue, but also sets a challenge.

Nothing here should scare the ALP from proposing an emissions target cut of 45%, which the Climate Council suggests is the “bare minimum” needed to fulfil Australia’s obligations to keep the global temperature rise below 2C.

This is particularly true because there was one alarming number also released last week – the latest global temperature data from Nasa.

It showed that July was the warmest such month on record; the past 12 months have been the warmest 12-month period on record; and, to top it off, the past 10 years have been the warmest 10-year period on record: