Australia could meet tougher emissions target 'with no extra economic pain'

Modelling for the government by economist Warwick McKibbin finds a more ambitious target of 35% by 2030 would increase economic costs only slightly

Australia could meet tougher greenhouse gas emission targets without extra economic pain, according to the modelling used by the Abbott government to decide on post-2020 emission reduction targets that have been labelled "pathetically inadequate".

Modelling for the government by leading economist Warwick McKibbin is understood to have found the Abbott government's target - to reduce Australia's greenhouse gas pollution by between 26% and 28% below 2005 levels by 2030 - would reduce gross domestic product by around 0.2% or 0.3% in 2030 if the government dropped its ban on allowing businesses to buy international carbon permits. If the government sticks to the current ban on international permits the 2030 GDP cost would double - to between 0.4% and 0.6%.