“Markets are forward-looking on investment,” Professor McKibbin said.
“The risk premia is already in there because of the carbon-intensity of the economy and the lack of any federal policy framework.
“The federal government has an impact on financial markets, so it’s important not only to have a target but also credible policies so investors can assess what you’re doing and how you’re doing it.”
Professor McKibbin described the government’s modelling by the Department of Industry and McKinsey as a “magic pudding” that required very little active policies by the federal government such as an explicit carbon price.
“It’s the magic pudding of climate policy – whatever the government wants to happen is in the report.”
Former government climate modellers said the modelling released on Friday afternoon avoided analysing whether Australia needed to commit to more action by 2030 and alternate policies such as a carbon…