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Monday, 7 November 2011
Page: 8387

Senator WONG (South Australia—Minister for Finance and Deregulation) (17:42): I am happy to respond, but you jumped, Senator.

Senator NASH: Thank you.

Senator WONG: I am asked about GDP and GNI. I refer to the modelling at page 98 of the Treasury document, where the findings are that real income continues to grow with carbon pricing. There is an explanation as to why GNI has been focused on, although GDP is also measured. It states:

GNI is a better measure of welfare because it also accounts for that part of domestically generated income that accrues to non-residents, including that part required to pay for abatement sourced overseas. It also accounts for foreign generated income that accrues to domestic residents.

Australia's GNI per person ... in both domestic policy scenarios—core and high price—grows at rates only slightly below those expected without carbon pricing. In the core policy scenario, GNI per person in today's dollars will be $9,000 higher in 2020 than it is today and more than $30,000 higher in 2050—an increase that is smaller than in the medium global action scenario, in which Australia does not price carbon, by just $320 per person in 2020 ...

Real income will continue to grow under a carbon price, but at a slightly reduced rate as the domestic economy transforms—

Senator Cormann interjecting—

Senator WONG: You wanted an answer, Senator. I am providing you an answer.

Senator Cormann interjecting—

Senator WONG: If you would let me finish. You asked about GNI and GDP. I am going to do both. It continues:

From 2010 to 2050, GNI per person grows at an average rate of 1.1 per cent per year in the core policy scenario compared to 1.2 per cent per year, if carbon levels continue unabated along their upward trajectory. That is, Australia's GNI per person continues to grow at a rate only around 0.1 of a percentage point per year slower than it would without carbon pricing.

I am also asked about GDP. I wanted to place on the record why the GNI measure has been preferred. GDP is also discussed in the report and, as I previously indicated, GDP continues to grow with carbon pricing and will be nearly three times as large by 2050 as it was in 2010. GDP grows in the core policy scenario by 2.6 per cent per year to 2050, slightly lower than the rate of more than 2.7 per cent per year in the medium global action scenario. This shows that we can continue to grow our incomes and our economy as well as jobs with a price on carbon. I again make the point that the Treasury modelling does not cost the cost of climate change, something that the senator wishes to disregard but which is actually very relevant to the reason Mr Howard signed up to a price on carbon.