“It can be a little frustrating to see what you consider to be good ideas fail to win the day and underpin policy. However, closely observing the sharp end of Australia’s governments of both complexions, I remain optimistic that good ideas ultimately win through, even if sometimes it may take a little longer than we might hope.”

A former deputy secretary of the Department of Climate Change and Energy Efficiency during the design and introduction of the Gillard government’s ill-fated emissions trading scheme, Kennedy praised that scheme as “a significant achievement” and “textbook-perfect example of what academics would recommend in addressing the externality of climate change”. The scheme operated for two years before it was axed.

It did, however, “contain some compromises” which ledto its undoing, Kennedy said.
“In particular, the fixed-price start to the scheme which came about because agreement could not be found on emissions targets.”

It was this fixed-price feature that led Gillard, under sustained questioning, to publicly concede it acted a bit like a “carbon tax”.

“This compromise would later prove to be one of the key aspects of the scheme that contributed to its political demise,” Kennedy said.

However, Labor’s new proposal to expand use of the existing “baseline and credit scheme” was also “seen in many textbooks” and “when operated effectively, can reduce emissions in an economically efficient way”.

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Under Treasurer Jim Chalmers, Treasury has taken on renewed responsibility for internal modelling of the impact of climate change on the Australian economy. Kennedy, who headed the secretariat to support economist Ross Garnaut to update his climate review in 2010, said Garnaut’s review remained “a foundational document”.

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