Deloitte has warned that climate change will savage Australia’s economy, with a massive fiscal response needed to prevent trillion-dollar losses.
A new report from Deloitte – A New Choice: Australia’s climate for growth – forecasts that climate change will wipe $3.4 trillion and 880,000 jobs from the economy by 2070, with the country to experience economic losses on par with COVID-19 (and getting worse every year) from 2055 onwards.
“For people in their 20s, 30s and 40s today, those losses are experienced in their lifetime,” Deloitte said.
“For a generation of Australians, their economic futures, and that of their families and friends will be profoundly disrupted by the consequences of unchecked climate change. But the effects of this will not be uniform across Australia.”
This cost will come through the profound impact that changes in environment – i.e. significantly higher temperatures, rising sea levels – can have on the wellbeing of workers as well as the physical impacts on infrastructure and productive land.
But Deloitte estimates a “new growth recovery” – fuelled by government and private sector investment in the wake of COVID-19 – that sees the construction of green infrastructure and greater emissions efficiency would grow Australia’s economy by $680 billion in present value terms, adding over 250,000 jobs by 2070.
“These are the gains, the opportunity, for Australia to claim by being a country that reaches net zero emissions, sooner rather than later, to limit global average warming to 1.5°C along with the rest of the world,” Deloitte said.
Of course, Australia will have to wear the costs of that transition, with the country still expected to take a hit from the “locked in” effects of global warming and the move to net zero by 2050 – an approximately 0.1 per cent loss in GDP growth on average over the 30 years to 2050.
“Of this $90 billion cost of moving to net zero, $23 billion, or 26 per cent is due to the locked in impacts of climate change,” Deloitte said.
“The remaining $67 billion, by 2050, represents the cost to the economy of reducing emissions to reach net zero in a new growth recovery.”