Deloitte paints bleak picture on carbon tax

New Deloitte report claims the carbon tax will significantly affect Victorian jobs, the state's economy and investment

By Ruza Zivkusic | September 21, 2011

Victoria will lose 35,000 jobs by 2015 due to the carbon tax, a report has revealed.

Leading economic consultancy firm Deloitte Access Economics has released a report called Modelling the Clean Energy Future Policy, which shows the Victorian State Budget is predicted to be $660 million worse off due to the tax.

Investment is also expected to plummet by $6.3 billion. The report says the carbon price will increase energy costs, which in turn flow through to industrial production costs and consumer prices.

"This encourages producers and consumers to shift from carbon-intensive fossil fuel to alternatives which, exclusive of a carbon price, have historically been more expensive forms of energy," it says.

"These effects tend to dampen economic activity, resulting in a decline in economic growth."

The report also shows there will fewer jobs in regional Victoria, with a cut of 1600 jobs in the Barwon area, 1250 in Gippsland and 1750 in Bendigo, Ballarat, Ararat, Bacchus Marsh and Gisborne.

Employment in small business is also estimated to fall by 16,000 full-time jobs. According to the report, the decline in small business employment will reduce to 8,000 full-time jobs by 2020.

"The employment impacts are significantly greater at 2015 due to more acute labour market adjustments in the short term to changes in industry activity," the report says.

"Over the longer term, to 2020, labour markets have more scope to support overall employment via changes in wage rates.

"Reflecting the differing sectoral impacts of the carbon price under the ‘core policy’ scenario, small and medium businesses in some areas would be expected to increase their output. On the other hand, output from smaller businesses in construction and services would be expected to contract."

Victorian Treasurer Kim Wells says the analysis shows households and businesses will face costs as a direct result of the carbon tax "that will keep increasing year after year".

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