In a video interview Professor McKibbin, a former Australian Reserve Bank Board member, argues that 'the political process has damaged what was a good idea, which when unravelled will destroy carbon pricing in the economy for a very long time'.
'The carbon tax taxes our competitive advantage' and has 'created a system that could self– destruct because the economic costs may become so great', he said.
Professor McKibbin criticises both sides of government, stating that 'neither side of politics really understands the importance of getting it right'. He argues that the Coalition’s direct action policy is also flawed in that it may not be scalable to large cuts if they become necessary in the future.
On an international level, Professor McKibbin argues that the Australian experience of carbon tax will damage the ability of other countries to implement carbon pricing systems, with a lost opportunity for Australia to 'teach other countries how to design these systems'.
He also contends that the carbon tax will reduce Australia’s flexibility to respond to global economic shocks and highlights that 'until we get an international agreement we are definitely getting ahead of the pack'.
During the video interview, Professor McKibbin points out that for any carbon tax to be effective, the government needs to establish credible long– term incentives for investments in energy sector capital, as well as research and development.
Professor McKibbin has made a prolific contribution to debate both here and internationally on how nations, including Australia, should use economic instruments to address climate change. His views were first published with co-author Peter Wilcoxen in 2002 and can be found in the 2006 Lowy Institute Analysis, A credible foundation for long-term international cooperation on climate change.
The video is freely available for broadcasters’ use/download: https://vimeo.com/45113453
An MP3 file from the interview is freely available for broadcasters’ use/download: http://soundcloud.com/lowyinstitute/professor-warwick-mckibbin-on
Warwick McKibbin biography/image and research work on climate change is available at: http://www.lowyinstitute.org/people/prof-warwick-mckibbin