State and territory governments are set to lose up to $1.4 billion a year to the federal government as a result of the introduction of the Carbon Emission Reduction Scheme, a new report warns.
The Australia Institute's report, Impact of an Emissions Trading Scheme on State Government Budgets, showed how the cost of energy, transport and wages paid by state and territory governments would increase as a result of the federal government’s plan to tackle climate change.
“Everybody knows that the cost of electricity, fuel and food will rise for consumers, but what this paper shows is the impact of those same increases on the states and territories when they are trying to provide schools, roads and hospitals,” said executive director Dr Richard Denniss.
"The problem is not that some costs will rise, but that at the moment there is no discussion of the need to compensate the state and territory governments."
While the federal government has promised to compensate households and polluters, state and territory governments have a much stronger case for compensation from the commonwealth than the bit emitters, Denniss said.
The report estimated that the cost to the states would be around $1.4 billion with NSW the hardest hit at $466 million.
Victoria and Queensland would follow close behind with $358 million and $289 million respectively.
Western Australia would lose $159 million while South Australia would be out of pocket $99 million.
The Tasmanian and ACT governments would be $22 million and $26 million worse off while the Northern Territory would lose $16 million.
"Unless the Commonwealth puts compensating the states ahead of compensating the polluters then those who rely most heavily on government services will miss out the most,” Denniss said.
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