The Economic Burden of Climate Inaction on Future Generations in Australia

A recent report by Deloitte has projected that without urgent climate action, Generation Alpha in Australia will face a lifetime economic burden of approximately $185,000 by 2070. This figure is based on modeling that assesses the impact of climate change on worker productivity, infrastructure, property, and health costs. The report indicates that millennials could incur costs of about $130,000, while Generation Z may face a reduction of $165,000 in lifetime income due to climate-related factors.

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The economists modeled two distinct scenarios: an "insecure youth prosperity" scenario, where global warming continues under current policies, and a "secure" scenario, which envisions aggressive action leading to net-zero emissions by 2050. The latter scenario suggests that proactive measures could significantly mitigate financial losses for younger generations, potentially saving millennials $50,000, Generation Z $70,000, and Generation Alpha $80,000 over their lifetimes.

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Rhiannon Yetsenga, an associate director at Deloitte Access Economics, emphasized that climate change poses immediate and severe consequences for younger Australians. She stated, “For this generation, climate change is not a distant threat but an immediate, lived experience with severe consequences.” The report highlights that the compounded impacts of climate change could slow economic growth, inflate costs, and jeopardize future well-being, particularly for younger demographics.

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The report advocates for implementing a carbon price as an effective mechanism to drive emissions reductions. Additionally, it suggests expanding the safeguard mechanism to enhance climate action. Yetsenga noted that pursuing sustainable growth does not necessarily equate to slower economic progress, suggesting that Australia could benefit from investing in green industries, such as green iron and critical minerals, to secure a sustainable economic future.

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Ken Henry, a former Treasury secretary, remarked on the intergenerational burden of climate inaction, stating, “We have been kicking this can down the road so future generations will have to bear more of the impact of climate change.” He underscored the existential risks posed by climate change, asserting that addressing it should be a top priority.

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The report's findings have sparked discussions among policymakers and economists about the need for a holistic approach to measuring national progress. Yetsenga emphasized the importance of considering environmental impacts alongside economic growth, advocating for a model that prioritizes sustainability.

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• “taking action on climate change is not just an environmental or moral issue, it’s really a question of intergenerational inequity” — Rhiannon Yetsenga, Associate Director, Deloitte Access Economics

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• “At some point if climate change is not addressed it poses an existential risk to human survival, so it’s right up there.” — Ken Henry, Former Treasury Secretary

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While the Deloitte report presents a clear economic forecast, it is essential to note that the modeling relies on current policy trajectories and assumptions about future climate action. Discrepancies may arise regarding the effectiveness of proposed measures and the actual economic impacts of climate change, necessitating further research and analysis.

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The findings of this report underscore the urgent need for comprehensive climate action to mitigate the economic burdens faced by future generations in Australia.

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