Australia’s Treasury will soon restart modelling of the economic impacts of climate change.

Treasury has not been asked for climate modelling since 2013, when former PM Tony Abbott made changes in the wake of his party’s electoral win. 

Last year, when the Coalition government put forth its plan to reach net zero carbon emissions by 2050, its modelling was conducted by private consultants McKinsey.

But now, Treasurer Jim Chalmers has ordered the Treasury to restart its climate modelling and restore the department's role in climate action.

“Treasury is working closely with other departments to rebuild this capacity after years of neglect under the Coalition, and we'll have more to say about this important work,” Mr Chalmers said this week.

“Treasury's modelling will help us chart a path that maximises jobs and opportunities for our country as we take advantage of this transformation.

“Australia's economic prospects will be in large part determined by our ability to take ambitious action on climate change and deliver cheaper and cleaner energy.”

Australia’s last major review of the impact of climate change on the economy, the Garnaut Review, was commissioned in 2007 by former prime minister Kevin Rudd.

In that review, Professor Ross Garnaut recommended that a carbon emissions trading scheme be established. 

Before this year’s federal election, Professor Garnaut said whoever won should commit to reducing emissions by 75 per cent by 2035 and phase out coal generation to avoid the worst-case scenarios of his 2007 report.

Labor has fallen short of that, pledging a 43 per cent reduction by 2030, though it is an increase from the Coalition's 26 to 28 per cent target.

“Australians face interrelated policy challenges of historic dimension,” Professor Garnaut wrote this week.

“Fail to deal with them well, and we irretrievably disrupt climate and environmental conditions that underpin Australian lives, lose the chance to regain effective influence in our neighbourhood, continue the last decade’s stagnation and decline in living standards for ordinary Australians.”

Shadow Treasurer Angus Taylor says the Coalition government had climate modelling in a separate department, and called for Mr CHalmers not to distract the Treasury. 

“Under the former government, climate policy was led out of the Department of Industry, Science, Energy and Resources and supported by robust economic capability, including the Office of the Chief Economist. Key policy development continued to be supported by Treasury, ABARES and the Productivity Commission,” Mr Taylor said. 

“It's up to the Labor Party to explain why its new environment super department does not have comparable economic capability.

Mr Taylor said the Treasurer “should not take away resources from the [Treasury’s] core economic task of easing pressure on families and small businesses by reining in inflation and putting downward pressure on interest rates”.