Industry experts have warned a green depreciation scheme considered by Julia Gillard’s Energy Efficiency Task Group could cost $2.3bn.
Thay also warned that its success would be difficult to measure.
The Task Group report released by the Prime Minister on Friday considered submissions for an accelerated scheme that would allow taxpayers to claim large deductions — akin to an interest-free loan — for the purpose of investing in energy efficiency measures.
The report did not provide costings for such a scheme, but a pre-2009 budget submission prepared by the Property Council of Australia recommended green depreciation as a way of fast-tracking improvements in energy efficiency in existing buildings.
On its 2009 economic modelling, which is being updated, a green depreciation scheme would cost about $2.3bn over 10 years, with initial outlay of $90 million.
Property Council of Australia chief executive Peter Verwer yesterday said the Gillard government’s election campaign announcement of a $1bn investment allowance had “superseded” the need for a green depreciation scheme.
That incentive, which will be effective from July1 next year, will allow businesses to claim a one-off bonus tax deduction of 50 per cent of the cost of improving the energy efficiency of a building that has a rating of two stars or lower.
University of Queensland ecological economist Colin Hunt criticised tax-based measures to promote energy efficiency in the forms of both accelerated green depreciation and a one-off green investment allowance.
“These schemes would be inefficient in that the rewards would vary according to tax status of the applicant, and both would be costly to government,” Dr Hunt said. “There is no built-in efficiency; if you have a very high marginal rate of tax, you are getting a big benefit.”
Dr Hunt said it was difficult for governments to measure the effectiveness of green depreciation because it would be difficult to gauge uptake levels and the successes of such a program.
Clean Energy Council chief executive Matthew Warren said providing a tax incentive was an effective way to encourage businesses to invest in energy efficiency.
“Tax and depreciation incentives are particularly useful because they allow companies to plan a pipeline of projects over a given period,” he said.
Wilhelm Harnisch, chief executive of Master Builders Australia, said the scheme had merit but it would be an “fiscal headache” for the government.
Opposition climate spokesman Greg Hunt yesterday voiced cynicism about the government’s capacity to implement the tax-based scheme if it opted to implement it.
“Having witnessed the madness of the pink batts program and been told at the start to support it no matter what, we will consider any efficiency (scheme) very carefully,” he said.
“Whilst we support energy efficiency in principle, the pink batts tell us there should never again be a blank cheque for energy efficiency programs until every element of safety, design, fraud protection and value for money is locked down.”
