Lack of carbon models 'shocks' Xenophon

Independent Senator Nick Xenophon is "shocked" Treasury hasn't done modelling to see if taxpayer dollars would be better spent reducing high greenhouse gas emissions activity or boosting clean energy generation.

That is what he told a Senate inquiry on Tuesday that was investigating laws to abolish the carbon tax, the Climate Change Authority and the Clean Energy Finance Corporation after the coalition government used its numbers to pass the package of repeal bills in the lower house.

The federal government insists it can meet Australia's emissions reductions target with direct action, which promises to cut emissions by paying for activities such as planting trees and improving soil carbon, rather than the current market-based trading scheme.

Via telephone on Tuesday, Senator Xenophon asked Treasury officials at the inquiry what modelling they had done on the abatement costs of spending money to reduce high-emissions activity or increasing cleaner generation activity.

"Does Treasury consider that they would have a different effect on electricity pricing and on outcomes in terms of abatement?" he asked via telephone.

"Presumably one would be more efficient than the other in terms of abatement, particularly in the context of the direct action scheme."

A Treasury official said the department had not undertaken an analysis of the effectiveness of different programs for delivering abatement and its impact on prices, but would do so if the government asked.

When the senator then asked if Treasury would advise the government it would be prudent to model those costs, the official replied: "We will make our usual comments to government through the process around the consideration of the emissions-reduction fund in the normal course."

Senator Xenophon told the inquiry chairman he was surprised the modelling had not been done.

"I must say, chair, I am quite surprised, shocked in fact, that the treasury hasn't taken any modelling in respect of this."