Green Tax Reform in Australia and the Possibilities of Double and Triple Dividends

  • Maruf Rahman Maxim

Student thesis: Doctor of Philosophy (PhD) - CDU


Green Tax Reform (GTR) or Environmental Tax Reform (ETR) is a well-researched topic and this concept pivots around two fundamental theories, (i) optimal taxation and (ii) the Double Dividend (DD) hypothesis. Europe is the forerunner in experimenting and implementing various applications of GTR and the rest of the world is also following European footsteps to experiment with various tax reform ideas that are environmentally beneficial and have the potential to entail additional economic benefits. The overall aims of the thesis are to explore GTR in the Australian context and to identify the policy mixes that have the highest potential in executing a successful tax reform.

Australia is the only developed country that initiated and then subsequently annulled a carbon pricing mechanism in the form of a carbon tax due to political reasons. In my thesis I hypothesised that in order to make any carbon pricing politically feasible, the policy needs to entail certain economic benefits along with environmental ones. One of the main reasons why carbon pricing was discarded initially is due to the fear of economic distress caused by the additional carbon tax. Exploring the potential of tax reform possibilities that can result in multiple benefits to the environment and economy is therefore very sensible and this thesis provides that insight.

The thesis is predominantly divided into two parts. In the first part I explored numerous GTR policy mixes to find out the ones that are truly effective. The effectiveness is measured on the scale of double and triple dividends. In DD. I assessed whether a GTR policy can lead to CO2 emissions reductions along with employment growth. In Triple Dividend (TD), I included GDP growth along with emissions reduction and employment growth. I ran meta regression analyses of numerous simulation results to identify different GTR policies that have the double and triple dividend potential. I categorised the data into European and non-European simulations to identify any fundamental difference between the policy effectiveness. I found differences between European and non-European GTR policy effectiveness and concluded that for optimal results, GTR policy mix should be assessed independently instead of following the European approach.

In the second part, I tested the effective policy mixes identified in part one of the thesis in an Australian context using a single country Computable General Equilibrium (CGE) model called ORANI-G. I tested for double and triple dividends separately. I also assessed whether Australia should mould the GTR policy design following European approach or follow an alternative approach. In the simulations, along with GTR policy mixes, I additionally tested the effect of productivity gain that can arise as a positive externality of lower CO2 emissions.

I conclude that GTR can offer a sustainable growth plan for Australia, offering lower emissions, higher GDP and higher employment. The reduction of payroll tax and GST had significant impact on the economic dividends, naming employment growth and GDP growth. The research also suggests that following European GTR policy design may not lead to the optimal results for Australia. Finally, the results suggest that productivity gain can amplify the results of GTR when considered in the simulation design.

Date of Award2021
Original languageEnglish
SupervisorKerstin Zander (Supervisor) & Rabindra Nepal (Supervisor)

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