Barriers to Effective Climate Change Adaptation

I, Bill Shorten, Assistant Treasurer and Minister for Financial Services and Superannuation, pursuant to Parts 2 and 3 of the Productivity Commission Act 1998 hereby request that the Productivity Commission undertake an inquiry into regulatory and policy barriers to effective climate change adaptation. The Commission will report within 12 months of receipt of this reference and will hold hearings for the purpose of this inquiry.

Background

Climate change adaptation is action by households, firms, other organisations and governments to respond to the impacts of climate change that cannot be avoided through climate change mitigation efforts. An effective national adaptation response will require all levels of government, the private sector and intermediary markets to contribute to that response.

This inquiry will assist the Council of Australian Governments (COAG) to advance climate change adaptation reforms in Australia by examining the policy frameworks required to facilitate effective adaptation, and the costs and benefits of various adaptation options so as to identify the highest priority reforms. In undertaking this review the Commission will also assess the effectiveness and efficiency of market based approaches in facilitating adaptation.

Scope of the Inquiry

The Commission is requested to assess the regulatory and policy barriers to effective adaptation. In undertaking the review, the Commission should identify any specific barriers that may act to inhibit effective adaptation to unavoidable climate change.

The Commission should identify high priority reform options to address any identified barriers to effective adaptation. The Commission should also:

• examine the costs and benefits of the options to address those barriers where it is feasible to do so, including a 'no change' (maintaining the status quo) option
• assess the role of markets (including insurance markets) and non-market mechanisms in facilitating adaptation, and the appropriateness of government intervention.

In undertaking its inquiry, the Commission should take into account the relevant policies of all levels of government and the work on adaptation undertaken under the auspices of COAG.

The Commission should consult with relevant Australian Government, state and territory and local government agencies, and other key stakeholders.

The Commission is to provide both a draft and a final report, and the reports will be published. The Government will consider the Commission's recommendations, and its response will be announced as soon as possible after the receipt of the Commission's report.

Bill Shorten
Assistant Treasurer

[Received 20 September 2011]