“The proposed expansion of the Safeguard Mechanism, an effective carbon tax on Australian industries, as laid out in the Safeguard Mechanism Review Consultation Paper, will further burden Australia’s most vital and important sectors of the economy,” said Saxon Davidson, Research Fellow at the Institute of Public Affairs.
Today the Institute of Public Affairs has released new analysis on the potential changes to the Safeguard Mechanism outlined in the Safeguard Mechanism Review Consultation Paper, which proposes to accelerate the decline in net emissions after the 2030 target of 100 million tonnes CO2-e to between 68.8 and 54.3 million tonnes CO2-e by the end of the 2035 financial year, in line with the federal government’s 2035 nationwide emissions reduction target.
The IPA’s analysis found:
- If the Safeguard Mechanism was expanded after 2029-30 the meet the federal government’s target of reducing emissions by between 62 and 70 per cent by 2035, the direct carbon tax costs to covered facilities would be between $18.9 billion and $33.1 billion between 2030-31 and 2034-35.
- This is in addition to the existing costs incurred before 2030. IPA analysis published in 2025 estimated the direct carbon tax cost to facilities under the Safeguard Mechanism would be a cumulative cost between $7.8 billion and $11.7 billion between 2023-24 and 2029-30.
- Western Australia would continue to be most affected state under the Safeguard Mechanism. Between 2030-31 and 2034-35, facilities in Western Australia will incur a direct carbon tax cost of between $6.3 billion and $10.8 billion, roughly a third of the entire nationwide carbon tax cost.
“Western Australia is a go ahead to get ahead state, and this carbon tax expansion, combined with the potential of a GST revamp, shows the elites in Canberra want nothing more than to hold the state back.”
“The industries that power WA, and the export revenue and jobs they provide, are vital to the nation’s entire sovereign capability.”
“The Safeguard Mechanism is a direct threat to our sovereign capability, as almost nine-in-ten of all the facilities targeted are in critical industries we need to survive as a self-reliant nation, including mining and manufacturing,” Mr Davidson said.
If the government were to run a proper review of the Safeguard Mechanism, it would immediately recognise its cost and abandon the policy, alongside the commitment to net zero emissions by 2050.
“Australia must be a country that takes advantage of our natural resources and services the needs of our country first, this means abandoning emission reduction targets set by global conferences.”
Click here to read the research
