Contrary to popular belief, the policies that are most effective in driving down greenhouse gas emissions actually raise revenue rather than cost the budget money. The Gillard Government has recently scrapped, or wound back, a range of policies designed to help reduce greenhouse gasses in order to ensure the budget returns quickly to surplus. These policies, including the Cleaner Car Rebate, Green Car Innovation Fund, Green Start Program (the ironically named replacement to the Green Loan scheme as the replacement was scrapped before it started), and the Solar Homes and Communities Plan, are often called ‘complementary policies’ as they are designed to complement the operation of a (as yet unseen) carbon price.

This paper outlines the circumstances in which such complementary policies are required and then assesses whether the recent decision to modify and abolish a wide range of these complementary policies was justified.