Australian governments should implement policies that help the community deal with the current climate by improving the flexibility of the economy. This would also build adaptive capacity to deal with future climate change. This includes reforms to:
• taxes that influence the way resources are used, such as land tax exemptions and conveyancing duty, which could inhibit the mobility of labour or capital
• government transfers that reduce incentives to adjust to changing circumstances, such as reforms to drought support as outlined in the Productivity Commission’s 2009 inquiry
• regulations that impose unnecessary costs or inhibit competition or flexibility and could impede climate change adaptation by reducing the ability of businesses, households or other entities to respond to changing circumstances, such as restrictions to water trading.

Recommendation 2